The problem is the strengthening of the Congress on unemployment assistance approved in late March, which includes an additional $ 600 in weekly payments to unemployed Americans. President Trump on Tuesday expressed reluctance to extend these benefits over a closed-door lunch with Senate Republicans, many of whom share his concern that increased federal payments will deter people from returning to work. The enhanced benefits expire in July.
Vice President Pence, Secretary of the Treasury Steven Mnuchin, Senate Majority Leader Mitch McConnell (R-Ky.) And Parliamentary Minority Leader Kevin McCarthy (R-California), major congressional Republicans said expressed support for the reduction of these benefits on Tuesday. to someone familiar with the matter who spoke on condition of anonymity to discuss private conversations. Party leaders also agreed to delay another round of aid to the coronaviruses by three to four weeks, the person said.
McConnell then told House legislators on Wednesday that Republicans must “clean up the Democrats’ crazy policy that pays people more to stay unemployed than they would earn if they returned to work,” said someone familiar with the remarks. , which were first reported by Politico. McConnell added to extend the increase in unemployment: “It will not be in the next bill. “
The renewed Republican opposition has infuriated some congressional Democrats, who have sought to maintain and increase federal unemployment assistance.
“The worst thing Republicans can do for the US economy and families is to allow supercharged unemployment benefits to expire,” said Senator Ron Wyden (D-Ore.).
The White House declined to comment on this story. White House press secretary Kayleigh McEnany said at a press conference on Wednesday that the president would “not rush to spend billions of dollars more in tax dollars.”
Spokesmen for Mnuchin, McConnell and McCarthy did not immediately respond to requests for comment.
So far, the new unemployment figures further illustrate the precipitous economic decline caused by the coronavirus epidemic, which has shut down many businesses nationwide. The unemployment rate in April reached 14.7%, higher than during the Great Recession, complicating a recovery effort that even some members of the Trump administration fear it will take years to resolve.
Some Americans have struggled for months to gain the benefits after a flood of applications overwhelmed by aging or neglected computer systems in states like Florida, New York and Maryland. These and other states have since made huge strides in reducing their arrears, although delays persist. More than 200,000 unemployed Americans are awaiting payments in Florida, according to state data, while New York’s order book stands at around 44,000, reported Wednesday. About 7,000 claims have been pending for the past month or so.
“The economic need does not go away,” said Martha Gimbel, labor economist at Schmidt Futures. “The fact that we are two months away from this, and that we are still getting figures of several million claims, shows how deep and intense the economic pain is right now. “
The threat of a prolonged slowdown prompted Jerome H. Powell, president of the Federal Reserve Board, to warn that Congress may need to authorize additional stimulus measures during a Senate hearing Tuesday. Trump and some of his key staff, however, have expressed a contrary opinion, insisting that business should rebound – and jobs will come back – much faster than experts imagine. ” We open; states are opening up, “Trump said. “It is a transition to greatness. “
Unemployment benefits are an essential part of the country’s recovery effort, as weekly payments to unemployed Americans work as a form of stimulus in their own right. Weekly checks are usually offered by state governments in varying amounts, but the care law, passed in March, has provided temporary additional federal assistance.
Over a decade ago, Washington also responded to the 2008 financial crisis with a wave of stimulus efforts, including extending eligibility for unemployment benefits up to 99 weeks.
The extensions were costly, hotly contested in Congress, and sometimes difficult for states that had trouble implementing them. But some experts say the payments have proven essential for Americans who have been unemployed for much longer than their states would otherwise have offered them weekly help, which is currently about 26 weeks in most parts of the United States. United.
“Unemployment insurance in a normal recession is a great boost because it gets your money’s worth. People are spending it, “said Chad Stone, the leading economist for the Left Center on Budget and Political Priorities. “It is very precious to the people who receive it and it is beneficial for the economy. “
In response to the coronavirus, lawmakers in March extended unemployment support for an additional 13 weeks while providing new benefits to workers who would not otherwise be eligible for unemployment assistance. This includes the self-employed and the so-called concert economy workers, including those who drive for companies like Uber. But the centerpiece of lawmakers’ efforts has been the additional $ 600 a week in payments they authorized for unemployed Americans until the end of July.
It took weeks to deploy the extra money, even though crowds of workers were left unemployed, due to federal delays and technical problems that hampered the aging of the state’s computer systems. Once these payments started reaching Americans in April, the money quickly started to “make a difference in their lives,” said Michele Evermore, senior policy analyst at the National Employment Law Project.
Increased unemployment benefits were designed to replace workers’ wages, unlike normal unemployment, which often covers only a small fraction of what people earn while they are employed. “They feel like they have a bit of a break,” said Evermore. “So that they have enough money to know that they can do their shopping, and finally get caught up on the bills, and know that their accommodation is fine – it’s a lifeline.”
But corporate groups have shrunk from the payments, fearing it will be too high and deterring people from going back to work.
Two-thirds of the unemployed who receive benefits earn more than they returned home, according to a May analysis by the Becker Friedman Institute for Economics at the University of Chicago. Conservative groups and Republicans in Congress have touted the study in recent days, while anecdotally companies say they find it hard to persuade workers to return to their old jobs – even if some workers say their job reluctance is the result of unresolved security concerns.
“It makes perfect sense in this current health pandemic, when companies are forced to close their doors, to provide a higher level of benefits,” said Rachel Greszler, researcher who focuses on budget issues for the Heritage Foundation. But, she said, the care law program “introduces many inequalities and perverse incentives that hurt the economy.”
The battle between business, lawmakers and union activists recently erupted in Washington, where Democrats have presented a multitude of proposals to increase unemployment insurance. House Democrats last week tested a $ 3 trillion coronavirus bailout bill that would allow improved unemployment benefits until the end of the year, arguing that these payments are essential to keeping the hard hit Americans afloat.
Senate Democrats held a conference call on Wednesday with Mark Zandi, the chief economist at Moody’s Analytics, who insisted that lawmakers should extend enhanced unemployment insurance, according to a Democratic assistant who spoke conditionally anonymity to describe the private conversation.
“As long as unemployment is double digits, the unemployed need extraordinary financial support,” said Zandi after the call, adding that additional help for employers is also essential.
Senate Republicans, however, maintain they are united in their opposition to extending the unemployment benefit by $ 600, said Senator Rick Scott (R-Fla.), Who said he called the president at the time of the adoption of the law on care to oppose the supply.
“I do not know anyone who is not on board,” he said. “The government is competing with businesses for workers, and this is the craziest idea ever. … We can’t hurt our ability to reopen the economy. “
Several private Senate Republican staff told Capitol Hill advisers that they expect the GOP to accept some extension of the increase in unemployment benefits, despite caucus opposition to the expansion , according to two people familiar with private conversations. However, GOP offices are considering a series of potential compromises, including phasing out the size of unemployment benefits or paying a lump sum to people, said the people, who spoke on condition of anonymity for describe the private interviews.
Republicans may face political consequences for the reduction of unemployment benefits for tens of millions of people during the economic crisis.
“I see no way of successfully removing some of the unemployment benefits when we have unemployment figures for May and June,” said Bill Hoagland, a Republican and former chief of staff for the Senate budget committee. “To say that we are not going to extend these benefits when we reach this peak, politically, makes no sense to me. These statements about the non-extension of benefits make no sense to me. “
Erica Werner contributed to this report.
Correction: An earlier version of this story truncated a quote from Senator Ron Wyden (D-Ore.) In a way that unintentionally changed the meaning. The article has been updated with the fuller citation.