A18 EZ RE THE WASHINGTON POST.TUESDAY, JULY 28 , 2020
The coronavirus pandemic
share of prior income that the new
unemployment benefits would
make up. The legislation proposes
capping the federal payments at
$500, which would mean that
workers in some states earning as
little as $50,000 annually would
hit the cap on wage replacement
and not be compensated up to that
amount, according to Ernie Tede-
schi, who served as an economist
at the Treasury Department dur-
ing the Obama administration.
The proposal also calls for a
second round of $1,200 stimulus
payments that would largely fol-
low the same parameters as the
payments approved by Congress
in March. There would be some
new restrictions, such as blocking
dead people and prisoners from
receiving the benefit, and tweak-
ing the eligibility of dependents so
they could access the $500 supple-
ment even if they are older than 17.
Under a measure spearheaded
by Sen. Tim Scott (R-S.C.), the leg-
islation would also offer a 100 per-
cent deduction on business meals
through the end of 2020 — a mea-
sure Trump has boosted as a way
to encourage people to support
hard-hit restaurants. Experts have
noted that few businesses are pay-
ing for their employees to dine out
during the pandemic.
Congressional Democrats op-
pose the proposals to curb the
benefit amount and to transition
the payment system to the new
model. Critics point out that state
unemployment offices are already
overwhelmed and would struggle
with further changes.
New parts of the legislation in-
cluded a proposal from Sen. Lind-
sey O. Graham (R-S.C.) aimed at
bringing production lines back to
the United States from China, leg-
islation by Sen. John Cornyn (R-
Tex.) that would increase incen-
tives for advanced chip manufac-
turing, and a measure by Sen. Rob
Portman (R-Ohio) that would ad-
dress intellectual-property theft
at federally funded research cen-
ters and universities.
[email protected]
[email protected]
[email protected]Renae Merle contributed to this
report.al unemployment benefits pro-
gram to replace 100 percent of a
worker’s prior income, but they
scrapped the idea because they
believed that states would be un-
able to handle the administrative
complexity. Congress ultimately
decided to have the federal gov-
ernment add a flat $600 per week
to every jobless worker’s state un-
employment benefits. Between
20 million and 30 million people
now collect these benefits, and the
jobless rate is 11 percent.
The GOP unemployment insur-
ance plan tries to both cut and
overhaul existing federal benefits.
The proposal, spearheaded by
Senate Finance Committee Chair-
man Charles E. Grassley (R-Iowa),
calls for giving states until Octo-
ber to switch to the new system in
which workers would be paid
70 percent of their prior earnings.
Until that point, the federal gov-
ernment would provide a $200-
per-week benefit for each jobless
worker, down from the current
$600. States “unable” to offer the
more targeted benefit by Oct. 5
could ask the Labor Department
for a waiver to continue the flat
payment for two months.
The GOP plan would limit thetion objections, the GOP plan con-
tains billions of dollars for corona-
virus testing and tracing, the Cen-
ters for Disease Control and Pre-
vention, and foreign assistance re-
lated to the pandemic. It also
includes tax credits to encourage
businesses to hire and retain
workers, as well as increased busi-
ness deductions for meals and en-
tertainment.
Given the difficulty of reaching
agreement on the contentious is-
sues, Meadows and Mnuchin sug-
gested over the weekend that Con-
gress might need to pass a narrow
bill with just unemployment in-
surance, schools money and liabil-
ity provisions.
Democrats have rejected that
approach, and McConnell has yet
to publicly embrace it as well.
The GOP legislation excludes a
payroll tax cut that Trump de-
manded and that Senate Republi-
cans opposed.
The question of what to do
about the expiring unemployment
benefits delayed a deal last week,
and Republican lawmakers
scrambled over the weekend to
hammer out their plan.
In March, congressional law-
makers discussed creating a feder-picked up steam in recent weeks.
White House officials, Republi-
can lawmakers and some business
executives have complained that
the $600 weekly payment has
meant that some Americans are
paid more to stay home than to
return to their jobs.
