Trump's big, beautiful bill boots millionaires off unemployment benefits

The days of mega-millionaires claiming federally funded unemployment benefits are about to end.

Fifteen years after the late Sen. Tom Coburn first launched his crusade to clamp down on what he called an “anti-benefit” for millionaires, Congress finally delivered in President Trump’s Big Beautiful Bill budget package.

In the early morning hours of July 1, as senators were debating and voting on dozens of amendments, Sen. Joni Ernst managed to get her colleagues to accept her amendment that forbids people who show at least a million dollars of income in any one year from collecting unemployment insurance benefits.

“For far too long, overtaxed and overworked small business owners have been forced to foot the bill for the lifestyles of the idle rich. But no longer. The freebies for freeloading fat cats are over,” Ms. Ernst, Iowa Republican, told The Washington Times.

As unlikely as it sounds, tax records show that every year several thousand tax returns report to the IRS that they had more than a million dollars in income, and also collected some unemployment.

The number shot up during the pandemic, with roughly 19,000 tax filers with million-dollar incomes claiming unemployment benefits in 2020. Among them were more than 900 who had incomes of $5 million or more.

In 2021, nearly 15,000 million-dollar filers claimed the benefit. And even as the pandemic waned and enhanced benefits expired.

In 2022, after the pandemic had waned and enhanced benefits expired, nearly 5,800 million-dollar filers still claimed unemployment, according to the latest IRS records.

In 2021 and 2022 the millionaires collected a combined $270 million in government assistance.

It’s a tiny fraction of the hundreds of billions in unemployment benefits paid out in those two years, but to opponents it’s the principle of the thing.

Efforts to rein in the benefit date at least back to 2010, in the fallout of the Great Recession when Coburn, an Oklahoma Republican and Congress’s all-time champion waste-watcher, first challenged colleagues on the idea.

His original proposal would have denied federal unemployment benefits to people who had at least $1 million worth of assets, using the same test as Medicare uses for its prescription drug benefit program.

That went nowhere but a year later Coburn was back with an updated version that narrowed the ban to those who had million-dollar incomes in a year — likely a smaller number than those with a million dollars in total assets.

The Senate approved his amendment on a 100-0 vote, but the bill it was attached to failed to clear the chamber. Other efforts over the years to revive the idea fizzled out — until Mr. Trump’s massive budget bill and Ms. Ernst’s amendment.

“We can’t afford to miss this opportunity to save as much as $100 million by passing my amendment,” she said in arguing for it.

Sen. Ron Wyden, Oregon Democrat, spoke against it, calling it an effort to undermine a core component of the social safety net.

He said unemployment is not welfare but rather a social insurance program, like Social Security, paid for through state and federal unemployment payroll taxes on businesses. So booting some people out of benefits they indirectly paid for was an attack on the program itself, he said.

“If it happens to unemployment insurance insurance, it can happen to other parts of the social safety net,” Mr. Wyden said.

But he allowed the amendment to pass on a voice vote, at 3:28 a.m.

Analysts have said there are several reasons why tax filers with million-dollar incomes may also get unemployment. A couple filing jointly could have one spouse with the substantial income and the other out of work.

And the Congressional Research Service, analyzing the issue in 2016, said there’s a risk that imposing an income limit might end up costing more money than it saves. And it might deter people who are eligible from applying.

Unemployment insurance is a federal-state partnership, splitting funding for the benefits.

Ms. Ernst’s amendment would only affect federal payments, which are particularly high during periods of economic stress such as the Great Recession and the pandemic.

John Hart, who was with Coburn at the time the idea first arose and is now head of OpenTheBooks, a spending watchdog, hailed the amendment’s approval.

“We should never demonize success, but we also should not be delivering welfare to the well-off. Senator Ernst deserves credit for pushing a reform that takes a commonsense step toward reducing our unsustainable debt and deficits,” Mr. Hart said.