Update on negotiations over the next round of Covid-19 relief
The $600 federal unemployment benefit expired on Friday. Officials in Washington have yet to reach a compromise on a second round of Covid-19 relief as the ranks of the unemployed swell and many await news on another $1,200 stimulus check.
Over the weekend, House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer met with Treasury Secretary Steve Mnuchin and chief of staff Mark Meadows to continue negotiations. While no deal was reached, Schumer did sound a cautiously optimistic note: “It was the best discussions we’ve had so far — I’d call it progress but a ways to go.”
On Face the Nation, Meadows agreed with Schumer’s characterization of the discussions, and agreed that “we still have a long way to go.” Referring to the discussions on Saturday, he said: “Yesterday was a step in the right direction. Our staffs are actually working today. We’ll be meeting again tomorrow. But I’m not optimistic that there will be a solution in the very near term.”
Here’s the latest on the negotiations over a second stimulus check and additional federal unemployment benefits.
$1,200 Stimulus Check
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In an interview on ABC’s This Week, Mnuchin noted that there is bipartisan support for some aspects of the next round of Covid-19 relief. He specifically mentioned the Payroll Protection Program and stimulus checks (Economic Impact Payments).
There are differences between the HEROES Act, introduced by House Democrats, and the HEALS Act, introduced by Senate Republicans, concerning the next round of stimulus checks. For example, the HEROES Act extends $1,200 payments to taxpayers and their dependents regardless of age, subject to income eligibility limits. The HEALS Act proposes the same $1,200 payment for eligible individuals, keeps rebates for dependents at $500, but also removes the age restriction.
These differences notwithstanding, Mnuchin’s comments suggest that the $1,200 stimulus check is not the sticking point to an agreement.
$600 Unemployment Benefit
The key roadblock to an agreement appears to be the $600 unemployment benefit. Under the CARES Act, the federal government paid a flat $600 weekly benefit in addition to state Unemployment Insurance (UI). In his interview on ABC’s This Week, Mnuchin noted that the initial $600 benefit was structured that way to address the emergency situation brought about by Covid-19 and because of limitations of state UI computer systems.
Some UI systems may not be capable of processing federal benefits based on a percentage of an individual’s prior income. The HEALS Act allocated $2 billion to assist states in upgrading their UI systems.
According to Mnuchin, he and Meadows made three or four different proposals to the Democratic leaders, all of which were presumably rejected: “I’m not going to make public comments, but Mark Meadows and I have made three or four different offers that deal with the enhanced unemployment.”
For their part, the Democrats do not seem to be budging from the $600 benefit in the HEROES Act. Last week, House Majority Leader Steny Hoyer suggested that Democrats might be willing to negotiate on the $600 benefit: “To say that $600 or nothing, no, that’s not where we are. We’re prepared to discuss this. But we’re also not prepared, however, to let down the American people, to let down the states, the cities, the local governments who hire people, who are meeting this pandemic’s crisis, including health personnel.”
His comments, however, were contradicted by Schumer, who said, “[we] don’t believe that.” Pelosi echoed this view. On ABC’s This Week, she was asked about Hoyer’s comments and whether she might consider something less than $600. “No, the fact is, the amount of money that is given as an enhancement for unemployment insurance should relate to the rate of unemployment. So as that goes down, you can consider something less than the $600, but in this agreement it’s $600.”
Does a $600 Benefit Keep People from Working
One issue that has surfaced is whether a $600 weekly federal unemployment benefit creates a disincentive for the unemployed to find work. Mnuchin on ABC’s This Week said that it does. He was asked about a Yale study (here) that found no evidence that recipients of more generous benefits were less likely to return to work.
In response, Mnuchin suggested he disagreed with the study, and he pointed to a Chicago study (here) that found that two-thirds of unemployed workers made more on UI with the $600 federal benefit than they made working. Twenty percent made twice as much.
Pelosi described the suggestion that the $600 benefit encouraged people to stay home as condescending, adding that to “disrespect their motivation — [it’s] so amazing how insistent the Republicans are about a working family and their $600, and how cavalier they are about other money that is going out.”
She has also stressed the need for certainty, which she believes a longer term relief package would provide:
Perhaps the central issue here isn’t about worker incentives, as important as they are. Rather, the key question may be whether unemployment benefits should be structured in a way that pays the unemployed more than their prior income.
It was this point that Mnuchin stressed on ABC’s This Week: “I think as you said, Steny Hoyer and others understand that unemployment is supposed to be wage replacement, so it should be tied to some percentage of wages.”