CORONAVIRUS

$600 unemployment benefits boost: update on extension talks

As talks continue over the next coronavirus relief package in the US, a scheme giving Americans expanded unemployment benefits expires on Friday.

$600 unemployment benefits boost: update on extension talks
SAUL LOEB AFP

Expanded unemployment insurance expires in the US on Friday, as negotiations continue over the terms of the country's next coronavirus stimulus package.

Under the CARES Act, a $2.2tn coronavirus relief bill passed in March, out-of-work Americans have been receiving an additional $600 a week in jobless benefits, as part of the Federal Pandemic Unemployment Compensation (FPUC) scheme.

However, the FPUC only runs until 31 July, with claimants typically receiving their final extra payments last weekend.

Democrats seek six-month extension to extra $600, GOP proposes reduced expanded benefits

Democrats sought a six-month extension to the $600 boost in the HEROES Act, a $3tn relief bill approved by the House of Representatives in May, but the package has met with Republican opposition in the GOP-controlled Senate.

Meanwhile, Republican senators on Monday introduced their proposed stimulus bill, the $1tn HEALS Act, which bids to reduce added unemployment pay to $200 a week until 5 October, before adopting a system whereby benefits replace up to 70% of a person's expected income, up to a maximum of $500 extra a week. This scheme would run until 31 December 2020.

The proposal comes amid GOP eagerness to avoid people being paid more than they would usually earn and, in the process, potentially being discouraged from looking for work. The $600 boost takes 68% of claimants' benefits over their usual wage, research by the University of Chicago's Becker Friedman Institute has found.

After HEALS Act unveiling, talks over next relief bill stall

Republican, Democrat and White House leaders have sought to find common ground in talks this week aimed at crafting a relief bill that can pass both the Senate and the Democrat-held House, but negotiations have stalled, with US Treasury Secretary Steve Mnuchin admitting on Thursday that the sides were "very far apart" on certain issues.

House's August recess canceled

Against this backdrop, House Majority Leader Steny Hoyer has now canceled the lower chamber’s August recess and says it will remain in session until a bill is agreed. "It is expected that the House will meet during the month of August," Hoyer said on Friday, per CBS. "I have told my members, and I have told the minority leader and whip that no one should schedule themselves for next week or until such time as we adopt Covid-19 legislation."

It is not yet known whether the Senate, which is due to go on recess on 7 August, will follow suit, CBS also reported.

Democrats reject short-term fixes to benefits issue

As a potential interim solution to the unemployment insurance issue, a $200-a-week short-term extension of the expanded benefits was proposed by Senator Ron Johnson (R-Wi) on Thursday, while a week-long extension of the $600 boost was put forward by Senator Martha McSally (R-Az), Forbes has reported.

The latter idea was supported by President Donald Trump, Forbes says, but both were rejected by the Democrats, who want the $600 weekly figure to be extended until January, as per the HEROES Act, and prefer a "comprehensive" package of stimulus measures rather than a piecemeal approach to such legislation, House Speaker Nancy Pelosi (R-Ca) has said.

On Friday, Pelosi also explained that a brief benefits fix would only be of use if agreement over an overall stimulus package were close. "There would be a time for that - if we had a bill,” Pelosi said, according to The Hill. “What are we going to do in a week?”

Three-month extension proposed by group of GOP senators

An immediate three-month extension to expanded benefits has also been proposed, after a Mitt Romney-led group of Republican senators tabled the Federal Pandemic Unemployment Compensation Extension Act of 2020 on Thursday.

As part of the plan, states would choose between paying benefits that replace 80% of a worker's usual wages, or adopting a gradually decreasing flat rate of $500 extra a week in August, $400 a week in September and $300 a week in October.

States would also be given an additional $2bn to "update their UI [unemployment insurance] systems to better handle targeted wage replacement", Romney said in a statement.

"Unemployed workers should not be left in limbo while Congress continues to negotiate the next relief package," he said. "Our solution extends the supplemental benefits for three months and incentivizes states to update their UI processing systems. We should act with urgency to help the millions of Americans who are on the verge of losing these additional benefits."

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