The good news: The Senate GOP and the White House appear to have finally coalesced behind a Phase 4 proposal. The bad news: It still appears that they haven’t done much to solve the underlying problems of Phase 3’s CARES Act. In part, that failure stems from the failure of states to retune their unemployment-benefit systems, but that still leaves the Republican proposal where it could have been two or three weeks ago.
Jazz hinted earlier that the White House and Mitch McConnell would move forward with a patch to the federal unemployment benefit that simply capped the benefit lower than its current $600 per week, rather than use a formula to adjust the benefit against previous earnings. The Washington Post reported shortly afterward that the cap would be lowered to $200 per week in an attempt to make sure no one makes more on unemployment than they would from working a job, removing one disincentive for employment:
Senate Republicans will propose cutting weekly emergency unemployment benefits from $600 to $200 until states can bring a more complicated program online, according to two people familiar with the plan granted anonymity to share details that had not yet been released.
The proposal will come as part of a broader $1 trillion stimulus bill aimed at dealing with the economic fallout caused by the coronavirus. Republicans plan to release later on Monday and that they hope to use during negotiations with Democrats. The $600 weekly jobless benefit expires in a few days, and House Democrats have proposed extending it until January because the unemployment rate remains very high.
Senate Republicans want to reduce the $600 payment to $200 until states can implement a new approach that would pay workers 70 percent of the income they collected before they lost their jobs. The states are supposed to phase in the new formula within two months.
It’s still unclear why it took so long to settle on this change, and how they arrived at the $200 per week. The Post’s reporters state that “many state unemployment systems” are unable to apply a formula to ensure a cap at 100% of previous earnings. We knew that in April, however, and states have had little opportunity or resources to shift to revamping their systems in the COVID-19 pandemic.
With that in mind, shifting to a lower cap is an easy call. It’s so easy that people have been proposing it since the CARES Act passed with the disincentive already well-known and identified. It’s the kind of fix that should have been on the table long before Phase 4 development started. Waiting until the last moment before dropping their version of it — and delaying that version until four days before the expiration of the Phase 3 bill — looks less strategic and more like disarray.
Letting it expire first might have been strategic, at least in intent — a way to force Democrats to negotiate over the benefit:
Republicans had hoped to release their official proposal as soon as last Thursday, but that did not happen as the clock ticked on the weekly unemployment boost that has kept many Americans afloat during the worst economic crisis since the Great Depression.
Senate Majority Leader Mitch McConnell said the White House had requested more time to “review the fine details.”
Mnuchin said Sunday that he hopes Congress can work in a bipartisan manner to approve the GOP proposal, which is expected to have another round of $1,200 stimulus checks for Americans and liability protections for businesses and schools among other provisions.
It also will modify the federal unemployment insurance supplement to include about 70% wage replacement for individuals, he said, instead of the $600 boost in weekly benefits for all recipients. That benefit, which was a key component of the $2.2 trillion CARES Act, came to an end over the weekend.
“We can move very quickly with the Democrats on these issues. We’ve moved quickly before and I see no reason why we can’t move quickly again. And if there are issues that take longer, we’ll deal with those as well,” Mnuchin said.
Once it expired, perhaps Republicans thought they’d be negotiating from scratch. Maybe it will pan out, but that strategy smells a little like holding the unemployed hostage for a week or two, with the intent to blame Democrats for any missing paychecks. You can bet that Democrats will paint it that way, especially since they passed a Phase 4 a couple of weeks ago that extended the status quo on jobless benefits to December. And if Democrats paint it that way, so will the media, especially since the cap now proposed by Republicans could easily have been included at any point in this process.
Roll Call notes that the dynamic has shifted as we get closer to the election. Parsimony won’t win many votes in November, or so Shawn Zeller believes, and Democrats will play hardball in testing that theory out:
The CARES Act passed quickly, with near unanimity. Don’t expect it to be so easy this time. Democrats sense political advantage. CQ Roll Call’s Capitol Insiders Survey of congressional aides this month found that nearly two-thirds of Democratic staffers thought the virus would benefit their side, politically, in November. Only 6 percent of the GOP respondents thought it would help theirs.
No surprise then that Democratic leaders are driving a tough bargain this time around, demanding that the Senate take up the nearly $3.5 trillion measure the House passed in May, which Democrats call the Heroes Act, to continue unemployment relief, mail another round of $1,200 checks to middle- and lower-income Americans, bolster virus testing and tracing, and bail out states hurt by shrunken sales tax revenue.
They’re also casting aspersions on the GOP proposal being assembled by Senate Majority Leader Mitch McConnell of Kentucky and aides to President Donald Trump. The “Republican bill will not come close, not even come close, to meeting the moment of this great crisis,” said Senate Minority Leader Charles E. Schumer, arguing that the $1 trillion that Republicans propose to spend is nowhere near enough. A day later, the New York Democrat said his party was “united, House and Senate, behind the Heroes bill.”
Democrats also brazenly assailed McConnell’s “red line,” new liability protections for reopening businesses, schools and health care providers, arguing that they were not needed and would embolden businesses to take risks with people’s lives.
In the end, the Senate GOP will have to give up something in order to get a Phase 4 bill passed. Democrats probably value state aid more than the bonus payments, but they’ll play tough with those as well if they can squeeze Senate Republicans. The GOP wants liability protections more than saving money, so don’t expect them to hold the line at a trillion dollars this time around. They want businesses to reopen without threats of lawsuits in order to boost the economy, so they will open their wallets to get that.
Republicans also know that they will need to get this Band-Aid ripped off quickly, too. Bet on a deal by the end of the week, with Donald Trump throwing in with anything on which Congress can agree. The sooner the cash goes out, the better it is for everyone in Washington DC, but Trump most of all.