My Stimulus Guess + Kudlow Says $1,200

This is my stimulus update for Sunday, July 26.

Kudlow Says $1,200 Checks

So this morning White House Economic advisor Larry Kudlow was on CNN, talking to Jake Trapper, and dropped the two magical words, $1,200 check, they were going back and forth on unemployment, Jake Trapper was honestly in my opinion being pretty annoying, not letting Kudlow talk, and Kudlow mentioned well Jake don’t forget that in addition to unemployment we’re also going to do another $1,200 check, here’s a brief clip:

Larry Kudlow: There’s a $1,200 check coming, that’s going to be part of the new package.

The check is there, the reemployment bonus is there. The retention bonus is there. There will be breaks, tax credits for small businesses and restaurants.

That’s consistent with what Mnuchin said last week, though obviously the NY Times document I showed you yesterday said amount and eligibility still TBA, but we now have two folks from the White House saying $1,200, of course the White House isn’t writing the Republican bill, that’s coming from the Senate, so we’ll see what the Senate releases tomorrow.

Mnuchin Interview This Morning

So this morning Treasury Secretary Steven Mnuchin was on Fox News Sunday with Chris Wallace being pressed on the Republican stimulus legislation.

Chris asks him a great question, he points out, look, Democrats put together a bill in May — now, sidenote, was it a serious effort at bipartisan legislation? no, not one bit, so not terribly helpful — but nevertheless they put out a bill, and now here we are the last week of July FPUC having run out for millions of Americans with the Republicans still not having shown us a bill, so in this context Chris asks the Secretary a very pointed question.

Chris: Won’t millions of Americans, and millions of Businesses, pay the price, because the White House and Senate republicans can’t get your act together? 

Secretary Mnuchin: Let me say, I think that’s unfair characterization. The administration and the senate republicans are completely on the same page. Mark Meadows and I were up yesterday just working on technical issues in the drafts. We have previously agreed on all these issues earlier in the week. We want to move forward quickly. The bill will be introduced Monday and we are prepared to act quickly. This is all about kids and jobs. This is our focus, and we want to make sure something gets passed quickly, so that we deal with the unemployment, and all the other issues like Paycheck Protection Plan, tax credits, rehire people and money for schools.

So Mnuchin says that the White House and Senate Republicans are on the same page with the next stimulus legislation, that he and sidekick Mark Meadows, White House Chief of Staff, were in the Capitol yesterday working on technical issues in the drafts and he reiterates McConnell’s statement in the Senate that we should see the Republican legislation tomorrow.

And then Chris asks him at the timing of the negotiations, this is in the backdrop of various Republicans, including Mitch McConnell and Meadows himself, using language that doesn’t exactly signify a sense of urgency to get something done and as he answers Chris’s question here Mnuchin does give us some confirmation as to the size of the bill.

Chris: So do you have a G.O.P. plan that will be announced tomorrow, and then, what are laid-off workers and water struggling businesses supposed to do while you spend, as the White House Chief of Staff just said until sometime in august negotiating with democrats?

Secretary Mnuchin: Let me first say we do have an entire plan, it’s a trillion dollars and let me just remind everybody that of the $3 trillion we’ve already passed, we have about a trillion to a trillion and a half still left to put into the economy so these are very, very large amounts of money, working with Congress to support this.

My Guess For the Republican Stimulus Bill

Apart from Peter Navarro I think we’ve all kind of assumed that $1 trillion is going to be the starting point for what Republicans propose.

And Mnuchin basically just said as much right here, so let’s think about this here for a second.

Best case in the original piece of Republicans legislation it seems is that they put another check for $1,200 in there, that’s what Mnuchin said last week, that’s what Kudlow said this morning, the New York Times document that the times got a hold of said amounts were TBA, but let’s just assume that Mnuchin was correct when he said that last week, we won’t know what Republicans put in there until we actually see it, but there’s a pretty good chance that there’s a CARES Act stimulus check for round 2.

But let’s put $300 billion as a placeholder for now for stimulus checks, assuming it’s the same as a CARES Act-type stimulus check.