But Democrats have countered
that the money is an emergency
cushion for millions of Americans
who have been displaced by the
labor market’s sudden changes.
In addition to the reduced un-
employment benefits, the legisla-
tion proposes a new round of
$1,200 checks to individual Amer-
icans; billions of dollars for
schools, with some of the money
aimed at helping classrooms re-
open for students; and a five-year
lawsuit protection for businesses,
health-care providers and others.
It also includes at least $100 bil-
lion more for the small-business
Paycheck Protection Program. It
does not contain any new money
for state and local governments —
a key Democratic demand — but
instead would give state and local
leaders more flexibility in spend-
ing the $150 billion approved in
the Cares Act in March.
Over initial Trump administra-swer to these challenges will not
simply be shoveling cash out of
Washington; the answer to these
challenges will be getting people
back to work. And as it stands now,
I think it’s likely that you’ll see a
number of Republicans in opposi-
tion to this bill.”
Bipartisan negotiations had
been delayed as Democrats waited
for the White House and Senate
Republicans to unify behind a
plan, which was initially supposed
to roll out last week. It was re-
leased Monday afternoon, al-
though as multiple bills rather
than one unified package.
The GOP plan calls for about
$1 trillion in new spending, while
House Democrats have coalesced
around a $3 trillion bill they
passed in May.
In their plan, Senate Republi-
cans propose cutting weekly
emergency unemployment bene-
fits from $600 to $200 until states
can bring a more complicated pro-
gram online. The $600 benefit ex-
pires in a few days, and House
Democrats have proposed extend-
ing it until January because the
unemployment rate remains high.
Senate Republicans want to put
the $200 limit in place until states
can implement a new approach
that would pay the unemployed
70 percent of the income they col-
lected before they lost their jobs.
The states would phase in the new
formula within two months under
the GOP plan, though it’s unclear
how cumbersome that process
could be.
The $200 would come on top of
whatever unemployment benefits
states already pay. State benefits
vary but generally replace 45 per-
cent of what workers earned be-
fore they lost their jobs.
The U.S. economy remains un-
der extreme strain five months
after the first American died of the
coronavirus. There have been
more than 4 million cases in the
United States and more than
145,000 deaths. The economy has
recovered a bit from its lowest
points in April, but fresh out-
breaks of the virus — particularly
in Southern and Western states —
have led some governors to pause
reopening plans. The labor mar-
ket remains weak, and layoffs haveSchumer said he and Pelosi told
the administration officials that
they would review the bills care-
fully overnight.
Elsewhere in the Capitol, Sen-
ate Majority L eader Mitch McCon-
nell (R-Ky.) and some of his top
lieutenants were briefing report-
ers on the package of bills assem-
bled as the GOP negotiating posi-
tion with Democrats.
“The American people need
more help, they need it to be com-
prehensive, and they need it to be
carefully tailored to this cross-
roads,” McConnell said. “That is
what this Senate majority has as-
sembled.”
But the GOP legislation con-
tains a number of provisions not
directly related to the coronavirus,
including $1.8 billion for con-
struction of a new FBI headquar-
ters in downtown Washington.
President Trump has taken a per-
sonal interest in the project, but
White House officials have not
said why they believe the language
should be inserted in the coronavi-
rus bill. Critics have alleged that
Trump is trying to keep the FBI
building at its current location,
close to a Trump hotel property.
The Trump administration pre-
viously squashed a plan to relocate
the FBI headquarters to the sub-
urbs, which could leave the lot
near the Trump hotel open for
development.
“That’s a good question,” said
Senate Appropriations Commit-
tee Chairman Richard C. Shelby
(R-Ala.), when asked what the FBI
project had to do with the corona-
virus. He said the administration
had sought its inclusion.
McConnell and his team
worked for days to put together a
$1 trillion package that could
unite Republicans and strengthen
their negotiating power with
Democrats, but there were signs
Monday that Republicans remain
split over how to proceed. Con-
gress already pumped $3 trillion
into the economy in March and
April, spending that many Repub-
licans say is sufficient.
