“We are in the throws of a once in a lifetime public health and economic crisis that Donald Trump created. With families to feed and rent to pay, it is astounding that Donald Trump is willing to make a dire situation even worse for the over 38 million Americans out of work by ending advanced unemployment benefits. This would be a gut punch to our economy, and signals that Donald Trump isn’t just out of touch, he is willing to risk the lives of those 38 million Americans by forcing them into unsafe work conditions – no matter the cost,” said Kyle Morse, an American Bridge Spokesperson.
ICYMI: Washington Post: 2.4 million Americans filed jobless claims last week, bringing nine-week total to 38.6 million
By Tony Romm and Jeff Stein on 5/21/20
President Trump and top Republican lawmakers are mounting fresh opposition to extending enhanced unemployment benefits to the millions of Americans who are still out of work, even as the administration released new jobless figures Thursday showing 2.4 million Americans sought benefits last week.
The reluctance by the White House and top GOP leaders drew sharp rebukes from congressional Democrats, who argue the coronavirus outbreak threatens to further ravage the U.S. workforce unless the government authorizes additional aid. Their clash could intensify in the next six weeks, as policymakers stare down a July deadline while the country’s labor market is expected to only worsen.
More than 38.6 million Americans have sought unemployment benefits over nine weeks, the Labor Department reported in its most recent update, illustrating the rolling devastation wrought by the pandemic.
At issue is the enhanced unemployment aid Congress approved in late March, which includes an extra $600 in weekly payments to out-of-work Americans. On Tuesday, President Trump articulated his reluctance to extend those benefits during a closed-door lunch with Senate Republicans, many of whom share his concern that the expanded federal payments deter people from returning to work. The enhanced benefits expire in July.
Top congressional Republicans signaled support for paring these benefits during a meeting on Tuesday attended by Vice President Pence, Treasury Secretary Steven Mnuchin, Senate Majority Leader Mitch McConnell (R-Ky.) and House Minority Leader Kevin McCarthy (R-Calif.), according to a person familiar with the matter who spoke on the condition of anonymity to discuss the private conversations. Party leaders also agreed to delay another round of coronavirus aid for three to four weeks, the person said.
McConnell then told House lawmakers on Wednesday that Republicans had to “clean up the Democrats’ crazy policy that is paying people more to remain unemployed than they would earn if they went back to work,” according to a person familiar with the remarks, which were first reported by Politico. McConnell added of extending the unemployment increase: “This will not be in the next bill.”
The renewed Republican opposition incensed some congressional Democrats, who have sought to maintain and augment federal unemployment aid.
“The worst thing Republicans can do to the economy and American families is to allow supercharged unemployment benefits to expire,” said Sen. Ron Wyden (D-Ore.).
The White House declined to comment for this story. On Wednesday, White House press secretary Kayleigh McEnany said at a news briefing that the president would not “rush forward with spending trillions more dollars in taxpayer money.”
Spokespeople for Mnuchin, McConnell and McCarthy did not immediately respond to requests for comment.
For now, the new unemployment figures further illustrate the precipitous economic decline caused by the coronavirus outbreak, which has shuttered many businesses nationwide. The unemployment rate in April hit 14.7 percent, higher than during the Great Recession, complicating a recovery effort that even some in the Trump administration fear could take years to resolve.
“We may need to do more, and Congress may, as well,” warned Jerome H. Powell, chair of the Federal Reserve Board, during a hearing with the Senate Banking Committee on Tuesday.
Trump and his top aides, however, have articulated a contrary view, insisting that business is set to rebound — and jobs will return — much more quickly than experts envision. “We’re opening up; the states are opening up,” Trump affirmed again on Tuesday. “It’s a transition to greatness.”
Unemployment benefits represent a critical component of the country’s recovery effort, as the weekly payments to out-of-work Americans function as a form of stimulus in their own right. Unemployment benefits are typically offered by state governments, but the Cares Act, which passed in March, provided the temporary additional federal assistance.
More than a decade ago, Washington responded to the 2008 financial crisis by adopting a wave of stimulus efforts that included extending unemployment benefit eligibility up to 99 weeks.
