That belief is in conflict with the administration’s stated position that it is “appropriate” for the emergency federal program to end, a view held by Biden personally, said the people, who spoke on the condition of anonymity to reveal private conversations.
The internal White House frictions over the unemployment aid cutoff reflect the challenge facing Biden as he tries to restore economic normalcy without punishing low-income Americans, as well as ideological divergences within the administration.
Unemployment benefits are typically paid by states, but the federal government stepped in with enhanced benefits last year when it was clear that so many people had lost their jobs because of the pandemic. The benefits have previously lapsed, only to be renewed because so many Americans remain out of work.
Anticipating a backlash to the program’s expiration next week, the Biden administration two weeks ago said states could on their own extend the jobless benefits using leftover state aid from Biden’s stimulus bill in March. Not a single state appears likely to do so, at least as of Friday. As a result, roughly 10 million people are set to lose some unemployment benefits on Sept. 6, including 7 million people who will lose all benefits.
“There’s a lot of anxiety internally right now, particularly given [the coronavirus] delta [variant], about going over the cliff — much more than there was two months ago,” one senior administration official told The Washington Post in late August.
A senior congressional Democratic aide added: “At the White House staff level, there’s a ton of support for focusing on at least trying to extend additional weeks for gig-workers and self-employed workers. But they’re not trying.”
White House press secretary Jen Psaki struck a markedly different tone at the press briefing on Monday, echoing Biden’s prior comments that “it makes sense” for the benefits to lapse. “[Biden] made a decision based on where things stand and our economic recovery at this point in time,” Psaki told reporters.
Biden on Friday acknowledged the jobs report was weaker than hoped for but said it reflected “an economic recovery that is durable and strong.” He reiterated that he believes states have the capacity to extend jobless aid using federal funds approved by the March rescue plan.
Economic officials in the White House come from a range of ideological backgrounds, with some having worked for more liberal lawmakers or groups and others having closer connections to centrist groups. Some said it should not be a surprise that there are divergent views on what would happen when the benefits expire, but they added that the real fear among some officials is that the benefit cut could be devastating for families.
The White House denied there were internal divisions or staff dissatisfaction over the expiration in unemployment benefits, with one senior administration official saying there is “unanimity within the team from the president on down” on both the need to protect workers and ensure a robust economic recovery.
Three administration officials said the White House had provided adequate flexibility and resources to states to extend the benefits, if they have high coronavirus case rates and unemployment rates. A White House official also said some states are using relief aid to help workers, with California connecting jobless Americans with other benefit programs, Connecticut using aid for “reemployment bonuses,” and Maine helping them receive reemployment services. The administration officials also pointed to the current 10 million job openings and the 800,000 jobs being created on average per month. That number, however, will be lower after the August jobs report.
“The best thing we can do is provide states with flexibility,” said Jared Bernstein, a member of the White House Council of Economic Advisers. “We believe the rescue plan has done so and we’ve gone a step further and conveyed to them that we’re willing to help them.”
Bernstein added: “Just about one year ago, the non-partisan [Congressional Budget Office[ projected the unemployment rate would now be 8 percent. Today, in a very clear indicator of the effectiveness of the president’s economic policies, we learned that unemployment fell to 5.2 percent.”
Cecilia Rouse, chair of the White House Economic Council, also pointed to “great variation” in state unemployment rates but said the relief plan “ensured that states have ample resources to support their workforces.”
That position has fueled discomfort among some White House allies.
The tensions were apparent on a private phone call on Aug. 19 in which White House National Economic Council officials Daniel Hornung and Nadiya Beckwith-Stanley joined Labor Department official Angela Hanks in briefing a group of liberal activists about allowing states to extend the benefits.
On the call, the Biden aides said the president has always felt that the federal program was meant to be temporary, according to three people who were part of the conversation or briefed on its contents. The administration officials also said states could enact their own benefits extension. This claim prompted some frustration among the advocates on the call, who in the words of one person involved regarded the idea as “totally unrealistic.”
While attendees described the call as civil, some of the activists made clear that they were dissatisfied with the White House strategy, the people said. They also made a concerted plea for the administration to enact long-term reforms to the unemployment insurance system as part of Democrats’ $3.5 trillion reconciliation package — given its relative inaction on the imminent deadline. But multiple people close to the negotiation said there appears to be little momentum for these unemployment reforms in the budget bill, as Democrats struggle to find sufficient funding for what is an already enormous list of social programs.
“If all of these people are going to lose their benefits and nobody is going to put up a fight for it, at the very least the administration needs to turn to the cause of unemployment insurance reform and making the program work as it should,” said Judy Conti, director of government affairs at the National Employment Law Project, a think tank, and a participant in the Aug. 19 call. “This is the biggest benefits cliff in American history.”
A senior administration official said reforming the unemployment system has been a priority of Biden’s since the early days of his presidential campaign.
In another private conversation early in the summer, William Spriggs, chief economist at the AFL-CIO, told officials with the White House Council of Economic Advisers that the administration should immediately challenge the authority of GOP governors who were prematurely cutting off aid. Labor Department officials ultimately concluded they had no ability to do so. Spriggs argued to the administration that they should try even if the courts ultimately sided with Republicans.
“There are people inside the administration who are good economists and know this stuff. They understand the dangers here and the impact on low-wage workers,” Spriggs said in an interview, adding he was not privy to any specific internal deliberations over the matter.
Rachel Deutsch, a worker advocate at the liberal Center for Popular Democracy, added: “There are people in the administration with a lot of expertise about UI who know this is an unprecedented number of people being impacted by the end of a recessionary program … I imagine those folks are quite disturbed and disappointed.”
