Unemployment Benefits In Flux As Democrats Negotiate Last Minute COVID-19 Stimulus Deal

In a last ditch effort to get every single Democrat behind the $1.9 trillion COVID-19 relief bill, Democrats on Friday made a change to jobless benefits in order to win over moderate senators. 

The new proposal, sponsored by Sen. Tom Carper (D-Del.), would offer $300 in weekly added unemployment benefits, instead of the $400 per week Democrats initially included in the bill, but extend the benefits for another month, until the beginning of October. The federal government is currently providing $300 in addition to weekly state benefits, so the change would continue the status quo.

That extension could be crucial because Congress will likely be on recess in August, when benefits would expire under the House-passed legislation. The amendment includes another big change that had been sought by progressive lawmakers. The proposal would waive federal taxes on the first $10,200 of jobless benefits individuals received in 2020, in order to cut down on surprise tax bills for the unemployed.

“Having an unnecessary cliff for unemployed workers is not good policy,” Carper said in a statement to HuffPost. “We’ve found a way to avoid that and ensure that the millions of Americans who are still struggling to find work will see an immediate benefit before Tax Day this year.”

The deal was meant to unite progressive and centrist Democrats, several of whom took issue with the size and duration of unemployment benefits earlier this week. The compromise appears to have pulled all the moderates on board except for one: Sen. Joe Manchin (D-W.Va.). 

But chaos erupted on the Senate floor Friday when concerns grew that Manchin, who this week said he wanted to shrink the size of unemployment benefits and see them end earlier in the summer, would potentially vote for a dueling Republican amendment that would do just that.

Sen. Rob Portman (R-Ohio), is drafting the competing amendment, which would bring additional unemployment benefits down from the proposed $400 per week to $300 per week and end the program on July 18. It would essentially negate Democrats’ compromise proposal.

The stakes are high for Democrats, who are trying to pass an emergency COVID-19 relief bill on party lines. The Senate procedure allows for an unlimited number of amendments, and it only takes one Democrat to vote with Republicans for a GOP amendment to pass.

Some state workforce agencies don’t give workers the option to withhold taxes from federal benefits, and with the extra $600 per week that Congress initially provided last year, millions of workers owe significant taxes but lack the income or savings to handle the bill.

Of the $580 billion in federal benefits paid last year, only 40% had taxes withheld, said Elizabeth Pancotti, an unemployment policy expert with the group Employ America. 

The tax break was originally proposed by Sen. Dick Durbin (D-Ill.) last year, but was omitted from legislation because of its cost. 

The longer duration of benefits combined with the tax break “would provide more relief to the unemployed than the current legislation,” White House press secretary Jen Psaki said Friday

The agreement, which was announced shortly before the Senate began voting on the bill on Friday, was made at the request of both progressive and moderate senators, according to an aide.

Sen. Ron Wyden (D-Ore.), the chairman of the Senate Finance Committee, said the agreement to lower jobless benefits from $400 to $300 was the best possible deal Democrats could have achieved given the realities of a sharply divided 50-50 Senate, where Republicans have been firm in their refusal to pass more generous unemployment relief.

“There just aren’t the votes in the Senate,” Wyden said when asked about his initial proposal for $600 a week in additional unemployment benefits. “What I said every day was that I’m going to fight for the best package possible.”

As Democrats are in the final throes of passing this massive relief bill, Manchin’s reluctance to stand in line with his party spells trouble for the hours ahead.

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