Dems Want to Save the $600 Unemployment Boost. GOP Has Other Ideas.

Dems Want to Save the $600 Unemployment Boost. GOP Has Other Ideas.

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Plus: A surprise extension for a coronavirus aid program
Wednesday, July 1, 2020

Dems Want to Extend the $600 Unemployment Boost. GOP Has Other Ideas.

The $600-a-week federal boost to unemployment insurance introduced by Congress in March is set to expire this month, and the debate about whether or how to extend jobless benefits will be central to negotiations on a next coronavirus relief bill — negotiations that are likely to be difficult, with Democrats and Republicans deeply divided. Here’s the latest:

Senate Democrats propose "automatic stabilizers":
Senate Democrats on Wednesday introduced legislation called the American Workforce Rescue Act to extend the weekly benefit increase and tie it to state unemployment levels.

The $600 increase would stay in place until a state’s three-month average unemployment rate falls below 11%. The benefit boost would then phase out after 13 weeks, falling by $100 for each percentage point decrease in the unemployment rate until the rate drops below 6 percent.

The bill would also continue a 13-week extension of unemployment benefits through March and then tie the extension to state unemployment rates, with additional 13-week extensions for each percentage point the unemployment rate rises above 5.5%. It would similarly extend the unemployment coverage Congress created for self-employed, gig workers and others who aren’t eligible for traditional unemployment through March 27, 2021, after which the benefits are tied to state unemployment levels.

"If we fail to renew the $600 per week increase in UI, millions of American families will have their legs cut out from underneath them at the worst possible time—in the middle of a pandemic when unemployment is higher than it's been since the Great Depression," Schumer said in a statement. "The American Workforce Rescue Act would tie the extension of enhanced UI benefits to economic data—not politics. As the need goes down, so will the benefits. As the need goes up, so will the benefits."

Republicans say no to extending the $600 payments:
The Democratic-led House in May passed legislation that would extend the $600 weekly payments through January, but the Senate Democrats’ proposal represents a new marker for negotiations with Republicans, who remain staunchly opposed to extending the payments as currently structured, insisting that they create an incentive for workers to stay away from their jobs — particularly low-income employees who are making more on unemployment than they did at work.

"You'd make more money if you don't go to work," President Trump told Fox Business Network in an interview Wednesday, apparently referring to the enhanced unemployment benefits even though he was asked about additional stimulus payments. "We don't want to have that. We want to have people get out, and we want to create a tremendous incentive for people to want to go back to work."

Senate Majority Leader Mitch McConnell (R-KY) also said this week that the $600 payments won't be in the next phase of coronavirus relief, according to NBC News. "Unemployment is extremely important. And we need to make sure, for those who are not able to recover their jobs, unemployment is adequate," McConnell told reporters on Tuesday. "That is a different issue from whether we ought to pay people a bonus not to go back to work. And so I think that was a mistake."

The Congressional Budget Office projected last month that if the increase in unemployment payments was extended for six months, about five in six recipients would get benefits that exceeded what they could expect to earn at work — and that economic output over the second half of the year would be higher and spending by those workers would be closer to normal than if the benefits weren’t extended.

Some Senate Republicans and Trump administration officials have supported the idea of return-to-work bonuses. But NBC News reports that in interviews with nearly a dozen GOP senators on Tuesday "one consistent theme emerged: They are certain they don't want to extend the $600 per week in emergency jobless compensation because they widely agree that it is motivating people to stay out of work. But they have little clarity on what ought to replace it."

Schumer on Tuesday pushed back on the GOP bonus idea. "The back-to-work bonus pays people who are working. What about the people who are unemployed and can’t get back to work?" he said. "I don’t get it, it’s illogical. If unemployment insurance is supposed people who are unemployed, back-to-work bonus doesn’t solve that problem."

Why it matters, part 1:
The automatic stabilizers in the new Schumer-Wyden proposal "would address a pernicious problem Democrats have faced as they’ve tried to extend the unemployment boost: The need to continually renegotiate benefits in the face of the pandemic’s ever-changing economic outlook," writes Kara Voght at Mother Jones. Given GOP opposition, the bill likely won’t pass Congress, but Voght says "it’s significant that Democratic leadership is embracing automatic stabilizers, which have been championed mostly by progressive economists and lawmakers."

