November 18, 2020; Washington Post
With the transition process at a standoff, it is highly doubtful that we will see bipartisan movement on even the most obvious of actions to support economic stability. As the pandemic keeps gathering steam, this dereliction of duty will harm many millions of people across this country at a time when they are particularly vulnerable.
When Congress passed the CARES Act in March, they created what two researchers are calling a “benefit cliff” for the day after Christmas. That’s when unemployment benefits will end abruptly for around 12 million households unless action is taken. Andrew Stettner and Elizabeth Pancotti, researchers with the Century Foundation, say these 12 million will join the 4.4 million who have already exhausted their benefits over the course of the pandemic. Not what anyone would call an incentive for consumers.
The post-Christmas dump will end benefits for 7.3 million workers on Pandemic Unemployment Assistance, the supplemental insurance program the CARES Act established for gig and self-employed workers, and the 4.6 million people on Pandemic Emergency Unemployment Compensation, which extends benefits for 13 weeks past their normal non-recession 26-week period. (It should be noted, however, that in the Great Recession, Congress voted to extend benefits for a much longer 99 weeks.)
“Nobody is talking about this,” said Stettner. “We’re just careening into this huge cliff and it’s like it’s not even happening. People are just totally, completely ignoring the situation at a time when things are getting worse before they’re going to get better in terms of public health. And that just really is going to constrain people’s ability to get a job when benefits run out.”
A few days after those benefits expire, on New Year’s Eve, so does the nationwide eviction moratorium. Student loan payment forbearance ends on that day, too.
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Stettner and Pancotti say that at least 18 states have options for some form of extended unemployment insurance, but this would apply—if fully deployed—to around 2.9 million people, leaving the other nine million high and dry.
The House has passed two versions of a relief bill, valued around $3 trillion (the so-called HEROES Act) in May and a trimmed-down $2.2 trillion version at the beginning of October, which would have extended the deadline for these insurance benefits and also reinstated the weekly bonus that many said had helped them stay afloat.
This article points to a decade-old study by Moody’s Analytics, which shows that every dollar spent on unemployment insurance generates $1.61 of gross domestic product.
“The folks who are getting unemployment insurance, they are spending that money,” said Celine McNicholas, director of government affairs at the Economy Policy Institute. “This is just bad economics. When you look at the impact of what this is going to do in the overall recovery, when demand is already so weak—you’re looking at taking a problem and making it so much worse.”
This cliff will, of course, disproportionately affect people of color, thus digging the economy further into its racist legacy.—Ruth McCambridge