This is my stimulus update for Thursday, July 23.
Mitch McConnell is expected to release the Republican stimulus legislation today, it could be one large bill or perhaps multiple smaller bills, but here’s an update on what we know, Mitch gave an overview of some of the things in the Republican legislation on the Senate floor two days ago.
Reports are that the White House and Senate Republicans have been disagreeing for the past few days about including a payroll tax cut in the next stimulus relief package, as we’ve talked about before on the channel, a payroll tax cut would essentially give workers a little bit more money in their paychecks every month.
Trump, Kudlow have expressed strong support for a payroll tax cut. Senate Republicans, not so much because I think they know that Pelosi and the Democrats would not go for it.
But now it appears that there is a resolution to the this issue.
No Payroll Tax Cut in the Second Stimulus Bill
This morning Steven Mnuchin, who is the Treasury Secretary, was on Squawk Box asked about the payroll tax cut, and here’s what he said:
Kernen: We hear again and again and again about that there’s remaining residual tension between the White House and the President and Senate Republicans on the payroll tax provisions tax cuts, where is that,
Steven Mnuchin: Well let me be clear 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. 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, there’s no question this worked before 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.
Kernen: Sounds like that it’s not going to be in the bill.
Steven Mnuchin: It won’t be in the base bill but again it as we roll out new things, and again this is cares 4.0 there could be cares 5.0.
Steven Mnuchin just said right there that the payroll tax cut will not be in the immediate legislation but rather stimulus checks would be in there because while a payroll tax cut gives people — and only employed people — a boost in every paycheck, the full benefit of which won’t be realized for months as they get each paycheck, the stimulus checks would be able to go out and boost the economy immediately, and he also said that the next round of stimulus checks would go out in August, of course this is assuming that Republicans and Democrats can work together to agree on the legislation.
So it appears that the White House and Republican Senators have reached an accord and they seem to be on the same page at this point.
And guess what? Mnuchin also opened the door to future stimulus bills, he said we’re rolling out CARES 4.0, but he said there could be CARES 5.0. McConnell, though, has said that this next round of relief will be the last, but Mnuchin said what he said.
Unemployment Update and More
In this interview Mnuchin also said that the priority will be kids and jobs, he talked about the $105 billion for school reopening that McConnell mentioned on the Senate floor a couple days ago, he mentioned liability protection, $25 billion for COVID-19 testing, perhaps a further extension of PPP but more targeted for companies whose revenues are down 50% or more and need money, tax credits to hire new employees, and he also talked about unemployment, and his answer was more clear than what President Trump said a couple days ago, here’s what he said:
Steven Mnuchin: I think as you know we have the enhanced unemployment insurance that’s expiring next week so that’s a priority we need to respond to that. As we’ve said before, we’re not gonna continue with in 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.
So Mnuchin clarified that the 70% figure that Trump threw out there is referring to wage replacement, which is what I suspected in my video a couple days ago about that, not 70% of the $600 weekly, which would be more money, $420 a week, Republicans aren’t going that high.
We know that CNBC reported this could be as low as $100 a week yesterday, based of course on anonymous sources, but we really gotta see the legislation about not only stimulus checks, but also unemployment, which hopefully we will see today.
On the topic of unemployment, the weekly unemployment claims data came out today indicating that 1.4 million Americans applied for unemployment for the week ending July 18 compared to 1.3 million in the preceding week, this is the first time that weekly unemployment claims have gone up, week-over-week, since March, so that’s a little frightening.
COVID-19 Update
Also frightening are the rising COVID-19 deaths, over 1100 nationwide yesterday. That is the highest we have seen in a while.
Stay Tuned for More Update
So now all there is to do is sit tight and wait for McConnell to release his legislation, hopefully today, and right when he does, I will dig into it and make a video about what they’re thinking in terms of stimulus checks and unemployment.
We still haven’t heard word confirming one way or the other if the eligibility requirements will change from the CARES Act or what the amount will be, we know that the #2 Senate Republican John Thune yesterday expressed openness to simply another CARES Act-type of stimulus, same recipients, same recipients, but we will see what’s in the legislation that will hopefully come out today.
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