Reed: Republican Plan to End $600 Unemployment Lifeline as COVID-19 Rates Spike Could Deepen the Recession, Damage the Economy, & Harm Public Health
Out-of-work Rhode Islanders have received nearly $670 million in Federal Pandemic Unemployment Compensation according to analysis by the Century Foundation
WASHINGTON, DC – With the U.S. economy reeling, millions of jobless Americans struggling, and COVID-19 cases soaring in states around the country, U.S. Senator Jack Reed (D-RI) is continuing his calls for Senate Republican leaders to allow a vote on extending the $600 per week boost to unemployment benefits. Without Congressional action, this crucial federal unemployment insurance will halt at the end of the week. Senator Reed notes that cutting off these funds now would deal a severe blow to those who are out of work, and will also be a real setback for the economy, businesses, and states, and could harm public health by forcing more Americans into desperate situations.
In March, Congress enacted the supplemental $600 weekly unemployment insurance payments known as the Federal Pandemic Unemployment Compensation (FPUC) program as part of the Coronavirus Aid, Relief and Economic Security (CARES) Act (Public Law No. 116-136). Under the law, out of work Americans who lost their jobs due to the pandemic and are eligible for unemployment insurance receive an extra $600 on top of what they normally claim under their state’s benefits, which can sometimes be less than $100 per week depending on prior earnings and dependents.
Senator Reed notes that because the COVID-19 infection rate has gotten worse since the CARES Act was enacted, not better, and the economic crisis is deeper and more of a long-term challenge than Congress hoped it would be: clearly there is a need to extend FPUC beyond the end of this week.
“We need smart, effective, coordinated strategies to bounce back from this unemployment crisis and ensure people can safely return to the workforce. Unemployment insurance is targeted and temporary and should end as soon as conditions allow, and I’m pushing for more help for small businesses through the RESTART Act. But we aren’t there yet – not even close. President Trump has failed to lead a national effort against the pandemic, but Republicans in the Senate have a chance to step away from his incompetence and actually do something. Arbitrarily halting Federal Pandemic Unemployment Compensation now while infection rates are surging makes zero sense. If Congress fails to renew pandemic unemployment assistance for the unemployed, it will hurt individuals, communities, and states and could tank consumer spending while increasing business closings that lead to even more unemployment,” said Senator Reed.
A new analysis by researchers at JPMorgan Chase Institute notes that if Congress fails to act and allows the $600 unemployment lifeline to expire “that expiration will result in large spending cuts, with potentially negative effects on both households and macroeconomic activity.” The report estimates that absent an extension of the federal funds, unemployed households could slash spending by 29 percent, leading to a shortfall in consumer demand.
“This extra $600 is a lifeline that is helping millions of families stay safe through a pandemic. These funds not only help families keep a roof over their heads and food on the table, they are an important stabilizing force for Main Street and communities. If Republicans cut pandemic unemployment off now even as some states are being forced to re-impose restrictions, it would be devastating and destabilizing to public health and the health of our economy,” said Senator Reed. “Seasonal hiring for the summer was unable to take place for many businesses. And how are employers supposed to hire more workers when they only have a fraction of their normal customers? Once we get COVID-19 under control, jobs will come back. But if Republicans repeat the President’s mistakes and try to force people into unsafe conditions, it will only lead to more sickness, a deeper recession, and a prolonged crisis.”
The Century Foundation estimates that Rhode Island has received nearly $670 million in Federal Pandemic Unemployment Compensation since the CARES Act was enacted, and that cutting off the program now will cost the U.S. economy more than $15 billion a week in consumer spending. The analysis also found that approximately 98,000 Rhode Islanders could lose nearly $58.9 million per week in unemployment benefits starting on July 27, unless Congress takes action.
To effectively address the pandemic and the economic crisis, Senator Reed has proposed the Worker Relief and Security Act. This legislation would use automatic “stabilizers” to ensure the involuntarily unemployed receive sustained federal unemployment insurance (UI) for the duration of the crisis, rather than see such assistance arbitrarily cut off. Reed’s bill, which was led in the House by U.S. Representative Don Beyer (D-VA), would tie enhanced UI benefits to the current public health emergency and economic conditions. Under the bill, enhanced benefits would end 30 days after the national emergency declaration or a state governor’s declaration for the pandemic ends, after which it would phase out over 13 weeks.
“Our bill would help stabilize the economy, allow hard-pressed families to put food on the table, compensate for lost employment benefits like health insurance, and keep businesses in business. It is not a cure all, but it will inoculate the U.S. economy against some of the worst impacts of the virus and go a long way toward keeping families, businesses, and states solvent through this crisis. The Worker Relief and Security Act offers a smart, data-driven strategy that automatically adjusts to evolving conditions and takes politics out of the equation. It invests in people, will help stave off a deeper depression, and better position America for a strong economic rebound,” said Senator Reed. “This legislation offers a firm commitment that Congress will put politics aside and take an effective, conditions-based approach to targeting relief where it is needed. It offers a strong return on investment for taxpayers and will provide a major boost to families, businesses, and communities."
Senator Reed has also joined a bipartisan coalition of a dozen leading U.S. Senators cosponsoring the Reviving the Economy Sustainably Towards a Recovery in Twenty-twenty (RESTART) Act (S. 3814). This bipartisan bill would create the RESTART Program, which will provide small- and mid-sized businesses with the working capital they need to get through 2020 and offers favorable, flexible terms and seven years to repay the federal loan. Notably, it targets businesses that have been hit the hardest and seen their revenue fall by twenty-five percent or more.