US economy

Democrats pan Republican plan to slash jobless benefits to $200 as 'totally inadequate'

Unemployment assistance, eviction protections and other relief for millions of Americans struggling in an economy cratered by the coronavirus crisis were at stake as White House officials on Monday began fraught negotiations with top Democrats on a new aid package.

Aid runs out on Friday for a $600 weekly jobless benefit that Democrats call a lifeline for out-of-work Americans. Republican want to slash it to $200 a week, saying that the federal bump is too generous on top of state benefits and is discouraging employees from returning to work.

The US Senate’s Republican majority leader, Mitch McConnell, on Monday rolled out a proposal worth around $1tn, amid infighting in his own party and Democrats imploring him to come to the negotiating table.

The Senate’s top Democrat, Chuck Schumer of New York, called McConnell’s proposed relief package “totally inadequate”, at only about a third the size of what House Democrats have put forward.

“It won’t include food assistance for hungry kids whose parents can’t feed them, how hard-hearted, how cruel,” said Schumer.

Nancy Pelosi, the House speaker, added: “Time is running out.”

With the virus death toll climbing and 4.2m infections nationwide, both parties are eager for a deal.

There is widespread agreement that more money is needed for virus testing, to help schools prepare to open at the end of the summer break and to shore up small businesses. Voters are assessing their handling of the virus crisis before the November election. Donald Trump’s Democratic challenger for the White House, Joe Biden, is ahead in many important polls, with just under 100 days to go to election day.

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And the president’s standing is at one of the lowest points of his term, according to a new AP-NORC poll, The Associated Press reported.

Steven Mnuchin, the treasury secretary, and Mark Meadows, the White House chief of staff, worked over the weekend on the GOP proposal and agreed to meet with Pelosi and Schumer at the speaker’s office on Monday evening for talks.

The Republicans come to the negotiating table hobbled by infighting and delays. McConnell said he wanted to hit “pause” on new spending after Congress approved a sweeping $2.2tn relief package in March.

But Pelosi took the opposite approach, swiftly passing a $3tn effort with robust Democratic support. In the intervening months, the crisis deepened.

The GOP proposal unveiled by McConnell on Monday afternoon provides some $105bn to help schools and colleges reopen, new money for virus testing and business benefits, including a fresh round of loans under the Paycheck Protection Program, tax breaks and a sweeping and controversial liability shield from Covid-19-related lawsuits.

Elizabeth Warren, the Massachusetts senator and former candidate for the Democratic nomination for president, slammed McConnell for what she saw as a focus on protecting big business at the expense of those suffering amid the crisis.

The Republican proposal would also provide another round of $1,200 direct payments based on the same formula from the earlier aid bill. People making $75,000 or less would receive the full amount and those making more than $75,000 would receive less, depending on their income. People earning above $100,000 would again not qualify for the payment.

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“Senate Republicans have offered another bold framework to help our nation,” McConnell said as he opened the Senate.

But conservative Republicans quickly broke ranks on McConnell’s plan, arguing the spending was too much and priorities misplaced. Half the Republican senators could vote against the bill, some warned, and their opposition leaves McConnell heading into negotiations with Pelosi without the full force of the Senate majority behind him.

Nancy Pelosi and Chuck Schumer speak to the media in the US Capitol in Washington DC, 23 July 2020.
Nancy Pelosi and Chuck Schumer speak to the media in the US Capitol in Washington DC, 23 July 2020. Photograph: Jim Lo Scalzo/EPA

“The focus of this legislation is wrong,” Texas Republican Senator Ted Cruz, one of the bill’s most vocal opponents, told reporters at the Capitol. “Our priority, our objective, should be restarting the economy.”

As bipartisan talks unfold, the White House is now suggesting a narrower relief package may be all that’s possible with Friday’s approaching deadlines.

The $600 weekly jobless benefits boost, which was approved as part of the March aid package, officially expires 31 July, but because of the way states process unemployment payments, the cutoff was effectively Saturday.

Under the GOP proposal, the jobless boost would be reduced to $200 a week for two months and phased out to a new system that ensures no more than 70% of an employee’s previous pay. States could request an additional two months, if needed, to make the transition.

Democrats pointed to an assessment from the economist Mark Zandi, who called it a “poor policy choice”. Zandi said that if the GOP proposal became law, nearly 1m jobs would be lost by year’s end and the unemployment rate, now above 11%, would climb more than half a percentage point.

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Economists widely see signs of trouble in the economy, which showed an uptick in the spring as some states eased stay-home orders and businesses reopened, but it now faces fresh turmoil with a prolonged virus crisis as states clamp down again.

Friday is also the end of a federal eviction moratorium on millions of rental units that the White House said it wants to extend in some fashion.

At the same time, budget watchers are wary of the rising debt load as Washington piles on unprecedented sums in trying to contain the pandemic and economic fallout.


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