Covid Relief Bill Stalls in Fight Over Unemployment Benefits

Covid Relief Bill Stalls in Fight Over Unemployment Benefits

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Plus, what the jobs numbers mean for Biden's bill
Friday, March 5, 2021

Covid Relief Bill Stalls in Fight Over Unemployment Benefits

Senate Democrat’s push to pass President Joe Biden’s $1.9 trillion Covid relief bill stalled out on Friday, leaving party leaders scrambling to ensure that they’d have the votes needed for passage. The uncertainty centered on whether Sen. Joe Manchin (D-WV), a key centrist, would support a last-minute Democratic agreement to change to the enhanced unemployment benefits provided in the bill or would instead back a Republican alternative.

The question led to an hours-long delay that left the fate of the entire package in doubt, raising questions about Democrats’ ability to enact legislation in an evenly divided Senate and with the party split between moderates and progressives.

The unemployment insurance question:
Democrats reportedly had reached a deal Friday to scale back the supplemental federal unemployment payments provided by the aid package in response to concerns from moderates. Under the deal, the extra weekly payments would be lowered from $400 back to their current $300, but the benefit would be extended by a month, until the end of September. That amendment, offered by Sen. Tom Carper (D-DE), would also make $10,200 in unemployment insurance exempt from taxes to prevent jobless workers from getting hit with an unexpected year-end tax bill.

The White House backed the deal, but it quickly became apparent that the agreement was in peril, resulting in a prolonged delay in the Senate’s consideration of amendments to the Covid package while Democrats tried to resolve the standoff.

Manchin had expressed concerns that the unemployment benefits might deter jobless people from going back to work at a time when the economic recovery is poised to take off, and he reportedly was troubled by the tax exemption in the Democratic amendment. As a result, he was considering supporting a competing amendment from Sen. Rob Portman (R-OH) that would both cut the unemployment benefit to $300 and have it expire on July 18, earlier than the original end-of-August cutoff. Portman’s amendment also wouldn’t provide the tax exemption. Republicans say it would trim $128 billion from the overall cost of the package.

Roll Call reports that some business groups backed the Portman amendment, with the U.S. Chamber of Commerce and National Federation of Independent Business both saying that they would make it a “key vote” on their annual scorecard.

"There's bipartisan support for what Rob's trying to do. And Manchin's getting beat up by his side. They're trying to get him in line, so to speak. And he's trying to do the right thing," said Senate Minority Whip John Thune (R-SD). "He knows that the Portman amendment saves a lot of money and is better policy. But Democrats in his caucus obviously don’t want to give Republicans a bipartisan win on this."

The original August expiration of benefits is problematic because lawmakers are scheduled to be on recess then, raising concerns that they’d be unable to renew the program in a timely fashion if needed.

Why it matters:
The boosted unemployment benefits are set to expire on March 14, and Democrats reportedly were concerned that the Portman amendment would require new negotiations with the House, threatening to delay passage past that deadline.

Minimum wage hike poised to be voted down:
The Senate scramble on unemployment benefits started as lawmakers were launching their “vote-a-rama,” a lengthy process of voting on potentially dozens of the hundreds of amendments filed for the aid bill. The first amendment was from Sen. Bernie Sanders (I-VT), who forced a vote on proposal to raise the federal minimum wage from $7.25 to $15 an hour.

In a speech on the Senate floor, Sanders said lawmakers shouldn’t leave the decision to the Senate parliamentarian, who ruled last week that the wage hike didn’t comply with the reconciliation rules being used to pass the entire aid package. “It is an absurd process that we allow an unelected staffer, somebody who works for the Senate, not elected by anybody to make a decision as to whether 30 million Americans get a pay raise or not,” he said.

But eight Democrats joined with all Republicans to vote down the amendment. Those eight are Sens. Tom Carper and Chris Coons of Delaware, Maggie Hassan of New Hampshire, Angus King of Maine (an independent who caucuses with Democrats), Manchin, Jeanne Shaheen of New Hampshire, Kyrsten Sinema of Arizona and Jon Tester of Montana.
“It's possible that the Democrats who rejected Sanders' amendment support a minimum wage hike, but voted ‘no’ because they oppose it as part of COVID relief or respect the parliamentarian's ruling,” Axios’s Ursula Perano notes.

That vote was held open for hours, though, as talks dragged on about the unemployment benefits.

What’s next:
Probably a lot more drama. If senators can strike a deal on the unemployment benefits — and that appears to be a big if at this point — the vote-a-rama will continue. Many or most of the votes will be meant to provide campaign fodder on hot button issues not related to the actual aid package. The process will take hours, but once it’s done Senate Democrats should be able to pass the relief package this weekend. It will then go back to the House, where Democrats will again be forced to face their intraparty divisions as they decide whether they can back the Senate-passed version of the bill.

