Some Democrats Push for Permanent Expansion of Unemployment Benefits

 

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Some Democrats Push for Permanent Expansion of Unemployment Benefits

Andrew Duehren, Andrew Restuccia  1 hr ago

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WASHINGTON—Democrats on Capitol Hill are pushing for the White House to propose more generous and long-lasting jobless benefits on a permanent basis as part of the antipoverty package President Biden is expected to roll out next week.

In a letter sent to the White House Friday, nearly 40 Democrats said President Biden should propose implementing a series of new federal standards of unemployment insurance programs, which are largely run by states. They proposed increasing the amount of jobless payments, extending the duration of the weekly benefit, expanding the pool of eligible workers, and implementing a system that would more closely tie the payments to economic conditions.

Since the Covid-19 pandemic began, Congress has taken several temporary measures to bolster jobless payments, including increasing weekly payments and offering support to more workers. Most recently Congress extended a $300 weekly supplement until early September, among other steps.

But the lawmakers are seeking more permanent changes to the social -safety net program.

“The Cares Act’s emergency programs must be extended to support jobless workers for the duration of the current economic downturn, but we must also fix the underlying problems facing our [unemployment insurance] system so that it can provide economic security for all workers,” they wrote in the letter, referencing the $2.2 trillion Cares Act passed last year that first added a federal supplement.

The pandemic drove up jobless claims last spring to historically high levels. State unemployment systems, hamstrung by decades-old technology, struggled to quickly deliver benefits to millions of unemployed people.

Officials under both the Trump and Biden administrations have cited the pressing need to address outdated computer systems and fraudulent claims plaguing state unemployment systems.

The White House has been studying possible unemployment insurance changes, according to a person familiar with the matter, and Democrats on Capitol Hill have been discussing the issue with the administration. But it isn’t known if the White House will address the issue in their coming plan, which is expected to be released next week and includes more than $1 trillion in funding for paid leave, tuition-free community college, and universal prekindergarten.

The White House didn’t immediately respond to a request for comment.

Republicans have argued that large payments distort the labor market by offering people more money than they could make at work, and some Democrats have expressed concerns about the proper size of supplemental checks. The level of the payments was a sticking point in the latest round of aid, with the $400 a week proposed by House Democrats reduced to $300 a week in the Senate.

An unemployment insurance overhaul is the latest target of Democratic lobbying of the White House ahead of the plan’s release. House Speaker Nancy Pelosi (D., Calif.), along with other Democrats, has been pushing for the Biden administration to include a plan allowing Medicare to negotiate the price of prescription drugs in the overhaul. Other Democrats are seeking a permanent extension of an enhanced child tax credit put into law earlier this year, though Mr. Biden told a group of lawmakers earlier this week he would propose a temporary extension of the credit.

Between the Democratic demands and Republican opposition to aggressively expanding social-welfare programs, the antipoverty plan will be a challenge for the Biden administration to shepherd through Capitol Hill. Lawmakers are also considering Mr. Biden’s $2.3 trillion infrastructure plan, which Democrats could ultimately combine with the antipoverty proposal. Narrow control of the House and Senate allows Democrats to pass legislation without GOP support, albeit through a process that only allows provisions related to the budget.

While Congress approved broad unemployment payments with bipartisan support last year, partisan disagreements over the generosity of the payments led to halts in federal support. After a $600 weekly payment expired in July last year, Congress didn’t approve another federal supplement until December, when it approved $300 weekly.

Sen. Ron Wyden (D., Ore.), the chairman of the Senate Finance Committee, and Sen. Michael Bennet (D., Colo.) put out an unemployment insurance plan last week that would require that states offer 26 weeks of jobless benefits that replace at least 75% of workers’ wages, among other steps. Democrats in the House, including Reps. Don Beyer (D,. Va.) and Suzan DelBene (D., Wash.), have also advocated for changes.

Democrats contend increasing the amount and duration of benefits would help avoid the state benefit cutbacks that occurred in the aftermath of the 2007-09 recession. Many states slashed jobless benefits to rebuild funds set aside to pay unemployment benefits after they were depleted during the last recession.

Labor Secretary Marty Walsh in an interview with The Wall Street Journal this month said addressing challenges in the states’ unemployment insurance systems is among his top initial priorities at the agency. He signaled he was considering issues around antiquated technology, fraud and the system’s overall patchwork nature. Each state sets its own criteria for its unemployment insurance system, including determining applicant eligibility and duration of benefits.

Mr. Walsh said he had begun to have conversations about how to address such issues, including proposals to regionalize or nationalize the states’ systems. He didn’t rule out a national system, but said it was too early to say whether such an overhaul should happen.

“I think it’s something that we have to just take a good look at and see what’s the best path forward,” he said.

Congress’s most recent coronavirus stimulus package allocated more than $2 billion to the Labor Department for administering unemployment compensation programs, and for detecting and preventing fraud and promoting equitable access in the programs.

Write to Andrew Duehren at andrew.duehren@wsj.com