Why it matters, part 2:
The unemployment benefit boost has provided a crucial safety net, offsetting lost income for millions of workers laid off of furloughed during the pandemic. The national unemployment rate remains above 13% and some 30 million Americans are collecting unemployment benefits of some sort. Nebraska (5.2%) was the only state with a May unemployment rate below 8.5%, while 33 states had rates of 10% or higher, including three states — Michigan, Hawaii and Nevada — were above 20%. Economists worry that without some extension of emergency unemployment benefits, incomes would plunge — and spending vital to the economy would follow.

Small Business Relief Program Gets a Surprise Extension

The Senate passed an unexpected extension of the Paycheck Protection Program Tuesday night, just a few hours before the $660 billion effort to aid small businesses was scheduled to cease receiving applications. The House approved the last-minute bill Wednesday, and if President Trump signs it as expected business owners will have until August 8 to apply for forgivable loans through the program.

The extension itself may not have a significant effect on participation in the loan program, however. While the PPP has approved about $520 billion in loans for nearly 5 million small businesses so far, another $130 billion has gone unused, and applications have slowed to a trickle in the last few weeks.

One problem for the program has been its requirement that the majority of the borrowed funds be used for payroll expenses in order for the loans to be converted to grants, a condition many small business owners such as restaurateurs fear they may not be able to satisfy.

While the extension, which required the agreement of all 100 senators, may not have a significant effect in the short run, it does signal that lawmakers are serious about providing more aid for small businesses. Treasury Secretary Steven Mnuchin said this week that he was looking into the possibility of reprogramming any remaining PPP funds to help businesses in other ways. Whatever the mechanism, senators made it clear that they want to include new federal aid for small businesses in the next stimulus package, which could come up for a vote later this month.

Democrats’ $1.5 Trillion Infrastructure Plan Is DOA: McConnell

A $1.5 trillion infrastructure bill is expected to get a vote in the House Wednesday, but according to Senate Majority Leader Mitch McConnell (R-KY), the effort is for naught.
"So naturally this nonsense is not going anywhere in the Senate. It will just join the list of absurd House proposals that were only drawn up to show fealty to the radical left," McConnell said Wednesday.

The White House also said it opposes the bill, saying Tuesday that it is "not a serious proposal" and "entirely debt-financed."

The infrastructure package includes substantial increases in spending for roads and bridges, clean water, rural broadband, public housing, schools, hospitals and clean energy. Democrats have not addressed how they plan to pay for the bill, but House Speakers Nancy Pelosi (D-CA) recently said that "with the interest rates where they are now there's never been a better time for us to go big."

Pelosi also said she didn’t expect McConnell to embrace the legislation. "As you know, the Grim Reaper said nothing is ever going any place in the Senate," Pelosi said, using a nickname the senator has given himself. "But there is tremendous interest in the country in building the infrastructure."

US Public Health System Starved for Funds: Report

The coronavirus crisis is shining a light on the inadequacies of the American public health system, which most experts agree is significantly underfunded. A new report from Kaiser Health News and the Associated Press documents the decline of the system over the last decade and warns that the situation will likely get worse as recession-driven budget cuts take their toll at the state and local level.

Some key details from the report:

  • Per capita spending for state public health departments has dropped by 16% since 2010.
  • Spending for local health departments has fallen by 18% during the same time period.
  • More than 38,000 state and local public health jobs have been eliminated since the recession in 2008 — "leaving a skeletal workforce for what was once viewed as one of the world’s top public health systems."
  • The majority of Americans live in states that spend less than $100 per person per year on public health.
  • Less than a third of local health departments have an epidemiologist or statistician on staff.
  • Most local governments spend more on policing than on health.

As the coronavirus raged in April, Robert Redfield, the director of the Centers for Disease Control and Prevention, told the reporters working on the report that his greatest regret was "that our nation failed over decades to effectively invest in public health."

Number of the Day: $323.1 Billion

U.S. hospitals and health systems will lose an estimated $323.1 billion in 2020 as a result of the Covid-19 pandemic, according to an American Hospital Association report published Tuesday. The analysis may underrepresent the losses hospitals will face this year, the report said, since it does not account for rising case rates in many states, or potential future waves of the pandemic.

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