WASHINGTON – Treasury Secretary Steven Mnuchin on Friday asked Congress to work with the Trump administration to pass additional stimulus legislation by the end of the month, as the growing coronavirus pandemic left uncertain the trajectory of the economic recovery.
The request comes as millions of Americans are about to see their expanded unemployment insurance benefits expire and lawmakers embark on an intense week of negotiations over what would be the fourth significant rescue package since the virus shuttered large sectors of the United States economy earlier this year. .
In testimony before the House of Representatives Small Business Committee, Mr. Mnuchin said that the next round of money to support the economy should be aimed at helping industries that have been hit hardest by the pandemic, as well as small businesses and low to medium businesses. income families. Mr. Mnuchin also said that the Paycheck Protection Program, which provides forgivable loans for small businesses, should be extended but with a focus on helping the restaurant, hotel, travel and hospitality sectors.
“We are closely monitoring economic conditions,” Mnuchin said in his prepared comments. “Certain industries, such as construction, are recovering rapidly, while others, such as retail and travel, face longer-term impacts and will require additional relief.”
He added: “We are also sensitive to the fact that certain areas of the country are experiencing an increased number of cases of the virus.” Cases are increasing in 39 states, according to a New York Times database.
But while Mnuchin acknowledged that more areas will need help, he went on to suggest that a solid recovery is looming, a vision very different from what many economists predict given an increase in new virus cases and renewed restrictions on business activity.
Mr. Mnuchin pointed to forecasts for strong economic growth in the third and fourth quarters of this year and a survey that showed that most small businesses have reopened at least in part.
“Recent improvements in unemployment insurance claims suggest that the labor market has continued to strengthen in July,” said Mnuchin.
Lawmakers will return to Washington on Monday to begin negotiations on the next virus relief package, which they hope to finish before the end of the month, but major disagreements remain about how and where to direct aid.
An important point is whether to send additional money to state and local governments, as Democrats have insisted.
Mr. Mnuchin underscored his reluctance to offer solid federal assistance at the hearing. He dismissed arguments that states like New Jersey, New York, and California send more tax money to the federal government than they receive in aid, and argued that state budget deficits should generally be addressed through cost cutting or tax increases.
If states had financial problems entering the crisis, Mnuchin said, “it is not the role of the federal government to rescue them from that.”
The House of Representatives approved a $ 3 trillion stimulus package in May that was not a start for Republicans in the Senate and White House. Republicans have been discussing legislation that would cost between $ 1 trillion and $ 2 trillion and would provide liability protection for companies reopening during the pandemic and additional incentives for companies to rehire their workers.
White House officials have been debating how to structure another round of economic impact payments that would be sent directly to American taxpayers. They are also weighing whether they will continue to provide an additional $ 600 a week to the jobless, an improved unemployment benefit payment that many Republicans say prevents people from returning to work.
President Trump has publicly called for a reduction in payroll taxes and tax deductions for food and entertainment expenses, but these proposals have received little support in Congress.
On Thursday, Senate Democrats opened a new front in congressional negotiations on another round of aid to the faltering U.S. economy, and proposed to reuse money that the Treasury Department has yet to spend from an approved economic bailout package. at the beginning of this year.
The Democrats’ proposal would spend a total of $ 350 billion on a variety of programs designed to help close racial wealth gaps and help blacks and other non-white Americans survive the Covid-19 recession, including more than $ 100 billion in health, child care and work. Creation programs in communities of color. Her plans include a tenant tax credit and one to provide up to $ 15,000 per family for a down payment on a home.
Mr. Mnuchin was joined at the hearing by Jovita Carranza, the administrator of the Small Business Administration, whose agency has been responsible for implementing the $ 660 billion Check Protection Program.
Lawmakers questioned both Mr. Mnuchin and Ms. Carranza about how well the small business program worked, including whether the money is going to companies that need funds and whether companies face too many obstacles for their loans to be forgiven. .
When asked about simplifying the loan forgiveness process, Mnuchin said that automatically forgiving all small loans is “something we should consider.” He did not suggest what the threshold might be, but suggested that some measures would need to be imposed to prevent fraud.
Mr. Mnuchin also reiterated that the Treasury Department will review large loans to ensure that they are appropriate and within government guidelines.
Published data on loans over $ 150,000 showed that while much of the money went to restaurants, doctor’s offices, and car dealerships, Washington lobbyists, high-priced law firms, and special interest groups also they got big loans.
Jim Tankersley contributed reporting.
