CONGRESS
Millions to lose $600 weekly jobless aid amid
Senate stalemate
A late night meeting with negotiators yielded little
progress.
By JOHN
BRESNAHAN, MARIANNE LEVINE and JAKE SHERMAN
07/30/2020
11:39 AM EDT
Updated:
07/30/2020 11:43 PM EDT
With
federal unemployment benefits expiring on Friday — a serious blow to millions
of Americans who lost jobs due to the coronavirus pandemic — the Senate became
bogged down in partisan fighting and left town without a resolution to the
crisis.
And two more
hours of high-level talks on Thursday night between Treasury Secretary Steven
Mnuchin and White House chief of staff Mark Meadows on one side and Speaker
Nancy Pelosi (D-Calif.) and Senate Minority Leader Chuck Schumer (D-N.Y.) on
the other yielded almost no progress. The talks will continue through the
weekend, but a deal seems far off at this point.
"We
had a long discussion," Schumer told reporters after the meeting ended
late Thursday night. "And we just don't think they understand the gravity
of the problem. The bottom line is this is the most serious health problem and
economic problem we've had in a century and 75 years, and it takes really good
strong bold action, and they don't quite get that."
The end of
the $600-per-week federal benefit, when combined with the lapsing of an
eviction moratorium, will likely lead to serious financial problems for those
hit hardest by the pandemic and economic collapse. More than 1.4 million people
filed initial unemployment claims last week, according to the Department of
Labor, while the U.S. economy contracted by more than nine percent in the
second quarter of 2020, the worst drop on record.
Faced with
Democratic resistance, as well as opposition in their own ranks, Senate
Republicans temporarily abandoned their hopes for a large-scale coronavirus
relief package on Thursday tried to pass a standalone extension of federal
unemployment insurance. But that effort was blocked by Democrats.
As the
Senate prepared to leave Washington Thursday afternoon, Majority Leader Mitch
McConnell (R-Ky.) took a procedural step to force debate on the issue on the
floor next week, although he never specified what he wants a vote on. In a
floor speech, McConnell accused Schumer of resisting any kind of agreement.
“If that is
their position, they’ll have to vote on it for the entire country to see,”
McConnell said.
Schumer,
however, dismissed the move as nothing but a stunt and blamed an intra-party
GOP struggle for the stalemate over the federal benefits.
“They’ve
woken up to the fact that we’re at a cliff, but it’s too late,” Schumer said.
“It’s too late because even if we were to pass this measure, almost every state
says people would not get their unemployment for weeks and months. All because
of the disunity, dysfunction of the Republican caucus.”
The leading
GOP proposal, offered by Sen. Ron Johnson (R-Wis.), would renew federal
unemployment payments at 66 percent of lost wages, or $200 per week. The
strategy had the general backing from the White House, which is eager to extend
the bulked up unemployment insurance.
Republicans
viewed the Johnson proposal as a way to put pressure on Senate Democrats the
day before the benefit lapsed. And they noted, it was far more than what was
approved more than a decade ago as the Democratic-run Congress reacted to the
2008 financial crisis.
But Schumer
retorted that Johnson's bill was a step in the wrong direction. Schumer instead
offered a unanimous request proposal to have the Senate approve the
House-passed Heroes Act, which Johnson objected to.
Sen. Martha
McSally (R-Ariz.) later attempted to pass a one-week extension to the $600 in
boosted benefits. But Schumer objected, deriding the effort as another stunt.
The New York Democrat then proceeded to try again to pass the Heroes Act, which
Republicans blocked.
At a White
House press conference on Thursday afternoon, President Donald Trump said he
supported the week-long extension offered by McSally as a "temporary
measure" to allow negotiations to move forward and complained when
Democrats objected.
He also
promised Meadows and Mnuchin would make some new proposals to break the
deadlock, although he didn't go into details.
In the
discussions in Pelosi's office later in the evening, Mnuchin and Meadows
offered a longer extension of the $600-per-week benefit to cover several
months, but only as a stand-alone measure, according to sources familiar with
the talks. Pelosi and Schumer rejected the offer, saying they don't want to
negotiate an agreement in piecemeal fashion. Democrats also insist the federal
payment should extend well into 2021, which Republicans are unwilling to do.
The two
sides also squabbled over a number of other flashpoints, including state and
local aid, which has emerged as a major difference between the parties.
Democrats are seeking more than $900 billion in such funding, while the White
House and Senate Republicans — arguing that a huge chunk of such money already
approved by Congress hasn't been spent — want to spend only a fraction of that
amount.
