Hearing of the House Select Subcommittee on the Coronavirus Crisis - Opening Statement of Rep. Walorki, Hearing on Back-to-Work Bonus and Economic Recovery

Hearing

"Thank you, Mr. Chairman, and thanks to our witnesses for being here.

"The CARES Act provided $600 per week in temporary supplemental unemployment benefits to support public health by allowing businesses and workers to get through closures and stay-at-home orders and to flatten the curve. This was a necessary step back in March. But if we want a V-shaped recovery as states and cities safely reopen, we need to take a different tack on this benefit so that it doesn't inadvertently disincentivize people from returning to work.

"For instance, in my home state of Indiana, workers receiving the $600 federal supplement would be getting about three times as much as they otherwise would on unemployment. Factor in the comparatively low cost of living in my district, and in many cases a worker would make more on unemployment than they would if they returned to work. In fact, the University of Chicago estimates that over two-thirds of unemployment insurance recipients nationwide are in this situation, and that over 20 percent are receiving double their salary.

"I want to be clear: I have no issue with any worker who took this benefit. Congress made it available at a time when much of the economy was going to be shut down for an undetermined amount of time. That additional benefit helped workers pay rent, put food on the table, and have peace of mind as they found themselves unemployed or furloughed through no fault of their own.

"But now businesses are reopening and rehiring and shouldn't have to compete with a temporary government benefit. That's why Ways and Means Ranking Member Brady and myself have supported looking at a back to work bonus proposal that would make work pay by allowing workers to keep up to two weeks' worth of that additional benefit after accepting a job, essentially amounting to a $1,200 hiring bonus. We also want to make sure that states provide clear notice to unemployment claimants about return to work obligations and good cause exceptions.

"This is a better policy than the Democrats' partisan bill, the HEROES Act, which would extend the $600 work disincentive through January 2021. The non-partisan Congressional Budget Office (CBO) said that doing this would weaken incentives to work, decrease economic output, and decrease employment. In short, it would kill our economic recovery.

"Another misguided policy in the partisan HEROES Act is restoring unlimited deductions for State and Local Taxes, or SALT. The non-partisan Joint Committee on Taxation has found that only 1 percent of the benefits of this policy would go to those making less than $100,000 a year. Instead, over half of the projected benefits would go to those with annual incomes of $1 million or more. This does nothing to rebuild our economy. It gives the wealthiest a whole cake, while the middle class is stuck with crumbs.

"Tax experts on the left and right agree that restoring an unlimited SALT deduction is bad policy. Just a few weeks ago, Mr. Furman, who is with us today, reportedly said restoring SALT was a "waste of money" that would not help economic recovery.

"As we climb out of this crisis, we need serious, substantive, bipartisan proposals that incentivize people to get people back to work and rebuild our economy, not bloated, partisan bills that disincentivize work and provide giveaways to the rich."

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