UPDATE: 8:16 p.m. EST Friday ― Democrats reached a deal to extend the enhanced unemployment benefits in the next coronavirus relief bill through Sept. 6 at $300 per week. The proposal would also provide tax relief to those who received benefits last year.
Sen. Joe Manchin (D-W.Va.), a key holdout, announced his support for the agreement, clearing the way for President Joe Biden’s $1.9 trillion coronavirus relief bill to move forward in the Senate.
“The President has made it clear we will have enough vaccines for every American by the end of May, and I am confident the economic recovery will follow,” Manchin said in a statement. “We have reached a compromise that enables the economy to rebound quickly while also protecting those receiving unemployment benefits from being hit with an unexpected tax bill next year.”
Senate Democrats’ efforts to quickly pass a $1.9 trillion COVID-19 relief bill ground to a halt abruptly on Friday due to lack of support from a key moderate Democrat: Joe Manchin of West Virginia.
The unexpected hang-up centers on the issue of added federal unemployment benefits, which are due to expire for millions of Americans on March 14.
Democrats made last-minute changes to the unemployment provisions in order to win over moderate senators. Those changes included providing $300 in weekly added unemployment benefits — instead of the $400 per week Democrats initially included in the bill — but extending the benefits for another month, until the beginning of October. The federal government is currently providing $300 in addition to weekly state benefits, so the change would continue the status quo.
That extension could be crucial because Congress will likely be on recess in August, when benefits would expire under the House-passed legislation. The amendment includes another big change that had been sought by progressive lawmakers: The proposal would waive federal taxes on the first $10,200 of jobless benefits individuals received in 2020, in order to cut down on surprise tax bills for the unemployed.
The deal was meant to unite progressive and centrist Democrats, several of whom took issue with the size and duration of unemployment benefits earlier this week, and clear the way for the bill’s passage. After the White House issued statements endorsing the measure, the Senate began voting on amendments on Friday. But the process quickly derailed when it became evident all Democrats weren’t on board.
Chaos erupted when it appeared Manchin, who this week said he wanted to shrink the size of unemployment benefits and see them end earlier in the summer, would potentially vote for a dueling Republican amendment that would do just that.
The competing amendment, authored by Sen. Rob Portman (R-Ohio), would bring additional unemployment benefits down from the proposed $400 per week to $300 per week and end the program on July 18. It would essentially negate Democrats’ compromise proposal.
Several Democrats, including Sen. Kyrsten Sinema (D-Ariz.), were spotted in animated conversation with Manchin off the Senate floor. Democrats held open a vote on hiking the minimum wage to $15 for hours while negotiations continued, a highly unusual move in a chamber where everything is usually highly orchestrated.
“I think they’re trying to wear down Joe Manchin, who is intent on making sure we don’t spend more than we have to,” Sen. Mitt Romney (R-Utah) told HuffPost on Friday when asked why the bill had stalled.
The stakes are high for Democrats, who are trying to pass an emergency COVID-19 relief bill on party lines. The Senate procedure allows for an unlimited number of amendments, and it only takes one Democrat to vote with Republicans for a GOP amendment to pass.
Some state workforce agencies don’t give workers the option to withhold taxes from federal benefits, and with the extra $600 per week that Congress initially provided last year, millions of workers owe significant taxes but lack the income or savings to handle the bill.
Of the $580 billion in federal benefits paid last year, only 40% had taxes withheld, said Elizabeth Pancotti, an unemployment policy expert with the group Employ America.
The tax break was originally proposed by Sen. Dick Durbin (D-Ill.) last year, but was omitted from legislation because of its cost.
The longer duration of benefits combined with the tax break “would provide more relief to the unemployed than the current legislation,” White House press secretary Jen Psaki said Friday.
The agreement, which was announced shortly before the Senate began voting on the bill on Friday, was made at the request of both progressive and moderate senators, according to an aide.
Sen. Ron Wyden (D-Ore.), the chairman of the Senate Finance Committee, said the initial agreement to lower jobless benefits from $400 to $300 was the best possible deal Democrats could have achieved given the realities of a sharply divided 50-50 Senate, where Republicans have been firm in their refusal to pass more generous unemployment relief.
“There just aren’t the votes in the Senate,” Wyden said when asked about his initial proposal for $600 a week in additional unemployment benefits. “What I said every day was that I’m going to fight for the best package possible.”
As Democrats are in the final throes of passing this massive relief bill, Manchin’s reluctance to stand in line with his party spells trouble for the hours ahead.