So with a $ 1 trillion figure as our guide and kind of looking at the New York Times document yesterday, I’m thinking it could look something like this:

• $300 billion stimulus payments
• $200 billion unemployment
• $120 billion school reopenings/childcare/education
• $115 billion public health (mostly COVID-19-related)
• $100 billion PPP
• $20 billion farmers
• $20 billion defense
• $10 billion airports
• $15 – $115 billion miscellaneous (Medicare, tax incentives, liability protection, etc.)

Just my speculation, but based on the $1 trillion figure that Mnuchin threw out there, knowing what the allocations were in the CARES Act, and the New York Times leak. That is just my speculation at this point, we’ll have a better idea obviously tomorrow of what the Republicans will be shooting for when they actually release their bill.

Unemployment

Mnuchin also says that well you know unemployment is obviously a priority because the supercharged unemployment has run out so the Republicans might want to do something piecemeal, you know, get a bill out the door for unemployment and threw in school reopening and McConnell’s liability protection in there as well, get that done ASAP, and then squabble with the Democrats throughout August about stimulus checks and state and local government, COVID, and PPP.

Then Chris points out that the Democrats probably won’t go for this kind of piecemeal approach because it can leave stuff out.

Like if Republicans want A, B, and C in the next bill but Democrats want C as well but they also want D and E, but Republicans say, let’s get B and C out now, Democrats are like, um, OK, but what about D and E, the other things we want, if we do it piecemeal, then there’s no guarantee that what the Democrats want will ever get passed in the future, so that’s why Pelosi and Schumer want a comprehensive bill that both the Democrat-controlled House and the Republican-controlled Senate can sign off on, one big compromise.

And here’s Mnuchin’s response.

Secretary Mnuchin: Well, Chris, just remember, when we did the last plan — and let me say, when you talk about piecemeal, this will be the fifth set of legislation, so there’s no reason why we can’t have number five, six, and seven as we need to deal with issues that obviously anything we do we need bipartisan support. But as it relates to unemployment insurance, we knew there was going to be large unemployment. We had a technical issue with the states and how they were going to be able to do this number so we picked a number that on the average looked okay, but what we’ve seen is now that we want to have the technical correction and we want to have something which pays people about 70% wage replacement, which I think is a very fair level, so it’s not a fixed number, it’s something that pays you a percentage of your wages that are lost.

So Mnuchin still appears to believe that states will be able to pull off a more targeted, individual-by-individual federally-funded unemployment benefit which was impossible last time, which is why Republicans signed off on the blanket extra $600 a week for everybody.

In Republicans’ ideal world, there would probably not be any supercharged unemployment benefits, that’s an exaggeration, but now they want to tie the enhanced unemployment you get to what you made before you were unemployed.

I mean, that’s great in theory, but will it roll out efficiently for the people who need the money in practice is the big question.

Months ago I made a video about why the state unemployment systems are so bad and archaic and a lot of smart people are saying, no, states will not be ready to tie the federally-funded enhanced unemployment to the individual’s prior wage.

So at least according to the Times document that I shared with you yesterday, it looks like Republicans might go for a reduced flat enhanced unemployment payment at first just to keep people alive and fed, and with a roof over their head especially the eviction moratorium going away. Kudlow actually said they might be looking to lengthen that, but I haven’t heard much about that from Republicans lately.

Anyway, maybe that initial flat payment might be something like $200 a week, and then after that explore the plausibility of states being able to update their unemployment technology systems to accommodate a more targeted benefit, they’ve thrown around 70% wage replacement this past week, Trump said, so did Mnuchin, and Larry Kudlow also said 70% this morning on CNN, and by the way, if you watch the interview, CNN’s Jake Tapper was being an absolute butt to Larry Kudlow, he would not let him talk.

Payroll Tax Cut

Then Chris asks Mnuchin about the payroll tax cut, he says Trump was so adamant it for so long, but then the administration caved and doesn’t appear to be putting it in their draft bill.

Mnuchin basically blamed politics, he said that it was clear that Pelosi would not go for it so that’s why the White House stopped pushing for it.