- The Republican Party is pushing to reduce the improved unemployment benefits to around $ 200 a week.
- The measure could cut approximately 3.4 million jobs from the economy, according to the left-wing Institute for Economic Policy.
- Many economists acknowledge that the federal government’s intervention to push state unemployment controls caused faster rebounds in consumer spending that helped prop up the economy during a recession.
- Visit the Business Insider home page for more stories.
Republicans are proposing to reduce the weekly federal boost from $ 600 to state unemployment benefits that Congress passed in March to an estimated $ 200 per week. But the move could cut 3.4 million jobs from the US economy, according to an estimate released Friday by the Economic Policy Institute, a left-wing group of experts.
The analysis indicated that reducing the government supplement to state benefits would remove a pillar of support for 30 million Americans who apply for unemployment checks, and would likely force spending cuts that underpin the economy.
It could also reduce growth of 2.5% of GDP until next year.
“If we allow the $ 600 supplement to expire, another major constraint on growth will be imposed: the collapse of income for the tens of millions of American families who have had to rely on these benefits in recent months,” Josh Bivens, director of Organizational research, he wrote in a blog post.
Combined with the $ 1,200 stimulus checks sent in April and May, many economists credit the reinforced unemployment payments for helping prompt faster rebounds in consumer spending, particularly among low-income households that weathered a disproportionate share of job losses. They also say the benefits helped keep people afloat during a period of high unemployment and job shortages.
The Republican Party delayed the filing of its initial coronavirus relief bill until early next week. Persistent gaps between lawmakers delayed their introduction, particularly around the design of a recently improved unemployment aid system to replace the weekly $ 600 bonus, The Washington Post reported.
President Donald Trump and Treasury Secretary Steven Mnuchin say the Republican Party will follow a plan for government payments that amounts to 70% of an unemployed person’s lost wages. That would mean reducing the federal supplement to $ 200 each week from $ 600.
Democrats are pushing to extend the $ 600 payments through January 2021.
The Republican setback to implement his proposal means millions of people with improved unemployment insurance will see their benefits expire this weekend as state offices distribute their latest payments.
Unemployed people who depend on boosted payments could experience sharp falls in income ranging from 50% to 75% depending on their state payments, according to Ernie Tedeschi, policy economist at Evercore ISI.
“All those tough decisions that you didn’t have to make before because you had unemployment insurance, now you have to make them,” Tedeschi previously told Business Insider. “Like, ‘Do I pay the rent? Do I cut groceries? Did I skip a medical appointment?’ That is going to really cut family budgets. “
