President Trump says the next round of stimulus is still being negotiated and says he wants to do what’s best for the American people and for the economy.
The supplemental $600-a-week in unemployment benefits officially expires Friday, dealing a major financial blow to the millions of Americans who lost their jobs during the coronavirus pandemic.
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CORONAVIRUS RELIEF PACKAGE TALKS AT A STANDSTILL AMID DIVIDE OVER JOBLESS AID
Congressional negotiations over the next round of emergency funding came to a standstill this week, despite a sweeping agreement between Republicans and Democrats that additional aid is needed for families and businesses still reeling from the pandemic.
One of the biggest points of contention between the two parties is whether to extend the sweetened jobless aid. The Senate adjourned Thursday evening without reaching a deal; discussions will continue over the weekend until lawmakers return to the Capitol on Monday.
Republicans unveiled the HEALS Act, estimated to cost about $1 trillion, on Monday, proposing extending but substantially reducing the boosted benefits to $200 per week until states could adopt a more complicated system that would cap the aid at 70 percent of a worker's former salary (something that could take months). They've repeatedly argued the $600 a week disincentivizes unemployed Americans from returning to their jobs.
MCCONNELL UNVEILS GOP'S $1T CORONAVIRUS STIMULUS FRAMEWORK
About two-thirds of workers on unemployment are receiving more government aid than what they earned at their old job, according to a paper written by economists at the University of Chicago's Becker Friedman Institute.
Democrats maintain the $600-a-week boost needs to be extended through the end of the year and have made it a key sticking point in negotiations. Senate Minority Leader Chuck Schumer called the inclusion of the $600 a week benefits nonnegotiable this week.
On Thursday, top White House negotiators pushed for a short-term proposal to replace lapsed unemployment benefits until lawmakers can cut a broader deal. One proposal from Sen. Ron Johnson, R-Wis., would have temporarily extended the benefits at $200 per week; another, from Sen. Martha McSally, R-Ariz., would have extended the $600 benefits for seven days.
But Democrats blocked the two proposals, with Schumer slamming them as a political stunt.
Talks are expected to heat up next week before Senators are scheduled to leave for their August recess.
WHITE HOUSE, REPUBLICAN PROPOSAL CUTS JOBLESS AID FROM $600 TO $200
On Friday, The Washington Post reported the Trump administration is willing to strike a stimulus deal with Democrats that leaves out Senate Republican legislation intended to protect businesses from pandemic-related lawsuits. That puts the White House at odds with Senate Majority Leader Mitch McConnell, who has said repeatedly that no relief bill will be passed without it.
President Trump on Wednesday panned the Senate Republicans' package, the HEALS Act, as "semi-irrelevant." He told reporters Wednesday the two parties are "so far apart" on what they think needs to be included in the next round of emergency aid. His priorities for those relief measures, he added, are an extension of the eviction moratorium and supplemental unemployment benefits, both of which are now expired.
“We want to work on the evictions so that people don’t get evicted. We’ll work on the payments for the people,” Trump said Wednesday. “And the rest of it, we’re so far apart, we don’t care. We really don’t care. We want to take care of the people.”
CALCULATE HOW MUCH MONEY YOU'D RECEIVE FROM THE SECOND STIMULUS CHECK HERE
When the $600 a week sunsets on Friday, the typical unemployment check will return to an average of $330 per week, a significant benefit cut for individuals collecting the aid. More than 30 million Americans, or roughly one in five workers, are receiving unemployment benefits, according to Labor Department data.
The end of the $600 a week will drain about $15 billion per week from the economy, according to one estimate from the Century Foundation, raising fears of a "fiscal cliff" that will hurt both individual households and the economy's recovery. Consumer spending accounts for about two-thirds of the nation's GDP, the broadest measure of goods and services produced in the country.
A separate study by the Economic Policy Institute found that expanding jobless aid boosted personal income by $842 billion in May; extending the boosted benefits through mid-2021, the nonprofit said, would provide an average quarterly boost to GDP of 3.7 percent.
For the past 18 weeks, jobless claims have continuously topped 1 million; before the pandemic, the record high was 695,000 set in 1982.
NEARLY HALF OF US JOBS LOST TO CORONAVIRUS COULD BE GONE PERMANENTLY, POLL FINDS
The resurgence of COVID-19 infections and a new wave of shutdowns in several U.S. states, including Florida and California, have intensified fears the labor market's nascent recovery is stalling. Last week, the Labor Department said more than 1.4 million workers filed for jobless benefits — marking the second consecutive week that claims have increased.
"The improvement in the labor market has lost momentum," said Scott Murray, Nationwide's financial economist. "Higher case counts and announcements about schools and fall activities have caused many businesses to rethink their needs even before calling back most workers."
Tens of thousands of workers at Levi's, United Air Lines, American Air Lines and Wells Fargo learned this past week they were — or could be — laid off or furloughed soon.
If the virus outbreak continues to intensify, forcing another round of business closures, the consequences could be dire.
FED UNDERSCORES SUPPORT FOR ECONOMIC RECOVERY THREATENED BY VIRUS RESURGENCE
“The path forward for the economy is extraordinarily uncertain, and will depend in large part on our success in keeping the virus in check,” Federal Reserve Chairman Jerome Powell told reporters on Wednesday during a news conference.
He sounded a sober tone about the time it will take for the U.S. economy to return to pre-crisis levels, warning that he anticipates additional fallout from the pandemic.
The debate over benefits comes as the Commerce Department reported the nation's gross domestic product, the broadest measure of goods and services produced in the country, shrank by a record-shattering 32.9 percent on an annualized basis in the second quarter, possibly raising the stakes for negotiations.
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