“I honestly think this can not be serious,” said Michele Evermore, a senior policy analyst with the liberal-leaning National Employment Law Project. “The White House must have released the idea that this is just a negotiation tactic, because it really is an empty promise.”
How would it work?
The action uses presidential powers under what is known as the Stafford Act to use disaster relief funding, combined with state dollars, to send money to unemployed workers.
The Department of Labor has so far said it will work with states, the Department of Homeland Security and FEMA to help deliver the relief, but it has not provided any more specifications. Some states, such as Hawaii and Missouri, have issued notifications saying they are awaiting further DOL guidance on how to implement the program.
States must apply for federal funding, and if they choose not to take in or say they do not have the funds to provide their share of the assistance, then unemployed workers in their state will not receive any additional benefit.
The memo instructs states to spread the payments through their regular unemployment systems. But many experts and Democrats say they are confused about how already warring state systems could handle Trump’s plan. “That’s something we just do not understand how that would work,” said a Democratic aide to the First Chamber POLITICO. “You basically have to set up this whole new entity.”
Where would the money come from?
Trump’s memorandum says the federal government would cover 75 percent of the cost, while states would provide the remaining 25 percent – as much as $ 100 per worker per week. But the president’s message about who would be required to foot the bill for the program has shifted in recent days, as he suggested he could cover the federal government all costs as more than 75 percent.
“We have a system where we can do 100 percent or do 75 percent. They would pay 25. And it will depend on the state. “They will make an application, we will look into it, and we will make a decision,” Trump said Monday in New Jersey. “That it may be that in some cases they pay nothing.”
But White House Press Secretary Kayleigh McEnany revealed that idea struck in Monday’s presentation, noting that states are legally required to pay a quarter of the aid. She added that states could use funding from the CARES Act “as a way to bring that hundred dollars forward.”
A White House spokesman told POLITICO that “states can also apply their existing state unemployment benefits” as funds that meet the 25 percent share.
But some state governments with cash have stuck to a portion of that money, hoping Congress will give them the flexibility to use it for budget gaps caused by declining tax revenues.
Can states afford it?
Governors are already making it clear that it will not be easy to come up with their required share of aid, nor to set up a new system in the midst of a pandemic that has already devastated state budgets.
The nonpartisan National Governors Association, which has been demanding $ 500 billion for federal government states for months, said in a statement Monday that it was “concerned” about “the significant administrative burdens and costs this latest action will have” the states would place. ” The group instead called on Congress and the Trump administration to work out a solution that would not place new administrative and fiscal burdens on states.
“States are going through and millions of Americans are unemployed, and yet the solution is asking the states to create a new program that we can not afford to start and do not know how to govern,” the New Jersey Democratic government said. Phil Murphy on Monday.
In Ohio Gov. Mike DeWine, a Republican, said Sunday that his state is still debating whether it can pay to fund its share in the new program. “The answer is, I do not know yet,” DeWine told CNN ‘State of the Union’.
How quickly will workers be paid?
States requiring the implementation of a new program can take weeks or months as they reprogram their outdated systems to calculate who is eligible. States will also need to find a way to fund administration of the new aid separately in addition to regular unemployment benefits.
“It’s definitely going to be months,” Evermore said. “And that’s in states that are able to pay it off completely.”
The White House on Monday acknowledged the uncertainty surrounding the creation of such a system. “I can not set a timeline,” McEnany said in a press release.
Who is eligible for benefits?
The memo states that workers must receive at least $ 100 in benefits a week to be eligible, a requirement that could leave many gig economies, low-wage and part-time workers.
State unemployment benefits, which vary by state, typically replace about 50 percent of a worker’s wage. Most states will pay a minimum wage below $ 100, suggesting that some part-time and low-wage workers may fall below the threshold to receive federal aid.
Will this help the economy?
Experts warn that there is not enough money available to have a significant impact on the economy.
Since Trump has no authority to order the spending of new money, most of what he can do is push existing programs to reissue their existing funding in new ways, said Jack Smalligan, who previously worked as a deputy. associate director at the Office of Management and Budget.
There is about $ 44 billion available in the Disaster Relief Fund, of which the government will sign the federal portion of the benefit. Andrew Stettner, a senior fellow at the Progressive Century Foundation, calculated that about six weeks would bring benefits if each state took over the additional unemployment insurance program – ‘not enough to sustain the current flow of Covid-19 and get to the point’ if the unemployed are able to return to their jobs, ‘he said.
He also noted that the additional $ 400 per week for eligible unemployed workers would still represent an average compensation of 22 percent for those who received an additional $ 600 week from the federal government through July.
And that in turn is likely to lead to a decline in consumer spending that has supported jobs. The Economic Policy Institute, a progressive think tank, estimates that cutting the enhanced benefit by $ 200 a week would cost 1.7 million jobs.
“Compared to actually doing another installment of unemployment insurance legislation,” Smalligan said, “what is being done in the executive order is really very bad.”
