Congress leaves town without a coronavirus stimulus deal, allowing $600 unemployment benefit to end

A $600 weekly unemployment benefit that has helped millions of Americans stay afloat amid the coronavirus pandemic will officially end at midnight as Congress adjourned for the weekend without coming to any deal on the program or a larger emergency stimulus package. 

The discussions over another package turned testy Friday as Democrats and Republicans each blamed the other for their inability to come to an agreement, leaving out-of-work Americans in limbo as the vital benefits come to a halt. 

In dueling press conferences, White House Chief of Staff Mark Meadows laid into Democrats for rejecting a short-term deal to continue the bolstered unemployment benefit for one week, while House Speaker Nancy Pelosi railed against Republicans and the Trump administration for attempting to take a piecemeal approach to help Americans as COVID-19 cases continue to surge nationally. 

"What we're seeing is politics as usual from Democrats up on Capitol Hill," Meadows said from the White House podium. "The Democrats believe that they have all the cards on their side, and they're willing to play those cards at the expense of those that are hurting."

Pelosi, D-Calif., criticized Republicans for waiting months before attempting to take up another emergency package, noting the surge of coronavirus cases and high unemployment rate. 

"They do not understand the gravity of the situation," she said of Republicans. "We don’t have shared values. That’s just the way it is." 

Breaking down what Republicans and Democrats want in the coronavirus stimulus plan

She argued a deal to extend the unemployment benefit by one week would only be meaningful if a larger bill was nearly worked out, noting the time it would take for the measure to pass and for money to reach families. Pelosi also said the Senate, which has remained divided on unemployment, likely would not have the votes to approve a continuation of the $600 weekly benefit, which bolsters state benefits that average nationally about $370 a week.

Later Friday, the president posted a series of tweets blaming Democrats for the deadlock, saying they're standing in the way of Americans receiving another stimulus check. 

"Pelosi & Schumer have no interest in making a deal that is good for our Country and our People. All they want is a trillion dollars, and much more, for their Radical Left Governed States, most of which are doing very badly," the president wrote in one post. In another, he said the two Democratic leaders were blocking unemployment assistance, "which is so terrible, especially since they fully understand that it was not the worker's fault that they are unemployed, it’s the fault of China!"

Though the back-and-forth attacks signal a deal is still far off, both Meadows and Pelosi said they plan to meet again to continue talks. 

Friday's news conferences cap off a week filled with negotiations over another stimulus bill talks that have all but stalled as Republicans are divided over what should be included in the measure, and Democrats remain against a smaller bill to keep unemployment flowing for a short period. The Senate adjourned on Thursday and the House left town on Friday, ensuring any deal wouldn't be able to pass until next week at the very earliest. 

On Thursday, Meadows and Treasury Secretary Steven Mnuchin met with Pelosi and Senate Minority Leader Chuck Schumer, D-N.Y., for a lengthy meeting where both sides attempted once more to come to a deal before millions saw their unemployment benefits rolled back significantly. 

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Meadows said Democrats were given four separate offers throughout the day but rejected all of them.

"We're going in the wrong direction. They're going in the wrong direction because of partisan politics. It is very disappointing," Meadows said. "It surprises me that when we talk about compassion and caring about those that truly are in need, that a temporary solution to make sure that unemployment, enhanced unemployment continues has been rejected not once but multiple times."

House Democrats passed their version of the next stimulus package in May, a $3 trillion measure that would have extended the $600 boost in weekly unemployment compensation until at least January. The proposal has not been taken up by the Republican-held Senate.

Democrats, including Pelosi, have balked at taking up unemployment assistance as a separate measure, arguing Republicans should come to the table for a larger deal on a host of pressing policy items, including more funds for local and state governments. House Democrats' bill included not only an extension of unemployment but also another round of $1,200 stimulus checks and increased funds for state and local governments. 

Senate Republicans, meanwhile, have had trouble negotiating their demands as the conference remains divided on what the next stimulus package should include. Some even expressed doubt that another bill is needed. The divisions remained even after Republicans unveiled their own proposal this week that included $1,200 stimulus checks, funds for schools and small businesses, and scaled-back unemployment benefits of $200 per week.

Many Republicans have spent weeks railing against the $600 unemployment benefit, which is paid to Americans in addition to state claims. They argue it should be changed or replaced with a back-to-work incentive in hopes of jump-starting the economy and getting shuttered businesses to rehire laid-off workers. 

