Unemployment Extension Update: Senate Democrats Sidestep Stimulus Trap

Congressional Democrats have changed the stimulus bill to extend unemployment benefits through September, ensuring the benefits won’t run out while Congress is in recess. Unemployment benefits are gaining importance as long-term unemployment approaches record levels, CNBC reports.

The move was led by Sen. Ron Wyden, (D-Ore.) Chair of the Senate Finance Committee. Wyden sounded the alarm on Wednesday.

“I’m going to fight like hell to get this extended to September,” he said. “It defies common sense for Congress to set up another cliff, and it’s in the middle of August.”

If the deadline had remained in August, it would have come while Congress was in recess, complicating any extension that proved necessary. The one-month extension is less than progressive Democrats had argued for, but comes packaged with a change that stops recipients from paying taxes on the first $10,200 they receive, NPR reports.

“What we're looking at is making sure that we can get a benefit so that people can make rent and pay groceries," Wyden said on the Senate floor. "And by God, we sure as hell shouldn't let folks who are unemployed pay taxes on those unemployment benefits they secured in 2020."

The timing also lines up the expiration with the end of the fiscal year, giving Democrats a chance to address it in the larger budget bill they hope to pass then.

Democrats plan to finish editing and pass their COVID-19 relief bill next week, before federal benefits run out on March 14.

Over 41% of the unemployed have gone without work for six months or more, with the pandemic driving that number toward the 45.5% record set by the 2008 financial crisis. COVID-19 has cost the U.S. almost 10 million jobs, and while a slow recovery has begun it’s yet to put much of a dent in the job deficit.