“There is significant resistance
to yet another trillion d ollars,” said
Sen. Ted Cruz (R-Tex.). “The an-
STIMULUS FROM A
Prospects for deal on economic relief package remain unclear as talks begin
SARAH SILBIGER/BLOOMBERG NEWS
Senate Majority Leader Mitch McConnell (R-Ky.) touted the GOP’s “carefully tailored” relief plan.a first-time home buyer is 33 or 34
years old. Right now a bulge of
millennials are turning 30 and
starting to think about home-buy-
ing seriously — if they have the
savings to do it.
There is some concern that such
a hot housing market echoes the
2008 -2009 financial crises, when
millions bought homes they really
could not afford and lost them in a
painful wave of foreclosures. But
many say it is much harder to get a
mortgage now, and people are hav-
ing to put a lot more money down
when they buy. Home builders also
have not been building nearly as
many homes in recent years at
they did heading into 2008.
“If you do have a job right now,
it’s not sufficient. You need to have
sufficient savings and pristine
credit to get a mortgage,” said Wa-
chter.
When the pandemic hit,
J PMorgan Chase tightened its
lending standards even further,
saying it would not issue a mort-
gage to anyone unless they could
put 20 percent down and had a
credit score of at least 700. Many
Americans who could have ob-
tained a mortgage in the 1990s are
now locked out, Wachter says, an-
other blow to anyone but those
already well off right now.
“People who own homes are in
the best financial shape in the
country. They are not the people
we should worry about. Renters
are the ones who need help and
forbearance,” said Logan
Mohtashami, who as lead housing
analyst at HousingWire is predict-
ing a rapid “V-shaped” recovery for
home sales.
Renters like Steen are worried
about becoming homeless in the
coming months. While she tries to
remain hopeful that she will land a
job soon with a maid service to
clean wealthy people’s homes, she
knows it will be difficult to find
another $700-a-month apartment
if she loses her current one.
Despite applying for Florida’s
unemployment aid online — and
sending in a paper application —
she has yet to receive any money.
The $1,200 check the U.S. govern-
ment sent in the spring provided a
lifeline, but that money is gone.
Church food banks have helped
her get by.
“I don’t know which way to
turn. I really don’t,” Steen said.
“I’m praying, and I’m mostly just
stressed. I don’t want to be out on
the streets.”
[email protected]year ago when the typical mort-
gage rate was 3.75 percent. Today it
costs $1,140.
“America’s houses — if you can
find one — are on sale, literally,
from unprecedentedly low mort-
gage rates,” said Susan Wachter, a
real estate professor and co-direc-
tor of the Penn Institute for Urban
Research at the University of
Pennsylvania.
The result is mortgage applica-
tions for home purchases are up
nearly 20 percent from a year ago
to the highest level in over a de-
cade, according to the Mortgage
Bankers Association. Refinancing
is even hotter, up more than
120 percent from a year ago. Hom-
eowners have been able to refi-
nance to save money or take equity
out of their home if they need a
cash lifeline, something renters
cannot do.
Realtors and housing experts
say they are also seeing another
factor at play driving home sales:
demographics. The median age ofcity, if needed. In the Hamptons, a
wealthy beach community outside
New York City, prices are up 25 per-
cent as the rich do their own ver-
sion of social distancing, accord-
ing to a report from Miller Samuel
and Douglas Elliman.
“It’s all about interest rates. It’s
really giving home buyers a lot of
buying power right now,” said Ten-
dayi Kapfidze, an economist at
Lending Tree.
In March, the Federal Reserve
slashed interest rates to zero and
started buying tons of bonds, in-
cluding mortgage-backed securi-
ties. These actions helped trigger
two of the biggest comebacks so
far in the economy: a surge in stock
prices and a surge in home-buying.
The interest rate on the popular
30-year fixed mortgage recently
fell below 3 percent for the first
time since Freddie Mac began
tracking mortgage rates in 1971.
