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Trump's Virus Cash Payment Plan Faces Dem Pushback

By Alan K. Ota · 2020-03-18 13:39:36 -0400

The GOP push to carry out President Donald Trump's plan to send cash payments to Americans faces potential objections from Democrats and disputes over other components of the emerging economic stimulus package to address fallout from the new coronavirus.

"My fear with that is it would take away the focus from those individuals who are most in need," Sen. Mark Warner, D-Va., said of a GOP-backed stimulus plan that could include sending cash payments to taxpayers. (AP)

Senate Majority Leader Mitch McConnell, R-Ky., has said he is prioritizing the development of a new stimulus package, possibly including a version of the White House plan to send cash payments through the Internal Revenue Service to taxpayers. But his strategy for shaping a Senate GOP stimulus blueprint drew a cool response from the rival party, as some Democrats voiced doubts about the benefits of such payments on their own without other measures that they support.

"My fear with that is it would take away the focus from those individuals who are most in need, the people who are quarantined and who have the job losses," Sen. Mark Warner, D-Va., ranking member on the Senate Finance Taxation and IRS Oversight Subcommittee, told Law360. "I also feel like you only get one chance to use that macroeconomic tool. I'm not sure that's what we ought to be doing right now."

Democrats also are voicing concerns about other priorities on the Trump to-do list for the new stimulus package, including $50 billion in financial aid for passenger and cargo air carriers and $150 billion in similar aid for other distressed business sectors.

Despite such criticism, Senate Majority Whip John Thune, R-S.D., a senior tax writer, made clear he hoped there would be consensus support in his caucus for Trump's vision of sending cash payments to taxpayers as a component of a stimulus package.

"We have a high-level interest in that idea," Thune told reporters Tuesday. "Again, you're not going to find unanimous consensus on any of these ideas. But I would say that idea has a lot more resonance with our members than does, for example, a payroll tax cut."

Thune also said components of the GOP stimulus plan would be developed by three Senate GOP working groups.

Thune and McConnell sought to seize momentum from Wednesday's 90-8 Senate vote to clear an economic relief package, H.R. 6201, which includes a payroll tax credit for businesses with at least 50 employees but fewer than 500 to help cover the cost of paid leave for workers.

Participants in a Senate GOP meeting with Treasury Secretary Steven Mnuchin on Tuesday said he outlined a plan for two waves of payments to taxpayers who earned less than an income cap of about $80,000. They said the payments would resemble tax rebates in a 2008 economic stimulus law  enacted under President George W. Bush in response to a financial crisis and a recession that began in late 2007. Those tax rebates amounted to $300 for an individual and $600 for a married couple.

Sen. Thom Tillis, R-N.C., said senators were told a second wave of payments to taxpayers was designed to help them deal with continuing economic problems linked to the new coronavirus. A Treasury summary of the payment plan said each batch of payments would cost about $250 billion apiece, with the first wave going out on April 6 and the second wave on May 18.

The summary said that payment amounts would be "fixed and tiered based on income level and family size," and the payments sent out in each of the two rounds would be identical.

"They are working out the technicalities," Tillis told Law360. "There will be income caps. If you are making $1 million, you won't be eligible. There will be an income eligibility cap, whether that's at $75,000 or $85,000. What we don't want to do is create something that lasts for months when the crisis is only going to be for weeks."

Several GOP senators said the idea of multiple waves of payments to taxpayers resembled a plan framed by Andrew Yang, the former Democratic presidential candidate, for delivering monthly payments of $1,000 to every citizen over age 18.

But Sen. Jerry Moran, R-Kan., said GOP senators reached no agreement on Trump's payment proposal during their Tuesday chat with Mnuchin.

"That was hardly talked about. And it's undecided," Moran told Law360.

The new GOP initiative came together rapidly starting Monday night as senators returned to Washington and discussed a new proposal by Sen. Mitt Romney, R-Utah, for sending $1,000 payments to taxpayers. In a room off the chamber floor, Finance Committee Chairman Chuck Grassley, R-Iowa, met with Mnuchin to discuss the framework for a new stimulus package, which Grassley said in a written statement would include "target measures to ensure workers and businesses nationwide can weather this temporary but unprecedented disruption."

On Tuesday morning, Trump and Mnuchin made clear in a White House briefing that the president's cash payment proposal was a centerpiece of their framework for a stimulus plan.

Some Democrats have voiced support for a similar plan. For example, Sen. Cory Booker, D-N.J., has backed a plan with Sens. Sherrod Brown, D-Ohio, and Michael Bennet, D-Colo., calling for a payment of $2,000 to taxpayers under an income cap, with possible additional payments later to address problems related to COVID-19, the disease caused by the new coronavirus.

But other Democrats voiced some doubts about whether Trump's proposed cash payments were the right approach to help families affected by the office closures and business restrictions related to the new coronavirus. They pushed back against fast action on a GOP cash payment plan and called for talks on other proposals backed by both parties.

"I'm interested in things that strengthen protections for families and workers. Sending cash doesn't get that," Sen. Chris Coons, D-Del., ranking member on the Appropriations subcommittee responsible for the IRS budget, told Law360.

He referred to efforts by Democrats to include in a stimulus package tweaks to traditional programs such as unemployment insurance and provide an expanded earned income tax credit for workers without children.

Coons and Warner also raised concerns about the potential burden on the IRS of enacting a cash payment plan in the midst of tax filing season.

"It's always going to be a challenge. And there's going to be some lag time to get it done," Warner said.

David Burton, a senior fellow at the Heritage Foundation, questioned whether Trump's proposed cash payments would deliver sufficient economic benefits and called for a closer examination of the plan.

"Part of it is old-fashioned Keynesian thinking that money dropped from helicopters will stimulate the economy. Politicians are in 'we need to do something' mode whether that makes sense or not," Burton told Law360.

Whether Senate Republicans reach agreement on a package or not, any Senate stimulus measure could face roadblocks in the House. That's because House Democrats would need to support any Senate-passed tax bill, and agree to forgo procedural blocking moves to assert their chamber's constitutional authority to originate all tax legislation.

In order to avert such potential barriers, senior Republicans such as Thune and Grassley made clear they planned to try to focus on ideas that have the potential to unify their party and entice support from Democrats.

Sen. Bill Cassidy, R-La., a member of the Finance Committee, said he believed there was a need to deliver cash to some workers and business operators to help them weather financial setbacks related to efforts to stem the spread of the new coronavirus.

He said lawmakers would need to work out details of a plan that can draw support from both parties.

"We want to get people over the short-term problem. We're trying to figure that out," Cassidy told Law360.

--Editing by Robert Rudinger and John Oudens.

Update: This story has been updated with Senate action on a coronovirus relief bill. 

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