Trump lawyers drawing up executive order as Democrats hold coronavirus relief hostage

President Donald Trump just put House Speaker Nancy Pelosi (D-CA) on notice: if Congress can’t get it together, he’s stepping in.

During an unexpected Friday night press conference, Trump said he was preparing to sign an executive order that would give some economic relief to Americans if Congress won’t come to an agreement on a coronavirus relief package.

“If Democrats continue to hold this critical relief hostage, I will act under my authority as president to get Americans the relief they need,” Trump said. The order would suspend payroll taxes retroactively from July 1 to the end of 2020, extend a federal unemployment boost, and defer student loans and forgive interest until further notice.

Negotiations for a fourth coronavirus relief bill have apparently stalled in Congress, with a $2 trillion Democrat compromise offer being declared a “nonstarter” by Republicans.

The sticking point: the $2 trillion bill was really just a shorter-term version of the Democrats’ original $3 trillion proposal, which calls for massive state government bailouts and extending a $600 per week federal unemployment boost that Republicans say is holding back recovery by paying people more not to work. Pelosi has refused to compromise further, however, hoping to force Senate Republicans to cave instead.

Payroll tax suspension long favored by Trump

Trump’s payroll tax suspension — letting Americans keep the 7.47 percent currently withheld from paychecks for Social Security and Medicare — might encourage more employers to hire and spur more economic growth. Americans would immediately see higher paychecks, which could lead to more spending on goods and services. Trump economic advisor Stephen Moore explained:

“Critics have said that a payroll tax cut does nothing to help the more than 30 million Americans who are currently unemployed. But the best way to help the unemployed is to make it easier for them to get a job. A payroll tax cut would do just that.”

After pushing for a payroll tax cut in previous legislation and in the current relief bill, Trump had said earlier that Republicans should drop the idea because Democrats weren’t going to support it.

“Based on that I told Republicans, I said I think a payroll tax would be good, but we’re not going to get it from Democrats,” Trump said in July. “So you still need Democrat votes. I would like to see it but if we’re not going to get their votes, I guess we have to go on to the next thing.”

It wasn’t immediately clear how much Trump’s federal unemployment extension would be, but Republicans had floated the idea of $200 per week instead of the $600 that expired at the end of July. Other ideas, like increasing the amount to 70% of previous income rather than the current 60%, were also discussed.

Senate Republicans divided over bill

Not only were Democrats pushing for a completely different set of priorities in this latest coronavirus relief bill, but up to a third of Republicans opposed any further coronavirus relief because of the additional deficit spending it would cause. Previous bills have already added at least four trillion to the national debt this year, and Republicans worry that such spending is unsustainable.

“I’m not only a ‘no.’ I’m a hell no,” Sen. Ted Cruz (R-TX) said in late July about another trillion dollars in debt.

A failure to reach an agreement on another relief bill may impact some Republican senators struggling to hold on to their seats in a tough election, however. If Republicans can be made to look like they don’t care about Americans’ pain in an election year, it could potentially help Democrats flip the chamber and lead to a lot of trouble for Trump down the road if he is re-elected.

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