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Biden Admin Will Cut COVID Benefits That Benefit 9 Million Workers

Millions still rely on the additional benefits, and the administration's case for ending it is shaky at best.

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The Biden administration is poised to allow additional federal unemployment benefits to expire on September 6, 528 days after they were first implemented as part of the CARES Act. That’s bad news for the 9 million-plus workers still receiving them, and it could very well mean American families losing their homes and American children going hungry. All of which begs the question: why isn’t the president trying to extend the benefits and protect those vulnerable Americans?

A letter to the chairmen of the House Ways and Means and Senate Finance Committees holds the answers. In it, Treasury Secretary Janet Yellen and Labor Secretary Martin Walsh explain the rationale behind allowing what they call “a critical lifeline for millions of Americans who were unemployed, through no fault of their own during the COVID pandemic” even as that pandemic takes a turn for the worse.

The Reasons Biden’s Admin is Letting Unemployment Expire:

“Our nation is getting back to work”

The secretaries cited statistics to support the contention that Americans are increasingly becoming employed. An average of 832,000 jobs have been created over the last three months, lowering the unemployment rate from 6.3 to 5.4 percent. The “grit and ingenuity” of the American people and the federal government “executing on a plan to bring our economy back” have rescued us from the abyss, according to them.

That version of events conveniently ignores the aforementioned millions who are still unemployed, of course, and rests on a similar assumption that pre-pandemic levels of unemployment aid were adequate for their families’ needs (they were not). That assumption is undercut later on in this very letter.

Part of eliminating poverty and hunger for children and adults is raising the baseline standard of living that we are willing to accept. By refusing to entertain the possibility that more generous unemployment benefits should be part of the permanent social safety net, the Biden administration is squandering an opportunity to reduce child poverty and hunger among working-class families and the deeply poor. (Children are the poorest group in the United States, and a massive amount of children suffer from hunger.)

States can use the federal relief funds they control on unemployment benefits

The administration’s principal justification for letting benefits expire is that state and local governments can use their shares of $350 billion in relief funds to continue paying out the additional unemployment benefits. It promised assistance from both agencies in justifying and implementing such payouts but leaves it up to the states to do so.

It’s reasonable to assume that the two dozen GOP-controlled states that opted out of federal unemployment assistance early, dubiously saying additional unemployment was causing a “labor shortage,” will not suddenly steer money toward the program.

And giving states a choice makes it harder to continue unemployment benefits when that would mean less money for other necessary COVID mitigation efforts, like money to schools, testing, or businesses.

Like it or not, people who depend on government benefits are among the most marginalized in America. Without a strong mandate from the top, many of those who lost their jobs through no fault of their own will lose the money they need to feed and shelter their families because even sympathetic representatives will be tempted to opt for less politically risky (and potentially still effective) ways to spend the money.

Delta variant poses only short-term challenges

The Delta variant is highly contagious, and it’s beyond the recent nationwide spike in cases, deaths, hospital visits, and reinstitution of mitigation efforts. Predicting its course seems a fool’s errand, particularly given the dramatic slowdown in vaccinations per day, the hesitancy of parents to get their kids inoculated even with schools reopening, and the looming fall and winter months—when there was a dramatic spike in COVID-19 cases last year.

Yet, the secretaries write only that the “Delta variant may also pose short-term challenges to local economies and labor markets.” It’s unclear what evidence they have that the Delta variant could have no effect, or that any effect it has won’t last long, and it’s unclear why anyone would accept that argument prima facie.

Congress will pass unemployment insurance reform as part of the reconciliation process

The letter closes with a call for Congress “to take up the issue of long-term UI reform as part of the reconciliation process.” It’s true that the problems with the UI system predate the pandemic, but there will be a gap between the end of the emergency benefits and Congressional action to reform the system. And that’s the best-case scenario.

It’s just as, if not more, likely that the unemployment insurance reform falls through the cracks of complicated, contentious budget reconciliation negotiations that can only be successful if everyone from Bernie Sanders—who wanted a $6 trillion budget—to Joe Manchin—who isn’t comfortable with the current $3.5 trillion reconciliation bill—votes yea.

What happens next?

If all of these assumptions prove correct, the Biden administration will look politically savvy.

But there are multiple ways in which this plan can fail, and the result will be families struggling to make ends meet, pay bills, put food on the table, and pay rent, as other pandemic-era benefits expire.

If that happens, it will be important to remember that it was the White House that opened the door to such calamities by failing to act at this critical juncture.