Meadows: We offered an extension of COVID-19 unemployment benefits, but Pelosi and Schumer refused

The blame game has commenced in earnest now that federal unemployment benefits will expire without any hint of extension or renewal. “What we’re seeing,” chief of staff Mark Meadows complained this morning, “is politics as usual from Democrats up on Capitol Hill.” Late yesterday, the White House proposed an extension of the current benefit of $600 per week for at least another seven days to allow for the potential of more negotiations, Meadows claimed.

The answer from Democrats? Hard pass. That could leave Democrats in a delicate political position as those benefits stop arriving to the jobless, as they are refusing on the basis of wanting more overall money in the comprehensive Phase 4 relief bill. Refusing even a short-term extension for more negotiations puts Democrats in the position of hostage-takers — a bit of a flip from Mitch McConnell’s own strategy earlier this week:

With aid expiring, the White House offered a short-term extension Thursday of a $600 weekly unemployment benefit that has helped keep families and the economy afloat during the COVID-19 pandemic, but Democrats rejected it, saying President Donald Trump’s team failed to grasp the severity of the crisis.

Democratic leaders panned the idea in late-night talks at the Capitol, opting to keep the pressure on for a more sweeping bill that would deliver aid to state and local governments, help for the poor and funding for schools and colleges to address the pandemic. Without action, the benefit runs out Friday.

“They want to do one small thing that won’t solve the problem,” said top Senate Democrat Chuck Schumer after meeting with Treasury Secretary Steven Mnuchin and White House chief of staff Mark Meadows.

“We have to have a bill, but they just don’t realize how big it has to be,” said House Speaker Nancy Pelosi, D-Calif.

Nevertheless, Senate Republicans plan to persist, according to Time Magazine:

Senate Republicans moved forward with a plan to set up votes on extending lapsed supplemental unemployment insurance with President Donald Trump’s endorsement, as talks on a broader pandemic relief package made little progress.

The GOP gambit is almost certain to fail in the face of opposition from Democrats in the Senate and House, who say the jobless measure must be part of comprehensive stimulus legislation. But it will give Senate Republicans a chance to go on the record as saying they tried to act as supplemental jobless aid for millions of Americans expired.

This looks like brinksmanship squared, and a very big risk for Democrats. It’s not as if Democrats are holding out for more benefits to individuals; Democrats are holding out for big block-grant cash for states and schools, which will go toward boosting their employee-union constituencies, as well as to block liability protections to help their trial-lawyer allies. Whatever the merits of those goals are, making the jobless go without federal benefits at all even in a short extension at current levels is a dramatically cynical step.

Both parties are in general agreement on individual benefits anyway, although Republicans want to scale back the $600 per week to $200 per week. There is also agreement on another round of stimulus payments at least at the same level as the first round, and Donald Trump even suggested boosting the payouts:

President Donald Trump says he wants the next coronavirus relief package to be “very generous” with direct stimulus payments to Americans that are potentially more than $1,200.

“It may go higher than that, actually,” Trump said in an interview on Wednesday with ABC affiliate KMID in Texas during a trip to the state.

“I’d like to see it be very high because I love the people,” he said. “I want the people to get it.”

The president didn’t elaborate on how much he’s eyeing for the direct payments.

Both sides might feel some pressure to move on this soon, however. Today’s report on consumer spending in June took the edge off of yesterday’s expectedly disastrous Q2 GDP report, and showed that momentum continued to build into Q3 for some level of recovery:

American consumers increased their spending in June by a solid 5.6%, helping regain some of record plunge that occurred after the coronavirus struck hard in March and paralyzed the economy. But the virus’ resurgence in much of the country could impede further gains.

Last month’s rise in consumer spending followed a seasonally adjusted 8.5% surge in May after spending had plunged the previous two months when the pandemic shuttered businesses, caused tens of millions of layoffs and sent the economy into a recession. So deep was the pullback in the spring that even with two months of gains, consumer spending was still down at a record annual rate of 34.6% in the April-June quarter.

Cutting off those benefits altogether might depress consumer spending again next month, which will end up costing even more jobs. The issue of disincentives provided by the too-generous federal benefit mattered more in staffing in May and June than it did in July, as states and localities re-imposed more limitations on business and commerce. The only way to ensure continued employment is to keep those businesses operating, and that means more cash for PPP and better resources targeting testing and treatment.

In other words, all sides have a big stake in getting Phase 4 passed in some form. Only in Washington could that situation lead to a break in talks and a refusal to extend benefits to constituents.

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