This is my stimulus update for Wednesday, August 12.
We’ve been talking about second stimulus checks, and we were so close but so far. What do I mean by that?
I mean that not only did both the top Democrats and Republicans agree that we need a second stimulus check, but as I told you on August 2, Treasury Secretary Steven Mnuchin said that in the course of the now-stalled stimulus negotiations, there was agreement with respect to the amounts and eligibility requirements for second stimulus checks.
So Close But So Far (Stimulus Checks)
And so at that point the concern was not so much, OK, do people support stimulus checks, the concern was bridging the gap between the Republicans’ $1 trillion proposal the HEALS Act and Democrats’ $3, $3.4 trillion wants in the HEROES Act.
So for two weeks, from July 27 until August 7, Mnuchin and White House Chief of Staff Mark Meadows met with the Democrats, Speaker of the House Nancy Pelosi and Senate Minority Leader Chuck Schumer, to try to strike a deal. The concern wasn’t stimulus checks; they agreed on those; the disagreements were over other big-ticket items like state and local funding, Democrats wanted almost $1 trillion in additional money from Uncle Sam to state and local governments; Republicans wanted none. Also, of course, the negotiators could not agree on unemployment. Democrats in the HEROES Act proposed an extension of the $600 weekly FPUC into early 2021, and Pelosi and Schumer stuck to their guns, they did not waver on that. Republicans threw out $400 a week, and Democrats said no.
So this past Saturday, after stimulus negotiations had failed on Friday, Trump signed various executive actions, three memoranda and one executive order, effecting various diluted stimulus measures.
So here we are, August 12, looking at a couple things. First, the effectiveness or lack of effectiveness of Trump’s executive actions, and second, indications that stimulus negotiations might resume again, that’s what I’m looking for.
Chances of a Second Stimulus Check in August
So Yesterday on Fox News Senate Majority Leader Mitch McConnell said regarding stimulus negotiations, “The stalemate needs to be ended. It doesn’t make any difference who says let’s get together again, but we ought to get together again…There hasn’t been a meeting of any consequences between the two parties since last Friday. That’s too long, and it’s time to sit down and get a deal done.”
This is significant for a few reasons.
One, it confirms that stimulus talks haven’t picked up, McConnell said, “There hasn’t been a meeting of any consequences between the two parties since last Friday.”
That tells me that stimulus talks are dead, this is why I don’t clickbait with words like, “Good News”, “Great News”, “Terrific”, “Finally”.
Now, could stimulus talks be revived? Yes, they could, as McConnell is saying they should.
But is anything going on right now? Am I going to go out on a limb against the backdrop of this information we have as of August 12 and tell you that you should be expecting your second stimulus check in August, no, I’m not.
Think about it. We had two weeks of failed negotiations, and now Trump kind of potentially helping but kind of complicating matters with his executive actions, and other than these actions by Trump, I feel like we’re in the same spot we were two weeks ago with respect to stimulus checks.
So call me pessimistic, but I’m fairly doubtful that negotiations will resume, successfully conclude, bill gets through both houses, and if you know how this works it often gets bounced around a bit, Senate version, House version, another Senate version, another House version, OK we’re gonna go with that one, pass the House, pass the Senate, signed into law by Trump, and Treasury successfully issues payments all in the next twenty days, especially considering that many in Congress are home right now, but yes, they could be called back on 24 hours’ notice of course as both Leader McConnell and Leader Hoyer have said.
And I think negotiations are especially difficult to resume this week because Chief of Staff Mark Meadows is out of town.
That’s my take. Not saying that chances of a second stimulus check are completely dead, but just right now I think it would be tough for that to happen in August given everything we’ve seen happen in the course of the past two weeks.
Feel free to disagree of course, no one has a crystal ball.
McConnell Doesn’t View Trump’s Actions as Final
Back to McConnell’s statement.
I believe that McConnell’s statement also signifies that the Senate Majority Leader does not view what Donald Trump did as providing finality to the stimulus situation.
Yes, McConnell has praised Trump’s executive actions, of course.
But here we see plainly that the chief Republican senator doesn’t view Trump’s executive actions as being the end-all solution we need right now, and he’s acknowledging that the American people need more stimulus and that he wants to see it happen.
Trump’s Dangerous Payroll Tax Rhetoric
Speaking of Trump’s executive orders, I’ve told you over the past few days my concern with Trump’s rhetoric regarding the payroll tax deferral, him saying that he wants to make a payroll tax cut permanent.
On Monday, Trump reiterated this, saying, “I signed directives to give a payroll-tax holiday, with the understanding that after the election — on the assumption that it would be victorious for an administration that’s done a great job — we will be ending that tax. We’ll be terminating that tax.”
Larry Kudlow has tried to defend him a couple times, saying, no, he doesn’t mean that, but look at what Trump said. I’m going to take him at his word when he says he wants to terminate that tax. He wants to terminate that tax.
The newest criticism of Trump’s payroll tax rhetoric has come from within the Senate G.O.P. itself from none other than Senate Finance Committee Chair Chuck Grassley.
Yesterday Grassley was asked if he would support a permanent payroll tax cut that Trump has implied he would seek if reelected. Grassley said, “I would not entertain that question unless … it would go in with the reform of Social Security. We’ve got to make sure that we keep our promises to senior citizens.”
White House Tweaking Trump’s $400 Unemployment Memorandum
Also, regarding Trump’s $400 weekly unemployment memorandum, the White House did clarify yesterday that if states don’t want to go along with the $100 kick-in that the feds would still kick in the $300 for those receiving at least $100 in normal unemployment benefits, including PUA, in that state, so what this practically means is that residents of some states could get the $400 weekly while residents of other states could only get $300 weekly under Trump’s memorandum.
Kudlow said yesterday, “We modified slightly the mechanics of the deal,” because if you read the memorandum itself it implies that a state has to be on board with the $100 for their residents to get the $300, but it looks like the White House wants to tweak that.
The concerning thing to me here is, right when the unemployment memorandum came out, the expiration of Trump’s unemployment plan under his memorandum, the expiration will happen when they’ve spent about $44 billion out of the FEMA Disaster Relief Fund, the DRF, and that’s assuming that we don’t have to put our hands in the DRF for a disaster in the middle of hurricane season which some parts of the country are in right now, so my concern is that if states are lax to roll out even the federal $300, we might see the residents of the states that got on board with this plan quick get the lion’s share, while states due to technology or something weren’t able to get on board as quickly, their residents might miss out.
And this is just another reason why we need another real stimulus relief bill.
Mnuchin and Capital Gains Tax Cut
In minor stimulus news, Secretary Mnuchin on Fox News this morning appeared to support a capital gains tax cut, we know that Trump mentioned both an income tax cut and a capital gains tax cut on Saturday, Mnuchin said, “While we recover, we should reduce those capital gains.”