Unemployment checks set to return to pre-pandemic amounts
The Senate has yet to unveil the next phase of their COVID-19 relief plan; economist Peter Morici reacts.
Senate Republicans are discussing cutting the extra weekly unemployment benefits from $600 to $200 a week until states can adopt a more complicated system, White House economic adviser Larry Kudlow said Monday.
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The proposal will come as part of the GOP's broader $1 trillion stimulus package aimed at helping workers and businesses still reeling from the coronavirus pandemic.
MCCONNELL PREPARES TO UNVEIL GOP'S $1T CORONAVIRUS STIMULUS FRAMEWORK
Republicans plan to unveil the framework on Monday, kick-starting negotiations with Democrats. The legislation is expected to extend — but reduce substantially — just-expired expanded unemployment benefits, send a fresh round of $1,200 stimulus checks to American adults earning less than $75,000 in August and funnel tens of billions of dollars in aid to schools and universities.
Without the extra $600 a week in jobless aid, which officially ends July 31, the typical unemployment check will return to below $400 per week. It will affect about 25 million Americans and drain roughly $15 billion per week from the economy, according to one estimate from the Century Foundation.
PELOSI DRAWS LINE IN STIMULUS TALKS, SAYS HOUSE WON'T ACCEPT SHORT-TERM EXTENSION OF UNEMPLOYMENT BENEFITS
Senate Republicans will propose reducing the $600 payment to $200 until states can adopt a new approach that would cap the aid at 70 percent of the income workers received before they lost their jobs. It's unclear how long it would take states to phase in the new system.
Although Democrats have pushed for the additional aid to be extended through at least the end of the year, the Trump administration and Republicans have argued the boosted benefits are actually disincentivizing some Americans from returning to their jobs.
Treasury Secretary Steven Mnuchin recently opened the door to replacing the $600 with another form of unemployment assistance. However, it would cap benefits so that workers don't receive more money than they did at their previous job.
US BUDGET DEFICIT HIT RECORD-SHATTERING $864B IN JUNE
Congress has already approved three massive stimulus packages totaling nearly $3 trillion to offset the economic pain triggered by the outbreak of the virus and subsequent lockdown.
That includes the $2.2 trillion CARES Act signed into law at the end of March, which sent one-time payments of up to $1,200 to Americans; established the Paycheck Protection Program and expanded unemployment benefits by $600 per week through the end of July.
But those benefits are lapsing soon, raising fears of a "fiscal cliff" that will hurt both individual households and the economy's gradual recovery.
This is a developing story. Please check back for updates.
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