Divisive debate heats up as GOP pushes to cut $600 federal unemployment benefit to $200

Jobless workers demonstrate in Miami Springs in support of continued federal unemployment benefits in the pandemic economy. Credit: Joe Raedle/Getty Images

The Century Foundation, a progressive research organization, says in an analysis that small businesses and employees would incur “devastating” losses under the proposed HEALS Act unveiled Monday by Senate Republicans in Congress.

The proposal would cut a popular $600 weekly federal Unemployment Insurance benefit for the jobless to just $200 a week.

But a conservative research organization, Foundation for Government Accountability (FGA), says in a report that those losses would actually benefit the economy by ending a “severe disincentive” for jobless people to find jobs.

“Put simply, across the nation – and as a direct result of bad government policy – unemployment has become far more attractive than work,” write Hayden Dublois and Jonathan Ingram, authors of the FGA report released Tuesday. They argue that workers are committing fraud in order to draw unemployment rather than work.

The issue has become one of the most divisive in Congress as the $600 supplement is set to expire this week and Republicans and Democrats are trying to broker a legislative deal for a new coronavirus package that includes unemployment provisions.

Meanwhile, jobless workers are suffering.

The debate centers on the federal Unemployment Insurance supplement of $600 weekly that millions of Americans have been receiving atop state unemployment benefits during the pandemic. House Democrats want to extend them. Senate Republicans want to cut them by two-thirds.

The U.S. Department of Labor’s last report said 32 million Americans were out of work early this month.

Neither of the research papers addresses workplace safety as state economies struggle to get back to business with coronavirus infections and deaths on the rise.

The GOP’s HEALS Act – Health, Economic Assistance, Liability Protection and Schools – would not extend the expiring $600 supplement nor the expiring federal moratorium on evictions, according to an analysis today by Forbes. It says the HEALS plan also calls for a liability shield to rebuff potential lawsuits if an employee or customer claims they became infected with COVID-19 in a place of business due to the proprietor’s actions or inactions.

At the Century Foundation, Senior Fellow Andrew Stettner’s analysis says the GOP plan to cut federal Unemployment Insurance (UI) benefits from $600 weekly to $200 weekly would eliminate $10 billion per week in household income that jobless Americans have been using during the pandemic to pay their bills and to consume goods and services.

The reduction in economic activity would mount to $90 billion between now and the end of September, when the GOP plan would shift federal payments to replace 70 percent of a jobless person’s previous income if they cannot land a job in the pandemic economy.

“Many of the states currently experiencing the worst surges in COVID-19 are also those that would see the largest percentage reduction in benefits, including Florida (47.1 percent), California (44.2 percent) and Mississippi (50.5 percent),” Stettner wrote. The largest reduction would be in Oklahoma, at 57 percent, he said.

In Florida, the maximum weekly unemployment insurance benefit is $275, according to the Florida Department of Economic Opportunity. Jobless people here qualified for up to $875 weekly in combined state and federal benefits, which will fall back to $275 a week.

House Democrats in their HEROES Act – Health and Economic Recovery Omnibus Emergency Solutions Actpropose, among other things, extending the $600 weekly benefit and the federal moratorium on evictions.

The Senate GOP plan as described by CNN and Fox news reports would add a $200 weekly federal supplement through the end of September and then scale back payments to replace 70 percent of a jobless person’s income for those who still cannot find a suitable job.

The Foundation for Government Accountability says even a $200 supplement is too much, contending that workers already are committing fraud by refusing to accept offers of suitable work.

“States can and should make it easier for employers to report individuals who refuse suitable work. State policymakers should also make it clear this refusal of work constitutes fraud and will not be tolerated in their state,” the reports authors conclude. “As states reopen, businesses should be able to reopen as well – but they need workers. State and federal policymakers must take steps to discourage UI fraud and let the UI boost expire as scheduled in order to fast track the economic recovery.”

The Florida Department of Economic Opportunity says unemployment recipients who decline a suitable job offer are disqualified for receiving future benefits. The DEO did not immediately respond to questions about whether Florida recipients are committing fraud.