Senate Democrats are nearing an agreement within their caucus to reduce the boost in federal unemployment benefits in the COVID-19 relief bill to $300 from the $400 included in the House bill.
Democratic centrists led by Sens. Joe Manchin (W.Va.) and Tom Carper (Del.) support keeping the weekly benefit at $300 given the cost of the $1.9 trillion relief measure.
The “contours” of the emerging deal call for keeping the weekly unemployment benefit at $300 but extending it to Oct. 4 to avoid the so-called August cliff, according to a Senate Democratic aide briefed on the matter.
In a concession to liberals, the deal would also make up to $10,200 in unemployment compensation exempt from taxes. The tax break would apply to benefits received in 2020.
People who have already filed their tax returns for 2020 would be allowed to file an amended return.
The change is likely to anger progressives in the House and Senate but may reflect the realities of the 50-50 Senate, where a single Democrat can join with Republicans to provide 51 votes.
White House press secretary Jen Psaki hailed the agreement for extending unemployment benefits until October.
“The President believes it is critical to extend expanded unemployment benefits through the end of September to help Americans who are struggling, as the President proposed in the American Rescue Plan,” Psaki tweeted.
Psaki also touted the tax break for people on unemployment rolls.
She praised the deal for “helping to address the surprise tax bills that many are facing by eliminating the first $10,200 of UI benefits from taxation for 2020.”
“Combined, this amendment would provide more relief to the unemployed than the current legislation,” she tweeted.
A number of centrist Democrats have been seen as worried about the cost of the legislation, and the jobless benefits had been a point of contention.
Carper said Thursday that he was thinking about offering an amendment to keep weekly unemployment benefits at $300 instead of the $400 a week proposed by President Biden and included in the House-passed relief bill.
“What the states have said is they don’t want to be jerked around, they want to have some predictability and certainty,” Carper told The Hill on Thursday. “We’re working on something. We’ll see.”
The deal also comes after a strong jobs report on Friday found the economy added 379,000 jobs in February, a better-than-expected figure.
Senate Minority Leader Mitch McConnell (R-Ky.) railed against Biden’s proposed $400 per week unemployment benefit Friday morning.
“By one analysis, the Democrats’ extra cash bonus for laid-off workers who stay home will result in more than 60 percent of workers earning more money by staying home than they’d earn from returning to work,” he said on the floor. “This isn’t state unemployment insurance, it’s borrowing from our kids and grandkids to pay yet an additional cash bonus for not working.”
GOP arguments about the impact of generous benefits on the labor market appeared to resonate with some Democratic centrists.
“I was concerned about not making it so high that people wouldn’t want to go back to work,” said Sen. Angus King (Maine), an Independent who causes with Democrats.
Some progressives applauded one aspect of the deal: the tax-break for recipients of unemployment insurance (UI) benefits.
“There are a lot of opportunities Congress has to make a real difference in peoples’ lives when they are in deep distress. They very rarely take those shots, and forgiving a portion of tax liabilities on UI benefits is a huge one, and I’m so glad they picked this fight,” tweeted Elizabeth Pancotti, the policy director at Employ America, a progressive think tank and advocacy group.
Naomi Jagoda and Sylvan Lane contributed. Updated at 12:48 p.m.