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At crunch time, Republicans push to slash unemployment benefits

The GOP hopes to replace current unemployment benefits with a 70% wage replacement plan - which even the Trump administration says won't work.
Image: People wait to file for unemployment at the Arkansas Workforce Center in Fort Smith on April 6, 2020.
People wait to file for unemployment at the Arkansas Workforce Center in Fort Smith on April 6, 2020.Nick Oxford / Reuters

For many Americans, Congress' next economic aid package is already too late. Though CARES Act benefits don't officially expire until Friday, the way many states administer their unemployment-aid systems, the effective deadline for enhanced benefits was yesterday.

It's against this backdrop that congressional Republicans and Donald Trump's White House have spent recent months largely ignoring the problem. GOP leaders hoped to have an opening bid for negotiations with the Democratic-led House by late last week, but Republicans were too busy disagreeing with one another to unveil a blueprint.

By all accounts, GOP leaders have finalized their opening bid, which the public will see later today. But in the meantime, Republicans on both ends of Pennsylvania Avenue spent the weekend making clear that one of their top priorities is slashing jobless benefits.

Top Trump administration and White House officials said Sunday that they want to replace expiring expanded unemployment benefits with a system that pays those out of work 70 percent of lost wages because they feel the current system gives people a reason not to return to the job. Treasury Secretary Steven Mnuchin said on "Fox News Sunday" that 70 percent of wage replacement from the federal government, as opposed to the additional $600 per week, "is a very fair level."

If the latest reporting is accurate, the GOP plan -- which will still need to be negotiated with Democrats -- will replace the current weekly jobless benefit with a 70% wage replacement plan, though it will also add a $1,200 direct payment. The overall package is set to carry a $1 trillion price tag, which is less than half the total of the original CARES Act, and is roughly a third of the House Democratic package passed more than 10 weeks ago.

We'll dig in on the details of the Republican proposal if/when it's released, but for now, it's worth pausing to appreciate why this basic structure is such a bad idea.

Right off the bat, it's obvious that the GOP plan is designed to make things tougher for the unemployed, which is a tough goal to defend in the midst of a pandemic and a recession with double-digit unemployment. It will also undermine the economy once so many millions of Americans have significantly less money in their pockets.

What's more, even if the Republicans' 70% plan could gain approval from House Democrats -- it can't -- there's no reason to assume state unemployment systems, many of which are barely functioning now, are prepared to administer such a complex payment structure.

Indeed, NPR reported over the weekend, "Critics have warned since March that such a proposal would undermine efforts to speed relief to millions of people out of work due to the coronavirus. The potential delays are so significant that the U.S. Department of Labor told Congress in May that it 'strongly' opposed such a change because states would find it 'exceedingly difficult if not impossible to implement.'"

The same report added, "The National Association of State Workforce Agencies told lawmakers on Capitol Hill that it would take most states eight to 20 weeks to move to a system of awarding weekly benefits on a sliding scale based on the worker's wages before losing their job, according to a copy of the memo obtained by NPR."

Or put another way, even the Trump administration thinks the plan from the Trump White House can't work, at least not anytime soon.

So why in the world are Republicans pushing this line so aggressively? Many GOP officials are convinced that many of the unemployed are choosing to stay out of the workforce thanks to generous jobless benefits. By this reasoning, slashing aid will, under Republicans' framing, force the unemployed to get off the couch and go back to work.

There are all sorts of problems with these assumptions, not the least of which is the idea that there are tens of millions of job openings just waiting for applicants who'd rather live off Uncle Sam.

So what happens now? Later today, GOP leaders will probably unveil some kind of conservative proposal, which will be widely panned. It will help serve as a starting point for bicameral talks, though no one seriously believes the process will be wrapped up before Friday.

Complicating matters, Republicans may control the White House and the Senate, but they don't necessarily have the upper hand in the negotiations. Sen. Lindsey Graham (R-S.C.) declared yesterday that "half" of the Senate GOP conference will oppose the aid package, no matter what's in it.

That shifts power in Democrats' direction because it means Republican leaders will need Democratic votes to approve the package, not just in the House, but also in the GOP-led Senate.

Watch this space.