Treasury Secretary Steven Mnuchin and White House Chief of Staff Mark Meadows said Sunday that Congress might have to pass a narrow piece of legislation this week to ensure enhanced unemployment benefits don’t expire for millions of Americans.
House Speaker Nancy Pelosi (D-Calif.) has rejected the piecemeal approach, but time is running short because the temporary unemployment benefits are set to expire at the end of this week. These $600 weekly payments were approved by Congress in March.
After weeks of inaction, White House officials have displayed a new sense of urgency about the economy in the past week amid signs that the recovery is slowing markedly.
In addition to new calls for a pared down stimulus bill, White House officials are also planning to push for an eviction moratorium through the end of the year, according to a senior administration official. The Department of Housing and Urban Development is expected to be involved in this effort. A previous four-month eviction moratorium expires at the end of this month.
Bipartisan talks on the next coronavirus package have barely begun, and the White House and Senate Republicans haven’t even formally offered a GOP plan yet. House Democrats passed a bill in May that would extend the $600 weekly payments through January, as the unemployment rate remains above 11 percent.
House Speaker Nancy Pelosi (D-Calif.) blasted the GOP inaction and said Democrats have been waiting to negotiate.
“We’ve been anxious to negotiate for two months and 10 days when we put forward our proposal,” Pelosi said on CBS’s “Face the Nation.” “They’re in disarray and that delay is causing suffering for America’s families.”
Senate Majority Leader Mitch McConnell (R-Ky.) intends to roll out a $1 trillion package on Monday covering a range of issues, including a new round of checks to individual Americans. But Democrats are demanding a bill three times that size, and McConnell has said it could take “a few weeks” to reach a deal.
“Honestly I see us being able to provide unemployment insurance, maybe a retention credit to keep people from being displaced or brought back into the workplace, helping with our schools — if we can do that along with liability protections perhaps we put that forward, get that passed as we negotiate on the rest of the bill in the weeks to come,” Meadows said on ABC’s “This Week.”
Mnuchin made similar comments on “Fox News Sunday.”
“Within the $1 trillion package, there are certain things that have time-frames that are a bigger priority. So we could look at doing an entire deal; we could also look at doing parts,” Mnuchin said, highlighting fixing unemployment insurance and a liability shield. “We can move very quickly with the Democrats on these issues. We’ve moved quickly before. … If there are issues that take longer, we’ll deal with those as well.”
Despite the comments from Mnuchin and Meadows, McConnell has not demonstrated public support for a piecemeal approach. Asked for comment Sunday, his spokesman pointed to remarks McConnell made last week touting the $1 trillion bill he plans to unveil on Monday. The legislation was supposed to have been rolled out last Thursday but that was called off at the last minute because of disagreement over unemployment insurance and other issues.
The $600 federal unemployment benefit was created by the Cares Act, which was approved by Congress in March. The extra benefit is paid on top of whatever unemployment insurance states offer, which vary but typically replace around 45 percent of a worker’s salary.
Republicans do not want to extend the full $600-per-week benefit, which they insist provides a disincentive for people to go back to work. Instead they’ve discussed a formula that would amount to 70 percent wage replacement of the salary a worker was getting paid before getting laid off. Mnuchin suggested on Sunday the federal payment would vary for each beneficiary based on what their earnings were before they lost their job.
Some economists say the new formula would effectively take the $600 weekly payment to around $200 a week, though Mnuchin stressed on Sunday it would vary from person to person.
Pelosi on Sunday declined to say whether Democrats would accept an amount lower than $600 per week.
“You don’t go into a negotiation with a red line,” Pelosi said. “But you do go in with your values.”
Pelosi also said the liability protections the GOP wants to put in the legislation would put workers at risk, removing the onus from companies to ensure that workers don’t contract the coronavirus while they are on the job.
"What they’re saying to essential workers, ‘You have to go to work because you’re essential. We place no responsibility on your employer to make that workplace safe and if you get sick you have no recourse,’” she said.
State unemployment offices have been overwhelmed processing the benefit applications of the 20 million to 30 million unemployed Americans. Some experts have suggested switching to a new system would be time-consuming and difficult, but Meadows said they had been discussing it and believed it could be done if the federal government steps in to help state unemployment offices.
“It’s our goal to make sure that it’s not antiquated computers that keep people from getting their benefits,” Meadows said.
Mnuchin said the package Senate Republicans will unveil on Monday will have a number of different elements, including aid for schools, another round of stimulus checks to individuals, and tax credits to encourage companies to rehire workers, among other things.
White House National Economic Council Director Larry Kudlow said on CNN that the 70 percent unemployment formula should be considered “quite generous by any standard.”
The U.S. economy contracted sharply earlier this year because of the coronavirus pandemic, with many state and local governments, as well as businesses, shedding workers and cutting back on spending. More than 20 million Americans lost their jobs in April.
Congress approved roughly $3 trillion in new spending and tax cuts to try to prevent the economy from completely collapsing, with additional aid provided by the Federal Reserve. The economy showed signs of recovering in May and June, but a new surge in coronavirus cases and a rise in deaths has led many states to pause reopening plans and the economy is showing fresh signs of weakness.
The path to another agreement could be narrow. Sen. Lindsey Graham (R-S.C.) said Sunday on Fox News “half the Republicans are going to vote ‘no’ to any” stimulus package.
“That’s just a fact,” he said. And a lot of Democrats are going to insist on $3 trillion, which would be way too much. It would be wasted money."
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