Senator Rob Portman told CNBC on Thursday that Washington legislature needed a constructive solution to the federal unemployment benefit, which is due to expire next month.
The additional $ 600 a week, in addition to government benefits, was raised as part of the $ 2.2 trillion corona virus package that was approved in March. From now on it will disappear at the end of July.
"I think we have to come up with something creative," said the Ohio Republican on Squawk Box, calling the upcoming expiration date "a cliff."
"We're going from $ 600 to nothing," he said.
Portman has proposed a return-to-work bonus of $ 450 a week, while extending the federal unemployment benefit by a lower amount by the end of the year. "This will help people get back to work that everyone should be for," he said.
Portman and others claim that the current $ 600 weekly allowance is a negative incentive for people to return to work because they can make more money out of unemployment. This could hamper the recovery of the US economy from the devastation caused by the pandemic.
House Democrats have already passed laws that include a $ 600-a-week extension to federal funding until early next year. However, the bill is a non-starter in the Republican-controlled Senate.
The US economy has shown some signs of a stronger-than-expected recovery as states attempt to ease the business restrictions associated with corona viruses. Around 2.5 million jobs were added in May when economists expected millions of job losses. Retail sales also rose 17.7% last month, more than twice as expected.
Former Obama adviser Jason Furman told CNBC earlier this week that expanding the federal government's increased unemployment benefits is key to keeping the economic recovery alive.
"The recovery we have seen so far has been supported by extraordinary fiscal and monetary support, and if we pull it off too soon, we will pull the carpet out of the prospects for the US economy," said Furman, former chairman of the council the economic advisor.
Instead of $ 600 a week, Furman and a non-partisan group of economists and former policy makers have suggested that weekly benefits be linked to the overall unemployment rate. "We would start by replacing about 90% of what you would get at work and then with lower unemployment rates that would be lower," said Furman.
Larry Kudlow, the White House's top economic advisor, said the Trump administration was considering some sort of "bonus" for returning to work. Portman said he had talked to some Democrats about his proposal, suggesting that the idea was open.
"But I think they [Democrats] have been told by their leadership:" Our plan is $ 600. That is our negotiating position, "said Portman.
A spokesman for the Senate minority leader, Chuck Schumer, D-N.Y., Did not respond to CNBC's request for comment.
CNBC reported last week that White House and GOP negotiators are planning to wait until the end of July to begin formal negotiations for a fourth coronavirus stimulus package. However, the White House's current stance on an additional incentive measure varies among government officials, the Washington Post reported Thursday.
The Post, citing anonymous sources, reported that some Republicans in Congress are dissatisfied with Treasury Secretary Steven Mnuchin, whom they consider too sympathetic to democratic proposals.
Legislators want Vice President Mike Pence or Mark Meadows, a former member of the House of Representatives who is now the White House chief of staff, to play a bigger role in the negotiations, according to the Post.
"Each phase 4 economic package must prioritize growth-enhancing economic measures that encourage employers and our large American workforce to return to the labor market," White House spokesman Judd Deere said in a statement on Thursday.
"Under the leadership of the President, the biggest comeback in American history has already begun, as evidenced by employment in May and the recent surge in retail confidence. President Trump's policy of lowering taxes, deregulation, mutual trade, and energy independence once had one booming economy built up and they will do it again, "he added.