Moneybox

Democrats Are Finally Picking the Right Fight Over Unemployment Benefits

WASHINGTON, DC - JUNE 30: Senate Minority Leader Chuck Schumer (D-NY) listens during a press conference on Capitol Hill on June 30, 2020 in Washington, DC.  Schumer criticized the administration's response to reports that Russia offered bounty to the Taliban to kill American soldiers, and stated that he has requested a Senate briefing on the matter.  (Photo by Stefani Reynolds/Getty Images)
Finally getting it right. Stefani Reynolds/Getty Images

One of the more surreal things about Washington’s response to the coronavirus crisis is that Chuck Schumer and Nancy Pelosi have essentially been forced to spend the past four months fighting tooth and nail to help reelect Donald Trump. With each relief bill, Democrats have found themselves pushing the White House and congressional Republicans for a stronger federal response to the outbreak—demanding that Capitol Hill go bigger on unemployment benefits, aid to small businesses, help for states, and COVID testing. Their efforts haven’t always been successful. But their wins have saved the country from a lot of hardship.

Politically, these efforts have probably helped the president as much as anybody. After all, a minimalist approach to the crisis would likely have left the country in even worse shape than it is now and further dampened the country’s already-damp mood heading into November. As of mid-June, 31.4 million Americans were on the unemployment rolls. Just imagine how mad those people would be, and how the economy would look, if they weren’t receiving the extra $600 per week in jobless benefits that Democrats jammed into the CARES Act. Trump might not love Chuck and Nancy. But they have gone to heroic lengths to save the president from himself.

It has always seemed unlikely that Republicans would return the favor if Joe Biden was elected in November. Under Mitch McConnnell’s leadership, the GOP spent the Great Recession and its aftermath stonewalling the Obama administration’s efforts to revive the economy, and there’s no particular reason to assume they’d act differently this time around. Conservatives have already begun to complain about deficit spending and appear dead-set on cutting back those crucial unemployment benefits, suggesting they’d attempt to shoot down any serious stimulus effort in 2021. Even if the party lost the Senate, it could still pull out its old 2009 playbook to slow down and obstruct the White House’s plans wherever possible.

Fear of Republican sabotage is a major part of why some Democrats have wanted to put coronavirus aid on autopilot. When the House was crafting the HEROES Act, its $3 trillion stab at a Round Four relief bill, in May, the caucus’s more progressive members pushed to include so-called automatic stabilizers, which would keep enhanced unemployment benefits and food aid rolling as long as the country was still dealing with mass joblessness. Pelosi even endorsed the idea, before reportedly axing it because of the price, to the bitter disappointment of many.

Thankfully, Senate Democrats have picked the automatic stabilizer idea back up from the cutting-room floor. This week, Schumer and Oregon Sen. Ron Wyden unveiled the American Workforce Rescue Act, which would keep the CARES Act’s supersized jobless benefits going past July, when they’re currently set to expire, and only phase them down as the economy recovers. The payments would stay at $600 in a state until its unemployment rate fell below 11 percent, then would start ticking down by $100 for each one point drop in joblessness, zeroing out entirely once it dipped under 6 percent.

As a short-term policy matter, these sorts of automatic triggers make obvious sense. We have no idea when the coronavirus crisis is going to end, and putting an arbitrary expiration date on aid risks cutting people off before they realistically can (or should) go back to work. Republicans have argued that keeping the $600 payments flowing will make it harder for businesses that want to reopen to rehire workers, but there’s no evidence that’s really the case (after all, the country added back 4.8 million jobs in June, and the unemployment rate fell to just over 11 percent, while these benefits were still place). Better to make sure people have enough money to buy groceries and pay rent until things actually start returning to normal.

Politically, the American Workforce Rescue Act also suggests that Democrats understand that Republicans can’t necessarily be trusted to cooperate and pass necessary relief legislation if Joe Biden is president. Whether or not Schumer and his caucus actually win this fight, that’s a welcome dose of realism.

Longer term, the proposal also represents an important philosophical shift when it comes to economic policy. Automatic stabilizers are a long overdue idea for recession-proofing the country. Rather than relying on Congress to negotiate an ad hoc stimulus package every time economic disaster comes our way, it would be better to have supports for households and businesses that snap into place as soon as they’re needed. The bill Schumer and Wyden are introducing wouldn’t make its automatic triggers permanent. But it would be a demonstration of the concept, and suggest that Democratic leaders might be open to eventually writing something similar into law for good. That might help us avoid some of these surreal political fights in the future.

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