White House Signals Openness to Unemployment Compromise as Crucial Deadline Looms

WASHINGTON (The Washington Post) -
Treasury Secretary Steven Mnuchin walks past a group of reporters to a meeting at the White House, Thursday, July 9, 2020, in Washington. (AP Photo/Evan Vucci)

Senior Trump administration officials have begun signaling their willingness to approve a narrow extension of the enhanced unemployment benefits helping tens of millions of jobless Americans hurt by the coronavirus pandemic.

In less than two weeks, the federal program that provides a $600-per-week increase to unemployment benefits will expire. Many economists warn the disappearance of this enormous federal stimulus, created in March, could hinder the economic recovery and deprive millions of Americans of a vital financial lifeline.

More than 30 million people are collecting what many recipients say is a crucial pillar of financial support right now.

For months, President Donald Trump and White House officials have argued the $600-per-week unemployment bonus provides a disincentive to work and should be scrapped so that more Americans return to work as part of the economic recovery. But with the benefits soon set to expire and the economy showing new signs of strain, Trump administration officials have begun opening the door to accepting a narrower version of what Congress previously approved.

Treasury Secretary Steven Mnuchin said on CNBC last week that the administration’s priority was ensuring that future benefits amount to “no more” than 100% of a worker’s prior wages. Mnuchin’s comments surprised some congressional Republicans who thought he shared their strong opposition to extending the benefits, according to two people who spoke on the condition of anonymity to describe internal dynamics.

Larry Kudlow, the president’s top economic adviser, told Fox Business on Monday that the administration is seeking “some unemployment reforms.” Kudlow had in previous weeks more aggressively bashed the $600-per-week increase.

Kudlow also pushed a “return to work” bonus that could supplement a reduction in unemployment benefits. That idea has been viewed as administratively difficult to implement and its path to passage is unclear, according to three lobbyists and congressional aides aware of internal conversations.

One potential compromise discussed by Republican lawmakers would involve cutting the unemployment benefit from $600 per week to between $200 and $400 per week and making up at least part of the difference by sending another round of $1,200 stimulus payments, these people said.

White House spokesman Judd Deere said in a statement that the administration is opposed to the $600-per-week increase but would not rule out the administration agreeing to a more limited expansion of the benefit. Maintaining unemployment insurance benefits at current levels “does not incentivize returning to work,” Deere said in an email. “UI reform is a priority for this White House in any phase four package and we are in ongoing discussions with the Hill.”

The emergency, temporary federal benefits come on top of the payments appropriated by state governments, though those benefits vary. Democrats have largely called for the benefits to be extended.

Lawmakers will have little time to resolve the competing positions. Republicans have discussed the issue internally but have not reached a caucus position on the matter. There are no serious bipartisan discussions underway to resolve the impasse. The Senate comes back in session on July 20, five days before the enhanced unemployment benefit expires in 49 states. They expire in New York State on July 26.

“They don’t have time, which is what is very scary about all this,” said Bill Hoagland, senior vice president at the Bipartisan Policy Center and former Republican staff director for the Senate Budget Committee. “It’s very irresponsible.”

President Trump has offered little clarity on his preferred outcome, saying on Fox Business last month about the benefits: “We had something where they wanted where it gave you a disincentive to work last time. And it was still money going to people and helping people, so I was all for that. But we want to create a very great incentive to work. So we’re working on that, and I’m sure we’ll all come together.”

Conservatives have argued the unemployment benefit makes it more lucrative for workers to stay at home than return to their jobs. In most states, the size of the unemployment benefit is equal to or greater than the minimum wage. Even some Democrats on the Senate Finance Committee have privately expressed concern about the potential for the benefit to disincentivize work, The Washington Post previously reported.

“From numerous conversations with people at the White House — they do understand redoing this $600-per-week benefit would be really bad for the economy and really bad in the fall, when you need the recovery,” said Stephen Moore, a conservative analyst and White House ally. “The stakes are really enormous here.”

Moore, citing conversations with multiple small-business owners, described talk of taking the benefit down to $200 per week as “very objectionable.”

“We should just go back to the old unemployment program, and if you want to help people financially just do the payments that go to everyone,” Moore said.

Adding further danger to the expiring benefits is the simultaneous expiration of eviction moratoriums in many parts of the country. About 26% of Americans have missed a rent or mortgage check or expect to miss the next one — the highest figure reported since the Census Bureau began keeping track in late April. In hard-hit Houston and Miami, more than 40% of households now struggle to pay the rent or mortgage.