Mnuchin: White House plan will inject $1 trillion into economy
The Treasury secretary discussed the proposal at Senate Republicans' weekly policy lunch
Treasury Secretary Steven Mnuchin said the massive stimulus package the Trump administration is proposing would pump $1 trillion into the coronavirus-ravaged U.S. economy, through a combination of direct tax relief and grants and loans to struggling businesses.
"It's a big number," he said, but "this is a very unique situation." Mnuchin said the package would be paid for with borrowed money, arguing that with historically-low interest rates deficits weren't an immediate issue.
The measure would include more than $500 billion in "general stimulus," a congressional aide said, or direct tax cuts for households, which President Donald Trump and Mnuchin said Tuesday would be in the form of rebate checks. An additional $200 billion would be for expanded loans to small businesses, plus some $50 billion in aid to the cash-strapped airline industry.
Mnuchin discussed the proposal Tuesday at Senate Republicans' weekly policy lunch. Both the administration official and congressional aide spoke on condition of anonymity to discuss plans that haven't been made public yet in detail.
Trump had been seeking a payroll tax holiday through the end of the year. Various iterations have been discussed, ranging from total elimination of the 6.2 percent tax paid by workers and employers, at a roughly $800 billion cost, to smaller cuts in just the workers' share of the tax.
Democrats have said a payroll tax holiday would be poorly targeted, deliver bigger tax cuts to higher-income workers and leave out retirees, tipped workers and those who are unemployed.
Another option promoted by some Democratic economists as well as by Sen. Mitt Romney, R-Utah, is a $1,000 tax rebate to all Americans. Sen. Tom Cotton, R-Ark., supports a similar proposal but his plan would provide up to $2,000 for married couples filing jointly who make less than $200,000 annually.
Senate Majority Whip John Thune, R-S.D., noted bipartisan support for stimulus checks, though Senate Appropriations Chairman Richard C. Shelby, R-Ala., said there were those within the GOP conference with "misgivings" about the idea.
Meanwhile, the airline industry has been bleeding cash at a rapid clip due to canceled bookings. United Airlines, for example, announced it would take a $1.5 billion revenue hit this month compared to the same time last year.
The main trade group for U.S. airlines on Monday released a wish list consisting of over $60 billion in cash grants, loans and tax relief for passenger and cargo carriers, dwarfing the $15 billion airline bailout enacted after the Sept. 11 terrorist attacks.
Shelby said much of the airline aid would likely be structured as loans backed by aircraft and other industry assets that could be used as collateral. He said that idea has more support than "grants and bailouts."
Combined, such a package would be larger than the 2009 stimulus, which at the time the Congressional Budget Office estimated would cost $787 billion, not counting interest payments on the debt.
Mnuchin and Senate Republicans also discussed the smaller economic aid package passed by the House early Saturday morning and then revised Monday night with, among other changes, expanded tax credits for small businesses that would be required to offer paid leave. The Joint Committee on Taxation said those tax credits would offset about $105 billion in wages that otherwise wouldn't be paid.
But a broad coalition of business groups wrote to Senate leaders Monday arguing instead for direct government aid to workers forced to stay home due to illness or to care for family members. They said some companies won't be able to stay afloat if they have to pay workers for up to 12 weeks of leave, even at reduced pay and with tax credits to defray the cost.
Critics also say the bill's exemption for companies with 500 or more employees will give huge corporations a pass from the requirement and leave millions of workers without paid leave. Cotton said Monday the House bill couldn't pass the Senate as currently drafted, though that was before changes were unveiled late Monday.
Sen. John Cornyn, R-Texas, said there are five holds on the House-passed COVID-19 aid bill that he believes are all Republican senators.
"We're going to go on and vote as soon as soon as the Senate can get permission to vote on the bill that came over from the House," Senate Majority Leader Mitch McConnell, R-Ky., said after the policy lunch.
While "many members" have concerns about the paid leave requirements in the House bill, McConnell said, "My counsel to them is to gag and vote for it anyway, even if it has shortcomings."
Sen. Lindsey Graham, R-S.C., said he didn't like the House's paid family leave provisions, but he said critics probably don't have the votes to amend the bill at this point. "What they've done in the House I don't think can be changed in the Senate," Graham said. "We're a minority in a minority. …It's time for the Senate to pass the House bill."
Earlier there has been some talk that the two packages — the smaller bill and the much larger measure currently under discussion — could be combined into one and sent back to the House. But that option seemed to be fading by Tuesday afternoon, with the House bill likely to pass first before moving on to the follow-on bill, which had yet to be drafted.
The Senate adjourned later Tuesday without taking action. A vote on the House bill could come as early as Wednesday, though Rand Paul, R-Ky., was holding out for consideration of his amendment to offset the cost of the measure, in part by ending the U.S. presence in Afghanistan, before final passage.
Paul's amendment wasn't expected to be adopted.
Meanwhile McConnell said his chamber won't recess until it passes a broader stimulus package, and Sen. Mike Braun, R-Ind., said there was discussion of remaining in session through the weekend if necessary.
"Senate Republicans, in conjunction with the administration, will write the next bill," McConnell said, in contrast to the earlier bill Speaker Nancy Pelosi, D-Calif., wrote with Mnuchin.
Senate Minority Leader Charles E. Schumer, D-N.Y., has outlined what he says is as much as $750 billion in economic assistance, but more targeted at government programs and cash assistance to households rather than tax cuts. He pushed back on McConnell's plan to take the lead, arguing for a "four corners negotiation" instead, involving the White House and the top Democrats and Republicans in both chambers.
Pelosi and Mnuchin discussed additional stimulus measures on Tuesday, with House Transportation and Infrastructure Chairman Peter A. DeFazio, D-Ore., joining them separately to discuss airline assistance. Pelosi said she and DeFazio also hosted a conference call with airline industry executives.
Pelosi aide Drew Hammill tweeted that while she was open to tax rebates, they should be "targeted to those most in need" rather than wealthier households.
Niels Lesniewski, Griffin Connolly, David Lerman and Lindsey McPherson contributed to this report.