That makes homes more afford-
able. A $340,000 home would
have cost about $1,260 a month awho were laid off and are now
locked out of the mortgage mar-
ket.”
The median listing price for a
home for sale in the United States
is now $340,000, according to Zil-
low data, up about 5 percent from
a year ago and an indication of
strong demand and few homes on
the market.
Realtors, economists and home
buyers say the surge in home pur-
chases is driven by three factors:
the cheapest mortgages ever, mil-
lennials hitting their 30s and
wanting to settle down and city-
dwellers suddenly wanting more
— and less expensive — space as
the pandemic forces families to
spend more time at home.
In the Harrisburg area, prices
are up 10 percent, Zillow found.
Dietsche, who is also a mail carrier,
says he has been delivering a lot of
forwarded mail for people relocat-
ing from major cities. Some are
deciding to stay, figuring they can
travel a day or two a week to a bigSteen, as she helped sell hot dogs
on a road heading to the beach.
“I’m just afraid to go back to Pensa-
cola Beach, but I have to make
some kind of money.”
Renters are rapidly losing the
few lifelines they had during the
pandemic. A federal government
moratorium that protected mil-
lions of renters from being evicted
expired on Friday. The extra $
a week in unemployment aid
many laid-off workers had been
getting ended over the weekend.
Congress has yet to agree on an
extension, a worry as Aug. 1 rent
payments loom.
“This crisis really does have the
potential to exacerbate housing in-
equality. Really low mortgage rates
are providing an extra $100 to
$300 of saved monthly housing
costs for people who are able to buy
a home right now or millions of
homeowners who have been refi-
nancing,” said Jeff Tucker, an econ-
omist at housing site Zillow. “But
it’s no help to renters or peoplebeen hired. She has started selling
hot dogs on the side of the road to
beachgoers, praying she does not
become homeless.
The coronavirus pandemic is
exacerbating inequities across
America, especially in housing.
This summer is one of the best
times for home buyers and one of
the worst for many renters. Ameri-
cans with money in the bank are
buying bigger homes, while rent-
ers increasingly worry about evic-
tion.
Homes sold nationwide in
April, May and June at an annual-
ized rate of about 15 million, ac-
cording to seasonally adjusted
data released last week by the
Commerce Department and the
National Association of Realtors.
Meanwhile, 12.6 million renters
say they were unable to pay rent
last month, according to the latest
Household Pulse survey from the
U.S. Census.
Home sales are booming, be-
cause Americans who have sav-
ings, stable jobs and good credit
scores are taking advantage of the
cheapest mortgage rates on record
to bargain-shop for larger homes.
New mortgage applications just
hit a level not seen since 2008.
Sales of previously owned homes,
like the one Dietsche listed in cen-
tral Pennsylvania, surged a record-
setting 20.7 percent in June. Sales
of new homes jumped 13.8 percent
last month, well above experts’
forecasts.
“People are literally trying to get
back to a house in the suburbs with
a yard and a fence. Those are the
houses that are blown off the mar-
ket in two seconds,” said Dietsche,
a broker at House 4 U Real Estate
in Dillsburg, Pa.
On the flip side, the worst down-
turn since the Great Depression
has hit low-income workers — who
are typically renters — the hardest.
Sixty percent of renter households
have had at least one person in the
home suffer a job or pay cut vs.
45 percent of homeowner house-
holds, Census survey data from
July 9-14 show. Evictions are wide-
ly expected to spike soon. Stout
Risius Ross, a consulting and in-
vestment banking firm, predicts
nearly 12 million eviction filings by
October.
“Whatever savings I had built
up, it all went on rent or else I’d be
living outside. My light and water
are about to be cut off. I’m trying to
work on keeping them on,” said
INEQUALITY FROM A
Renters face e victions as buyers enjoy low mortgage rates
JOHN MINCHILLO/ASSOCIATED PRESS
Anil Lilly tours his new home in Washingtonville, N.Y., this month. Home sales are booming because Americans who have savings, stable
jobs and good credit scores are taking advantage of the cheapest mortgage rates on record to bargain-shop for larger homes.