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Pelosi, Mnuchin open door to narrower COVID-19 aid through 2020

[August 10, 2020] By Susan Heavey and Jeff Mason

WASHINGTON/Morristown, NJ (Reuters) - U.S. House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin on Sunday said they were open to restarting COVID-19 aid talks, after weeks of failed negotiations prompted President Donald Trump to take executive actions that Democrats argued would do little to ease Americans' financial distress.

Discussions over a fifth bill to address the impact of the coronavirus pandemic fell apart on Friday, a week after the expiration of a critical boost in unemployment assistance and eviction protections, exposing people to a wave of economic pain as infections continue to rise across the country.

Trump on Saturday sought to take matters into his own hands, signing executive orders and memorandums aimed at unemployment benefits, evictions, student loans and payroll taxes.

Trump told reporters in New Jersey before returning to Washington on Sunday that his suspension of the collection of the payroll tax could be made permanent. He said doing so would have no impact on Social Security because reimbursement would be made through the general fund.

Trump, noting that Democrats want to resume stimulus discussions, said the White House would be willing to talk to them again "if it's not a waste of time."

Joe Biden, the presumptive Democratic presidential nominee, called Trump's orders a "series of half-baked measures" and accused him of putting Social Security, the government pension plan for the elderly, "at grave risk" by delaying the collection of payroll taxes that pay for the program.

"This will have zero impact on Social Security," Trump said.

"It may be permanent, we're looking into it," he added. "We'll take it out till the end of the year and then I'm going to make a decision as to, number one, an extension, and number two, make it permanent and no reimbursement."

Trump's move came as the number of U.S. cases of COVID-19 rose past 5 million. More than 160,000 Americans have died. Trump's orders also raised questions about the legality of bypassing Congress' constitutional powers to tax and spend.

On Sunday, both Pelosi and Mnuchin appeared willing to consider a narrower deal that would extend some aid until the end of the year, and then revisit the need for more federal assistance in January. That would come after November's election, which could rebalance power in Washington.

"Let's pass legislation on things that we agree on," Mnuchin told Fox News in an interview. "We don't have to get everything done at once. ... What we should do is get things done for the American public now, come back for another bill afterwards."

Pelosi dismissed Trump's orders as unconstitutional and "illusions" that would not quickly or directly help Americans. She said separately to "Fox News Sunday" that a deal between congressional Democrats and the White House was essential.

"Right now, we need to come to agreement," she said, adding that Democrats could shorten the length of time aid is provided in order to bring the bill's costs down closer to the Trump administration's proposal.

"We could talk about how long our provisions would be in effect, so we can take things down -- instead of the end of September of next year, a shorter period of time -- and we'll revisit all of it next year anyway," said Pelosi, whose fellow Democrats control the U.S. House of Representatives.

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U.S. House Speaker Nancy Pelosi (D-CA), attends a news conference on Capitol Hill in Washington, U.S. August 7, 2020. REUTERS/Jonathan Ernst

Mnuchin appeared open to consider the idea, telling Fox: "Anytime they have a new proposal, I am willing to listen."

$2 TRILLION GAP

The House passed a $3.4 trillion coronavirus support package in May that the Republican-led Senate ignored for weeks before putting forward a $1 trillion counteroffer.

Democrats, pushing hard to keep a $600 per week unemployment benefit, which is a supplement to state jobless payments, and deliver more funds to cash-strapped states and cities battered by the pandemic, had offered to meet Republicans halfway to close the $2 trillion gap -- a move the White House rejected.

On Sunday, Mnuchin urged lawmakers to accept the money the administration was willing to lay out now to help schools reopen, boost local coffers and help the jobless, even if it fell short of Democrats' goals.

While it remained unclear whether there would be formal legal challenges to Trump's orders, some legal and tax experts said his actions took few concrete steps to provide immediate relief.

"It's basically nothing," Josh Blackman, a professor at the South Texas College of Law, said of Trump's move directing his Cabinet to look at the issue of evictions.

Trump's memo on unemployment aid did not extend benefits under the current system, but instead authorized a separate system that would have to be paid for in part by the states, which are already struggling to pay benefits amid a wave joblessness not seen since the Great Depression.

White House economic adviser Larry Kudlow told CNN on Sunday it was unclear how states would come up with the additional money, while Mnuchin on Fox said, "They can either take that out of the money we've already given them or the president can waive that."

Democratic New York Governor Andrew Cuomo, vice chair of the National Governors Association, said states cannot afford to pay 25% of unemployment costs as outlined by the president. "It's simply impossible," Cuomo wrote on Twitter.

Trump's memo calling on companies to defer withholding payroll taxes changed the deadline for when such taxes were due but did not eliminate them. It would rely on employers' compliance and does not help Americans who are out of work.

A fourth memo allowed borrowers to defer payments on student loans.

Pelosi declined to say whether Democrats would challenge the legality of Trump's actions in court.

(Reporting by Susan Heavey and Jeff Mason; Additional reporting by Christopher Bing, Brad Heath and David Brunnstrom; Editing by Mary Milliken, Daniel Wallis and Leslie Adler)

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