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GOP renews ‘go slow’ approach on virus aid after jobs report

Trump on board with tax cuts for households, businesses

Senate Finance Chairman Charles E. Grassley, R-Iowa, says it's too early to say whether another economic rescue bill is necessary.
Senate Finance Chairman Charles E. Grassley, R-Iowa, says it's too early to say whether another economic rescue bill is necessary. (Tom Williams/CQ Roll Call)

Some top Republicans see more reasons to pump the brakes on efforts to pass another multi-trillion-dollar pandemic relief package after Friday’s surprisingly positive jobs numbers.

The Labor Department’s report of a modest decline in the unemployment rate to 13.3 percent in May — instead of a rise to Depression-era levels many economists had been expecting — gave Republicans fresh ammunition to move slowly on a new aid package or at least scale back its scope.

“The jobs report underscores why Congress should take a thoughtful approach and not rush to pass expensive legislation paid for with more debt before gaining a better understanding of the economic condition of the country,” said Michael Zona, spokesman for Senate Finance Chairman Charles E. Grassley, R-Iowa. Grassley’s panel has jurisdiction over tax policy, health care, unemployment benefits and other pandemic-related measures.

The report of a gain of 2.5 million jobs in May, rather than the loss of more than 10 million some economists were expecting, came three weeks after House Democrats passed a nearly $3.5 trillion aid package. That bill calls for another round of tax rebate checks, an extension of expanded unemployment benefits, more than $900 billion in state and local funding, food assistance and much more.

Senate Majority Leader Mitch McConnell, who panned the House measure last month as a “liberal wish list,” said Friday the new economic numbers make the case for more narrowly targeted relief.

“We must keep the wind in our sails, not slam the brakes with left-wing policies that would make rehiring even harder and recovery even more challenging,” McConnell said in a statement.

The Bureau of Labor Statistics noted in Friday’s jobs report that survey errors in recent months resulted in millions of individuals being classified as employed but not at work, rather than unemployed on temporary layoff. Adjusting the numbers accordingly yielded a higher 16.4 percent unemployment rate for May, the agency said, though still down from April’s adjusted rate of nearly 20 percent.

Senate Minority Leader Charles E. Schumer said the positive jobs report was no reason to ease up on relief for an economy that has been battered by the COVID-19 pandemic.

“With nearly 20M people out of work and unemployment among African Americans increasing, now’s not the time to be complacent or take a victory lap,” Schumer tweeted. “Senate GOP must stop sitting on their hands. We need to act!”

President Donald Trump, who held a news conference Friday to hail the jobs numbers, said he would still push for a different sort of economic “stimulus” package, one which appears likely to be much smaller than what Democrats want.

“We’ll be going for a payroll tax cut,” Trump said. “We’ll be asking for additional stimulus money because once we get this going it will be far bigger and far better than we’ve ever seen in this country.”

Republicans on Capitol Hill have largely dismissed the payroll tax cut idea, which Trump first floated in March. However, the $2 trillion March aid package allowed businesses to defer their portion of the 6.2 percent Social Security tax on worker wages, though it has to paid back within two years. But the idea of another round of tax rebates, worth up to $1,200 per eligible adult in the March law, has bipartisan support.

Trump on Friday made no mention of aid to state and local governments, which have been hit with large budget shortfalls because of an economic shutdown that began in March. Democrats have made state and local aid a focus of any new relief package.

Instead, Trump suggested his proposal would be more targeted, including assistance to the restaurant industry that has suffered massive job losses and furloughs. 

“We’re going to be doing things for restaurants and various pieces of the entertainment industry, which will be an incentive whether it’s deductions or whatever,” he said. “But we’re going to be asking despite the numbers and how good they are.”

McConnell and some other Republicans have been eager to go slow on additional aid as concerns grow about mounting red ink. The Congressional Budget Office has projected a whopping $3.7 trillion deficit this fiscal year after Congress passed several relief packages with borrowed money.

‘More work ahead’

But in the days leading up to Friday’s jobs report, economists of various ideological stripes have advocated additional aid, saying debt concerns should be addressed only after a strong recovery. And some Republicans have endorsed that prescription.

While calling the new jobs numbers “very encouraging news,” Sen. Josh Hawley, R-Mo., tweeted: “Congress should act now to encourage further rehiring (and new hiring!) and spur the economy into full-fledged recovery.”

Senate Majority Whip John Thune, R-S.D., tweeted that the economy “may bounce back faster than predicted.” Even so, he cautioned, “there’s more work ahead.”

And Kevin Hassett, one of Trump’s senior economic advisers, said his team would be presenting “options” to the president “so we can get everybody back to work.”

Even Grassley appeared open to another aid package “if it becomes necessary” after further study. “It’s too early to say what that legislation might encompass,” said Zona, his spokesman. “It would need to address any ongoing problems in an effective manner and encourage further job growth.”

Grassley’s Finance Committee plans to hold a hearing Tuesday on what could become a key battle of any new package: whether to extend expanded unemployment benefits of $600 a week that are set to expire at the end of July. House Democrats’ relief bill would extend those benefits through January.

[CBO: Extending higher jobless benefits would increase unemployment]

The Congressional Budget Office said Thursday that five out of six workers who receive those benefits would be paid more than they would earn on the job if the benefits were extended through January. It said employment levels would be lower, both this year and next year, than they otherwise would be, though economic output would be higher later this year as jobless benefits prop up consumer spending.

Grassley, who requested the CBO analysis, said in a statement Thursday that extending the higher jobless benefits would “encourage unemployment, government dependence and reduced productivity.”

Democrats pushed back on that report Friday as they sought to make a case for extended benefits. The Democratic-led House Ways and Means Committee issued a statement saying the CBO analysis “does not include the value of health, retirement, or other workplace benefits, or any opportunities employers provide for long-term advancement.”

Speaker Nancy Pelosi, meanwhile, continued to push for the mammoth House-passed aid package.                                                  

“The May jobs report shows that decisive action by Congress to support small businesses and workers can make a strong difference in our economy,” the California Democrat said in a statement. “But with more than 100,000 Americans tragically dead, 21 million still out of work and state and local budgets collapsing, now is the worst possible moment to take our foot off the gas.”

Lindsey McPherson contributed to this report.

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