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 under the new GOP plan, though it’s unclear how cumbersome that process could prove to be.
Many state unemployment systems are expected to have difficulty implementing the more targeted program, so the $200 weekly payment would be designed to serve as a bridge until the other changes are made. The $200 would come on top of whatever unemployment benefits states already pay, which vary but generally replace 45 percent of a worker’s wages before they lost their job.
The new plan was discussed on an internal call with congressional Republican staffers on Monday, one of the people said. White House officials, Republican lawmakers and some business executives have complained that the $600 weekly payment has created a situation where some Americans are paid more to stay home than to return to their jobs.
But Democrats have countered that the money serves as an emergency cushion for millions of Americans who have been displaced by the labor market’s sudden changes, particularly when many states are reversing reopening plans.
The late afternoon rollout of the GOP legislation will come after Treasury Secretary Steven Mnuchin and White House Chief of Staff Mark Meadows spent the weekend on Capitol Hill negotiating final language with key Senate aides. It will be the second try for Senate Majority Leader Mitch McConnell (R-Ky.), who had planned to unveil the bill last Thursday. That was canceled at the last minute amid disputes over language on unemployment insurance and other issues.
In addition to the reduced unemployment benefits the legislation is expected to include a new round of $1,200 checks to individual Americans, billions of dollars for schools with some of the money aimed at helping classrooms reopen, and a five-year liability shield for businesses, health-care providers and others.
The legislation also includes at least $100 billion more for the small-business Paycheck Protection Program and is expected to extend a limited moratorium on evictions. It does not contain any new money for state and local governments — a key Democratic demand — but instead gives state and local leaders additional flexibility in spending the $150 billion approved in the Cares Act in March.
Democrats, who have rallied around a $3 trillion House bill passed in May, attacked Republicans Monday over the continued delays.
“We have unemployment running out, we have renter protection running out, we have state and local governments going into a new month and won’t have the money and will lay off thousands and thousands of people,” Senate Minority Leader Charles E. Schumer (D-N.Y.) said Monday morning on MSNBC. “We’re at all these cliffs and we still at this very moment don’t have a plan from the Republicans. We want to sit down and negotiate. But you can’t negotiate with a ghost.”
Given the difficulty of reaching agreement on the multiple contentious issues at play, Meadows and Mnuchin suggested over the weekend that Congress might need to pass a narrow bill including just the unemployment insurance, schools money and liability provisions.
Democrats have rejected that approach, and McConnell has yet to publicly embrace it, either.
The legislation will exclude the payroll tax cut President Trump had demanded, which Senate Republicans opposed. But it is expected to include language related to the FBI headquarters building that is diagonal from Trump’s hotel in downtown D.C. It was unclear exactly what the language would say, but Trump has said he wants to see a new headquarters building built on the site, and his administration killed a plan to relocate the headquarters to the suburbs.
The legislation also appeared likely to contain a number of other provisions pushed by a variety of Senate Republicans, which could potentially help secure more votes. These include a bill by Sen. Lindsey O. Graham (R-S.C.) aimed at bringing production lines back to the United States from China. Graham predicted over the weekend that half of Republicans wouldn’t support a new coronavirus spending bill.
Legislation by Sen. John Cornyn (R-Tex.) on increasing incentives for advanced chip manufacturing also was being eyed for inclusion, as was a bill by Sen. Rob Portman (R-Ohio) called the Safeguarding American Innovation Act.
The question of what to do about the expiring unemployment benefits delayed a final deal last week, and Republican lawmakers scrambled over the weekend to hammer out their plan.
In March, congressional lawmakers discussed creating a federal unemployment benefits program to replace 100 percent of a worker’s prior income, but scrapped the idea because they believed states would be unable to handle the administrative complexity of doing so. Congress ultimately decided to have the federal government add a flat $600 per week to every jobless worker’s state unemployment benefits — creating a system that in some cases paid the unemployed more than what they had received while working. There are now between 20 million and 30 million people collecting these benefits, as the jobless rate is 11 percent.
GOP lawmakers are also discussing imposing an income cap on the 70 percent wage replacement plan, one person said, which would limit the size of the program. Replacing 70 percent of the income of high earners who had lost their jobs could lead them to receive more in benefits than the $600 weekly bonus. The level of the income cap was not yet known.
Congressional Democrats oppose both GOP plans to curb the benefit amount and to transition the payment system to the new model. Critics point out state unemployment offices have already been overwhelmed. The National Association of State Workforce Agencies has warned in a memo circulated on Capitol Hill that targeted wage replacement could take most states “8 to 20 weeks or more” to implement from the date of the Labor Department’s guidance.
“We are skeptical that state UI infrastructure has improved dramatically since the CARES Act given how overloaded the system has been,” Evercore ISI, which conducts market research, said in a Monday note.