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Millions of Americans face unemployment cash cliff with no sign of congressional deal

A combination of unemployment benefits, cash payments to families and assistance to schools could form a final agreement.
Speaker of the House Nancy Pelosi and Senate Majority Leader Mitch McConnell arrive at the Capitol on June 30, 2020.
House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Mitch McConnell, R-Ky., arrive at the Capitol on June 30.Tom Williams / CQ Roll Call via AP

WASHINGTON — Millions of Americans' unemployment payments will abruptly shrink if Congress doesn't find a solution in the next week to extend emergency benefits created in the early days of the coronavirus pandemic.

Democrats have one proposal and Republicans promise another, but with no sign of negotiations, chances are slim that Congress will pass a bill before the added $600-a-week unemployment payments expire.

More than 32 million Americans claimed some form of jobless benefits at the end of June, the Labor Department said Thursday. The unemployment rate was 11.1 percent last month. And the pandemic shows no sign of waning, with new hot spots emerging across the country and governors shuttering businesses.

For Senate Majority Leader Mitch McConnell, R-Ky., the task of finding a deal may be daunting.

McConnell faces a difficult balancing act: He must appease conservatives wary of new spending, but he also must address the needs of politically vulnerable Republicans facing difficult re-election prospects who are eager to return home in August with accomplishments.

And he needs 60 votes to advance the bill, which means at least seven Democrats must agree.

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Any deal will have to weigh at least four elements: unemployment benefits, possible cash payments to families, funding for schools and assistance to state and local governments.

House Speaker Nancy Pelosi, D-Calif., is pushing a $3.4 trillion package that would provide payments to families, continue boosted unemployment benefits and help states whose tax revenues have fallen.

McConnell said he'll unveil his own bill next week, which Republicans expect to cost more than $1 trillion. His office is talking with the Trump administration and some Senate Republicans, according to officials familiar with the discussions who requested anonymity to describe internal conversations.

McConnell hasn't provided the details of his proposal, but he has said he will focus on funding to get children back to school, lower the unemployment rate and help companies that are beginning to reopen by providing liability protections.

Unemployment payments

For many anxious Americans, a priority is the boosted unemployment payments.

States provide unemployment benefits, but when the economy shuttered in March to stop the spread of the coronavirus, Congress provided federal funding for an extra $600 a week, hoping to avoid a collapse of the economy and ease financial pressure on workers to look for jobs in a pandemic.

But now, the drumbeat of opposition is growing in the White House.

"We can't allow those benefits to be extended, or we're not going to have a jobs recovery in the fall," said Stephen Moore, a conservative economist who has advised the White House.

Image: Unemployment line
Hundreds of people line up outside a Kentucky Career Center hoping to find assistance with their unemployment claims in Frankfort on June 18.Bryan Woolston / Reuters file

Conservatives like Moore are calling on Congress to eliminate the federal bonus entirely and let states determine unemployment payments. But he said there are discussions about that, because some Republicans want to replace it with a smaller benefit, while others want to peg it to a percentage of workers' pre-pandemic earnings.

"I guarantee you it's not going to be $600," Moore said. "That number is negotiable."

McConnell backed the $600-a-week jobless bonus in March, but in an appearance Tuesday in Kentucky, he called the payments "a mistake." He also appeared to leave room for negotiation, saying he could support federal benefits that didn't top workers' previous salaries.

The details are still being negotiated, two GOP aides said.

"We expect the Senate will act on this issue when it returns," Michael Zona, a spokesman for Finance Committee Chairman Chuck Grassley, R-Iowa, said in an email.

The U.S. Chamber of Commerce, the powerful business lobbying group that is influential among Senate Republicans, said in a letter Thursday that "completely withdrawing the $600 risks significant individual hardship as well as a drop in consumption that holds back economic recovery."

But the chamber said it does want the payments to change. It called for payments to cover 80 percent to 90 percent of people's previous wages, capped at $400 a week. The payments would be lowered when a state's unemployment rate is under 15 percent and eliminated when it falls below 7 percent.

Senate Democrats' proposal would extend the $600, which would be reduced by $100 a week until a state's unemployment rate falls below 6 percent.

Pelosi is making the public case to preserve the bonus as new coronavirus cases break daily records and force numerous states to pause or reverse their reopening plans.

"They make a big fuss over $600 when they were willing to give $2 trillion in tax breaks at a cost of $2 trillion to the national debt — to give tax breaks to their friends," she said Wednesday on MSNBC's "All In With Chris Hayes." "People need the $600."

'It will be costly'

Pelosi indicated that there is room for negotiation on unemployment insurance. She told reporters Wednesday that she will look at the benefit and another round of direct payments in totality to determine where she could compromise with Senate Republicans.

"We'll see what the entire package looks like," she said. The Democratic bill would provide families of four with up to $4,800. The CARES Act provided up to $3,400 for families of four.

McConnell indicated that he's open to another round of direct payments, but, unlike Pelosi, he wants it to be more targeted, potentially to those making less than $40,000 a year. In the CARES Act, people making up to $99,000 a year received the payment.

Image: Nancy Pelosi
House Speaker Nancy Pelosi, D-Calif., speaks at a news conference on Capitol Hill on June 26.Carolyn Kaster / AP

Most lawmakers agree that to reopen, schools will need more money to accommodate personal protective equipment, staggered schedules, extra sanitation and more.

"There's going to be a heavy emphasis in the bill I'm going to unfold next week on education. I know it will be costly," McConnell said. "We need to find a way to safely get back to work, and we feel, I feel, like the federal government will have to play a financial role in helping to make that possible."

Senate Republicans are discussing whether to make school aid contingent on whether schools offer in-person classes, Sen. Roy Blunt, R-Mo., said Thursday. President Donald Trump has pushed to cut off funding for schools that don't reopen. He can't do that by himself, but Congress can offer schools incentives to reopen with more money.

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Another unsettled point is whether the federal government should provide pandemic relief to state and local governments,

House Democrats are proposing $1 trillion in government aid, but Republicans have resisted the funding, with some pushing for a small price tag.

Senate Democrats are already showing signs of chafing, saying Republicans aren't actively negotiating with them even though Democratic votes will be needed.

"We've heard nothing from the Republicans on unemployment insurance or state and local aid. They're just pursuing their own bill," a senior Senate Democratic aide said.

"The stakes are just too high for them to say it's our way or we're going home," the aide said.