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Congress fails to agree on the next coronavirus stimulus deal as $600-a-week unemployment benefits expire

A coronavirus relief agreement in Congress appeared in doubt Friday morning, ensuring a financial lifeline will expire as economic data showed a U.S. economy buckling under the pandemic’s weight. 

The current $600 per week enhanced federal unemployment benefit expires at the end of the day, though states stopped paying it out last week. After last-ditch efforts to pass an extension failed Thursday, the Senate left for the weekend, guaranteeing the assistance buoying millions of people during an economic crisis will at least temporarily dry up. 

House Speaker Nancy Pelosi, D-Calif., held late-night talks with Senate Minority Leader Chuck Schumer, D-N.Y., Treasury Secretary Steven Mnuchin and White House chief of staff Mark Meadows. Democrats, who passed legislation in the House in May that would maintain the jobless benefit into next year, rejected the Trump administration’s offer of a one-week extension, NBC News reported. 

“What is a one-week extension good for? A one-week extension is good if you have a bill, and you’re working it out,” Pelosi said after the discussions. 

Meadows had little better to say about the parties’ progress toward bridging a gulf in their pandemic relief priorities. Late Thursday, Meadows tweeted: “Tonight, once again, the White House offered a temporary extension of needed unemployment assistance—which expires tomorrow. And again, Chuck Schumer and Nancy Pelosi said no.”

Congress is struggling to find common ground on coronavirus relief as statistics show an economy still experiencing damage from an outbreak spreading throughout the country. Initial jobless claims climbed to 1.43 million last week, rising for the second straight week. U.S. GDP also fell by a record 32.9% in the second quarter during the peak of pandemic-related shutdowns — an expected but still devastating plunge. 

Democrats have said the GOP waffled on the need for coronavirus aid throughout June and July, before turning to address a rescue package only a couple weeks before the unemployment benefit expires. After the meeting Thursday, Schumer said, “We just don’t think they understand the gravity of the problem.”

The discussions followed a couple of doomed attempts by the Senate to pass legislation before it adjourned. 

On Thursday, Sen. Ron Johnson, R-Wisc., tried to unanimously pass an extension of the weekly enhanced federal unemployment insurance that would slash the benefit from $600 to $200 per week. Schumer rejected it.

Schumer then attempted to unanimously approve the $3 trillion rescue package House Democrats passed in May. That legislation also failed, leaving Congress no closer to breaking an impasse over how best to boost a health-care system and economy ravaged by the pandemic.

Congressional leaders tossed blame for the inevitable expiration of the strengthened unemployment insurance.

Senate Majority Leader Mitch McConnell accused Democrats of refusing to “engage” with the GOP after it released its coronavirus relief proposal on Monday. Republicans unveiled the plan more than two months after the House passed its legislation, which Democrats considered their opening offer in the next round of aid discussions. 

“Either our Democratic colleagues come to the table, or the American people won’t get the help they need,” McConnell, a Kentucky Republican, said on the Senate floor Thursday. 

The sides will have to resolve differences on a range of issues, most notably the unemployment insurance extension. Democrats want to maintain the $600 per week jobless benefit, on top of what recipients get from states, into next year. Republicans want to cut it to $200 per week through September, then set it at 70% wage replacement.

Democrats have also criticized the lack of several other provisions in the GOP plan, including direct aid for state and local governments and funds for rent, mortgage and food assistance. They also oppose liability protections for businesses, doctors and schools, which McConnell has said will have to be in any bill he brings to the Senate floor.

Schumer said the lack of a Republican consensus on pandemic aid has hindered progress toward a deal. Multiple GOP senators have said a large share of the caucus does not support the legislation Republicans released this week

“Our friends on the other side now are scrambling,” he said on the Senate floor Thursday. 

As they moved closer to Friday’s deadline without a comprehensive deal, both President Donald Trump and Mnuchin floated the possibility of passing a short-term deal to extend the unemployment insurance and a federal eviction moratorium.

Schumer and Pelosi have both shot down a temporary fix. 

Even as the progress of talks looked bleak Thursday, Schumer said he believes the parties can still reach a deal. 

“It’s never easy, it’s never painless, but it can be done,” he said.

CNBC’s Terri Cullen contributed to this report.

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