President Donald Trump’s memorandum to extend the additional benefits for unemployment does not coincide with what an act of Congress could have provided.
The memorandum that Trump signed after Congress failed to reach a new incentive action has several weaknesses, according to Andrew Stettner, an unemployment insurance expert and senior fellow at the Century Foundation, a think tank.
It provides limited funding; the benefits are difficult to manage; there is no national policy; and the total amount of benefits is less than promised, Stettner said.
“All of these are symptoms of why it was really important to come to a real agreement with Congress to continue this program,” he said.
‘It just falls apart in comparison’
Trump has offered an extra $ 400 a week as a way to help unemployed Americans, but the actual supplement most will receive is just $ 300 – if their states implement the extra benefits anyway.
“I’m taking action to provide an extra or an extra $ 400 a week in extended benefits,” Trump said at his golf club in Bedminster, New Jersey, on August 8 when he signed the memorandum. “That’s generous, but we want to take care of our people.”
Read more: Here’s what you need to know about being eligible for unemployment
In contrast, the Democrats’ proposal called the HEROES Act would have provided the extra $ 600 per week under the CARES Act, providing $ 130 billion in assistance to families by the end of September, according to an analysis by Stettner and Michele Evermore, a senior policy analyst at the National Employment Rights Project. That’s $ 86 billion more than the maximum amount that could be distributed under Trump’s memorandum.
“It just pales in comparison to what we have universally provided for the CARES Act and then the HEROES Act,” Stettner said.
‘It’s exactly the same pot of money’
The up to $ 44 billion earmarked to fund Trump’s unemployment benefits could also be used for other purposes. The funds come from the Federal Emergency Management Agency (FEMA) and are also used to fund disaster relief, which means they may fail sooner than expected if a natural disaster occurs.
That’s already happened. Gov. Iowa’s Kim Reynolds has raised $ 4 billion this weekend for those affected by the recent derecho storm in her state. The request was approved by the President.
“They are asking for FEMA help and it is exactly the same pot of money that is being used for employment insurance benefits,” Evermore told Yahoo Money earlier this week. “I imagine this will happen more than once in the next month.”
‘For local economies, it means fewer jobs’
The $ 86 billion deficit – the difference between full funding of $ 600 and the total benefits provided under Trump’s memorandum – between August and September will also hurt local economies. The states that will see the biggest losses in potential unemployment benefits are California ($ 14.8 billion), New York ($ 9.4 billion), Pennsylvania ($ 5.6 billion), and Texas ($ 4.9 billion). ), found the analysis.
“For the local economy, it means fewer jobs,” Stettner said. ‘Most of us [local] economies are consumer economies … the sectors that lost the most jobs were retail, commerce, leisure, hospitality, and services. These depend on people who have money to spend. ”
Great government support has kept American incomes at high levels during the pandemic. Even as the nation’s gross domestic product shrank by 32.9% in the second quarter, personal income grew by 7.3%, according to the Bureau of Economic Analysis (BEA). But the benefits provided under the memorandum may not be strong enough to have a similar impact.
‘Now, people will have these problems that are familiar with unemployment: people who are losing their homes, people have to move with their families, and their children cannot go back to college. We’ll start seeing more of those problems, “Stettner said.” The money they give is just a band-aid, and it could make it easier to not take care of the problems. “
‘Different perceptions of the unemployed in different parts of the country’
Another problem with the $ 300 benefits is that they are not evenly distributed across different states, compared to the CARES Act, where each state adds a flat $ 600 in weekly benefits.
The federal government contributes $ 300, while states have two options for paying the rest of the benefit. States can count $ 100 in unemployment benefits they already pay as the match required in Trump’s memorandum. By doing this, unemployed workers receive only $ 300 extra per week. Or, states can find funds to provide an additional $ 100 on top of the $ 300 from the federal government.
Most states go for the $ 300 as a cheaper and less complex option to manage the benefits. So far, Kentucky is the only state that has promised to pay the extra $ 100.
But some states may or may not apply for benefits or refuse to use them – as South Dakota did. This means that many unemployed Americans do not see any additional benefits, depending on their state
“People have different perceptions of the unemployed in different parts of the country,” Stettner said. “You have no guarantee of this help, depending on where you live.”
Denitsa is a writer for Yahoo Finance and Cashay, a new personal finance website. Follow her on Twitter @denitsa_tsekova.
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