Biden and Congress are setting 'a 5-alarm fire' by letting federal unemployment benefits expire in a week as Delta surges, an expert says

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  • Federal unemployment-benefit programs expire in a week, and Congress isn't renewing them.

  • Andrew Stettner, an unemployment expert, said it was "a 5-alarm fire."

  • "Now we're putting people in harm's way," he said. "A lot of people will be harmed by this."

  • See more stories on Insider's business page.

Pandemic-era federal unemployment benefits end in exactly a week as cases from the Delta variant pile up nationwide. The Century Foundation has projected that 7.5 million Americans will lose benefits completely - an unprecedented fiscal cliff that is likely to drastically affect incomes, spending, and jobless workers' lives.

Andrew Stettner, a senior fellow and jobless-policy expert at the left-leaning Century Foundation, tweeted on Thursday that it was "a 5-alarm fire."

"Most people live paycheck to paycheck, and starting next week they're not going to be able to count on a regular source of income," Stettner told Insider. "They're going to be put into harm's way."

Jobless workers have told Insider that the end of benefits is coming too soon as the Delta variant surges, jeopardizing plans to return to work and school in person. For some, a loss of income could also jeopardize their ability to stay in their home. Last week, the Supreme Court struck down a scaled-back eviction moratorium, paving the way for local courts to restart evictions that had been halted.

Now 7.4 million renters are at risk of eviction, according to the Census Bureau. Analysts at Goldman Sachs forecasted 750,000 households could be evicted by the end of the year with potentially "severe" public health consequences.

The People's Policy Project estimated that 20 million jobless Americans would see their incomes slashed as benefits wind down. In both cases, people may find themselves at the mercy of local action.

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Washington isn't pursuing an extension, but states could

In a letter from Treasury Secretary Janet Yellen and Labor Secretary Marty Walsh earlier this month, the Biden administration made it clear that the federal benefits would expire as scheduled in September. However, states can step in to provide benefits and even issue one-time or periodic relief payments for jobless workers getting cut off. So far, except for a round of stimulus checks in California earlier this year, no states have committed to providing additional benefits.

"To adequately address continued claim payments for those not traditionally eligible for unemployment assistance or those facing the completion of available claims weeks, we would need to see further congressional action," a spokesperson for Washington state's governor previously told Insider.

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But Congress isn't pursuing a renewal of federal jobless aid. Democrats have largely excluded it from discussions as they draft a $3.5 trillion spending plan, and Republicans are staunchly opposed to it. Twenty-six mostly GOP-led states pulled the plug on some jobless-benefit programs months before their expiration.

Some key Democratic moderates like Sen. Joe Manchin of West Virginia came out against an extension, all but torpedoing it in a 50-50 Senate. Such a package would need the support of every Senate Democrat to clear the Senate under an arduous procedure called reconciliation.

House progressives like Rep. Alexandria Ocasio-Cortez have said they're discussing whether to push for an extension. But it'd be a long-shot effort given the resistance from Democratic centrists and Speaker Nancy Pelosi's focus on assembling a spending plan that can survive wafer-thin Democratic majorities in both chambers.

White House officials said on Monday that President Joe Biden had decided not to push Congress to renew benefits, given the rebounding economy. "I think he made a decision on where things stand in our economic recovery at this point in time," Jen Psaki, the White House press secretary, said.

She said the administration's focus was pivoting to ensuring that people can tap into state relief programs and the revamped child tax credit. The latter measure provides monthly cash payments of up to $300 per child depending on age.

'A lot of people will be harmed by this'

The benefit cutoff will throw some workers into a precarious situation. Amanda Rinehart, a Pennsylvania mom receiving federal benefits, has a child at high risk for COVID-19. She'll continue to stay at home with him as he starts another year of virtual schooling - which means she won't be able to return to her beloved hospitality job.

"I'm honestly not sure what I'm going to be doing financially moving forward without these benefits from unemployment," Rinehart previously told Insider.

Some experts have also said it's too early to end unemployment, and research on states that opted out of federal benefits early showed a $2 billion drop in spending. That may become an $8 billion drop come September and October, researchers say.

"Losing a job is one of the most damaging things that can happen to your financial health and your personal health," Stettner said. "We've avoided some of those damages for the last 18 months. But now we're putting people in harm's way. A lot of people will be harmed by this."

Read the original article on Business Insider