As Unemployment Aid Expires, White House and Congress Clash on Relief Plan

Written by on 31/07/2020

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President Trump and Democrats blamed each other for the lapse of $600-per-week federal unemployment benefits, risking further economic pain and a voter backlash for failing to act.

Credit…Anna Moneymaker for The New York Times

Emily Cochrane

WASHINGTON — The White House and Congress hurtled over an economic and political cliff on Friday, failing to reach agreement to extend $600-per-week federal jobless aid payments for millions of Americans before their midnight expiration and risking a backlash from voters amid a pandemic-induced recession.

Republicans and Democrats heaped blame on each other for the breakdown, even as they said they would continue to try to strike an agreement on a recovery package that would restore the benefits, which have become a critical lifeline for laid-off workers and the economy itself. But in allowing the lapse, President Trump and congressional leaders in both parties were treading on politically perilous ground three months before the general election.

The relief package under discussion is almost certainly the last chance Mr. Trump has to inject fresh stimulus into the battered economy before he faces voters in November, with his political standing damaged amid widespread public dissatisfaction over his handling of the pandemic. Republicans, whose hold on the Senate majority is under threat, could also pay a steep price for failing to deliver relief to struggling Americans, after waiting weeks to present their own proposal and ultimately endorsing a deep cut to the enhanced jobless benefits.

But the impasse also amounts to a calculated risk for Democrats, who have pressed to extend the full $600-a-week federal unemployment payments through January as part of a sweeping $3 trillion recovery plan. They opted to reject Republicans’ last-ditch proposals for a short-term extension or a continuation of the aid at a lower rate, taking the position that allowing the benefits to expire was better than agreeing to an aid proposal that they considered far too stingy to meeting the needs of a crippled economy and a continuing public health crisis.

“We don’t have shared values — that’s just the way it is,” Speaker Nancy Pelosi of California said. “It’s not bickering. It’s standing our ground.”

Mr. Trump, who has been largely absent from the talks on a recovery package, savaged Democrats for the impasse, saying they were jockeying for political advantage instead of working to find a compromise.

“Democrats do not care about the people of our country,” he said at the White House. “It is a disgrace that they’re not negotiating, but they’re only looking to play a political game.”

As the two sides traded insults from either side of Pennsylvania Avenue, the economy hung in the balance. The pandemic has obliterated nearly five years of growth, according to the latest government figures, which came as the tally of new claims for state unemployment benefits exceeded one million for the 19th consecutive week. Economists have warned that a failure to enact additional federal relief could further devastate American families and permanently damage an already shuddering economy.

Still, a deal to produce such a package appeared no closer.

Senate Republicans waited until Monday — days after workers in several states received their last unemployment benefit payments — to unveil their $1 trillion relief proposal, and even then remained deeply divided on its contents, with many preferring no action at all.

Democrats, who pushed their $3 trillion stimulus plan through the House in May, have rejected Republicans’ efforts to buy time for negotiations with a short-term extension of the unemployment benefits. Sensing that they have the upper hand in the talks given the likelihood of substantial Republican defections, Democrats appear reluctant to offer many concessions.

In the absence of much common ground, the two sides resorted to finger-pointing in dueling news conferences on Friday. Ms. Pelosi charged that the administration officials who had huddled in her Capitol Hill suite the night before had no grasp of the gravity of the pandemic and its mounting toll. Mark Meadows, the White House chief of staff, blamed the Democrats for the impasse, saying they had rejected four proposals that would have maintained the unemployment benefits for a brief period.

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Credit…Stefani Reynolds for The New York Times

A weeklong extension of the benefit, Ms. Pelosi said, would only suffice had there been a broader agreement within reach and an additional few days were needed to cement and pass such a deal.

“What are we going to do in a week?” she said. “We anticipate that we will have a bill, but we’re not there yet.”

Despite the bitter talk, there were glimmers of efforts to break through the logjam. Ms. Pelosi is set to host Senator Chuck Schumer of New York, the minority leader, Mr. Meadows and Steven Mnuchin, the Treasury secretary, for a rare meeting on Saturday morning in her office on Capitol Hill, according to an aide familiar with the plans. The House postponed the start of its monthlong August recess until a deal was struck, and on Thursday, before the Senate adjourned until Monday, the procedural wheels for passing legislation had begun to creak forward.

But the stalemate could already be taking its toll. The sudden reduction in buying power that comes with the loss of the enhanced unemployment insurance benefit is likely to cause the economic slowdown to worsen, a blow that comes as the chair of the Federal Reserve, Jerome H. Powell, warned that the recovery underway in May and June was slipping and other economists offered dour predictions of little job growth and stubbornly high unemployment.

“The danger is that the economy stalls, and that we have double-digit unemployment for months and months and months until a vaccine arrives,” said Michael R. Strain, an economist at the conservative American Enterprise Institute. “That creates a situation where the roots of economic weakness grow stronger and grow deeper, and you start to have systematic and structural problems in the economy, over and above the need to partially close due to the coronavirus.”

On Capitol Hill, lawmakers who support another sweeping infusion of federal money across the American economy, including many who are facing difficult re-election contests in November, said that a failure to strike an agreement would be unacceptable.

“Congress has to rise to the crisis — it is too serious,” said Senator Susan Collins, Republican of Maine. “If we can’t work together in a bipartisan, bicameral way, in the midst of a persistent pandemic that is causing such harm to people’s health and to the economic stability, then we will have failed the American people.”

Jim Tankersley, Michael Crowley and Zach Montague contributed reporting.

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