Mitch McConnell's new plan to slash unemployment payments could trigger financial catastrophe for millions

Progressives are rejecting out of hand a proposal by Senate Republicans to temporarily slash the weekly federal boost to unemployment benefits from $600 to $200 until states develop the capacity to implement a more complex system that would pay laid-off workers 70% of what they earned prior to losing their jobs.

Bloombergreported Monday that the Senate GOP plan, which was approved by the Trump White House, will call for a two-month transition to the new unemployment system and provide states with an option to apply for a waiver for up to two additional months. Senate Majority Leader Mitch McConnell (R-Ky.) is expected to officially unveil the plan later Monday as part of the GOP's coronavirus stimulus package.

"Millions of Americans are out of work and millions of renters will soon face eviction," said advocacy group Patriotic Millionaires. "Meanwhile, Trump and Senate Republicans want to cut unemployment benefits from $600 to $200 a week. Absolutely unacceptable."

Analysts warn that replacing the flat $600-per-week payment with an individualized benefit would overwhelm antiquated state unemployment insurance (UI) systems, potentially causing massive relief delays for millions of people on the brink of financial collapse.

Michele Evermore, senior policy analyst with the National Employment Law Project, tweeted Monday that the GOP's proposed "70% income replacement is a weird technocratic solution to a problem that doesn't exist."

"This would require a different individual calculation for every person. States will take months to get this up while still processing historic new claims," Evermore wrote. "The fact that low income folks are getting more on UI is a good thing and has kept unemployed workers’ pain from spreading in their communities. This is giving people the economic power to make good choices to slow the spread of Covid, which is out of control."

Under the GOP proposal, the $400-per-week reduction in UI payments would be implemented as states transition to the wage replacement program. The change would amount to a $1,600 monthly income cut for the tens of millions of Americans currently relying on the boosted UI benefits to cover basic expenses.

The steep benefit reduction would also cost the U.S. more than three million jobs over the next year, according to the Economic Policy Institute.

Unless Congress reaches a deal to avoid a lapse in additional federal payments, state unemployment benefits will revert to the pre-pandemic rate—which averaged about $370 per week nationwide—starting August 1.

"Senate Republicans want to cut unemployment benefits for 30 million Americans by $400 a week," tweeted Sen. Sherrod Brown (D-Ohio). "This cannot stand."

With bipartisan negotiations over the stimulus package expected to begin late Monday, Democratic leaders have not said the Republican unemployment proposal is a deal-breaker.

Asked about the UI payments in an appearance on CBS "Face the Nation" Sunday morning, House Speaker Nancy Pelosi criticized the GOP's 70% wage replacement idea as overly complicated but said "you don't go into a negotiation with a red line."

In May, the House passed a bill that proposes extending the $600-per-week benefit through January of next year. Senate Minority Leader Chuck Schumer (D-N.Y.) and Sen. Ron Wyden (D-Ore.) introduced legislation earlier this month that would extend the $600 weekly UI boost until economic conditions improve.

"These negotiations are absurd," HuffPost senior reporter Zach Carter tweeted Monday. "The country is on fire and the chief concern for Senate Republicans is that unemployed people have too much money."