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GAO: Unemployment benefits fell below poverty line in 13 states

GAO: Unemployment benefits fell below poverty line in 13 states
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Thirteen states have allowed unemployment benefits to fall below the poverty level of $245 a week, or $12,760 a year, according to a study released Monday by the Government Accountability Office (GAO).

The change has occurred since the the end of July, when a federal program providing $600 in supplemental weekly benefits expired.

The CARES Act signed into law in March provided the weekly $600 payments to all unemployment benefit recipients. The amount was an attempt to bridge the difference between average weekly payments that came in at $333 per week and median income.

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Congress had sought to strike a deal that would include renewed benefits as part of a new round of COVID-19 relief, but has been unable to do so.

The $600 in weekly benefits has been one sticking point. Republicans argued that the flat increase created warped incentives for workers, as many as two-thirds of whom earned more through unemployment than at work. Studies showed that due to extremely high unemployment, the benefit had few effects on the overall labor market.

In September, President TrumpDonald TrumpLil Wayne gets 11th hour Trump pardon Trump grants clemency to more than 100 people, including Bannon Trump expected to pardon Bannon: reports MORE directed the Federal Emergency Management Agency to provide an additional supplement of $300 a week in benefits for up to six weeks.

“Those supplemental benefits have ended,” the GAO noted.

In addition to regular unemployment benefits in 13 states slipping below poverty levels, a special CARES program for gig economy workers and the self-employed, called Pandemic Unemployment Assistance (PUA), fared even worse. Those benefits fell below poverty levels in 29 of 41 states that reported data, according to the GAO.

PUA and several additional CARES Act programs, including one that extends the timeline for receiving unemployment benefits, are set to expire on Dec. 31 unless Congress renews them. The prospects of a fifth COVID-19 relief bill before the new year remain slim, though some key program extensions may be included in a year-end government funding bill.

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The combination of high unemployment and the lack of federal funding has put increased financial strain on states.

The GAO report found that 20 states and the U.S. Virgin Islands held federal loans totaling about $40.2 billion.

This sum among the 20 states is equal to what a larger group of states owed after the financial crisis of the last 2000s.

“This total loan balance is about equal to the approximately $40.2 billion held by 30 states and territories at the end of 2010, the height of borrowing after the 18-month long 2007-2009 recession and early recovery,” the report said.

Updated at 3:01 p.m.