White House, Congress Flirting With A Double-Dip Recession

Negotiations on another coronavirus relief bill have stalled. The economy might also stall.

When the coronavirus pandemic first started spreading in the United States, Congress sprang into action, creating unprecedented relief programs for businesses and workers, sending out stimulus checks to more than 150 million people, and temporarily blocking evictions for millions of renters.  

But now ― with the national unemployment rate still above 10%, more than a million people losing their jobs every week, and the coronavirus still claiming a thousand lives per day ― lawmakers have left town. 

Republicans have claimed that the added $600 a week in unemployment benefits, which expired July 31, was doing more harm than good. With Republicans and Democrats unable to reach a sweeping deal to extend the benefits, Republicans are about to see if they were right to think the country’s economic problems will go away on their own.

But monthly job gains have been slowing down and economists warn that cutting benefits to force people back to their jobs won’t work. 

There is no more effective way to support an economy in a downturn than providing help to the hard-pressed unemployed, who spend any money they receive as quickly as they receive it,” Mark Zandi, chief economist at Moody’s Analytics, said in an email. 

“If lawmakers don’t come through and quickly pass another fiscal rescue package, including more unemployment insurance, the economy is likely to backslide into recession,” Zandi said. 

Before it lapsed at the end of last month, at least 25 million people were receiving the extra $600 on top of their state benefits, which typically pay a little more than $300. That means letting the federal boost expire collapsed incomes for a huge number of people ― roughly one out of every six workers ― which is bad news not just for them, but also the various businesses that count on their spending. 

A University of Chicago analysis said in July that if Congress did nothing, unemployed people would cut their spending by a third. Since unemployment benefits represented about 15% of total wages, dropping the federal supplement “could cause substantial declines in aggregate demand and potentially negative effects on the macro-economy.” 

But Republicans have been more concerned about employers than the broader economy, complaining that for many workers, the combined state-federal benefit amounted to more than their previous wage. With the federal portion gone, employers are able to keep wages low and force people back to work ― coronavirus be damned. 

It’s all about the people in the high end and the ones that have the most money and the corporations. Amber Logue

Further complicating matters, President Donald Trump has signed a memorandum ordering the Labor Department and Federal Emergency Management Agency to try to replace the lapsed benefit with a weekly $300 “lost wage assistance” payment. The proposed scheme would pay half of the previous benefit, and likely suffer from major logistical problems, but Trump has given Republicans cover to claim the unemployed are being taken care of.

“The existing unemployment program expired at the end of July after Democrats played politics and blocked efforts to renew it several times,” White House spokesman Judd Deere said in an email, referring to Republican motions to reauthorize the benefits after they had already lapsed. “President Trump acted where no one would to provide relief to the American people which will help continue our economic recovery that is already well underway.” 

The problem is, it’s not clear how soon Trump’s initiative would actually pay anyone. State workforce agencies could have to erect shadow payment systems to distribute the money, since the wage assistance technically isn’t an unemployment benefit. So far, 45 states have either declined to participate or are waiting for more guidance, according to a tally by Rep. Don Beyer (D-Va.), who is a member of the House committee that oversees unemployment. 

Democratic leaders in the House sent members home for the August recess two weeks ago, but they said that, should they reach a deal with Republicans on another coronavirus stimulus package, they’d bring members back.

“I’m ready to be on the next flight to D.C. if there’s a COVID deal,” Rep. Jared Huffman (D-Calif.) told HuffPost on Thursday. “And I think all of my colleagues are similarly on standby. Given how much we pushed through in July, and how everything is piled up in the Senate, the main reason for being in D.C. would be to vote on that kind of deal, and it looks like Trump and [Senate Majority Leader Mitch] McConnell are just not serious about making that happen.”

There has been no progress in talks between House Speaker Nancy Pelosi and the administration, with the two sides unable to agree even on an overall dollar figure. Democrats have offered to reduce the total cost of their demands using the same budgetary gimmick Republicans used for their 2017 tax bill, but Republicans now dismiss the tactic. 

The situation has grown so dire that a senior White House aide, anonymous and free to speak candidly about negotiations, only offered that the president was taking an “all hands on deck approach” and  “evaluating every possible option to bring relief to the American people.”

The missing benefits and bad economic numbers reflect real material deprivation for millions of people. 

Amber Logue of Las Vegas, Nevada, said her unemployment income shrank to $108 and her landlord wants her to pay up or get out. She said Congress has been “disrespectful” of working people. 

“It’s all about the people in the high end and the ones that have the most money and the corporations,” she said.  

Logue said Nevada’s Department of Employment, Training and Rehabilitation determined her benefit amount based on wages from her call center job instead of the income from her housekeeping business, which is substantially higher. But she’s been unable to get through to anybody at the department, a common problem unemployed people have reported across the country. The same state workforce agencies Trump wants to set up a new payment system can’t even answer the phone. 

Even before she lost the extra $600, Logue, 35, struggled to cover expenses for herself and her kids. The manager of her apartment complex reminded her in a July 30 letter about the expiration of federal and state eviction moratoriums enacted at the outset of the pandemic.  

“This means that Nevada courts will allow evictions for non-payment of rent cases to resume in September 2020,” the letter said.  

She’s applied for jobs and had interviews at call centers, but hasn’t heard back yet. She didn’t think they seemed safe anyway. 

“The three interviews I’ve had since the pandemic, it’s ridiculous,” she said. “There’s no six feet of distancing, there’s no masks in the call centers.”

On top of all that, a reckless driver killed Logue’s mother Monday night in Chicago. In addition to figuring out how she’ll maintain shelter, Logue has to grieve and make funeral arrangements.  

“I don’t have no answers,” she said. “I’m so blanked with everything right now. I can’t even. There’s nowhere to turn.”