“We are making a profoundly fundamental mistake by not re-authorizing all of our unemployment insurance programs,” Rep. Don Beyer (D-Va.), Vice chairman of the Joint Economic Committee of Congress, told POLITICO. “If we take the money away, that’s what sustained consumer spending and people’s ability to get through.”
Pandemic Unemployment Assistance, a new program that provides unemployment benefits to gig workers and others traditionally not eligible for help, and Pandemic Emergency Unemployment Compensation, which extends state unemployment benefits for an additional 13 weeks, both run at the end of the year out . Another program – Federal Pandemic Unemployment Compensation – provided additional unemployment benefits of $ 600 per week for four months before it expired on July 31, and the Democrats are pushing to restore it.
These workers “don’t know how they’re going to make it through the month,” said Rep. Steven Horsford (D-N.V.). “I have nearly 200,000 Nevadans contacting my office regularly and other members of our delegation to express their concern about the situation.”
States ”have very few options. And that is why only the federal government can really help at this critical time. “
With the week 30 pandemic, millions of Americans have been unemployed for more than six months. Regular government benefits typically only last 26 weeks, which means that many workers take the extra weeks of benefits funded by the CARES law.
More than 352,000 workers have already used up the 13-week compensation for unemployment in the event of pandemics created as part of the March package. Now they rely on an additional federal safety net program known as “Enhanced Benefits” that allows states to offer an additional 13 to 20 weeks of unemployment benefits during periods of high unemployment.
The resulting shock to states and workers if these programs were to expire could trigger a downward spiral as Americans can no longer buy goods or pay rent, economists and lawmakers warn.
“It’s going to have so many reverberations,” said Rep. Judy Chu (D-Calif.). “We haven’t even seen the full extent yet.”
There are currently 46 states and territories in Extended Benefits and more workers are expected to join this program as they take advantage of the 39 weeks of unemployment benefits provided for in the CARES Act. Without expanding coronavirus aid, states may no longer be able to afford to participate. They have to share 50 percent of the tab for advanced benefits. The CARES Act provided full federal funding for the program, but only until December 31st.
Republicans opposed an expansion of the tightened pandemic unemployment benefit last December, arguing that the benefits brought people more unemployment than employment and stole the incentive to return to work. They also point out that states have not even tapped into the $ 150 billion that Congress earmarked for them in the CARES bill.
With historically high numbers of people displaced from work, states are already struggling to pay regular unemployment benefits. Several states are forced to borrow from a federal trust fund and may face a cliff of their own.
Twenty-one states have borrowed approximately $ 36 billion from the Treasury in total. according to the latest data. Although these states have not yet been required to pay interest on the loans, they are set to begin on January 1 – and may soon be forced to cut costs.
“If you bring the states into a big financial bond [unemployment insurance]They are withdrawing access immediately, ”said Morna Miller, human resources director for the Subcommittee on Workers and Families. “Because the only way to pay benefits when they run out of money is to make it harder for people to claim and receive them.”
Another option could be to levy taxes on companies, many of which are already struggling to stay afloat. In fact, some states have automatic triggers that levy taxes once their unemployment insurance trust funds are fully depleted.
Doing so “would be incredibly damaging to the many small businesses that are struggling to survive in pandemic conditions,” said James Nash, spokesman for the National Governors Association. It could also lead to more unemployment if companies have to cut jobs.
As it stands, an updated version of the Democratically Supported Heroes Act that the House passed earlier this month would only extend the provisions until January 31 – weeks into a new presidential term and session of Congress.
That would still leave little room for a new Congress to expand the benefits before they expire. The inauguration of the President is scheduled for January 20, 2021. A new congress has a few weeks to work out another deal.
“The January 31st end date was a hero-wide rule set by the speaker’s office. It should essentially give us a couple of weeks for the next administration and Congress so that things can be expanded, fixed or addressed in the future before anyone is cut off, “said a Democratic political advisor involved in the drafting process. The idea was to “put the cliff close enough so that Republicans could agree to the package, but enough time to be ready.”
Another factor was a reluctance to admit that the recession could still be in full swing through 2021, the aide said. “People are not ready to pay unemployment benefits in February because they don’t want to admit that many people will be unemployed in February.”
Some Conservatives say they are opposed to the Democrats’ sweeping economic relief plans because a one-size-fits-all approach to the economy may no longer help. Rachel Greszler of the Heritage Foundation notes that unemployment rates vary widely across the country. In August, the rate was 4 percent in Nebraska and 13.2 percent in Nevada.
“Now is the time for state and local decision makers to think about their unique living components and what is happening in their economies,” said Greszler. States still have funds from the CARES bill to adjust the benefits they offer after the federal programs expire, she said.
Jared Walczak, vice president of government projects at the tax foundation, said states had been holding on to the $ 150 billion Congress allocated in March in hopes that certain costs, such as unemployment benefits, would eventually be funded in a future relief package
“There are still many states that are sitting on money from the Coronavirus Relief Fund that they are currently allowed to spend on unemployment benefits and not,” said Walczak.
For Beyer, the debate is not about stimulating the economy, but about keeping people afloat.
“This is not a real incentive, but rather a lifesaver,” he said. “It’s not that we’re trying to get the economy going again. We’re just trying to help people who have been badly hurt by the economy get through without an eviction without hunger.”
Katherine Landergan contributed to this report.