The extensions were costly, hotly contested in Congress and fraught at times with difficulties for states that struggled to implement them. But some experts say the payments proved critical to Americans who were unemployed for far longer than their states otherwise would have offered them weekly aid, which currently is about 26 weeks in most parts of the United States.
“Unemployment insurance in a normal recession is a great stimulus because it has high bang for your buck. People spend it,” said Chad Stone, the top economist at the left-leaning Center on Budget and Policy Priorities. “It’s very valuable to the people receiving it, and it’s beneficial to the economy.”
In response to the coronavirus, lawmakers in March extended unemployment support for an additional 13 weeks while granting new benefits to workers otherwise ineligible for jobless aid. That includes self-employed and so-called gig economy laborers, including those who drive for companies such as Uber. But the centerpiece of lawmakers’ efforts had been the additional $600-per-week in payments they authorized for out-of-work Americans until the end of July.
It took weeks to roll out the extra cash, even as throngs of workers found themselves jobless, thanks to delays at the federal level and technical glitches that hamstrung aging state computer systems. Once those payments did start to reach Americans in April, the money quickly began “making a difference in their lives,” said Michele Evermore, a senior policy analyst at the National Employment Law Project.
The heightened unemployment benefits had been designed to replace workers’ wages, unlike unemployment in normal times, which often only covers a small fraction of what people earn while they have a job. “They feel like they have some breathing room,” Evermore said. “For them to have enough money to know they can stock up on groceries, and finally get caught up on bills, and know their housing is okay — it’s a lifeline.”
But business groups have balked at the payments, fearing they are too high and creating disincentives for people to return to work.
Two-thirds of unemployed workers who are receiving benefits are earning more than they were taking home previously while on the job, according to a May analysis from the University of Chicago’s Becker Friedman Institute for Economics. Conservative groups and congressional Republicans have touted the study in recent days, while anecdotally, companies say they’re having a hard time persuading workers to return to their old jobs — even though some laborers say their reluctance is the result of unaddressed safety concerns.
“It absolutely makes sense in this current health pandemic, when businesses are forced to close their doors, to provide a higher level of benefit,” said Rachel Greszler, a research fellow who focuses on budget issues for the Heritage Foundation. But, she said, the Cares Act program “introduces a lot of inequities and perverse incentives that damage the economy.”
The battle between businesses, lawmakers and labor advocates recently has erupted in Washington, where Democrats have put forward a slew of proposals to bulk up unemployment insurance. Last week, House Democrats piloted the adoption of a $3 trillion coronavirus relief bill that would authorize enhanced unemployment benefits until the end of the year, arguing such payments are critical toward keeping hard-hit Americans financially afloat.
On Wednesday, Senate Democrats held a conference call with Mark Zandi, the chief economist for Moody’s Analytics, who stressed lawmakers should extend enhanced unemployment insurance, according to a Democratic aide who spoke on the condition of anonymity to describe the private conversation.
“As long as unemployment is in the double digits, the unemployed need continued extraordinary financial support,” Zandi said after the call, adding additional aid for employers also is critical.
Senate Republicans, however, maintain they are unified in their opposition to extending the $600 unemployment benefit, said Sen. Rick Scott (R-Fla.), who said he called the president around the time of the passage of the Cares Act to object to the provision.
“I don’t know of anybody that’s not on board,” he said. “The government is competing with businesses for workers, and that’s the craziest idea ever. … We can’t hurt our ability to reopen the economy.”
Several Senate Republican staffers private have told advisers off Capitol Hill that they expect the GOP to accept some extension of the unemployment benefits increase, despite the caucus’s opposition to the expansion, according to two people familiar with the private conversations. However, GOP offices are considering a raft of potential compromises, including phasing out the size of the unemployment payments or offering people a one-time lump sum, said these people, who spoke on the condition of anonymity to describe the private talks.
Republicans may face political consequences for cutting unemployment benefits for tens of millions of people during the economic crisis.
“I don’t see any way they’ll be successful in shutting down some of the unemployment benefits when we get the unemployment numbers for May and June,” Bill Hoagland, a Republican and former staff director on the Senate Budget Committee. “To say we won’t do any extension of those benefits when we reach that peak, politically, doesn’t make any sense to me. These statements about not extending benefits makes no sense to me at all.”