KEY POINTS

  • Initial unemployment claims were above 1 million for the 20th straight week
  • State and local governments are warning of massive layoffs if help from Washington is not forthcoming
  • Senate Majority Leader Mitch McConnell says there won't be any deal until House Speaker Nancy Pelosi and President Trump agree

As the clock ticked down on a self-imposed Friday deadline, coronavirus stimulus negotiators appeared to have made little progress amid signs the economic recovery had stalled. State and local officials warned of massive layoffs if help isn’t sent from Washington.

Talks in earnest on a new round of stimulus began last week, but largely absent from the discussions was Senate Majority Leader Mitch McConnell, who was having difficulty getting the Republican caucus to come to a consensus.

“The data is clear – the economic recovery is stagnant, if not in reverse. Americans continue to lose their jobs, hiring has stalled and more jobs will be at risk if Congress does not take urgent and decisive action,” Clarence Anthony, executive director and CEO of the National League of Cities, warned in an email to International Business Times Thursday.

“As negotiators continue to debate the details of a fourth stimulus bill, it is imperative they prioritize a comprehensive solution to unemployment in order to keep America working and put the country on the road to economic recovery.”

The comments came as the Labor Department released the weekly initial unemployment claims report that showed nearly 1.2 million Americans filed for benefits last week, the 20th week in a row claims were above 1 million.

Negotiations have involved Treasury Secretary Steven Mnuchin, White House Chief of Staff Mark Meadows, House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer.

“If we can’t reach an agreement on the major issues, it’s going to be hard to complete a deal,” Mnuchin told reporters after a round of talks Wednesday.

McConnell justified his hands-off approach in an interview on Fox News: “The only thing that gets an outcome is the speaker and the president of the United States reaching an agreement.” He said he would support whatever agreement is produced, even if he has problems with parts of it, but he can’t say the same for all Senate Republicans.

Meadows said Republicans have been more accommodating than Democrats, and he’s perfectly comfortable with President Trump acting unilaterally through executive orders if no agreement can be reached.

Among the most contentious issues is the $600 a week boost in unemployment benefits that expired last month. Republicans initially wanted to cut that benefit to $200 a week, arguing the more generous benefit encourages people to remain on unemployment rolls rather than look for jobs. The White House has upped its bid to $400 a week, but Democrats are sticking to the original number and want the help extended through January. The GOP offer would only extend through mid-December.

“The largest groups have been out of work since April, and after enduring 13 or more weeks of unemployment, they are in no position to suddenly go without the $600 per week boost,” Century Fund unemployment expert Andrew Stettner told IBTimes.

“These families are preparing to be socked with the additional costs of sending their kids to school and paying sky-high COBRA premiums and out-of-pocket healthcare costs, not to mention skyrocketing food prices, on meager unemployment benefits that average just $330 per week. It’s simply an untenable situation for these families.”

Another contentious issue is the $10,000 cap on the state and local tax deduction enacted as part of the tax cut bill adopted in 2017. Democrats want the cap removed but Republicans argue it largely benefits wealthy individuals in high-tax states.

Democrats also want help for cash-strapped state and local governments that have borne the brunt of coronavirus costs. Republicans are resistant.

“If the Republicans continue to take the stand that they’ve taken … against support for local governments and state governments, then we’re going to have to make drastic cuts,” Illinois Gov. J.B. Pritzker warned.

The National League of State Legislatures noted the relief provided under the CARES Act in March came with too many restrictions.

“One thing the Treasury made clear is those funds could not be used to backfill lost revenue. That presented a major challenge because for many states that’s the greatest need they’re facing right now,” said Shelby Kerns, executive director of the National Association of State Budget Officers.

Anthony warned without help cities also are facing massive layoffs among municipal workers.

“Municipal governments directly support millions of jobs, including police officers, firefighters, sanitation workers, education and public health workers, and indirectly support millions in the private sector through funding infrastructure, public works and other economic development initiatives,” Anthony said. “Further layoffs, budget cuts and cancelled infrastructure projects and capital expenditures directly impact private sector activity and growth.

“By delivering critical direct aid to local governments and extending unemployment insurance benefits, Congress can actually address the current unemployment crisis in a meaningful way.”

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