Senate Majority Leader Mitch McConnell started the process on Thursday for the Senate to take up a measure that could tackle unemployment, meaning boosted unemployment could be approved by the chamber early next week, though currently the House is not expected to approve such a proposal. 

While unemployment benefits have remained a point of contention, both sides have butted heads over a number of proposals, including Republican demands that companies be shielded from coronavirus-related lawsuits and Democratic requirements that state and local governments be given more funds to offset their budgets after the pandemic. 

But both sides appeared mostly opposed to a request from the administration for $377 million to modernize the West Wing along with more than $1 billion to keep the new FBI headquarters in Washington, D.C.

On Friday, White House Press Secretary Kayleigh McEnany defended the requests. While pointing out previous coronavirus relief bills had "plenty of other things" that were unrelated to the pandemic, McEnany insisted the FBI funding "is not a red line for us."

"It was part of the initial bill but it is certainly not a red line priority," she said.

California lawmakers grilled the director of the state's unemployment office in a hearing on Thursday, saying too many Californians have been unable to access unemployment benefits due to a confusing and unresponsive bureaucracy.

"Because of [the Employment Development Department's] failures, our constituents are depleting their life savings, going into extreme debt, having trouble paying rent and putting food on the table," David Chiu (D-San Francisco) told EDD director Sharon Hilliard.

Unemployed Californians have had trouble applying for benefits online. And when they need help, many can't get through to anyone on the phone. Some have now been waiting for months.

HUNDREDS OF THOUSANDS HAVE YET TO RECEIVE PAYMENTS

Hilliard said EDD has been swamped, processing an unprecedented 9.3 million claims since the coronavirus pandemic began. For reference, she said EDD processed 3.8 million claims during the worst year of the Great Recession.

The department reports that close to 890,000 applicants who may be eligible for payments still have not been paid.

Hilliard said most applicants in that group have not completed the steps necessary to certify for benefits, but she said EDD is aware of 239,000 claims still needing department resolution. She said those claims would be completed by September.

Applicants are facing long wait times to get their claims processed. During normal economic times, EDD delivers payments to 80% of applicants within three weeks, according to the Legislative Analyst's Office.

But during the pandemic, only 62% of Californians have been paid within three weeks of applying, compared to the nationwide average of 69%.

APPLICANTS STRUGGLE TO REACH EDD BY PHONE

To meet the increased demand, the department has expanded call center hours for technical support to 12 hours per day, seven days a week.

But EDD's core call center — staffed by 100 caseworkers — is only open four hours per day on weekday mornings. Applicants on the department's callback list are waiting four to eight weeks to be contacted, on average.

"We realize that the current call center operations are not currently serving all of our customers in a timely manner," Hilliard said. She said the department plans to expand the hours of its core call center, but she did not say when.

This week, the Governor's office announced the formation of a "strike team" to reform EDD. Hilliard said the department will contract out a complete overhaul of the state's outdated technology infrastructure starting in October.

Lawmakers said these actions aren't happening quickly enough for the millions of unemployed Californians who desperately need financial help.

Assemblywoman Cottie Petrie-Norris (D-Laguna Beach) said, "All of these timelines seem totally out of step with the urgency of the moment we're in."

Meanwhile, Congress is currently negotiating a potential extension of federal unemployment benefits, now that the extra $600 per week provided by the CARES Act has expired.

Democrats want to renew the weekly $600 federal payments, but Republicans are pushing to cap total benefits at 70% of workers' past wages.

Hilliard said making those calculations for each Californian would be challenging, and could take the department up to 20 weeks to program into its computer system.

The Paycheck Protection Program has been a vital lifeline for businesses during the pandemic, providing close to $520 billion in aid to more than 5 million businesses. The premise of the program is to provide recipients with cash infusions to help pay their employees and qualified expenses such as rent, with the promise that in many cases, the loans will be forgiven.

But should such loans be automatically forgiven—allowing businesses to skip the paperwork required to prove the government funds were used for the intended purpose? According to two bank lobbying organizations and Treasury Secretary Steve Mnuchin, borrowers with loans under $150,000 should not have to go through the forgiveness process. This would mean that more than 86% of all PPP loans would be automatically forgiven, according to data provided by the SBA.

