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Republicans Would Cut Unemployment Payments in Virus Relief

July 27, 2020, 8:11 PM

Senate Republicans propose cutting supplemental unemployment benefits to $200 weekly from $600 until states are able to create a system that would provide 70% of a laid-off worker’s previous pay up to a state-set cap, according to two people familiar with the plan.

The plan, which was agreed to by the Trump administration, calls for a two-month transition and then allows states to apply for a waiver for up to two additional months if they can’t implement the new calculation, according to the people, who spoke on condition of anonymity because the plan hasn’t been made public.

Senate Majority Leader Mitch McConnell and other top Republicans set to release a series of bills that represent the $1 trillion GOP plan for a new virus stimulus package after the Senate convenes Monday at 4:30 p.m. in Washington, despite persistent divisions among his fellow Republicans. That will mark the starting point for negotiations with Democrats, who’ve previously proposed a $3.5 trillion package.

Watch: Senate Majority Leader Mitch McConnell presents the $1 trillion plan to bolster the pandemic-ravaged U.S. economy.
(Source: Bloomberg)

House Speaker Nancy Pelosi and Senate Democratic leader Chuck Schumer are set to meet in her office with Treasury Secretary Steven Mnuchin and White House Chief of Staff Mark Meadows Monday evening to begin talks, according to two people familiar with the schedule.

The expanded unemployment benefits that were part of the March economic rescue began running out Saturday, adding urgency to negotiations on the next round of relief. There are signs, including filings for unemployment benefits, that a nascent rebound from pandemic shutdowns is stalling. Congress has only two weeks before lawmakers are scheduled to leave Washington for an August break.

Read More: Republican Unemployment Plan Could Take Five Months to Execute

Most states experienced significant delays in processing the current flat-rate supplemental benefits as they dealt with an unprecedented flood of claims and antiquated computer systems. The same technology hurdles may require time to implement the new calculation.

All states currently provide close to 50% wage replacement. The federal government would come in to make up the difference to bring a recipient’s wage up to the 70% level once the transition is complete.

The plan for unemployment insurance is sure to draw strong opposition from Democrats, who wanted to continue the $600 payment that was part of the economic rescue package approved in March through the end of the year.

They have argued that the system should be kept simple, but many Republicans, such as Texas Senator Ted Cruz, say the $600 payments mean some people are getting more in benefits than they earned from wages, making them reluctant to return to jobs.

Pelosi and other Democrats have rejected cuts to the $600 level and the Californian Democrat on Monday called for negotiations to begin on a bipartisan solution immediately after the GOP plan is introduced in the Senate.

“It is the ultimate disconnect with what is being experienced by real Americans if they think 200 bucks is enough,” Representative Dan Kildee of Michigan said.

Read More: U.S. Economic Recovery Stalls for a Fourth Consecutive Week

Pelosi also has dismissed suggestions by the White House that parts of the package, like unemployment insurance, could be passed before a comprehensive deal is reached. But some Democrats appeared open to passing a short term extension of the existing $600 supplemental benefit.

McConnell’s expected unveiling comes after Mnuchin and Meadows spent much of the past week struggling to hammer out some of the differences with Republican lawmakers.

But the GOP is hardly unified, and there’s a world of difference with what Democrats demand.

“Half the Republicans are going to vote no” on any additional stimulus, South Carolina Republican Senator Lindsey Graham said Sunday on Fox News Channel. “And a lot of Democrats are going to insist on $3 trillion, which would be way too much.”

McConnell said on Friday that he expected Congress would pass something by “the end of the next few weeks.” Graham predicted Congress would reach a deal by the first week of August, and Mnuchin said the negotiations can move “very quickly.” That and a September government funding bill are likely the last chances to act before the November election.

(Updates with meeting between top Democrats and White House officials in fourth paragraph)

--With assistance from Billy House, Laura Davison and Laura Litvan.

To contact the reporter on this story:
Erik Wasson in Washington at

To contact the editors responsible for this story:
Joe Sobczyk at

Gregory Mott

© 2020 Bloomberg L.P. All rights reserved. Used with permission.