White House-backed proposal would reduce emergency unemployment insurance by two-thirds

Senate Republicans set the stage on Monday for a clash with congressional Democrats by unveiling a White House-backed plan for $1tn in new stimulus that would cut emergency unemployment benefits by two-thirds.
The move on the coronavirus relief package came after weeks of hesitation by party conservatives wary of more government spending. It reflects rising concern among Donald Trump’s allies about the deterioration in US economic prospects fewer than 100 days before the November election.
“We have one foot in the pandemic and one foot in the recovery. The American people need more help,” Mitch McConnell, the Republican Senate majority leader, said as he introduced the plan, which was structured as a series of bills.
Democrats in the House of Representatives, who approved $3tn in additional government aid for the economy two months ago, said the Republican proposal fell short of what is needed as the recovery faces new setbacks because of surging Covid-19 cases in many states.
Republicans have argued that the Democratic bill discourages work by maintaining emergency jobless benefits at $600 a week. Under the Senate plan, enhanced unemployment insurance would be continued — but at just $200 a week in September. From October, workers would receive 70 per cent of previous wages.
$16bn
Funds set aside for coronavirus testing under the stimulus plan
Ron Wyden, the top Democrat on the Senate finance committee, said: “The Republican proposal is a punch in the gut and a slap in the face for the 30m Americans relying on lifeline unemployment insurance benefits. It adds insult to infection.”
In addition to the jobless benefit extension, Americans would get a new round of direct payments from the US Treasury, worth $1,200 for most adults, in addition to the amount they received in April.
Congress would also set aside additional funding for loans directed towards the hardest-hit small businesses. The legislation does not, however, provide for significant aid to cash-strapped state and local governments, compared with the $900bn proposed by Democrats.
Nancy Pelosi, the Democratic speaker of the House, called on Republican leaders to immediately begin negotiations on a compromise. Most policy analysts and congressional aides are not expecting a deal to take shape before early August, in a best-case scenario.
“Time is running out. Congress cannot go home without an agreement,” she said. Chuck Schumer, the Democratic leader in the Senate, added on Twitter: “The American people have been waiting 10 weeks for the Republicans to get their act together!”
Nancy Pelosi, the Democratic speaker of the House, with Mitch McConnell earlier in the day at a service for the late civil rights leader John Lewis. She called on Republican leaders to immediately begin negotiations on the stimulus plan © REUTERS
The fate of the US stimulus is being closely watched by economists, including at the Federal Reserve, who are worried that failure to reach a deal, or an agreement on a deal with limited support, could stunt a recovery already being hit by rising Covid-19 cases in many states.
The Republican plan also includes $16bn for coronavirus testing and $105bn in federal funding for schools that reopen amid the pandemic, which has been strongly encouraged by the Trump administration.
Other provisions would shield businesses from liability related to Covid-19 — a proposal strongly supported by corporate America.
“The clock is ticking and there is no time for the traditional Washington games; we urge Republicans and Democrats to come together now and enact the relief American workers, families and employers need,” said Neil Bradley, chief policy officer at the US Chamber of Commerce, the business lobby group.
One provision in the Republican plan, worth $1.75bn, provides funding for the renovation of the FBI building in downtown Washington, which had been pushed by Trump administration officials. The US president’s flagship hotel in the US capital is nearby.
In addition, a provision pushed by Lindsey Graham, the Republican South Carolina senator, would create a domestic purchasing requirement for personal protective equipment to fill the domestic stockpile and a $7.5bn tax credit for companies that produce medical supplies such as gowns and masks.