Covid Relief Bill Stalls in Fight Over Unemployment Benefits

By Yuval Rosenberg

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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News

Views and Analysis


February’s Jobs Report Doesn’t Let Congress Off the Hook for
More Stimulus – Catherine Rampell, Washington
PostPandemic
Relief Is an Economic Leap of Faith – Michael R. Strain,
Bloomberg


Too Many Smart People Are Being Too Dismissive of
Inflation – Steven Rattner, New York
TimesWhat
Are the New Inflation Hawks Thinking? – J. Bradford
DeLong, Project SyndicatePopular
Policies Don’t Elect Presidents – Jonathan Bernstein,
Bloomberg
If Congress Offers You This Tax Advance, Beware –
Alexis Leondis, Bloomberg
Congress Is Broken. Earmarks Might Actually Help –
Bloomberg Editorial BoardFiscal
Follies in the COVID Recovery – Daniel Gros, Project
SyndicateThe
Minimum-Wage Debate Is a Mildly Encouraging Folly –
George F. Will, Washington PostWhat
Ron Johnson’s Latest Stunt Tells Us About the Next Four
Years – Paul Waldman, Washington PostRepublicans’
Most Self-Destructive Political Move Yet – Jennifer
Rubin, Washington PostBiden's
COVID-19 Bet Comes With Deep Risks – Niall Stanage, The
Hill