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We May Already Be Out Of Time To Avoid Expiration Of Enhanced Federal Unemployment Benefits

Rep. Don Beyer, the Vice Chair and top Democrat on Congress’ Joint Economic Committee, today issued the following statement on Senate Majority Leader’s announcement that the Senate would take “weeks” to pass legislation that includes an extension of expanded federal unemployment benefits:

“Mitch McConnell may already have doomed the tens of millions of American workers who depend on enhanced federal unemployment benefits to a sudden, sharp decline in income at the end of July.

“Because state unemployment benefits need to be extended by July 25 in order to be processed by states administering their programs, McConnell’s announcement that the Senate will not even begin drafting or negotiating legislation until next week effectively makes a lapse in those expanded payments unavoidable. We may already be out of time to avoid the iceberg.

“The nearly 400,000 Virginians who currently receive up to $978 per week will see that figure cut to a maximum of $378 just as their rent or mortgage payments fall due. McConnell and the Trump Administration could make things even worse by demanding reductions or policy changes that require states to further delay payments to implement changes. Thousands of workers are still waiting to have their initial applications processed by state unemployment systems, and could now have to wait even longer.

“This could have been avoided if McConnell had acknowledged the economic emergency facing our country – and the millions of American families who desperately need help from Congress – and acted on it sooner.”

The CARES Act, which Congress enacted in March, added $600 per week to monthly unemployment insurance payments with an expiration “on or before” July 31, 2020. Most states process unemployment payments on a weekly cycle ending on Saturday or Sunday; because July ends on a Friday, states need an extension by July 24 in order to cover the final week of the month, which runs into August.

Further delays are possible if Republican demands continue to include significant policy changes to federal employment benefits. State programs took weeks and in some cases months to recalibrate their existing unemployment systems to deliver the expanded benefits enacted by the CARES Act, and tens of thousands of workers in states like Kentucky are still waiting to have their initial applications processed.

Nearly 36 million American workers are either receiving unemployment benefits or waiting to have their applications reviewed according to analysis of Labor Department statistics by the Economic Policy Institute.

The lapse in benefits would likely be reflected in payments that reach unemployed workers on or just before housing payments are due at the beginning of August. Previously reported analysis found that nearly a third of American households made partial or late housing payments or no payment at all in the month of July.

The effects of a lapse in enhanced federal unemployment benefits will not be limited to families who depend on the benefits directly. Analysis by the Brookings Institute found that expanded federal unemployment benefits from the CARES act replaced roughly half of lost wages for American workers in the month of April. Loss of that income could spur a sharp decline in aggregate demand and new rounds of layoffs and business closures.

Leading economists credited CARES Act stimulus, particularly expanded unemployment benefits, with helping to boost the economy and fuel better-than-expected jobs reports for May and June. They warn that a corresponding absence of stimulus could swiftly imperil the recovery. Federal Reserve Chair Jerome Powell urged Congress to spend more in future government aid packages to boost the economy, and the House responded in May with the Heroes Act.

Despite these warnings, Senate Majority Leader Mitch McConnell has refused to consider or negotiate new legislation to boost the economy during the pandemic, saying he felt no “urgency of acting.”