Democrats try to pass smaller, longer-lasting jobless benefits, make 2020 benefits tax-free

Jessica Smith
·Chief Political Correspondent
·3 min read

Senate Democrats are trying to lower the weekly unemployment boost to $300 per week, while extending the enhanced benefits by a month in the next COVID relief package. They also want to grant tax forgiveness on 2020 unemployment benefits.

While they appeared to have a deal earlier in the day, the votes on amendments to the relief package stalled on Friday afternoon as senators continued to negotiate.

The House bill, included an extra $400 per week in jobless benefits that would expire at the end of August. Moderates have been pushing to lower the enhanced benefits, while progressives have fought to extend them through September.

Sen. Tom Carper (D., Del.) proposed a compromise amendment. The measure would extend the benefits through the fiscal year, expiring on October 4, according to a copy of the amendment obtained by Yahoo Finance.

“Having an unnecessary cliff for unemployed workers is not good policy. We’ve found a way to avoid that and ensure that the millions of Americans who are still struggling to find work will see an immediate benefit before Tax Day this year," said Carper in a statement.

Senate Finance Chairman Ron Wyden (D., Ore.) has also argued the benefits should not expire in August, when Congress will likely be away from Washington for recess.

Unemployed workers are currently receiving an extra $300 per week, but those benefits expire on March 14.

A Carper spokeswoman said keeping the weekly boost at its current level will make it easier for states to administer the benefits, which senators hope will reduce errors and wait times due to modifying the payment amount.

Lawmakers are racing to pass the relief bill before current benefits lapse.

Several senators told reporters the Friday afternoon delay centers around negotiations on the jobless aid. They say there is concern among Democrats that Sen. Joe Manchin (W., Va.) won't support the Carper amendment, but will break ranks and support Sen. Rob Portman's amendment that would cut benefits further.

Sen. Tom Carper, D-Del., returns to the Senate chamber as House impeachment managers present their second day of arguments in the Senate trial of former President Donald Trump, at the Capitol in Washington, Thursday, Feb. 11, 2021. (AP Photo/J. Scott Applewhite)
Sen. Tom Carper, D-Del., returns to the Senate chamber as House impeachment managers present their second day of arguments in the Senate trial of former President Donald Trump, at the Capitol in Washington, Thursday, Feb. 11, 2021. (AP Photo/J. Scott Applewhite)

The Carper amendment would also make $10,200 in 2020 unemployment benefits non-taxable.

Sen. Dick Durbin (D., Ill.) and Rep. Cindy Axne (D., Iowa) have been urging Democratic leaders to waive federal income taxes on the first $10,200 in unemployment benefits.

"We sure as hell shouldn't let folks who are unemployed pay taxes on those unemployment benefits that they secured in 2020," said Wyden on the Senate floor Friday.

The White House backed the compromise on Friday morning. White House Press Secretary Jen Psaki tweeted that extending the unemployment benefits through September is "critical" and the tax relief would help avoid surprise tax bills that many Americans could face.

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"This amendment would provide more relief to the unemployed than the current legislation," said Psaki in the tweet.

Senators will propose a slew of amendments to the COVID relief package in a marathon voting session that began Friday morning. The House will have to vote on any changes the Senate makes to the bill.

Jessica Smith is chief political correspondent for Yahoo Finance, based in Washington, D.C. Follow her on Twitter at @JessicaASmith8.

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