VIDEO3:5103:51Mnuchin: GOP jobless benefits plan will be based on '70% wage replacement'Squawk Box
The Republican coronavirus relief plan will extend enhanced unemployment insurance "based on approximately 70% wage replacement," Treasury Secretary Steven Mnuchin said Thursday.
The Treasury secretary also said a payroll tax holiday, which President Donald Trump has repeatedly pushed for, "won't be in the base bill."
Mnuchin spoke to CNBC about the state of negotiations hours after Senate Republicans and the Trump administration said they reached a tentative deal on legislation they say will serve as a starting point in talks with Democrats. Congress faces pressure to pass an aid package, as Covid-19 case and death counts rise around the country and the critical extra $600 per week unemployment benefit expires at the end of the month.
It is unclear how Republicans would structure the plan to provide 70% wage replacement. Lawmakers chose the $600 per week sum in the March rescue package because they decided outdated state unemployment systems could not handle processing payouts for 100% of a worker's previous wages.
As of Wednesday afternoon, the GOP was considering slashing the extra benefit from about $600 to $100 a week through the rest of the year, sources told CNBC. Negotiators had not made any final decisions at that time.
Treasury Secretary Steven Mnuchin testifies before the House Small Business Committee at the U.S. Capitol on July 17, 2020 in Washington, DC.Kevin Dietsch | Getty Images
Speaking to CNBC after Mnuchin's comments, House Majority Leader Steny Hoyer, D-Md., said 70% wage replacement is not "the policy we ought to pursue." He said that "if we're going to ratchet that down, it ought to be over time." But he added that "it's not a dealbreaker."
Senate leaders hope to release their legislation as soon as Thursday, but the bill is only one step in what could be an arduous process to pass a package to boost a health-care system and economy devastated by the pandemic. As Democrats and Republicans try to hash out a range of disagreements — and Republicans try to come to a consensus even among themselves — millions of Americans wait to see whether they will have enough money to pay for food and housing.
Mnuchin spoke just before the Labor Department said initial jobless claims topped 1.4 million last week, the 18th straight week they totaled more than 1 million.
Here are other provisions of the Republican plan, according to Mnuchin:
- $105 billion to help schools reopen, with funds partly dependent on schools reopening
- A targeted additional round of the Paycheck Protection Program, with "second checks" for certain companies whose revenues are down more than 50%
- $16 billion in new funding for coronavirus testing
- Tax credits to encourage companies to hire workers
- More flexibility for state and local governments in how they spend federal relief, but no new aid
- Direct payments to individuals (though he did not specify the amount paid or eligibility)
Hoyer said not approving additional aid for states and municipalities jeopardizes jobs and essential services in areas where governments have lost significant revenue and incurred huge expenses because of the pandemic. Democrats included nearly $1 trillion for state and local governments in the $3 trillion rescue package the House approved in May. Republicans did not take it up in the Senate.
The GOP will need Democrats to sign off on any plan, as they control the House and have the ability to block the Republican proposal in the Senate.
Republicans want the package to cost roughly $1 trillion. House Speaker Nancy Pelosi, D-Calif., has called that level of spending insufficient to address the health and economic crisis created by the pandemic.
Congress appears unlikely to meet a deadline to extend the $600 per week enhanced unemployment benefit passed in March, which expires at the end of the month. The weekly sum has helped to buoy tens of millions of jobless Americans while many businesses are closed to slow the outbreak's spread.
The scramble to pass more relief legislation comes as U.S. Covid-19 cases approach 4 million and deaths from the disease top 143,000, according to data compiled by Johns Hopkins University. Its unabated spread has forced many states to either pause or roll back their economic reopening plans.
Mnuchin noted that the administration would consider an additional relief package if the spending in the developing plan does not go far enough to combat the crisis.