Next COVID-19 bill depends on June jobs report

The looming jobs report for June is poised to make or break the Senate’s next coronavirus relief bill.

The Labor Department will reveal next week whether the U.S. economy was able to carry a surprising May hiring surge into June and strengthen the recovery from the pandemic-driven recession.

Another strong month of employment gains could quash a Democratic push for a new round of stimulus checks and extended unemployment benefits that are slated to expire at the end of July.

But if payrolls decline in June, that will likely increase pressure on President Trump and Senate Republicans to pass another sweeping COVID-19 relief bill instead of the smaller measures currently supported by the conference.

“They don’t see the market crashing, they see a better-than-expected jobs report last month, and so their focus is very much targeted [around a] back-to-work narrative,” said Ben Koltun, senior research analyst at Beacon Policy Advisors in Washington.

“If there’s a bad jobs report — and when you see more people out of work than last month — then there may be an impetus by more Republicans in the conference to provide broader support and more stimulus spending than they’re talking about right now,” he added.

Lawmakers and the Trump administration are planning to start discussing another relief package next month after Congress returns from a two-week July 4 recess. The June jobs report, scheduled for release on July 2, is expected to determine the tenor and urgency of those talks.

After approving more than $3 trillion in bipartisan pandemic response and economic relief, Republicans and Democrats are largely divided over how to best support the burgeoning recovery going forward.

Republicans have centered their proposals around bringing Americans back to work as quickly as possible. Top White House officials and GOP lawmakers have voiced support for ending enhanced unemployment benefits, adding a liability shield for businesses and providing direct aid only for the most financially vulnerable Americans.

“My hope is we move from rescue to economic growth incentive,” said Larry Kudlow, director of the White House National Economic Council, in a Tuesday interview with Fox Business Network.

“As this economy reopens, it’s going to be a V-shaped boom. I believe that’s what all these green shoots are telling us,” he added.

Trump has voiced support for another round of direct payments to most households and a $1 trillion infrastructure plan, but congressional Republicans are largely opposed to another massive spending bill that includes stimulus checks.

“I’m a skeptic about the idea of doing that. That was an emergency measure taken when we were in a full-blown crisis and, frankly, knew it was wildly inefficient because all kinds of people were getting checks whose work was not jeopardized,” said Sen. Pat Toomey (R-Pa.).

Congressional Republicans also don’t want to mix infrastructure with coronavirus relief.

The narrow approach preferred by Senate Republicans has fallen flat among House Democrats. The Democratic-controlled House passed a $3 trillion rescue package in May, and leaders insist that any offering from the Senate must include an extension of enhanced unemployment benefits, aid for struggling state and local governments and another round of direct payments.

The June jobs report may be crucial in breaking the partisan stalemate.

The gradual recovery of the U.S. job market — along with a surprising May surge in retail and new home sales — sapped some of the urgency behind the bipartisan rescue bills already passed by Congress.

The unexpected addition of 2.5 million workers to payrolls last month, driven by the return of 2.7 million furloughed workers, fueled hopes of a quick recovery from the worst economic collapse since the Great Depression.

The $2.2 trillion CARES Act signed into law March 27 was largely negotiated by Speaker Nancy Pelosi (D-Calif.) and Treasury Secretary Steven Mnuchin amid the backdrop of a crumbling economy. Senate Republicans, including Majority Leader Mitch McConnell (Ky.), griped about being marginalized in those talks and insisted that the next measure would originate in the Senate.

“He doesn’t want to be caught off-guard like he did with the earlier bills where he really didn’t have a choice,” Koltun, of Beacon Policy Advisors, said of McConnell, adding that the lack of a “crisis mentality” seen during the CARES Act would give Senate Republicans more leverage and time to pare down another bill to the $1 trillion threshold preferred by his party.

But a sharp reversal in May’s hiring gains could quickly turn the tables.

“These are all things that could really push the negotiations away from McConnell and towards Mnuchin and Pelosi,” Koltun said.