"The
proposals we made were not received warmly," Meadow told reporters in the
Capitol after the meeting broke up late Thursday evening.
For Pelosi
and Schumer, the White House and Senate GOP leadership don't understand the
enormity of the problems the country faces, and they refuse to try to break
their package down into smaller pieces.
"They
understand that we have to have a bill, but they just don't realize how big it
has to be," Pelosi added.
The
partisan jockeying could not come at a worse moment. There is no end in sight
to the coronavirus, which so far has claimed 150,000 American lives and
sickened more than 4 million.
The Trump
administration remains at an impasse with both members of its own party and
Democratic leadership over the boosted federal unemployment benefits. The March
CARES Act provided an additional $600 weekly benefit that’s on the cusp of
expiring, while Democrats are pushing for the full $600 to go into next year.
Meanwhile,
Republicans argue the benefits provide a disincentive to work and instead want
to see a temporary flat payment of $200 a week until states can adjust their
systems to offer 70 percent wage replacement.
McConnell,
for his part, accused Pelosi and Schumer of not wanting to engage on any issue
in order to pressure Republicans to cave in on the Heroes Act.
“Both
Republicans and Democrats agree that in these extraordinary times it makes
sense for the federal government to provide historic additional help on top of
normal unemployment,” McConnell said. “But the speaker and the Democratic leader
say they won’t agree to anything unless the program pays people more to stay
home than to work.”
Schumer
retorted earlier in the day that negotiating with White House and Senate
Republicans is like “trying to nail JELL-O to the wall.”
“Who is
leading the effort on the Republican side,” Schumer asked. “Chief Meadows and
Secretary Mnuchin….Leader McConnell has said that Democrats won’t engage. I
would remind him if he refuses to go into the room when Speaker Pelosi,
Secretary Mnuchin, chief of staff Meadows and I sit in there.”
EMPLOYMENT
& IMMIGRATION
‘A meaningful hit to the economy’: What could
happen if Congress cuts unemployment benefits
White House economic advisers and GOP lawmakers
including Senate Majority Leader Mitch McConnell contend the extra payment acts
as a disincentive for workers to seek new jobs.
By REBECCA
RAINEY and ELEANOR MUELLER
07/30/2020
12:49 PM EDT
More than
30 million people are receiving unemployment benefits and new applications for
jobless aid have started to rise again. But Republicans want to reduce a $600
enhanced unemployment benefit in the next coronavirus relief package, a
proposal that could leave families with billions of dollars less to spend to
bolster the economy.
White House
economic advisers and GOP lawmakers including Senate Majority Leader Mitch McConnell
contend the extra payment acts as a disincentive for workers to seek new jobs,
because some people are receiving more money in benefits than they would earn
working. Democrats and many economists say there are no jobs for those people
right now anyway, and the payments are essential for keeping the economy afloat
— and ensuring Americans can buy food and pay the rent.
Here’s a
look at the potential impact of cutting benefits right now:
The GOP
argument
The Senate
GOP’s latest $1 trillion plan calls for the reduction in increased unemployment
benefits from $600 to $200 a week for 60 days, or until states are able to
provide a 70 percent wage replacement. Some Republican senators are rolling out
their own proposals that would reduce the benefits with varying levels of wage
replacement.
Their
argument is that payments should be pegged to workers’ former wages as an
incentive for them to seek jobs instead of remaining on benefits.
“Should we
have generous unemployment insurance in this crisis? Of course,” McConnell said
on the Senate floor Wednesday. “But obviously we should not be taxing the
essential workers who’ve kept working so the government can pay their neighbors
a higher salary to stay home.”
Under the
GOP plan, weekly benefits would drop from a national average of $920.68 per week
to $520.68 per week, an average overall cut of 55 percent, according to a
recent analysis by The Century Foundation, a progressive think tank.
Laid-off
workers would lose more than $10 billion per week, under the GOP proposal. And
by the end of September, the losses would reach $90 billion, the analysis
found.
But White
House economists say the checks aren’t stimulating the economy.
“Do not
repeat this idiot notion that giving people money is somehow a stimulus to the
economy,” said Stephen Moore, a conservative economist and outside adviser to
President Donald Trump, in an interview. “I mean, in that case we could just
give everybody $100,000 and we'd all be rich right? It’s just so stupid.”
The impact
on the economy
It’s a
“meaningful hit to the economy,” if lawmakers reduce or cut off the enhanced
benefits, wrote Mark Zandi, chief economist at Moody's Analytics. He estimates
that cutting the benefit to $200 per week as the GOP has proposed would cost
nearly 1 million jobs by the end of the year and raise unemployment by 0.6
percentage points.
