Governments and lawmakers are ready to do whatever it takes to boost the local economies. However, there are certain challenges as well. For example, in the case of the U.S. Democrats and Republicans still seem unable to reach an agreement regarding the enhanced unemployment benefits. Interestingly, the $600 weekly subsidy expired more than two months ago. As a result, millions of people are struggling to meet ends meet.
It is worth noting that, White House officials and senior congressional Democrats were still trying to reach an agreement regarding a fifth financial relief package. However, President Donald Trump upended those talks around 3 pm E.T. on Tuesday.
People should keep in mind that, President Trump instructed White House representatives to cease negotiations, until after the election day in early November.
Interestingly, unemployment benefits appeared to be the main sticking point in the negotiations, despite consensus in other areas. For example, stimulus checks as well as aid for small businesses.
Let’s have look at the most recent data from the U.S. Labor Department. Notably, more than 26 million Americans were receiving jobless benefits as of mid-September.
Last week, House Democrats narrowly passed a $2.2 trillion relief package. The package approved by the lawmakers would extend a $600-a-week supplement to unemployment benefits through January 2021.
As a reminder, federal lawmakers enacted weekly enhancement as part of the $2.2 trillion CARES Act relief law in March. However, that subsidy expired at the end of July.
Unemployment benefits and Treasury Secretary
Last week, Treasury Secretary Steven Mnuchin proposed a $1.6 trillion measure, during the negotiations with House Speaker Nancy Pelosi. That measure includes a $400-a-week unemployment supplement. Importantly, that aid would reportedly last through December.
Interestingly, Senate Republicans proposed a $1.1 trillion measure in July that offered an extra $200 a week in unemployment benefits.
However, it’s unclear whether congressional Republicans would support a $400-a-week policy or bill. Nevertheless, some experts hopeful lawmakers can still reach an agreement. It is worth noting that, unemployment remains high seven months into the economic crisis.
Republicans criticized the supplement as a disincentive to return to work. As it paid many people more than they’d earned on the job. Interestingly, numerous economic studies found that in aggregate the $600 enhancement didn’t discourage people from looking for work. The same applies when it comes to accepting job offers.
Importantly, Democrats want to extend the $600 weekly payments, which come on top of state-allotted aid. Unemployment benefits help to boost consumer spending. It would be difficult to support the economy without such programs.
According to the Bureau of Labor Statistics, the unemployment rate fell to 7.9% in September after businesses added 661,000. As a reminder, the unemployment rate reached 14.7% in April, the highest recorded since the Great Depression.
Interestingly, President Trump appears intent on passing another relief package before the November election. In August, the Trump administration enacted a Lost Wages Assistance program. This program offered a $300 weekly supplement to unemployment benefits for up to six weeks.
Lawmakers from both parties as well as the White House should work together to reach a deal on unemployment benefits.
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