Just a day after Senate Democrats unveiled their COVID-19 relief bill, progress on the $1.9-trillion measure stalled Friday — not because of Republican opposition, but from Democratic infighting over a few proposed last-minute changes to unemployment benefits.
The chaos reflected the challenges Senate Democrats face in shaping legislation that meets the demands of both progressives and centrists in their party, particularly in a Senate divided 50-50, where every vote is critical.
Problems arose when Senate Democratic leaders moved Friday to tweak the bill they had released just a day earlier. They decided to reduce the weekly federal unemployment supplement in the bill from $400 to $300.
The change was aimed at appeasing moderate Democrats such as Sen. Joe Manchin (D-W.Va.), who was concerned that $400 payments — part of the House-passed bill and the original Senate bill — would provide some laid-off workers with more money than they earned at their jobs, thereby discouraging them from going back to work.
At the same time, Democrats, in a nod to progressives, proposed extending the unemployment benefits through September rather than August, and making last year’s unemployment benefits tax-free for those who received them. Progressives and President Biden have wanted the unemployment benefits to last at least six months until September.
Biden supported the changes, White House Press Secretary Jen Psaki said in a tweet Friday.
But Manchin raised concerns, particularly about the newly included tax break, Democratic sources said.
Democrats were seen arguing on the Senate floor with Manchin about whether he would back the new compromise, or instead support a GOP amendment sponsored by Sen. Rob Portman (R-Ohio) to lower the weekly supplemental to $300 and end it in July. That amendment would not waive taxes on the unemployment benefits.
Because no Republicans support the measure and Democrats need at least 50 votes — with Vice President Kamala Harris breaking the tie — a defection by Manchin would prevent the tweaks from being approved.
Under the revised proposal by Senate Democrats on Friday, the weekly unemployment supplement would drop to $300 on top of what an individual receives through state unemployment, and last through September. The version unveiled Thursday included $400 a week through August.
In addition, under the revision, people would not be taxed on the first $10,200 of unemployment insurance benefits they received in 2020. People who have already paid taxes on their unemployment benefits would need to seek a refund on their tax returns, a Democratic aide said.
Some Americans did not realize that unemployment benefits are taxable or live in states that didn’t automatically withhold federal taxes. Many were facing big tax liabilities on their 2020 return.
Sen. Tom Carper (D-Del.) was expected to offer an amendment making the change to the original Senate bill either Friday or Saturday.
Last year the supplemental payment was $600. That ended in the summer and was reinstated by Congress in December at $300 a week.
Democrats hope to pass the bill before current unemployment benefits expire March 14 for more than 10 million Americans. They are using a process called reconciliation, which limits what can be included in the bill, but sets only a 51-vote threshold for passage, rather than the usual 60 needed in the Senate.
Friday’s delay could make it difficult to meet that deadline.
Passage is possible if the 48 Democrats and two independents who caucus with them all vote for it, with a tiebreaking assist from Harris.
“In this kind of environment where literally every single Democrat is key, so far the reaction has been positive,” Finance Committee Chairman Ron Wyden (D-Ore.) told reporters. He was among those pushing not to have unemployment expire in August, when Congress is traditionally not in Washington.
Republicans say the bill is too expensive and doesn’t focus enough on vaccinations and getting people back to work or school. They are expected to offer a slew of their own amendments over the next few days to try to reduce the cost before the Senate votes on the final package.
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