Mnuchin: Stimulus talks with Dems have stalled and so we're recommending Trump sign an executive order

Mnuchin: Stimulus talks with Dems have stalled and so we're recommending Trump sign an executive order

I disliked it when Obama used congressional inaction as a license for “creative” executive action and I dislike that Trump’s doing it now, but there’s no disputing that it’s good politics in this case. The GOP tends to take the blame among voters whenever Democrats and Republicans clash on spending, as most Americans rarely want to tighten Uncle Sam’s belt. (They’ll say that they do in the abstract but ask them about specific programs and see what happens.) That’s enormously risky in the context of the coronavirus stimulus stalemate, partly because the election is so near and partly because life is so precarious for so many Americans right now. If all federal lifelines are cut because Pelosi and the White House can’t reach a deal and swing voters conclude that the GOP’s being stingy — or, more likely, that whoever’s in the White House is responsible for whatever the federal government does or doesn’t do — then the party’s facing a bloodbath. The bottom could drop out of Trump’s polling.

He has to do something to prove to voters that he’s using every weapon at his disposal to keep them afloat, even if Pelosi can’t be bothered to compromise. So that’s what he’s going to do, according to Steve Mnuchin and Mark Meadows after another go-nowhere negotiation with Pelosi and Schumer this afternoon. Even if his executive orders are challenged in court, he’ll probably benefit politically from being seen as fighting to keep benefits flowing to struggling Americans.

He’s looking to do four things. First, keep beefed-up federal unemployment benefits going, even if it requires redirecting funds from other programs. Second, a moratorium on evictions for tenants who live in homes with federally backed mortgages. Third, some sort of delay in collecting student-loan payments. And fourth, cutting — or rather, deferring — collection of payroll taxes. All of this could get very messy.

If Trump orders the Internal Revenue Service to temporarily pause collecting payroll taxes, companies will still be responsible for making those payments later. The president can’t unilaterally cut taxes, so Congress would need to forgive those payments before they come due — something that is far from certain in a divided Congress where even Republicans have been resistant to a payroll tax cut…

Employers are required to withhold and submit payroll levies on behalf of their workers. That makes them more likely to hang onto that money so they aren’t stuck trying to get it back from staff if the bill comes due. In that event, many wouldn’t even have seen relief, because the money wouldn’t ever have reached their paychecks.

With expanded unemployment benefits, Trump likely would have to redirect money that is already allocated for states and comes with directions from Congress about how to spend it that are sufficiently broad. Federal law requires the administration to spend only the money that Congress has authorized, regardless of what an executive order says.

Pelosi has said that she’s fine with Trump halting evictions but anything involving cash has to come from Congress, since they have the power of the purse. If Trump can start moving money around unilaterally then Pelosi’s leverage in negotiations would weaken considerably and Trump might enjoy a political bonanza from grateful voters.

It’s clear enough what the topline of a final deal will look like. Democrats want something in excess of $3 trillion but have reportedly been willing to come down to the $2 trillion range, with the proviso that nothing less than that can pass the House or the Senate if McConnell needs Democratic votes. (And he does. Lots of them.) The White House wants something in the $1 trillion range but is willing to come up, with the proviso that probably nothing more than $2 trillion can pass the Republican-controlled Senate. So we’re headed for a $2 trillion or so package. When it comes to the fine print, Pelosi’s been adamant about keeping $600/week unemployment benefits going but the White House is reportedly pushing for something more like $400/week. Do I hear $500?

The parties remain very far apart on aid to state and local governments, though. Ten days ago Mnuchin’s Treasury Department issued a report noting that most of the money appropriated for local government in the last round of coronavirus stimulus remains unspent. Just $34 billion of the $139 billion disbursed to date has been used for costs. Local governments claim that they’re hamstrung because federal regulations tightly restrict how they can spend the money, which has forced them to cut their budgets. To the GOP, the fact that states still are still sitting on cash they haven’t used is reason enough not to go big again in this new round of stimulus. To Democrats, there’s no time like the present to squeeze Uncle Sam hard for more sugar, especially since no one knows how daunting this fall’s expected “second wave” of COVID might be for the states. Better to supply them now. Dems want $915 billion, reportedly; Pelosi claims the White House is countering with $150 billion.

I don’t know how that gap’s going to close. Neither does the White House, which is why we are where we are with Trump preparing executive orders:

Here are Mnuchin and Meadows this afternoon after another disappointing meeting followed by Pelosi going for the throat on CNBC yesterday.

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