The Senate left Washington yesterday without putting its plan for the next coronavirus aid package on the table. That guarantees, in case you had any doubt, that the enhanced $600 a week unemployment benefit that, for practical purposes, expires with today’s payment, will lapse without any action. About 20 million unemployed workers received the enhanced federal benefit.
The problems with getting some legislation out of Republican Majority Leader Mitch McConnell’s pocket were at least two fold.
First, the Republican majority in the Senate could not agree on its proposal for renewing the enhanced benefits program. Senate Republicans continued to insist that the benefit to cut below the expiring $600 level, but they could not agree on the size of the cut. Some wanted to cut the benefit to a flat payment of $200 a week. President Donald Trump and Treasury Secretary Steve Mnuchin, in charge of negioating with Congress along White House chief of staff Mark Meadowns, said the the White House goal was to have total unemployment benefits total 70% of a workers prior wages. (State unemployment programs typically pay about 45% of prior wages so the federal enhancement would amount to an additional 25% or so in weekly benefits.)
And second, it’s generally agreed on both sides of the partisan aisle that state unemployment systems, that have struggled to handle the huge surge in claims for unemployment because of the pandemic, would simply be unable to reset their systems to calculate worker benefits in a plan attached to prior wages plus a federal enhancement. That’s one reason that Congress passed a flat $600 a week payment.
You don’t have to believe the Democrats on this one. Back in March when Congress initially discussed how to increase unemployment benefits (with the goal then being to match 100% of a worker’s prior wages) Trump Administration Labor Secretary Eugene Scalia warned that state unemployment systems could not handle the complexity of matching every individual’s unemployment benefits to his or her prior income, according to Sen. Ron Wyden (D-Oregon), who led those negotiations. “Scalia said, ‘It can’t be done,’ ” Wyden said in an interview with the Washington Post. “We have not seen a single piece of paper describing how this would be administered without the downsides Scalia pointed out months ago.” The National Association of State Workforce Agencies recently said that it would take one to four weeks for most states even to change the bonus amount from $600 to some other amount, according to Wyden’s office.
Mnuchin and Meadows have talked of some transition mechanism, perhaps an initial flat $200 a week enhanced payment, or a repeat of the $1200 a person stimulus payment included in earlier coronavirus legislation. But the earliest the Senate can begin debating any package will be next week–and even that time table is optimistic. Congress is scheduled to go into recess again on August 10 and not to return until September 7.
The delay on a new stimulus measures and coronavirus aid means that states and cities will continue to layoff workers as they face huge budget shortfalls, and testing efforts will continue to collapse without new funding, and economically stressed families will face renewed rent payments as the federal rent moratorium expires. Estimates say as many as 20% of renters could face eviction by September. Estimates are that 12 million renters have been protected from eviction during the four-months of the program. About 20% of the 110 million American leaving in rental housing are at risk of eviction by Sept. 30, according to an analysis by the Covid-19 Eviction Defense Project.
And meanwhile, the indications from the weekly initial claims for unemployment report, from credit card spending, and for OpenTable.com’s data on restaurant bookings say the U.S. economy is facing the prospect of a slide into a double dip recession in August.