GOP Targets 70% Wage Replacement in Stimulus Bill, Aides Say

(Bloomberg) -- White House Chief of Staff Mark Meadows said the Republican stimulus bill will contain an extended unemployment-benefit plan to replace 70% of jobless individuals’ lost wages -- a proposal Speaker Nancy Pelosi said was too complicated.

Appearing Sunday on “This Week” on ABC, Meadows said the proposal, to be unveiled by Senate Majority Leader Mitch McConnell on Monday, won’t revive the $600 supplemental unemployment payments included in a stimulus bill in March. States have already ended the $600 extra payments or were doing so this weekend.

“The original unemployment benefits actually paid people to stay at home” and the administration and Republican-led Senate isn’t going to do that again, Meadows said.

Of the proposal to be offered by McConnell, Meadows said, “We are going to be prepared 70% of whatever the wages you were prior to being unemployed,” adding, “hopefully to get people back on their feet.”

While Meadows didn’t offer details, such a federal approach would increase state benefits so that every jobless American would get 70% of their previous pay. States now provide an average of 45% of a worker’s previous pay.

Treasury Secretary Steven Mnuchin made similar comments on “Fox News Sunday.”

More Talks Sunday

“We want to have something which pays people about 70% wage replacement, which I think is a very fair level. So it’s not a fixed number. It’s something that pays you a percentage of your wages that are lost,” Mnuchin said.

Meadows and Mnuchin will be back on Capitol Hill on Sunday for more talks on the stimulus plan.

White House economic director Larry Kudlow said on CNN that the Republican package would also include new $1,200 one-time stimulus checks to many Americans, and an extension of the federal eviction moratorium that has just expired.

The 70% wage replacement option has been criticized as unworkable because many state unemployment offices work with outdated technology. Others, including Senator Rob Portman, Republican of Ohio, and the U.S. Chamber of Commerce, have called for a transition period to any new formula. Portman wants two months during which a flat weekly payment is made that’s lower than $600.

Pelosi and Senate Democratic leader Chuck Schumer have insisted that supplemental unemployment remain at the $600 a week level, and more broadly, have rejected a piecemeal approach to the stimulus package.

‘Keep it Simple’

“The reason we had $600 was its simplicity. And figuring out 70% of somebody’s wages -- people don’t all make a salary, maybe they do -- they make wages,” Pelosi said on CBS’s “Face the Nation.”

“Why don’t we just keep it simple: unemployment benefits, and the enhancement, which is so essential right now. And that’s really where we are starting,” Pelosi said.

Democrats have criticized Republicans for delaying their proposal, underscoring that the House passed a far broader, $3.5 trillion plan in May. But Pelosi said Democrats wouldn’t go into discussions with the GOP with a “red line.”

“You don’t go into a negotiation with a red line. You go in with your values,” she said.

Former Treasury Secretary Larry Summers and former New York Federal Reserve President William Dudley are among those who’ve warned of a dangerous “fiscal cliff” for the U.S. economy if unemployment compensation lapses without a replacement.

“We need to maintain a very substantial fiscal impulse in the economy for quite some number of months,” Summers said Friday.

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