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Financial Planning > Tax Planning

GOP Stimulus Bill to Include $1,200 Checks, No Payroll Tax Cut: Mnuchin

By Melanie Waddell

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Treasury Secretary Steven Mnuchin said Thursday morning that the next coronavirus relief package will not include a payroll tax cut.

The GOP bill was expected to be released Thursday, but has been delayed “as GOP lawmakers and the White House strained to finalize an opening offer in negotiations with Democrats,” The Wall Street Journal reported.

Senate Majority Leader Mitch McConnell, R-Ky., said on the Senate floor Thursday afternoon that ”We’ll be laying down a framework next week.”

The GOP proposal will focus on: kids, jobs and the economy and healthcare, McConnell said.

“Republicans want to send a second round of payments to households,” McConnell said.

“We think the payroll tax cut is a very good pro-growth policy, but the president’s focus is he wants to get money into people’s pockets now, because we need to reopen the economy,” Mnuchin said on “Squawk Box,” a CNBC program. “One of the issues I think you know about the payroll tax cut is people get that money over time. So the president’s preference is to make sure that we send out direct payments quickly so that in August, people get more money.”

The previous direct payments “worked before,” Mnuchin continued, as “retail sales was up year over year 1%; people went out and spent that money in small businesses, and that’s having a big impact in the economy. So as I said, it’s all about getting money now for kids and jobs.”

The new GOP bill is reported to include direct payments of $1,200.

A payroll tax cut, Mnuchin said, “won’t be in the base bill,” which will be CARES 4.0. “there could be CARES 5.0.”

Unemployment Benefits

As to unemployment benefits, the enhanced unemployment insurance expires next week, “so that’s a priority we need to respond to that,” Mnuchin said. “As we’ve said before, we’re not gonna continue within its current form because we’re not going to pay people more money to stay at home than work, but we want to make sure that the people that are out there that can’t find jobs do get a reasonable wage replacement, so it will be based on approximately 70% wage replacement.”

Republicans said Wednesday afternoon that they were considering extending the enhanced unemployment insurance benefit “at a dramatically reduced level of $400 per month, or $100 a week, through the rest of the year,” CNBC reported.

The current federal benefit of $600 per week is set to expire at the end of July. The payment is in addition to state jobless benefits.

A lot of tax credits will also be provided, he continued, “to incentivize companies to hire people.”

As to the Paycheck Protection Program, Mnuchin stated that “there’s a lot of bipartisan support for extending the PPP. I’ve had conversations with [Sens.] Cardin and Rubio, and we want to have second checks for companies whose revenues are down, 50% or more and need more money small businesses to get people back to work.”

Melanie Waddell

@Think_MelanieW

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