Trump and GOP split on payroll tax cut, testing as Covid talks kick off

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President Donald Trump and top administration officials are continuing to push for a payroll tax cut — but GOP leaders on Capitol Hill haven’t signed off on the proposal as Congress begins work on a new coronavirus relief package.

Trump and Republican leaders, however, are united on reducing unemployment insurance payments as part of their newest stimulus proposal, and they will call for additional direct payments as part of a $1 trillion package expected to be unveiled this week.

Senate Republicans are also pushing for tens of billions of dollars in funding for testing for the states and additional funds for the Centers for Disease Control, in addition to spending boosts for the State Department and Pentagon — money that the White House so far has resisted including in the new package.

The negotiations kicked off Monday as lawmakers returned to Washington after a two-week recess that saw massive spikes in coronavirus cases in many states, as the U.S. continues to struggle to stem the spread of deadly virus.

Trump administration officials have also floated new spending caps for next year’s budget, as well as seeking funding for other non-coronavirus related projects, such as $250 million for FBI renovations, said GOP lawmakers and aides.

But Trump’s insistence on the payroll tax cut in particular is putting Republicans in a bind ahead of the negotiations, and it remains a non-starter for Democrats.

Following a meeting Monday at the White House with Trump, Treasury Secretary Steven Mnuchin and Senate Majority Leader Mitch McConnell (R-Ky.), House Minority Leader Kevin McCarthy (R-Calif.) said that the payroll tax cut would likely be included in a GOP proposal. During that meeting, Trump doubled down on the issue, calling it “very important.”

“It’s a tremendous saving and an incentive for companies to hire their workers back and to keep their workers,” Trump told reporters afterward.

McCarthy reiterated that the GOP proposal will center “on getting the economy moving again” and will be “focused about the kids’ safety and the teachers as well, liability protection.” Mnuchin said the negotiations will kick off with a $1 trillion price tag.

Unemployment benefits are expected to be a major sticking point in coronavirus negotiations. The March CARES package included an additional $600 in benefits to individuals that Republicans argue discourages individuals from returning to work. Without congressional action, the benefits will expire in the coming days.

Democrats, including Speaker Nancy Pelosi (D-Calif.) and Senate Minority Leader Chuck Schumer (D-N.Y.) remain insistent that the increased unemployment assistance payments continue. The House included it as part of the $3 trillion Heroes Act passed two months ago, although McConnell refused to take up the measure.

“We don’t want to create a [disincentive] for people to work,” McCarthy said following the White House meeting. “That’s why we’ve got to get together and solve this problem before the end of the month so we can make sure we have unemployment but at the same time don’t create a disincentive.”

Another top priority for Senate Republicans will be liability protections for businesses and other entities. McConnell has circulated a summary of the proposal, which would offer protections to schools and companies from lawsuits over coronavirus exposure. Democrats so far have shown little openness to the idea, though they haven’t drawn their own red lines opposing it.

Mnuchin and White House chief of staff Mark Meadows plan to speak with Senate Republicans at their weekly lunch Tuesday. Meadows is also planning to meet with Senate Appropriations Chairman Richard Shelby (R-Ala.) along with Senate HELP Committee Chairman Lamar Alexander (R-Tenn.) and Sen. Roy Blunt (R-Mo.) later Monday afternoon.

GOP sources said the trio of Senate Republicans will press Meadows and Mnuchin for additional testing funding especially.

Senate Democrats are vowing to only negotiate alongside House Democrats. In a letter sent to his caucus Monday, Schumer urged party unity ahead of the negotiations and reminded Democrats that was their strength during the March CARES package.

“It was our unity against a partisan, Republican first draft that allowed for significant improvements to be made — improvements that have benefited millions upon millions of Americans,” Schumer wrote in the letter. “I hope we will not have to repeat that process. But we will stand together again if we must.”

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