McConnell Says Goverment Should Help Cover 'Basic' Unemployment Benefits as States Worry About Funds Running Out

Senate Majority Leader Mitch McConnell said the federal government should help states cover "basic" unemployment benefits, as many states are currently at risk of running out of such funding.

"Basic unemployment insurance, which is a shared responsibility with the states and the federal government, is important," McConnell told Kentucky's Local 6 Tuesday. "We need to help the states make sure basic unemployment insurance is still there for quite a while."

Each state has its own fund to support unemployed workers, regardless of the coronavirus pandemic. But because of the rising rates of unemployment seen nationwide as a result of the public health crisis, several of those funds are nearing depletion.

State officials in Louisiana, for instance, expect its state fund to run out in September.

According to the Louisiana Workforce Commission, the unemployment trust fund had almost $1.1 billion when the pandemic hit the U.S. in March. As of July 20, it had just $382 million.

"We will begin borrowing money in September under the current trajectory," Ava Dejoie, the agency's secretary, told Nola.com, adding that the fund's balance is dropping by about $50 million per week.

States can borrow money from the federal government to continue providing unemployment benefits, but with the promise of eventually repaying what it borrows and replenishing its trust fund. Doing so could require state lawmakers to make businesses pay higher taxes and reduce the amount of money provided to the unemployed.

As of early May, nine states—New York, California, Connecticut, Hawaii, Illinois, West Virginia, Texas, Massachusetts and Ohio—had already requested to borrow a collective $38 billion from the Federal Unemployment Account (FUA), ABC News reported.

Newsweek contacted the U.S. Department of Labor, which manages the FUA, for updated statistics, but did not hear back in time for publication.

"Based on the current health crisis, most states are likely to exhaust their unemployment compensation trust funds and borrow from the federal government," Jared Walczak, Tax Foundation's director of state tax policy, told ABC News.

Mitch McConnell 7/21
Senate Majority Leader Mitch McConnell (R-KY) speaks to the media after weekly policy luncheons on Capitol Hill July 21, 2020 in Washington, DC. McConnell said during an interview that same day that the federal government should help states cover “basic” unemployment benefits. Tasos Katopodis/Getty

McConnell, a Republican from Kentucky, made the comments to Local 6 the same day he appeared on the Senate floor to outline the new GOP-proposed stimulus bill.

The $105 billion plan is set to be released in the coming days and is primarily focused on providing the aid necessary to safely reopen K-12 schools amid the coronavirus pandemic, McConnell said on the floor Tuesday.

Senate Republicans are still in the process of working with the Trump administration to iron out disagreements over payroll tax cuts, another round of individual unemployment checks and state and local unemployment aid.

Currently at risk of expiring this month are the weekly payments to Americans who are unemployed because of coronavirus. Since March, qualifying Americans have received $600 per week from the federal government, an added bonus to the unemployment benefits already provided by their state.

If Congress allows the plan to expire, unemployed Americans will receive only state unemployment benefits, which vary by locality and are generally less than $600.

Critics of the federal payment plan, including McConnell, maintain that the government is enabling Americans to receive more money staying unemployed than they would if they were working.

"Well, what I think we don't think is a good idea is paying people more not to work than to work," McConnell told Local 6, but added that the federal government needed to help states ensure that "basic unemployment insurance is still there for quite a while," as unemployment numbers are expected to remain high in the U.S. for the foreseeable future.

Newsweek contacted McConnell for comment but did not hear back in time for publication.