Tens of millions of unemployed Americans are unlikely to be increasing their weekly unemployment checks anytime soon — despite President Donald Trump’s executive action promising an additional $400 a week.
The president’s order is conditional on the already poor states being able to create and implement a new system and fund a quarter of the aid, which would be a difficult, if not impossible, task for many governors.
It would also draw from a limited funding pool, meaning expanded benefits might only last a few weeks once the program is up and running. And it imposes a minimum benefit requirement that might make some low-wage and gig workers ineligible.
“I honestly think this can’t possibly be serious,” said Michele Evermore, a senior policy analyst at the liberal-leaning National Employment Law Project. “The White House must have released this thinking that this is just a negotiation tactic because it really is an empty promise.”
how would it work
That Action uses the powers of the President under the so-called Stafford Act to use disaster relief funds in combination with government dollars to send money to the unemployed.
The Department of Labor has so far said it will be working with states, the Department of Homeland Security and FEMA to provide the assistance, but has not provided specifics. some states, like hawaii and Missourihave issued notices stating that they await further guidance from DOL on the implementation of the program.
States must apply for the federal funding, and if they choose not to or say they do not have the funds to provide their share of the aid, unemployed workers in their state will not receive any additional benefit.
The memo directs states to distribute the payments through their regular unemployment systems. But many pundits and Democrats say they are confused about how already ailing state systems would be able to manage Trump’s plan. “It’s something we just don’t understand how this is supposed to work,” a Senate Democrat adviser told POLITICO. “They basically have to build this whole new entity.”
Where will the money come from?
Trump’s memorandum said the federal government would pay 75 percent of the cost, while the states would provide the remaining 25 percent — or $100 per worker per week. But the president’s message about who would have to foot the bill for the program has shifted in recent days as he suggested the federal government could pick up all the costs, or more than 75 percent.
“We have a system where we can do 100 percent or 75 percent. You would pay 25. And that depends on the state. And they’re going to make an application, we’re going to look at it, and we’re going to make a decision,” Trump told reporters in New Jersey on Monday. “So it may be that in some cases they don’t pay anything.”
But White House Press Secretary Kayleigh McEnany appeared to dismiss that idea during a news conference Monday, noting that states are required by law to pay a quarter of the aid. She added that states could use CARES Act funding “to push that hundred dollars forward.”
A White House spokesman told POLITICO that “states could also use their existing state unemployment benefits” as funds that meet the 25 percent quota.
But some cash-strapped state governments have held on to some of that money in hopes that Congress will give them the flexibility to use it for budget shortfalls caused by falling tax revenues.
Can states afford that?
Governors are already making it clear that raising the required chunk of aid and setting up a new system in the midst of a pandemic that is already wreaking havoc on government budgets will not be easy.
The bipartisan National Governors Association, which has been demanding $500 billion from the federal government for states for months, said in a statement Monday it was “concerned about the significant administrative burden and cost that this latest measure would impose on states.” “. Instead, the group called on Congress and the Trump administration to come up with a solution that doesn’t impose new administrative and fiscal burdens on states.
“States are going bankrupt and millions of Americans are out of work, but the solution requires states to create a new program that we cannot afford and cannot administer at first,” said Democratic New Jersey Governor Phil Murphy said on Monday.
And Ohio Gov. Mike DeWine, a Republican, said Sunday his state is still evaluating whether it can afford to fund its share of the new program. “The answer is, I don’t know yet,” DeWine said on CNN’s “State of the Union.”
Requiring states to implement a new program could take weeks or months as they reprogram their antiquated systems to calculate who will be eligible. States must also find a way to separately fund the administration of the new aid alongside regular unemployment benefits.
“It’s definitely going to take months,” Evermore said. “And in states that can pay it at all.”
The White House on Monday acknowledged the uncertainty of setting up such a system. “I can’t give an exact timeline,” McEnany said during a news conference.
Who is entitled to benefits?
The memo says workers must receive at least $100 a week in benefits to be eligible, a requirement that could exclude many gig economy, low-wage and part-time workers.
State unemployment benefits, which vary by state, typically replace about 50 percent of a worker’s wages. Most states pay a minimum benefit of well under $100, suggesting some part-time and low-wage workers could fall below the threshold to receive federal aid.
Does that help the economy?
Experts warn that there is not enough money to make a significant impact on the economy.
Because Trump doesn’t have the authority to order new money to be spent, all he can do is push existing programs to spend their existing funds in new ways, said Jack Smalligan, who previously worked as a deputy assistant director in the Office of Management and Budget.
About $44 billion is available in the Disaster Relief Fund, from which the government will draw the federal portion of the benefit. Andrew Stettner, a senior fellow at the progressive Century Foundation, calculated that if each state took up the supplemental unemployment insurance program, that would yield about six weeks of benefits — “not enough to sustain the current Covid-19 surge and getting to the point when the unemployed can go back to work,” he said.
He also noted that the additional $400 a week for eligible unemployed would still represent an average pay cut of 22 percent for those who had received an additional $600 a week from the federal government through July.
And that, in turn, will likely lead to a fall in consumer spending that has supported jobs. That Estimates by the Economic Policy Institute, a progressive think tank that a $200-per-week cut in expanded performance would cost 1.7 million jobs.
“Compared to actually enacting another installment of unemployment insurance legislation,” Smalligan said, “what was done in the executive order is really pretty flimsy.”