Coronavirus stimulus: GOP floats lowering extra unemployment insurance to $100 from $600
Republicans are discussing reducing the extra weekly unemployment benefits for jobless Americans by more than 80% through the end of the year as part of its next stimulus package.
Until a deal can be struck, though, the GOP is also considering a temporary extension of at least some of those benefits, which expire at the end of the month.
“If we can't get it all done by next week, we cannot allow there to be a cliff in unemployment insurance given we're still about 11% unemployment, about 17 million Americans out of work some through no fault of their own," Sen. Rob Portman (R-OH) told reporters on Wednesday. “So I think we should do something.”
When asked, Mark Meadows, the White House chief of staff, said the administration wants a long-term solution rather than a short-term patch, according to Politico’s Jake Sherman.
As a long-term plan, the GOP is floating $400 a month in extra benefits — or roughly $100 a week — CNBC reported. That’s down from the additional $600 per week that unemployed workers are now getting along with their regular state benefits under the CARES Act. The $600 weekly bonus expires on July 31.
Democrats favor making the extra $600-per-week available until next year.
Many Republicans are against extending the full $600, saying it is a disincentive for Americans to return to work, especially for those who earn more while unemployed. Critics include President Donald Trump, White House advisor Larry Kudlow, and Treasury Secretary Steven Mnuchin.
An unintended side effect of the extra benefits is that many lower-earning workers are receiving more income on unemployment than from their usual wages. Two in 3 unemployed Americans were earning more with the additional $600 per week than when they were employed, according to a paper from Becker Friedman Institute at the University of Chicago.
A temporary extension?
While Mnuchin said on Tuesday that they’re expecting a new stimulus deal by the end of July, some see a deal unlikely to be reached before the benefits lapse. Asked whether he anticipates a bill to be passed by the end of the month, Senate Majority Leader Mitch McConnell (R-KY) said he doesn't expect that to happen, according to Politico’s Jake Sherman.
In between the passage of the bill and the expiration of the benefits, Republican lawmakers are looking at a short-term unemployment extension.
Portman said Congress should try to pass the relief package by the end of the month, but there may be a need for interim measures if they fail to do so.
Read more: Do you have to pay taxes on unemployment benefits?
If not extended, the additional $600 of unemployment benefits will lead to an immediate pay cut for jobless Americans that ranges from 52% to 72%, according to an analysis by Evercore ISI provided to Yahoo Money.
Sen. John Barrasso (R-WY) confirmed that Senate Republicans and the White House are discussing the possibility of a short-term extension of the benefits but “the question is length and price in total dollars,” he said, according to HuffPost’s Igor Bobic.
Other lawmakers like Sen. Marco Rubio (R-FL) said they may approve the extension depending on its duration, according to HuffPost’s Igor Bobic.
“It would depend on how long that extension is for,” Rubio said. “If it’s for a few more weeks to get us to Aug. 6, that might be something I’d consider.”
Denitsa is a writer for Yahoo Finance and Cashay, a new personal finance website. Follow her on Twitter @denitsa_tsekova.
Rich Americans' pullback in spending is hurting the economic recovery
'Nobody can survive on that': Jobless Americans fear end of extra unemployment insurance
Read more personal finance information, news, and tips on Cashay
Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, SmartNews, LinkedIn, YouTube, and Reddit.