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A new stimulus deal is brewing — here's what that could mean for unemployment benefits

State of COVID economic relief negotiations
U.S. Chamber of Commerce official on COVID economic relief negotiations 08:33

With major federal jobless aid programs slated to expire by year-end, the question remains about what could replace them. High unemployment continues to afflict the U.S. economy and millions of Americans struggle to make ends meet.

In Washington, D.C., two competing proposals were introduced last week, although each offers markedly different levels of support for jobless workers. The first is a $908 billion bipartisan congressional plan that prioritizes aid for people who are out of work, businesses, and state and local governments. The second is a smaller Republican initiative that focuses on helping businesses stay afloat while limiting their legal exposure to coronavirus-related lawsuits. Neither proposal includes direct payments to Americans. 

The larger stimulus package appears to be gaining traction, with Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer saying the proposal should form the basis for any further negotiations. The plan also has received support from several Republican senators. Pelosi on Friday said she would like to attach new coronavirus relief legislation to a government funding omnibus bill that must pass within the next week to avoid a government shutdown.

Although the final contours of a stimulus measure remain under debate on Capitol Hill, many experts see a clear need for additional economic relief. Job growth slowed sharply last month as the coronavirus surged throughout the country. 

"We're still in situation where just under 19 million people are claiming benefits for the main unemployment programs," said Andrew Stettner, an expert on unemployment benefits at The Century Foundation, a progressive think tank. "Extreme numbers of people have been out of work for a long time and thus are at the end of their rope."

Ideally, Stettner said, Congress would approve another six months' worth of the core benefits provided by the Coronavirus Aid, Relief and Economic Security, or CARES, Act. That could provide a financial bridge for workers until vaccinations become widely available, at which point businesses like restaurants and hotels could again start rehiring. 

The unemployment programs due to shut off on December 26 are the Pandemic Unemployment Assistance (PUA) program, which provides aid to self-employed and gig workers, and the Pandemic Emergency Unemployment Compensation (PEUC) program, which provides an additional 13 weeks of benefits beyond the typical 26 weeks that states provide unemployed workers. 

Neither stimulus proposal would provide an additional six months of benefits for the two programs.  But President-Elect Joe Biden and the new Congress that will be seated in January could negotiate a more generous stimulus package in early 2021, experts say. 

Here's what each stimulus plan would offer jobless workers. 

$908 billion bipartisan plan

Backed by senators including Joe Manchin, a Democrat from West Virginia, and Mitt Romney, a Republican from Utah, the proposal would allocate $180 billion for unemployment aid. 

That would represent the second-largest chunk of spending under the plan's framework, along with $288 billion in funding for small businesses. The money would provide an additional $300 a week in jobless aid, as well as continuing state jobless benefits, according to the Washington Post. 

The $180 billion "Is sufficient enough to add another 13 weeks of benefits to both the PEUC, for W2 workers, and PUA, and for those not eligible for state benefits," Stettner said. 

In other words, unemployed workers could see their benefits extended through March instead of expiring at the end of December.

McConnell's "targeted" plan

The second plan proposed this week comes from Senator Mitch McConnell, Republican of Kentucky, who described it as "targeted" aid. His plan would extend PUA and PEUC for one month, until January 31, and then phase out benefits for the two months after that. 

However, the two-month phase-out after January 31 would only be available to people who have exhausted their benefits. In other words, if you lost your job early in the pandemic and have exhausted your eligible jobless aid, you wouldn't qualify for additional assistance after January 31. 

McConnell's proposal also includes a liability shield for businesses to protect them against lawsuits in case workers become infected with the coronavirus while on the job. That has spurred opposition from consumer and worker advocates.

"The McConnell one is possibly worse than nothing because it's only a month extension and it has the liability shield," said Michele Evermores, senior policy analyst at the National Employment Law Project. "That will force people back to COVID-infested workplaces, with no way to sue if they are injured and gives workplaces very little incentive to be safe."

Bipartisan $908 billion stimulus plan gains momentum on Capitol Hill 02:09
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