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Republicans block pandemic aid including $2000 checks, 14 million lose unemployment benefits

By Masao Suzuki

Masao Suzuki

San José, CA – Republicans in the House and Senate have blocked an effort by Democrats to increase the amount of individual payments in the new pandemic aid act from $600 to $2000. Many progressive Democrats including Senator Bernie Sanders and Representative Alexandria Ocasio-Cortez had tried to increase the amount during the negotiations over the new aid package. These payments have been very popular, and at the last minute, President Trump chimed in, saying that he would refuse to sign the bill unless the larger amount was included.

While Democrats will try for a new vote on Monday, December 28, this delay means that 14 million people will lose their unemployment benefits starting December 26. The federal Pandemic Unemployment Assistance or PUA, for self-employed and gig workers, and the federal Pandemic Emergency Unemployment Compensation or PEUC, for the long-term unemployed whose state benefits have run out, both expire during the last week of this month.

Extending the unemployment benefits and providing larger individual payments are critical at this time as more and more working people are being hit by the recession. While the most recent report on new unemployment claims did show a drop to just over 800,000 for the week ending December 19, this level still remains above the pre-recession record set all the way back during the brutal 1981-82 recession. But the total number of people collecting the regular state unemployment insurance, the federal PUA, the federal PEUC, the state extended benefits program for states with high unemployment rates, as well as other smaller programs, remained above 20 million.

Other economic data released in the past week painted a gloomy picture for the month of November. Sales of new homes fell 11% from October to a five-month low. Most economists had predicted an increase in sales as the growing economic inequality boosted the ability of higher-income households to buy homes, even as millions of low-income households faced growing rent debt and the threat of eviction. The Centers for Disease Control eviction moratorium will expire on December 31, 2020 unless the extension in the new aid bill is signed into law. Despite the moratorium, landlords across the country are evicting tenants in the midst of the pandemic.

Consumer spending in November also fell by 0.4%, the first drop since April. Personal income fell an even larger 1.1%, for the third time in four months as more and more people exhaust their state unemployment benefits, which last for only six months or less. The household savings rate also fell to the lowest level of the recession, meaning that consumers will be less able to spend going into the new year.

The biggest drop in spending was on restaurant and hotels which declined by 3.8%. This reflects the growing pandemic that was causing consumers to pull back and local and state governments to reimpose restrictions. This had a big impact on the first reading on consumer confidence in December. The Conference Board reported a 4.6% fall in their monthly consumer confidence reading between November and December. All of this was because of the fall in their current conditions index, which plunged almost 15% in one month.

It is no surprise that households think current economic conditions are poor. The Census Bureau estimates that almost one out of four households, or more than 80 million people, are having a hard time paying for basic needs. Along with housing insecurity, poverty and hunger are growing. The new aid bill has a small amount of food aid, $13 billion, to boost the Supplemental Nutrition Assistance Program or SNAP that provides food stamps to poor individuals. This comes to a 15% increase in the SNAP budget, which is totally inadequate given the current needs.

While the new aid bill has many needed unemployment benefits extensions for the PUA and the PEUC, extension of the eviction moratorium, as well as smaller amounts of money for schools, renter assistance, public transit, and childcare it also contains a lot of wasteful spending. The single largest amount of money, more than one-third of the total bill, will go to businesses. Almost all of this is for a second round of the Paycheck Protection Program loans, which were riddled with problems in the first round. While claiming to be for small businesses, much of it went to larger corporations and even elite restaurants with $1200-per-person menus, not mom and pop businesses. Despite the label ‘paycheck protection,’ much of the money went to landlords in the form of rent.

Congress even added to the benefits for businesses by making the forgivable loans not taxable. In contrast, the federal government taxes unemployment benefits, another example to the double standard for business owners on one hand and workers, on the other. Congress went even further by saying that the expenses that the PPP money was spent on are deductible on taxes.

Another problem with the new bill is that it does not extend the family and medical leave provision in the first CARES act that expires at the end of the year. This provision allowed workers who had to leave their jobs because of COVID illness in their families or childcare needs and be paid by the federal government.

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