“The single most important thing we have to do going forward is stop the $600 a week [unemployment] payments,” Heritage Foundation economist Stephen Moore told Yahoo, adding that the U.S. economy may have lost between 1 million and 2 million jobs due to the unemployment benefits.
Republicans in the Senate and other White House officials have said they do not support extending the extra benefits, saying that it creates an incentive for people not to return to work. The benefits were allowed under March’s CARES Act, which also authorized direct payments of up to $1,200 and $500 for children.
Democrats in Congress, however, have argued that the extra payments are needed due to the economic fallout caused by the COVID-19 pandemic caused by the CCP (Chinese Communist Party) virus. The payments would be extended until next year under Democrats’ HEROES Act, passed several months ago.
It’s not clear if lawmakers will come to a compromise on the extra unemployment benefits.
“If President Trump were to sign a bill that extended those benefits for another six months, we would have eight to 10 million fewer jobs by the end of the year. It’s a very significant negative. We have 30 million unemployed people and they can’t get workers back on the job because they are making more money than getting back on the job. That is a very, very economically destructive plan,” Moore noted.
The additional unemployment payments are slated to expire at the end of July, but in some states, they will end on the Saturday or Sunday before the end of the month.
Meanwhile, a study found that Americans who received enhanced unemployment benefits due to the coronavirus pandemic spent more than when they were working.
The $600 weekly supplement added to jobless benefits as part of the CARES Act helped unemployed households spend 10 percent more after receiving benefits than they did before the pandemic, according to research by the JPMorgan Chase Institute.
Researchers analyzed transactions for 61,000 households that received unemployment benefits between March and May. Spending dropped for all households as the virus spread and led to business shutdowns, but then rose when households began receiving jobless benefits, the study found.
“Our estimates suggest that expiration will result in large spending cuts, with potentially negative effects on both households and macroeconomic activity,” the researchers wrote.
Reuters contributed to this report.