Experts disagreed on whether another round of stimulus should extend the highly controversial expanded jobless benefits, according to testimony provided before the U.S. House Committee on Financial Services on Thursday (July 23).
The Trump administration had shot down propositions to maintain the $600-a-week jobless benefits that have supported Americans as joblessness reached record levels. The decision is now part of ongoing discussions about another bill to continue assistance amid COIVD-19.
“Common sense tells us that people will avoid work when they receive more income by not working,” said Dr. Steven Davis, labor economist and The University of Chicago Booth School of Business’s William H. Abbot professor of international business.
Davis acknowledged that some contend that the supplemental jobless benefit should be extended to aid demand for products and services, but he disagreed with the notion.
“That argument rests on a false choice between extending the supplement and doing nothing. If the goal is to stimulate demand, and that’s a worthy goal, Congress can do so in ways that do not destroy the financial incentive to work,” Davis said.
The Honorable Robert Reich, who is the Carmel P. Friesen’s Professor of Public Policy at the University of California, Berkeley’s Goldman School of Public Policy, disagreed with that position.
“It is absurd to argue, as some have, that the extra unemployment benefits contained in the CARES Act have discouraged recipients from seeking jobs,” Reich said in his testimony.
Reich contended that not many jobs are available, while some of the positions available to low-wage workers present risks of contracting with COVID-19, and that usual unemployment benefits tend to pay just a small percentage of lost wages. He also said the economy benefits from having consumers with extra spending money and public health benefits from having the maximum number of individuals who present any infection risk steer clear of workplaces.
Reich also pointed out that the HEROES Act offers $75 billion for tracing, testing and other steps to keep the coronavirus in check beyond complimentary access to COVID-19 treatment as well as help for hospitals and other providers.
“In my view, this is the least that is needed. Given what we now know about the spread of this virus and the central importance of testing, tracing, and isolating — as well as the challenges confronting us now that the virus has become so widespread — the necessary amount is probably closer to $200 to $300 billion,” Reich said.
As previously reported, an approximately $2 trillion gap exists between the stimulus proposal introduced by House Democrats and the plan being put together by Republicans in the Senate .
On Thursday (July 23), Treasury Secretary Steven Mnuchin told CNBC that Mitch McConnell, the Senate majority leader, and the White House have arrived at a consensus on a $1 trillion CARES Act package amid the debate over pandemic relief measures.
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