Secretary Mnuchin on Trump administration's efforts to ease the financial fallout from coronavirus pandemic
Treasury Secretary Steven Mnuchin joins Chris Wallace on 'Fox News Sunday.'
In an effort to address the coronavirus crisis the House passed the Families First Coronavirus Response Act on Friday.
The vote was bipartisan and President Trump is supportive.
Among other things, the bill provides paid medical leave for the employees of small businesses (500 or fewer employees) impacted by the coronavirus, with the federal government reimbursing employers for those costs.
Almost immediately, there was an adverse reaction from America’s small business community. Their concerns were understandable but, as it turns out, largely unwarranted.
Because of the coronavirus, small businesses are suffering from dramatic sales declines, supply chain disruptions and vanishing cash flow.
At first blush, the House bill appeared to mandate that they use what little cash they have to cover paid medical leave – with government reimbursing those costs sometime down the road. Many believed the reimbursement would come only after this mandate drove them out of business leaving their employees without jobs or benefits and dragging the economy further towards recession.
We shared their concerns and began looking into how this bill would work should it become law. We had discussions with legislators and Treasury Department officials.
We read Secretary Mnuchin’s written statement and saw his Fox News interview. While there are still important details to work out, we believe that the Trump administration is aware of and determined to satisfactorily resolve any issues in the best interests of employees, small business, and the economy.
More from Opinion
Let’s start with how employers who are cash strapped because of the coronavirus can pay their affected employees medical leave. The government will reimburse those costs, but the government is slow, often too slow. So, in order to mitigate the cash flow impact on employers, we believe the IRS will issue guidance essentially as follows.
Every two weeks, employers are currently required to pay into an escrow account the amount they owe the IRS for withholding and payroll taxes which are due at the end of the quarter. Rather than depositing these funds, the IRS will permit employers who are short on cash to use those monies to cover medical leave payments. The IRS and the employer will reconcile the amounts at the end of each quarter, but the funds will be available every two weeks.
CLICK HERE TO GET THE OPINION NEWSLETTER
For example, say an employer has 10 employees and two are out sick. The employer will be making deposits every two weeks for withholding and payroll taxes for all 10 employees. Those funds will be available to pay, and likely sufficient to cover, medical leave for the two employees who are ill.
To assure that employers have sufficient funds available to cover these costs, the IRS will additionally provide an online form employers can file explaining the reasons for any shortfall.
The IRS will then advance the appropriate amount by making a direct deposit into the employer’s account sufficient to pay the employee. While this may not be an immediate process, we were told that it will be rapid.
Employers who pay their employees sick leave but don’t owe the IRS anything at the end of the quarter against which to offset the payments will get a refund from the IRS for the amounts paid.
Additionally, the bill authorizes exemptive relief from the extended family leave provisions to cash-strapped businesses with under 50 employees. While the exempted employer’s employees will not have the same benefits as others, they can nonetheless apply for medical leave under the Department of Labor’s recent guidance on unemployment insurance.
That guidance grants states increased flexibility in administering their unemployment insurance programs to provide paid medical leave for employees affected by the coronavirus outbreak. It won’t get them a biweekly paycheck but it will provide relief.
But why involve employers at all? Certainly, we can all agree that employees impacted by the coronavirus need help and that the government should ultimately pay for it.
Why not have the government pay the affected employees directly? The answer should be obvious to every businessperson. By its very nature, the government is too slow and its processes too cumbersome.
The public policy objective is to assure that employees who are ill, quarantined or caring for others do not feel economically compelled to go to work.
If an employee is battling this disease, do we really want them to choose between going to work and trying to manage the bureaucratic maze that accompanies any government benefit program – not to mention the waiting period before the checks start to arrive?
Those who managed to do so would likely recover before receiving any benefits. As any businessperson (particularly those of us who were formerly employees) knows, workers often live paycheck to paycheck. They need those paychecks every two weeks. Employers are the most direct and effective source for those checks.
Again, we don’t blame anyone for being concerned about this new proposed program. But we believe it protects both employees who are suffering from the coronavirus and employers strapped for cash.
CLICK HERE TO GET THE FOX NEWS APP
The congressional and Trump administration officials who developed it should be commended for their efforts. They will need to follow through carefully if the legislation passes – as we think it should – but so far it’s been a difficult task well executed.
The bill’s medical leave provisions expire in a year. Let’s all pray they are unnecessary long before then.
Andy Puzder was chief executive officer of CKE Restaurants for more than 16 years, following a career as an attorney. He is currently a Senior Fellow at the Pepperdine University School of Public Policy.” He was nominated by President Trump to serve as U.S. labor secretary. In 2011, Puzder co-authored "Job Creation: How It Really Works and Why Government Doesn't Understand It." His latest book is "The Capitalist Comeback: The Trump Boom and the Left's Plot to Stop It" (Center Street, April 24, 2018).
Best of Opinion
Get the recap of top opinion commentary and original content throughout the week.
By entering your email and clicking the Subscribe button, you agree to the Fox News Privacy Policy and Terms of Use, and agree to receive content and promotional communications from Fox News. You understand that you can opt-out at any time.