US economy

Democrats rebuff plan for short-term extension of jobless benefits

Congressional Democrats have rebuffed a White House proposal for a short-term extension of emergency jobless benefits due to expire on Friday, as tensions grow over a new rescue package for the US economy.

The impasse is leaving millions of Americans facing the immediate prospect of a big dip in income, with the coronavirus pandemic driving a sharp rise in unemployment in the world’s largest economy.

At the end of a late negotiating session on Thursday, Trump administration and Democratic negotiators remained deeply divided over a new fiscal agreement that would add to the $3tn in government aid passed by Congress since the beginning of the pandemic.

“We had a long discussion and we just don’t think they understand the gravity of the problem,” Chuck Schumer, the top Democrat in the Senate, said.

In May, Democrats in the House of Representatives passed legislation to plough $3tn in additional spending into the economy, including an extension of $600 per week in federal unemployment benefits to workers introduced at the outset of the crisis.

Republicans were sceptical of the plan until a surge in coronavirus cases across the sunbelt states in recent weeks led them and the White House to grudgingly accept the need for at least $1tn in fiscal support.

But Republicans want to slash emergency unemployment benefits initially to $200 per week, which Democrats deem unacceptable.

This week, the White House proposed a short extension of the jobless benefit programme to give more time for negotiations, but this was rejected by Democrats.

“What is a one-week extension good for? The one-week extension is good if you have a bill, and you’re working it out, the details [and] the writing of it,” Nancy Pelosi, the House speaker said. “It’s worthless unless you are using it for a purpose.”

In a tweet on Thursday night, Mark Meadows, the White House chief of staff, attacked the Democratic leaders. “What we’re seeing is clear. This is a politically motivated party that won’t take ‘yes’ for an answer,” he said.

The Republican-controlled Senate adjourned until Monday afternoon, meaning the new stimulus is highly unlikely to pass before the enhanced jobless benefits expire on July 31.

The prospect of such a sudden withdrawal of stimulus in the middle of a deep economic downturn has raised fears of another drop in disposable income and consumption, and of many households battling desperately to pay for basic needs.

Apart from unemployment benefits, Democrats and Republicans are also split on funding for state and local governments. Republicans are resisting a Democrat proposal for more than $900bn in support.



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