Relief Funding Needs To Be Accounted For

The U.S. economic fabric is woven from the industrious efforts of millions of hard-working entrepreneurs, farmers, medical providers, service providers, and others. The PPP was specifically designed to keep this fabric from unraveling in the midst of an unprecedented crisis

    If the PPP were intended to function as the economic impact payments to citizens, the government would have simply issued checks to U.S. business owners—just like it did with its stimulus payments to eligible citizens. PPP funds are taxpayer dollars specifically intended to maintain employment and support the economy during this tumultuous time; as such, some accountability must be required for the use of these funds.

    Business owners should be expected to take the time to show how they used the money, in order to encourage accountability and reduce fraud. If a small business owner using the PPP loan for the intended expense items of payroll and utilities, the loan should be 100% forgiven. If not, it is not the responsibility of taxpayers to cover the cost of misused funds.

    Yes, it will be an effort for both business owners and lenders to go through the forgiveness process; but the process of documenting the use of funds will help to maximize the effectiveness of this $520 billion in aid.

    Automatically Forgive Loans To Sole Props And The Self-Employed 

    While I don’t believe in auto-forgiveness for all loans less than $150,000, I do advocate that loans to sole proprietors, 1099 contractors, and self-employed individuals should be automatically forgiven. It is already challenging for those very small businesses to document how they pay themselves, they aren’t supporting other employees and they usually don’t have a separate office space with utility expenses. This is a segment of small business owners that should benefit from an auto-forgiveness mandate.

    However, for every business that has employees, I strongly recommend maintaining the original guideline in the PPP that requires basic accountability for how the loan is used. If used appropriately, forgiveness should be granted. If not, the SBA should require the payback of the loan.

    My hope is that the forgiveness process is as streamlined and easy as possible. Although I have empathy toward lenders who would rather focus their efforts elsewhere right now, I believe this process is necessary to protect against fraud.

    The Unintended Consequence Of Speed Is Fraud

    In April, when unemployment numbers were soaring by the day, the need to quickly deploy capital into the hands of small businesses was paramount. Business owners were desperate and the collective industry was trying to do everything possible to process loans in the most efficient manner possible. Unfortunately, one of the unintended consequences of speed is increased fraud.

    “The limited safeguards and lack of timely and complete guidance and oversight planning have increased the likelihood that borrowers may misuse or improperly receive loan proceeds,” the Government Accountability Office wrote.

    Due to how quickly the program rolled out, there were also questions around who got a share of the funds. Some public companies received millions of dollars in aid, to the outrage of many people. Worse yet, the program has been at risk for fraudsters.

    In a more egregious case of PPP fraud, a Florida man has been arrested after he allegedly received nearly $4 million in federal loans and spent it on lavish purchases including a Lamborghini Hurac├ín. The man claimed to have operated four businesses that employed 70 people with $4 million in monthly expenses. Authorities took notice after he applied for additional money that totaled more than $13 million.

    While the above example is an extreme case, the insertion of basic accountability through documenting the use of PPP funds will help to collectively decrease fraud and ensure proper use of taxpayer dollars.

    Will There Be Another Round Of PPP?

    Unfortunately, the COVID-19 pandemic continues on, and most small businesses are still feeling the pain. The initial PPP loan has certainly helped many to survive, but those that have been hit the hardest are in need of another lifeline. Senate Republicans have put forward a plan that will set aside funds to businesses of under 300 employees that were hit hard by the pandemic. Part of the initiative will also stipulate that applications show at least a 50 percent revenue loss compared to the previous quarter.

    A portion of this new round of PPP loans will be set aside for businesses with 10 employees or fewer, a segment that has been historically disadvantaged when it comes to receiving loans from large banks. It is these business owners, along with sole proprietors, that would likely receive loans of up to $20,000.

    Throughout the PPP, my company, Lendio, has helped many of the smallest businesses in the country to connect with one of our 300 PPP lenders. To date, we have facilitated 100,000 PPP loan approvals totaling $8 billion. More is needed to keep these businesses afloat. Congress should act quickly to pass another aid bill, with the proper accountability measures in place, in order to keep the small business engine of our country chugging along.

    Congress is taking its negotiations for the second stimulus package—and more stimulus checks—right down to the wire.

    Republican and Democratic leaders are trying to hash out what should be included in the latest legislation to boost the economy during the pandemic. Congress goes on a month-long break starting Aug 7. One of the most closely followed potential provisions is another round of economic impact payments, also referred to as stimulus checks.