The White House has rejected the calls of some unemployment advocates to act unilaterally, without Congress. When unemployment benefits ran out last year amid a breakdown in congressional negotiations, the Trump administration raided a disaster relief fund to temporarily finance jobless benefits. Approximately $40 billion remains in that fund now, compared with roughly $77 billion at that time.
Rep. Alexandria Ocasio-Cortez (D-N.Y.) said in an interview that she and other members of the Congressional Progressive Caucus have for months tried pushing the administration to seek their extension, whether unilaterally or through Congress.
“I don’t understand exactly why the decision was made not to do it,” said Andy Stettner, senior fellow for the Century Foundation, a left-leaning think tank. “It could probably last a couple months and be a big deal for as many as 1 to 2 million families.”
A White House official said in a statement that it would be malpractice to repurpose funding necessary to combat hurricanes and wildfires as natural disasters, such as Hurricane Ida, continue to ravage the United States.
“It was irresponsible when the previous administration did it, and it would be irresponsible now,” the White House statement said. “The president is committed to ensuring emergency personnel have all the resources they need to support and rebuild the communities facing life-threatening disasters.”
The administration has faced withering criticism from businesses and Republicans over its previous support for enhanced jobless benefits, which for some low-wage workers amounted to more than their prior incomes. After fighting for unemployment benefits in the $1.9 trillion rescue plan, Biden appeared to pivot this summer amid the uproar. Biden’s remarks at his June news conference took several economic officials in his administration by surprise and signaled a lack of appetite for fighting to extend the benefits at the highest levels of the White House.
At a town hall in Ohio in late July, Biden fielded questions from John Lanni, owner of the Thunderdome Restaurant Group, who complained to the president about difficulty hiring. Biden was sympathetic.
“I think your business and the tourist business is really going to be in a bind for a little while,” Biden responded. Biden maintained that he believes there was no “serious impact” on hiring from unemployment benefits. But, he added: “Let’s assume it did. It’s coming to an end, so it’s not like we’re in a situation where, if that was it and it ends, then we’re going to see John is going to have a problem.”
Biden added: “We’re ending all of those things that are things keeping people from going back to work.”
Deepening the sense that expiration was inevitable was public resistance among centrist Democrats. In early August, Sen. Joe Manchin III (D-W.Va.) told Insider he was “done with extensions” given that “the economy is coming back.” Manchin’s comments have been cited by some administration officials as evidence that the White House would be unable to extend the program, even if it wanted to press Congress on the matter.
Some influential liberal lawmakers also grew quiet on the issue. Senate Budget Chair Bernie Sanders (I-Vt.), focused on the budget bill, has not been vocal about the benefits’ expiration. Sen. Elizabeth Warren (D-Mass.) has also said little about the matter.
But even as the path toward extension narrowed, concerns built inside the administration about the looming benefits lapse.
The delta variant surged across the United States over the summer, affecting economic behavior, making it more dangerous for immunocompromised Americans to return to work, and complicating many parents’ return to the labor market.
A growing body of research by academics respected by the administration has found only a small link between expanded unemployment benefits and employment. Mark Zandi, one of the economists most cited by the administration, said, “There’s just no evidence the supplemental UI has any material impact.” Conservative economists have said these results are premature or based on faulty data.
And the administration’s flailing response to the end of a national eviction moratorium underscored the potential for a similar political firestorm over the jobless benefits. Biden was forced to backtrack amid a furor from liberal allies after initially saying he had no legal means to extend the moratorium, leading to a three-week extension in the ban. In the days following the eviction controversy, White House officials reached out to congressional Democrats to see if there were plans to push an extension in unemployment benefits, one person familiar with the matter said, but the administration’s overall strategy was unclear.
Alessandra Biaggi (D), a New York state senator, said it could cost her state several billion dollars per month to fund unemployment benefits for the 1.6 million New Yorkers on pandemic benefits. New York received $12.6 billion in rescue package funding and almost all of it has already been set aside for other needs, given the economic toll covid exacted on the state. Biaggi’s district includes the Bronx, which has a 13.5 percent unemployment rate and only a 50 percent vaccination rate.
“It’s impossible, frankly,” Biaggi said of the state. “You can’t make something from nothing.”
The political fallout of the expiring benefits is unclear. Marianne Leblanc, 58, an event planner in Las Vegas, has relied on the pandemic unemployment program, but in September she is taking a job that will require her to travel to nine different cities. Leblanc suffers from lupus, an autoimmune disorder that could make her particularly vulnerable to the delta variant. She said she is very worried the coronavirus could kill her, but that she has no choice as her savings have almost entirely disappeared and she would soon not have money for food and her mortgage, or to support her daughter’s college education.
Last year, Leblanc voted for Biden in the presidential election, hoping for an end to the “endless emotional roller-coaster” since the outset of the pandemic. After watching him fail to push for extending the program that has kept her afloat, she is unsure whether she would do so again.
“I expected more out of this man who constantly — during his entire campaign and even in his inaugural speech — stressed he understood what it was like to be in a working class family. I want to work,” Leblanc said. “You can’t stand there and say you’re the child of the Great Depression, but not understand what you’re doing to the population pushing millions of people off a financial cliff.”
Correction: An earlier version of this article misspelled the name of Nadiya Beckwith-Stanley. A previous version also incorrectly said that Labor Department official Daniel Koh was on an Aug. 19 phone call with liberal activists about unemployment benefits. Koh was invited but did not participate in the call. This version of the article has been corrected.