Job Growth Jumps in February: What Does It Mean for Biden’s Relief Bill?

The U.S. labor market added 379,000 jobs in February, the Labor Department announced Friday, raising hopes that the economy is accelerating as it heads into the spring.

The pace of hiring was faster than expected, with most of the job growth concentrated in the virus-ravaged leisure and hospitality sectors. The jobs numbers for January were also revised higher, bringing the new jobs total for the first two months of the year to 545,000.

The topline number was weighed down by bad weather throughout much of the country, which typically limits hiring, especially in industries that involve outdoor work such as construction. Employment in state and local public education also fell during the month, with a loss of 69,000 jobs.

The unemployment rate ticked slightly lower to 6.2%, though pronounced differences in the population persisted. The jobless rate fell to 5.6% for white workers and 8.5% for Hispanic workers, while it rose to 9.9% for Black workers.

The labor force participation rate was unchanged at 61.4%, about a point and a half lower than before the pandemic.

“What we’re seeing is broad, slow gains,” Julia Pollak of the job site ZipRecruiter told The New York Times. “It’s consistent with a slow reawakening of the labor market after a winter hibernation.”

J.P. Morgan’s Michael Feroli said in a note that the report hints at better times to come in the labor market: “Overall this was a pretty good report, and we expect even better numbers in coming months as the incredibly powerful tailwind of reopening should support some rather large job growth figures.”

Too soon to celebrate: Though the jobs report provided better-than-expected results, the U.S. economy still has a long way to go before it returns to pre-pandemic conditions — and the latest report may not be quite as good as it appears. Joseph Brusuelas, chief economist at the consulting firm RSM, wrote Friday that “the major policy takeaway from this report is that there has not been a dramatic acceleration in hiring.”

Most of the new jobs simply made up for layoffs in the late fall and early winter, Brusuelas said, and job losses were recorded in the goods-producing and financial sectors, with little growth outside low-wage areas marked by temporary employment.

With the real unemployment rate hovering near 10%, Brusuelas said there was little in the jobs report to suggest that economic conditions have fundamentally changed. “The report will neither persuade the Federal Reserve to alter its path of accommodative monetary policy, nor should it be used as an argument to pull back on the Biden administration’s proposal for $1.9 trillion in fiscal stimulus,” he wrote.

Goldman Sachs chief economist Jan Hatzius said Friday that while the jobs report is better than could have been expected just a few months ago, the risk of permanent damage to the U.S. economy remains. “I think that’s why expansionary monetary and fiscal policy is the right call here because you want to minimize the time it takes before you get to something more normal,” he told CNBC.

Politics of Covid relief: The White House embraced the February report in its effort to push Democrat’s $1.9 trillion Covid spending package Friday.

"Today's jobs report shows that the American Rescue plan is urgently needed,” President Joe Biden said, noting that there are still 9.5 million fewer jobs than there were at the start of the pandemic. “At that rate it would take two years to get us back on track.”

White House Chief of Staff Ron Klain provided a little more detail for the argument. “If you think today's jobs report is ‘good enough,’ then know that at this pace (+379,000 jobs/month), it would take until April 2023 to get back to where we were in February 2020, Klain tweeted.

Coronavirus Aid Bill Includes Tax Change for Gig Workers: Report

CQ Roll Call’s Doug Sword reports on a last-minute change to the relief package that would raise tax collections from gig workers like Uber drivers and Airbnb hosts by about $1 billion a year:

“Under current law, such online platforms only have to report to the IRS when they pay individuals at least 200 times a year, for a minimum $20,000. The change inserted into a managers' amendment just before House floor debate on the $1.9 trillion measure would cut that threshold to $600, regardless of how many transactions, generating an estimated $8.4 billion in extra tax revenue through fiscal 2031. …

“Nina Olson, who ran the IRS's taxpayer advocate services for 18 years, predicted the estimated tax revenue will prove elusive because many gig workers who are paid by Uber, Lyft, DoorDash, Grubhub, TaskRabbit and the like are living paycheck to paycheck and won't be able to pay the bill. …

“The new $600 income-reporting threshold for gig workers is also included in the Senate's substitute amendment to the House-passed relief bill, making it all but certain to become law.”

Read the full story at Roll Call.

Number of the Day: 60%

In a major shift in public opinion, the majority of Americans say they think the Covid situation is getting better, Gallup announced Friday. “For the first time in Gallup's trend, a majority of Americans (60%) perceive the coronavirus situation in the U.S. as getting better, while 26% say it is staying the same and 14% believe it is getting worse,” the polling group said. “This record-high optimism likely reflects the steep decline in new COVID-19 cases in the U.S. in late January and early February.”

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