Unemployment to be a focus in coronavirus stimulus package
Unemployment will most certainly be up for debate when Congress gets to work on the next coronavirus checks and other aid stimulus package today. The big question will be whether lawmakers will be able to get along well enough to pass a bill in the short amount of time they have left before the August recess.
Get The Full Seth Klarman Series in PDF
Get the entire 10-part series on Seth Klarman in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues.
Q2 2020 hedge fund letters, conferences and more
Unemployment in coronavirus stimulus package
The CARES Act passed in March included an extra $600 in weekly unemployment benefits added on to what states pay in unemployment. Democrats want the next coronavirus stimulus package to be renewed for the same amount of extra weekly unemployment benefits.
RV Capital Co-Investor Letter for the first half ended June 2020, titled, “Business Owner TGV vs. the DAX.” Dear Co-Investor, The NAV of Business Owner was €777.13 as of 30 June 2020. The NAV increased 4.5% since the start of the year and 683.2% since inception on 30 September 2008. The DAX was down 7.1% Read More
However, Republicans are concerned about the fact that the extra $600 means most people get paid more on unemployment than they did while on the job. That could cause people to avoid returning to work for as long as possible, making it difficult for the economy to get back up and running again.
As a result, Republicans are unlikely to agree to an extension of the extra $600 in weekly unemployment benefits for the next coronavirus stimulus checks package, especially since they want to keep the price tag at $1 trillion. Republicans are far more likely to decrease the amount of extra unemployment aid, and now we’re hearing some details about how much it could be.
The Washington Post reports that Republican lawmakers are looking at cutting the extra unemployment benefit from $600 a week to between $200 and $400 a week. Sources told the Post that the lower number is seen as the more likely number for extra unemployment benefits in the next coronavirus stimulus package.
However, sources also said negotiations are ongoing. The extra $600 in weekly unemployment benefits expires at the end of the month. The Post also said some Republicans are considering setting new limits on emergency unemployment payments for those who were high earners before they lost their jobs.
Payroll tax cut and other provisions
President Donald Trump also has plenty to say about the next coronavirus stimulus package, although he isn’t discussing unemployment. He told Fox News Sunday that he would actually consider not signing the bill if it doesn’t include a payroll tax cut.
Democrats oppose a payroll tax cut, and some Republicans aren’t very keen on the idea. That means it might not make it into the legislation Senate Majority Leader Mitch McConnell is expected to reveal sometime this week.
If a stimulus package makes it all the way through both houses of Congress and Trump doesn’t sign it, it seems safe to say that he would say goodbye to all hopes of reelection in November.
Trump also said the bill needs “some kind of immunity” or liability protections for businesses, medical facilities, schools and other entities. Republicans have been calling for liability protections for weeks, but Democrats are opposed to the idea.
There is also a chance that the next coronavirus stimulus bill will include a second round of checks, especially for those making no more than $40,000 per year.
Timing for the next coronavirus stimulus package
Sen. John Kennedy of Louisiana told Fox News on Sunday that he doesn’t even know if there will be another coronavirus stimulus bill or what will be in it if there is one. He also said no one else knows either because everything is very much up in the air.
McConnell is expected to reveal his version of the next stimulus package this week, but Republicans remain split on what will be in it. Just about the only thing they do agree on is that it won’t contain all the things the Democrat-led House’s HEROES Act contained.
Kennedy called Pelosi’s HEROES Act “untethered to reality,” noting that even some Democrats don’t agree with what’s in the bill, which is “about as popular as a sinkhole.” Sources told Fox News that McConnell believes he could get Republicans on board with the next piece of legislation if he writes it himself.
White House Chief of Staff Mark Meadows told Fox News that negotiations on the next coronavirus stimulus package will begin “in earnest” today on Capitol Hill. He said McConnell and House Minority Leader Kevin McCarthy will meet with Trump and Treasury Secretary Steven Mnuchin to “fine tune” the package.
Meadows noted that unemployment has remained a sticking point for Democrats in debating the next coronavirus stimulus package.