WASHINGTON—Senate Republicans are discussing the possibility of extending a $600 weekly supplement to unemployment benefits on a short-term basis to prevent a lapse, as lawmakers struggled to reach a consensus on the next package of coronavirus relief.
Federal jobless benefits are set to expire on July 31, leaving lawmakers just days to try to reach either a permanent or interim solution. Republicans said the details of any possible extension remained unclear, as GOP lawmakers tried to settle disputes among themselves and with both the White House and Democrats over the next tranche of aid.
Asked at a White House briefing Wednesday if he supported a short-term extension in jobless aid, President Trump didn’t answer directly. “I think ultimately something good will come out of it,” he said of the talks.
Sen. Rob Portman (R., Ohio) said Congress should try to pass a full package before the deadline but that a stopgap measure might be needed to prevent a lapse in benefits.
“My hope is we can get our work done by the end of next week on the broader Covid-19 package because there’s so many things that are urgent,” Mr. Portman said. “But if we can’t get it all done by next week, we cannot allow there to be a cliff in unemployment insurance,” given how high the jobless rate remains, he said.
Because states need time to process unemployment claims, the deadline for avoiding a disruption in payments is widely seen to be July 25, or one week before the legal expiration of the federal supplement.
“We’ve been saying for weeks and weeks and weeks that we can’t let this cliff happen,” said Sen. Ron Wyden of Oregon, the top Democrat on the Senate Finance Committee. “When people come off the rolls and on the rolls there’s all kinds of confusion and problems and it’s gonna be experienced this weekend,” he said.
Mr. Wyden said Republicans should have started negotiations earlier to avoid this last-minute scramble. “It was completely preventable.”
How to address the expiring jobless benefit is a central question before Congress as it works to put together a fifth coronavirus relief package in the coming weeks. Democrats want to continue the current weekly $600 benefit as it is through January, while Republicans want to reduce it, arguing the current level discourages people from working.
“There needs to be a federal benefit continued, but it needs to be readjusted because it’s creating a disincentive to go back to work,” said Sen. Lindsey Graham (R., S.C.), who noted that one idea under discussion is to lower the benefit to 70% of the current $600 weekly federal supplement.
Republicans have pushed a back-to-work bonus as a way to encourage the unemployed to go back to their jobs after some managers said the weekly $600 payment was so generous that many employees refused to return.
A University of Chicago study found 68% of unemployed workers who are eligible for benefits receive more in jobless payments than their lost earnings, with the median payment 34% more than their former weekly paychecks.
Senate Majority Leader Mitch McConnell (R., Ky.) is expected to outline a Republican proposal for the next bill soon, trying to craft a plan that will unite Senate Republican and the White House. Republicans have faced a number of sharp internal disagreements, with GOP lawmakers opposed to a White House push to include a payroll-tax cut, among other issues.
Senior Senate Republicans acknowledged the debates still being waged among their ranks, saying that their proposal wouldn’t be the final word, since it will need Democratic support as well to become law.
“This is just the starting place,” said Sen. John Cornyn of Texas, a member of Senate GOP leadership. “You’ve got to give everybody a chance to express their views and we’re getting a lot of different views on all aspects of it.”
Sen. Ron Johnson (R., Wis.) is among the Republican lawmakers who have said they would oppose any legislation that goes beyond tweaking the roughly $3 trillion in assistance Congress has already approved.
“We shouldn’t be talking at all about additional authorized spending,” he said.
Democrats have largely rallied around a $3.5 trillion bill the House passed in May, and Democratic leaders have said they are waiting to see a Republican plan before beginning negotiations in earnest.
“The Republican Party is so disorganized, chaotic and unprepared that they can barely cobble together a partisan bill in their own conference,” Senate Minority Leader Chuck Schumer (D., N.Y.) said on the Senate floor Wednesday. “The disarray on the Republican side has real consequences. Americans will suffer unnecessary pain and uncertainty because of it.”
The Republican legislation is expected to include a proposal that would shield workers from state taxation if they are temporarily outside their home states or normal work locations, according to a person familiar with the negotiations. The proposal from Sens. John Thune (R., S.D.) and Sherrod Brown (D., Ohio) would limit states’ ability to tax workers who may be working remotely from one place during the pandemic instead of their usual job site.
It would also set a 30-day requirement before a state can impose taxes on most nonresidents and a 90-day requirement for certain traveling health-care workers. New York lawmakers have objected to similar proposals in the past.
The bill is also expected to include a proposal from Sen. Rob Portman (R., Ohio). It would provide businesses a refundable tax credit against payroll taxes for 50% of the costs incurred by testing, protective equipment, extra cleaning and reconfiguring office space until the end of the year.
As Senate negotiators focus on short-term support for the economy and virus-fighting efforts, House Republicans want the package to include longer-term business tax incentives, too.
“The growth for a healthy economy beyond the next few months is really crucial for all Americans,” Rep. Kevin Brady of Texas, the top Republican on the House Ways and Means Committee, said in an interview Wednesday.
Their proposals include doubling the research and development tax credit and extending full, immediate deductions for capital investment, which starts shrinking at the end of 2022. They also want to change a rule they created in the 2017 tax law that starts requiring slower deductions for research expenses in 2022.
They are also proposing a new tax credit for investments in equipment for manufacturing pharmaceuticals or medical devices and lower tax rates on income from domestically produced drugs and other medical products.
Democrats objected to business tax breaks that Congress passed in March and many of them want to block further assistance to corporations. And tax breaks that don’t take effect until 2022 or 2023 might have limited impact on today’s business decisions.
Republicans also want to create new incentives to produce medical products and supplies domestically, arguing that the pandemic highlighted supply-chain problems that hurt the U.S. response.
“Every major business is taking an assessment of where they are,” said House Minority Leader Kevin McCarthy (R., Calif.).
The concept has some bipartisan support, including from doctors in Congress. Reps. Raul Ruiz (D., Calif.), who worked as an emergency-room doctor; Phil Roe (R., Tenn.), an obstetrician-gynecologist; and Lauren Underwood (D., Ill.), a registered nurse who worked at the Department of Health and Human Services, introduced legislation in mid-March to examine whether the country is too dependent on medical equipment, devices and drugs produced abroad.
—Richard Rubin and Siobhan Hughes contributed to this article.
Write to Andrew Duehren at andrew.duehren@wsj.com and Kristina Peterson at kristina.peterson@wsj.com
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