WASHINGTON (CN) — With just a week to go before some 30 million out-of-work Americans lose the unemployment bonus they have been collecting during the pandemic, a panel of economists warned the Senate that more government intervention is vital to forestalling an even deeper crisis.
Nearly a third of Americans missed rent or mortgage payments in July, but a third round of stimulus funding has been held up for months over rancor about too much generosity disincentivizing those who file jobless claims from seeking reemployment.
Sixty days ago, the House passed the Heroes Act, a $3 trillion relief package providing $200 billion for emergency housing assistance, renewal of the $600 unemployment plus-up that expires July 31 and nearly $1 trillion for states and local governments to shore up their flagging economies.
Senate Majority Leader Mitch McConnell refused to consider the bill from its inception, but Treasury Secretary Steve Mnuchin indicated Thursday that a compromise is in the works.
Leaving Capitol Hill after a meeting with McConnell, Mnuchin told reporters that there is talk of a deal for workers to collect 70% of their income, roughly $200 or $300 per week instead of the current $600 payment.
Shaun Donovan, the former secretary for the U.S. Department of Housing and Urban Development under President Barack Obama, told lawmakers providing adequate resources to low income families hamstrung by the pandemic was a no brainer.
“It not only protects them but public health by ensuring they do not return to workplaces prematurely and contribute to the spread of the coronavirus,” Donovan said, noting that millions of children could be made homeless in the coming weeks and months as parents struggle to make ends meet.
Only 18% of the 48% of renters who are unemployed receive unemployment insurance, according to the Bureau of Labor Statistics, leaving a significant gap of Americans financially vulnerable in a public health crisis that has afflicted nearly 4 million Americans and killed 140,000 as of Thursday.
Friday will mark the end of a federal moratorium on evictions — relief that Donovan says has been critical if narrow as it only helps those who live in federally assisted or insured properties.
“That means there are still enormous risks for displacement and eviction even before the moratorium expires… The human cost and fiscal cost of evictions are deep. As we see families lose homes, we see consequences in children’s learning. We see disconnections from jobs,” Donovan said. “In long-term homelessness, we see an increase in the use of mental health services, prisons, emergency rooms. Not only are the human costs terrible but the fiscal costs are often more expensive to let someone become homeless than it is to keep them stably housed.”
As a former federal budget director, he noted, it would be “pennywise and pound foolish” from both the human and economic perspective not to provide sweeping additional housing assistance in the coming relief package.
Robert Reich, former secretary of the Department of Labor under President Bill Clinton, worked to disabuse Republicans on the House Financial Services Committee of their notion that an increase in unemployment benefits would keep Americans from returning to work.
“The number of Americans negatively affected are simply huge,” Reich said. “The $600 employment insurance is to prevent human suffering and to stimulate the economy so people have extra money to spend and we don’t lose more jobs. If we don’t keep those two in mind. We’re going to potentially make some terrible mistakes right now.”
As some Republicans push to lower unemployment benefits in the next go, an exasperated Representative Ed Perlmutter questioned the logic.
“Part of what we were trying to do in the CARES Act was to provide money into the economy so there would be a demand for goods and services once we came out of this pandemic — so people could pay their rent or mortgage or buy some goods,” the Colorado Democrat said. “I think we’re in some serious soup here. I feel like Republicans are fiddling around while Rome is burning.”
Reich called the metaphor “unfortunately appropriate,” noting the U.S. has not been walloped like this since the Great Depression.
“This is also much, much worse than the Great Recession that we went through,” he said.
Representative Bill Foster, an Illinois Democrat, suggested splitting the difference on party lines: If leadership in “red states” object to a $600 stipend or object to a moratorium on rent, then so be it, he said.
Using the example of his own state, Foster noted that Illinois pays $20 billion to $40 billion annually to states in the Sun Belt, which he said are, more often than not, right-to-work states that promote “competition through low wages.”
“This may be an opportunity to rectify this imbalance so states that have higher wages and are economically productive stop getting led to support states who don’t believe in things like education and so on,” Foster said.