The Washington Post is reporting this week that senior Trump administration officials have begun signaling their willingness to approve a “narrow extension” of the enhanced unemployment benefits helping tens of millions of jobless Americans hurt by the coronavirus pandemic.
In less than two weeks, the federal program that provides a $600-per-week increase to unemployment benefits will expire. Many economists warn the disappearance of this enormous federal stimulus, created in March, could hinder the economic recovery and deprive millions of Americans of a vital financial lifeline.
More than 30 million people are collecting what many recipients say is a crucial pillar of financial support right now.
However, Senate Majority Leader Mitch McConnell R-Ky., on June 30 said the expiring added unemployment benefits were a “mistake,” and President Trump and White House officials have argued the $600-per-week unemployment bonus provides a “disincentive to work and should be scrapped. But with the program's termination approaches and the economy showing new signs of strain, administration officials have begun opening the door to some form of “what Congress previously approved,” the Post said.
For example, Treasury Secretary Steven Mnuchin said last week that the administration's priority was ensuring that future benefits amount to “no more” than 100% of a worker's prior wages -- comments that surprised some congressional Republicans who thought he shared their strong opposition to extending the benefits, the Post said.
Larry Kudlow, the president's top economic adviser, said this week that the Trump administration is seeking “some unemployment reforms.” Earlier, he had more aggressively bashed the $600-per-week increase.
Kudlow also seemed to push a “return to work” bonus that could supplement a reduction in unemployment benefits. That idea has been viewed as administratively difficult to implement, so its path to passage is unclear, the Post said.
One potential compromise discussed by Republican lawmakers would involve cutting the unemployment benefit from $600 per week to between $200 and $400 and making up at least part of the difference with another round of $1,200 stimulus payments.
On Monday, Senate Majority Leader Mitch McConnell R-Ky., said the next package would include “unemployment insurance for those unable to get back to work,” though he did not specify how much aid would be necessary.
White House spokesman Judd Deere said that the administration is opposed to the $600-per-week increase but would not rule out a more limited expansion of the benefit. “UI reform is a priority for this White House in any phase four package being discussed,” he said.
The emergency, temporary federal benefits come on top of the payments appropriated by state governments, which vary widely. Democrats have largely called for the benefits to be extended.
The time left for discussion is short, the Post said. Republicans have discussed the issue internally but have no caucus position, and there are no serious bipartisan discussions underway. The Senate comes back on July 20, five days before the enhanced unemployment benefit expires in 49 states. They expire in New York state on July 26.
The discussions are complicated by current labor market distress, the Post said. More than 1 million Americans continue to apply for jobless benefits every week and “the rise of coronavirus cases across the country threatens to prompt a new wave of shutdowns.”
June's jobs numbers showed the U.S. has recovered about a third of the jobs lost during the worst of the crisis, but the “economy appears to have worsened in recent weeks since and there are few signs it will improve before expanded unemployment benefits expire,” the Post said.
The report says that recent unemployment benefits helped stabilize the economic turbulence as unemployment rose to roughly 15 percent in April before falling slightly to 11 percent in June. Wages declined by $70 billion in May compared with February. The emergency unemployment benefits filled that gap, funneling $70 billion per month into the economy, according to Ernie Tedeschi, who was an economist in the Obama administration's Treasury Department.
Removing that lifeline could spell hardship for millions of Americans. If the benefits disappear, perhaps 30 million Americans would see a severe income cut of between 50% and 75%, Tedeschi said.
There is some bi-partisan agreement. People at the White House do understand reducing this $600-per-week benefit would be really bad for the economy and really bad in the fall, when you need the recovery,” said Stephen Moore, a conservative analyst and White House ally. “The stakes are really enormous here.”
Moore, citing conversations with multiple small-business owners, described talk of taking the benefit down to $200 per week as “very objectionable. We should just go back to the old unemployment program, and if you want to help people financially just do the payments that go to everyone,” Moore said.
As a result, many workers are left in a state of unparalleled uncertainty. For some, the supplemental insurance “was all that was keeping rent and expenses paid, especially for those recently laid off with local unemployment benefits alone.
So, we will see. This high-pressure debate is also seen as very high stakes for many—fights producers should watch closely as they intensify, Washington Inside believes.
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