    The Coronavirus Aid, Relief and Economic Security (CARES) Act provided one-time payments for households based on adjusted gross income and how many dependents they had lived at home. Now, Congress is considering another round of payments.

    Both the House and Senate have come up with numerous proposals, but the full Congress has passed no legislation, and the president has not signed anything into law. Yet, it's still worth knowing what could potentially be passed.

    Here are four popular stimulus check proposals.

      The Republican proposal for the next stimulus package is the $1 trillion Health, Economic Assistance, Liability Protection, and Schools (HEALS) Act. It would provide another round of direct payments to Americans, under many of the same provisions found in the previous stimulus package, the CARES Act.

      The HEALS Act proposes $1,200 stimulus checks for individuals and $2,400 stimulus checks for married couples filing jointly. Additional $500 payments would be provided per qualifying dependent, no matter their age. Note that the CARES Act capped qualifying dependent age at 17 and younger.

      Payment amounts would gradually phase out for individuals making more than $75,000, married couples filing jointly making $150,000, and heads of households making more than $112,500.

      Use this HEALS Act calculator to determine how much money you would receive if this act was signed into law.

      The Democrat’s HEROES Act Stimulus Proposal

      The Democratic Party leadership in the House of Representatives passed the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act in May, and again in late July. Among the act’s many provisions are providing an additional one-time stimulus payment to Americans in response to the coronavirus pandemic. The act awaits a Senate vote and would require a signature from the president to be passed into law. 

      The $3 trillion HEROES Act proposal would follow the stimulus payment amounts and income thresholds passed in the CARES Act, but it provides additional money for up to three dependents. For example, the HEROES Act would provide $1,200 per qualifying child; the CARES Act provided only an additional $500. 

      Both acts put adjusted gross income maximums at $75,000 for individuals, $150,000 for married couples filing jointly, and $112,500 for heads of households; individuals with higher gross incomes would see their payments decrease as their income increases.

      Use this HEROES Act stimulus calculator to determine how much money you would receive if this act was signed into law.

      Monthly Economic Crisis Support Act Stimulus Proposal

      Sens. Kamala D. Harris (D-CA), Bernie Sanders (I-VT), Kirsten Gillibrand (D-NY) and Ed Markey (D-MA) have proposed the Monthly Economic Crisis Support Act to provide monthly stimulus payments to Americans in response to COVID-19. 

      The proposal would provide a lump-sum payment retroactive to March 2020, followed by monthly payments that would continue until three months after the secretary of Health and Human Services declares the coronavirus public health emergency has ended. Individuals who qualify will receive $2,000 and married couples filing jointly will receive $4,000 per month.

      The Monthly Economic Crisis Support Act would provide monthly payments to individuals or married couples filing jointly who have adjusted gross incomes below $100,000 for individuals or $200,000 for couples; AGIs above those thresholds would see their payments reduced. It also includes an additional $2,000 per child, for up to three children. In some cases, households could receive as much as $10,000 per month.

      Use this Monthly Economic Crisis Support Act stimulus proposal calculator to determine how much money you would receive if this act was signed into law.

      Emergency Money for the People Act Stimulus Proposal

      Rep. Tim Ryan (D-OH) has proposed the Emergency Money for the People Act to provide monthly stimulus payments to Americans for 12 months in response to the coronavirus pandemic. Individuals would receive $2,000 each month, and married couples filing joint returns would receive $4,000 each month. Each dependent child would receive $500, up to three children.

      The income threshold amounts for the Emergency Money for the People Act are high compared to other proposals. The adjusted gross income maximum for individuals is $130,000 and for married couples filing jointly $260,000. The payment amount will decrease by 5% for each $1,000 over those amounts.

      This proposal would provide payment to both U.S. citizens and individuals who are not citizens or residents but have been physically present in the U.S. since Jan. 27, 2020. 

      Use this Emergency Money for the People Act stimulus calculator to determine how much money you would receive if this act was signed into law.

      Lawmakers are currently discussing what will be in the next federal stimulus package, and another round of stimulus checks are being included in discussions. The first round of stimulus payments provided by the CARES Act was used as a lifeline for many Americans, a survey by YouGov for Forbes Advisor found.

      Most Americans agree that at least one additional round of stimulus payments will help bolster the economy, another Forbes Advisor survey found, with respondents stating $2,000 per month for six months would be the most beneficial.