On The Money: Pessimism grows as coronavirus talks go down to the wire | Jobs report poised to light fire under COVID-19 talks | Tax preparers warn unemployment recipients could owe IRS

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THE BIG DEAL — Pessimism grows as coronavirus talks go down to the wire: Lawmakers are increasingly pessimistic about the chances of a quick agreement as negotiations over a fifth coronavirus relief bill continue down to the wire. 

Congress and the White House are barreling toward an end-of-the-day Friday deadline set by the main negotiators: House Speaker Nancy Pelosi (D-Calif.), Senate Minority Leader Charles Schumer (D-N.Y.), White House chief of staff Mark Meadows and Treasury Secretary Steven Mnuchin. 

But despite weeks of near-daily meetings, the four are struggling to overcome steep political headwinds and policy differences to reach an agreement and have little progress to show so far, raising the probability that they will blow past their self-imposed timeline. The Hill’s Jordain Carney updates us here.

What lawmakers are saying: 

• “We might not get a deal,” Senate Appropriations Committee Chairman Richard Shelby (R-Ala.) said. “There’s a lot of pessimism here. …Are we too far apart?” 
• Sen. Lisa Murkowski (R-Alaska) told reporters it “doesn’t look like” there will be a deal this week. And asked if he was optimistic there would be a deal, Sen. Mike Rounds (R-S.D.) responded “nope.”
• Asked if being allowed to leave town signaled that negotiators aren’t optimistic about meeting their Friday deadline, Sen. Dick Durbin (D-Ill.), the No. 2 Senate Democrat, said “it certainly does.” 
• Sen. Chris Coons (D-Del.), during an interview with MSNBC, said that odds of a deal by Friday are “at best 50-50.” 

Though the Senate will technically be in session next week, members were not told when they should expect to return. The House left Washington last week, with House Majority Leader Steny Hoyer (D-Md.) planning to give his members a 24-hour heads up.

Jobs report poised to light fire under COVID-19 talks: As talks lag, the July jobs report is poised to shake up stalled negotiations between the White House and Democrats over another coronavirus stimulus bill as Republicans threaten to walk away from the table.

• The national employment report from the Labor Department on Friday morning is projected to show a sharp slowdown after two months of strong job gains. 
• Expectations range from a gain of roughly 1 million jobs to a loss of several thousand following the 8 million added during May and June.

An unexpectedly positive report could buy Trump administration officials more time to negotiate, and even give them some leverage, as President Trump attempts to circumvent Congress’s COVID-19 relief talks with executive action. But a disappointing downturn could spur Trump to strike a quick deal with Democrats to avert deeper economic pain ahead of the November election. I explain why here.

LEADING THE DAY

Tax preparers warn unemployment recipients could owe IRS: Tax preparers are concerned that many of the millions of Americans receiving unemployment benefits due to the pandemic are unaware that they might owe money to the IRS next year.

• Jobless benefits are subject to federal income taxes, as well as state income taxes in most parts of the country.
• But workers who are collecting benefits for the first time may not be aware of those tax implications, or they might opt against having taxes withheld from their benefit payments.
• People who do not have enough money withheld during the year could end up with smaller refunds or balances due to the IRS when they file their 2020 tax returns.

“It’s a bigger issue now because the volume of people who are unemployed is higher than usual,” said Cari Weston, director for tax practice and ethics at the American Institute of CPAs.

The Hill’s Naomi Jagoda explains here.

A record rush for jobless benefits: The coronavirus pandemic has led to the highest unemployment rate since the Great Depression and record numbers of workers applying for unemployment benefits. Tens of millions of Americans have filed claims for unemployment benefits since March, and many may have to pay taxes on those benefits.

The often unknown implications: 

• Recipients of unemployment benefits have to pay federal income taxes on the money they receive from the federal government, but not payroll taxes. Additionally, most states require people to pay state taxes on their unemployment benefits.
• When people apply for unemployment benefits with their state, they have the option to have 10 percent of each payment withheld for federal income taxes. But tax professionals said some people may not know how to sign up for withholding.
• Additionally, tax professionals said some recipients may choose not to have taxes withheld from their unemployment benefits because they need as much money as possible immediately.

Trump touts economic agenda in battleground state of Ohio: President Trump visited Ohio on Thursday for official and campaign business, targeting a battleground state where he finds himself in a tight race with presumptive Democratic nominee Joe Biden.

• Trump delivered brief campaign-style remarks at the airport in Cleveland and then traveled to Clyde to deliver a speech on his economic agenda at a Whirlpool plant. 
• There, he highlighted a new executive order intended to boost domestic drug manufacturing and revealed that he had signed a proclamation reimposing 10 percent aluminum tariffs on Canada.

The president’s remarks on Thursday were mainly focused on the economy, once considered his greatest asset heading into the 2020 election. Instead, he attempted to contrast his ability to steward the nation through its recovery from the coronavirus pandemic with that of Biden. The Hill’s Brett Samuels takes us there.

GOOD TO KNOW

• A seasonally adjusted 1.2 million new people applied for unemployment benefits in the week ending Aug. 1, a marked drop from the 1.4 million in the previous two weeks.
• Sen. Bernie Sanders (I-Vt.) on Thursday introduced legislation to impose a 60-percent tax on billionaires’ wealth gains from March 18 through the end of the year, and to use the revenue raised by the tax to direct Medicare to pay all Americans’ out-of-pocket health-care expenses for a 1-year period.
• The tech-heavy NASDAQ closed at a new record of 11,108 on Thursday as broader stock indexes gained for their fifth day, even as talks over a crucial COVID-19 relief package made scant progress.
• The U.S. has jumped into the top 25 countries on the annual Bloomberg Misery Index, which looks at unemployment and inflation numbers to forecast how miserable the citizens of 60 different nations are.
• Eliminating the $600 in additional weekly unemployment benefits could hamper the economic recovery, according to a study released last week.
• Loretta Mester, president of the Federal Reserve Bank of Cleveland, asked for more assistance from Congress on Wednesday as negotiators seek to complete a deal on a new coronavirus relief package.
• The country’s top five labor union groups are calling on Congress to include expanded paid leave benefits in a new COVID-19 relief bill.

ODDS AND ENDS

• The rush of armchair traders investing through Robinhood, an easy-to-use app for trading stocks, may be helping inflate a stock bubble and setting up investors for a potential bust.
• Gaming giant Nintendo has seen its operating profits soar during the coronavirus pandemic, reporting an increase of more than 400 percent on Thursday.
• President Trump is struggling to win over Maine voters with his recent pledge to lift restrictions for the state’s lobster industry.