Congress returned to Capitol Hill today, to begin heated negotiations over another round of stimulus funding to prop up the U.S. economy. Democrats and Republicans only have two weeks to come to an agreement with the White House over a strategy, before Congress again leaves town for the August recess.
Also ramping up the pressure is the looming expiration of the $600 weekly benefit for unemployed Americans, which was part of the original $2.2 trillion CARES Act and is due to sunset on July 31. Its deadline comes at a precarious time for the economy, whose recovery is threatened by a recent spike in COVID-19 cases and subsequently stalled or reversed reopenings.
There are a number of proposals circulating among lawmakers in Washington. They include extensions of existing programs and the introduction of new measures to support individuals and some of the hardest-hit industries — such as retail, which continues to shed jobs.
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Matt Priest, president and CEO of the Footwear Distributors and Retailers of America, advised that action is needed immediately to support workers. “We think the federal government should move quickly to ensure Americans continue to have access to funding, especially those suffering job loss or reduced working hours and wages,” he said. “Whether that funding takes the form of continued unemployment benefits, direct payments or some additional mechanism, we support backstopping those in need and who are the most vulnerable.”
Steps must be taken to aid businesses as well, Priest added. “It is vitally important that American companies, including footwear companies, have access to ongoing funding via the Paycheck Protection Program and other federally backed programs,” he said.
Here are some of the major stimulus measures up for debate:
Extending the Paycheck Protection Program
The Small Business Administration’s Paycheck Protection Program — aimed at bolstering cash-strapped small- and mid-sized companies — has already been extended once since it was introduced as part of the CARES Act. Its current expiration date is Aug. 8.
Treasury Secretary Steve Mnuchin has reportedly urged Congress to continue the program, and has even suggested that the government automatically forgive the loans for small businesses (current rules make forgiveness contingent on whether a business retains its employees). So far, there seems to be bipartisan support for at least extending the PPP further.
Sending More Stimulus Checks
There also seems to be bipartisan agreement about issuing another round of direct stimulus payments to Americans.
In a CNBC interview early this month, Mnuchin said of the White House stance: “We do support another round of economic impact payments. We can get that into hard-working Americans’ bank accounts very, very quickly.”
However, the amount on the check is in question. Democrats have proposed giving out another set of $1,200 checks for individuals making less than $75,000, and they raised the amount for families to as much as $6,000. Senate Majority Leader Mitch McConnell, though, has reportedly said he wants to lower the threshold to qualify to $40,000, which would greatly reduce the number of eligible citizens.
Continuing the Unemployment Bonus
Unemployment benefits are expected to be a major sticking point in negotiations in the coming days. Democrats are in favor of extending the $600-per-week extra payment for the unemployed, but Republicans and the Trump administration want to limit the payouts.
Because some Americans take home more from the benefits than they did when they were employed, critics have argued that the weekly payments have created a disincentive to return to work.
As a compromise, some lawmakers have proposed smaller amounts of $200 or $300, which could still help sustain families during the current recession.
Adding a Payroll Tax Cut
President Donald Trump has repeatedly emphasized his desire to include a payroll tax holiday in the next stimulus plan. Democrats oppose the idea, and even GOP leaders had been lukewarm — that is, until today, when party leaders reportedly told the president they are considering it for the Senate proposal.
A temporary reduction of the corporate payroll tax would provide companies with liquidity to offset slumping sales, and workers would see a small but immediate increase in their paychecks.
In fact, FDRA estimated earlier this year that a tax cut would provide an additional $250 a month to shoe store employees. However, payroll tax reductions offer no benefit to the country’s millions of unemployed.
Introducing the Healthy Workplace Tax Cut
One of the newer proposals on the table, the Healthy Workplace Tax Cut was introduced last week by Rep. Tom Rice (R-S.C.) and would offer a refundable tax credit against payroll taxes, to cover 50% of the costs incurred for COVID-19 safety measures. That includes testing, personal protection equipment, disinfecting, extra cleaning and reconfiguring workspaces.
Leaders throughout the retail industry cheered the announcement. According to the National Retail Federation, some mid-size retailers are spending as much as $1 million a week on safety measures. “This tax credit addresses many of those new expenses,” said David French, NRF’s SVP for government relations.