Other
estimates of job losses are higher. Economists caution that a reduction in
benefits could spark a drop in demand, setting off a “vicious cycle” that
eventually results in the permanent loss of millions of jobs. Slashing the
extra $600 week could destroy as many as 5 million jobs, according to an
analysis by the left-leaning Economic Policy Institute.
“People
will have to make terrible choices between things like medicine and rent, but
it also means that they will no longer be buying things that they had been
buying, and the workers that produce the goods and services that they will no
longer be buying will lose their jobs,” said Heidi Shierholz, EPI policy
director and former Labor Department chief economist. “And the vicious cycle is
set off. So it’s terrible macroeconomic policy.”
Federally
enhanced unemployment benefits led to a 10 percent increase in consumption
among those out of work when they were first rolled out, according to an
analysis by the JPMorgan Chase Institute, estimates that have alarmed business
groups.
A
disruption could result in a drop in spending as high as 20 percent, the
research found.
“Small
businesses desperately need the consumer demand” Small Business for America’s
Future, a coalition of small business owners, said in a statement. “We need
legislation that puts money in the hands of people who will spend it at local
small businesses. The future of our Main Street economies depend on it.”
Rachel
Greszler, a senior policy analyst at the conservative Heritage Foundation,
agreed that the change in benefits will have short-term negative impacts on the
economy. But she warned the increased spending will have the longer-term consequence
of running up the national debt.
“If you
continue excessively high payments, then you end up just trading a global
health pandemic for a fiscal crisis,” she said.
The impact
on Black and Hispanic workers
Because
Black and Hispanic workers are disproportionately reliant on unemployment aid,
slashing the benefits could do permanent damage to the economic well-being of
those demographics, already among those the pandemic has hit hardest.
Forty-seven percent of recipients of state unemployment benefits in July are
projected to be nonwhite, according to the Congressional Budget Office.
“These
universal approaches to addressing economic issues ignore the recent and past history
of structural racism, and how wealthy is distributed in the country,” said
Andre Perry, a research fellow at Brookings Institution.
“We need to
think about the long-term protection of the most vulnerable,” Perry said. “And
unemployment insurance provides that safety net for now.”
Is a $600
payment causing workers to stay home?
The
Congressional Budget Office estimated in June that extending the boost by six
months would likely lead to greater economic output in the second half of 2020.
But the non-partisan scoring office also forecast that the work disincentive
would lead to lower levels of employment for the remainder of the year and into
2021 — an estimate Republicans have seized on during discussions over the
benefits.
Yale University
researchers recently found “no evidence” that the boosted unemployment benefits
increased layoffs at the outset of the pandemic or discouraged workers from
returning to their jobs over time, according to a report based on data from the
business scheduling software company Homebase.
Weekly
Shift
“If there
is still really depressed labor demand, asking people to go out and search more
intensely will not necessarily yield higher employment,” said Dana Scott, the
primary author of the report. “And on the flip side of the coin, reducing
people's income will also decrease those stimulus effects...where they’ll have
income replaced, go out and spend more money, which isn't just for the
economy.”
But those
close to the White House disagree. “I get ten calls a day from employers
telling me the workers will not come back on the job,” Moore told POLITICO. He
pointed to the 5.4 million new job openings reported by the Bureau of Labor
Statistics in May. “That's a lot of jobs,” Moore said, “but look that's not 20
million.”
The most
recent jobs report from BLS indicated that the number of workers who
permanently lost their job increased to 2.9 million in June. Some 9.1 million
workers would have preferred working full-time, but were only able to get part
time jobs in June. And 8.2 million individuals said they would like a job, but
were unavailable or not actively seeking out work in June, according to BLS.
What about
just sending stimulus checks?
Republicans’
proposal would suggest another round of stimulus checks, similar to those
enacted via a previous round of aid, in an effort to bolster consumption.
“The way
the previous bill was crafted, five out of six workers are actually making more
staying at home than going back to work,” McConnell said on CNBC’s “Closing
Bell” Tuesday. “And remember, all of these folks are going to get another $1200
in direct payment.”
But the
cash is a less efficient way to rejuvenate the economy because it is not as
narrowly tailored, economists warn.
“Spending
less on unemployment insurance and also doing the stimulus check … is terrible
economic policy,” Shierholz said. “You’re taking something that’s very, very
well targeted — getting money to people who’ve lost their jobs — and giving it
broadly.”
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