Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Retirement Planning > Social Security > Social Security Funding

Trump’s Payroll Tax Cut to Be Included in Next Relief Bill

Your article was successfully shared with the contacts you provided.

A new coronavirus relief package drafted by Senate Republicans will take center stage this week as the Senate gets back to work — and will include a controversial payroll tax cut championed by President Donald Trump.

The bill, being drafted in collaboration with the White House, will also tie aid to schools to classrooms reopening, according to The Washington Post.

Trump met in the Oval Office with Senate Majority Leader Mitch McConnell, R-Ky., and House Minority Leader Kevin McCarthy, R-Calif., the Post reported Monday.

McCarthy confirmed to reporters that “GOP stimulus bill includes both payroll tax cut and direct payments,” Bloomberg News tweeted Monday.

Payroll taxes fund Social Security and Medicare.

Nancy Altman, president of Social Security Works, an advocacy group that favors expanding Social Security, said in a Monday statement ”that McCarthy’s statement today means that every Republican member of Congress supports defunding Social Security — unless they quickly and explicitly denounce their party’s plan to raid our earned benefits.”

McConnell stated in a Monday tweet that the next relief package “should focus on four things: Jobs, healthcare, kids in school, and liability protections for those helping us fight the coronavirus.”

Senate Minority Leader Chuck Schumer, D-Calif., objected in a Monday letter to colleagues that McConnell wants to write the next coronavirus legislation “behind the closed doors of his office.”

Citing media reports, Schumer said McConnell’s bill “will prioritize corporate special interests over workers and main street businesses, and will fail to adequately address the worsening spread of the Coronavirus.”

This one-party approach “is the same approach that delayed the passage of the CARES Act and the subsequent interim emergency relief legislation, failed on policing reform, and it won’t work this time around either,” Schumer wrote.

McConnell’s highest priority, Schumer continued, is “a sweeping new multi-sector corporate immunity proposal that would have the federal government preempt the laws of all 50 states and grant legal immunity to negligent corporations, nursing homes or others that fail to take reasonable steps to avoid spreading the virus.”

Senate Republicans’ bill “comes up short in a number of vital areas, such as extending unemployment benefits or funding for rental assistance, hazard premium pay for frontline workers, or investments in communities of color being ravaged by the virus, and many other necessary provisions,” Schumer said. Democrats, he said, “will need to fight hard for these important provisions.”

Passage Likely

David Kelly, chief global strategist at J.P. Morgan Funds, wrote in his Monday email briefing that “even in a highly polarized environment, it is likely that a bill will be passed.”

However, negotiations are likely to stretch into early August rather than be wrapped up in July, Kelly predicted.

Senate Republicans and House Democrats will consider the “true priorities of the administration,” so the final legislation, according to Kelly, could include:

  • Further one-time checks to individuals, although likely phased out at a lower income threshold than in the first go-round.
  • An extension of enhanced unemployment benefits into early 2021, but at a significantly lower level than the extra $600 per week in the CARES Act.
  • Some redirection of unused PPP money to a revised program generally targeting companies that have seen a substantial revenue decline.

The price tag could be between $1 trillion and $1.5 trillion, Kelly stated, “added to a national debt that has already grown by over $3.3 trillion this year.”

Moreover, he pointed out, “realistically a further bill will likely be needed after the November election.”

— Check out Stimulus Alone Can’t Save Economy: J.P. Morgan’s Kelly on ThinkAdvisor.


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.