Democrats are giving up on their greatest achievement since the 1960s
The pandemic boost to unemployment benefits has helped millions of Americans
The $600 boost to unemployment benefits passed in the CARES Act last year was the best policy passed in this country since the 1960s. Sadly that measure expired long ago, but the American Rescue Plan passed by Democrats in March included a $300 supplement that is still pretty great — together with some other boosts to the program.
But now 25 Republican-controlled states and counting have bailed on the $300 boost, and President Biden isn't fighting them. On the contrary, Press Secretary Jen Psaki said states "have every right" to reject the money (which is not actually true, as I'll explain below). Biden himself now says it's good the program will officially expire in September. This retreat from an accomplishment that helped keep millions of Americans out of destitution is a disgrace.
It's worth remembering how the original super-unemployment program came about. In March and April, the pandemic was wrecking the economy — states and cities were locking down, people feared to go out and spend money, and jobs were vanishing en masse. New unemployment claims spiked up to 6.1 million in a single week.
The U.S. unemployment system was not remotely designed to deal with a shattering emergency like this. In most states, unemployment is supposed to be a bare subsistence payment to tide you over between jobs. It's annoying and time-consuming to claim (wrongful denials are common), and often you have to endure a lot of abusive hectoring that assumes you are a sponging moocher, if not a criminal. In the worst states, like Florida, there practically is no unemployment system at all — it's been designed not to work, so as to further coerce the unemployed to take any job they can find, and to keep down state spending and thus taxes on the rich.
So when tens of millions of people were thrown out of work practically overnight, Democrats scrambled to make the unemployment system more like a European version that you could actually live on. The natural idea was to change the benefit formula so that it paid out 100 percent of your previous earnings. Unfortunately, state unemployment bureaucracies are so ancient and crummy that such a calculation could not be made without months and months of retooling.
Instead, congressional Democrats just tacked on an additional $600 per week, so that the average benefit would equal the average wage. This turned out to be a terrific help to people who were previously making less than that average. For instance, if you were making $200 a week and got laid off in April 2020 (and managed to claim your benefits), suddenly your income was more than tripled. Reporters wrote dozens of stories about how people who had been living hand to mouth for years suddenly had an economic cushion. People paid off credit card debt, got their car or homes fixed, set some money away for retirement, or simply just bought themselves something nice. A little economic security can be revolutionary for people who have never had it.
As noted above, the $600 supplement expired in July last year. It was renewed at $300 in December, which was then extended as part of Biden's American Rescue Plan. Two other programs were also included in the ARP: an extension of the duration of unemployment benefits, plus an expansion of benefit eligibility to many more classes of workers (called Pandemic Unemployment Assistance, or PUA).
There is every reason to keep all these boosts going through September at least (which is when they are scheduled to expire), if not longer. For one thing, the pandemic is still not even close to over — while a number of states seem to have reached herd immunity, that is not remotely true of many more conservative states, which seem to be stuck at less than half of adults vaccinated. Unless they can get those numbers up, future regional coronavirus outbreaks could keep happening for months or years.
Second, it's the right thing to do, both morally and economically. The American working class has taken it on the chin for the last 40 years, sold out by both political parties that cut welfare benefits, killed unions, and stood by while corporations shipped jobs overseas and inequality skyrocketed. A little extra money in the pockets of a fairly small proportion of the population won't cause any kind of crisis — indeed, it would help the economy to keep some stimulus going so that high demand can be sustained long enough to sort out various supply bottlenecks. The U.S. is still about 7.5 million jobs in the hole compared to before the pandemic. Even in the best case scenario, it will take many months for that many jobs to come online, and in the meantime boosted unemployment will be a vital source of income.
Third, preserving the PUA portion of the unemployment boost is legally required. As Matt Bruenig explains at the People's Policy Project, the law stipulates that while states can opt out of the $300 supplement, the Department of Labor must extend PUA benefits. The department's own inspector general issued an opinion last year making this explicit: "The relevant language is not discretionary," it said.
I see two big reasons Democrats are unwilling to defend their own biggest achievement in decades. First is that the party basically can't do anything unless there is a crisis. The American constitutional structure is a janky mess, and the party is deeply split both ideologically and along class lines. A really bold policy like super-unemployment could only happen as a response to a catastrophe. Now that the most serious part of the crisis is over, the urgency is lost, and their traditional timid hesitancy is coming back.
Second, Democrats basically agree with conservatives about the need to discipline and starve the working class. The reason Republican governors are slashing unemployment benefits is (as Karl Marx explained) they want to beat workers into laboring for capitalists at whatever wages are on offer. A few small business tyrants found themselves in the unaccustomed position of not having a big queue of desperate unemployed people available to work for minimum wage, so they ran crying to the government to demand it create more desperation, and Republican governors are obliging.
Biden is singing the same tune. After halfheartedly defending the $300 boost for a few months, last week he said it "makes sense" that the program "expires in 90 days."
In reality, there is actually little sign that the unemployment boost is holding back labor supply. Recent reports have shown more people moving out of the labor force altogether, or quitting jobs voluntarily (making them ineligible for unemployment), and most states have requirements about not turning down suitable jobs.
But because the Democrats have no solid rooting in the working class, a few complaints from rich businessmen (or discredited economists with a decades-long record of failure) is all it takes to get the party elite running scared from their own best policies. It does not bode well for the rapidly-passing remainder of this congressional term.