Trump’s COVID orders too little, too late to help US economy, experts say

(Reuters) – U.S. President Donald Trump’s weekend effort to hold stagnant congressional talks on the next coronavirus bailout package will not do much to boost the economy, experts said.

Trump’s executive order and presidential memorandum, introduced on Saturday, would extend temporarily improved unemployment benefits to a reduced amount of $ 400 a week, defer payroll taxes for some workers, suspend federal student loan payments and provide potential exemptions. Even if he can overcome the legal questions about his actions, the efforts may not pack much punch, economists say.

Mark Zandi, the chief economist at Moody’s Analytics, calculated the orders could deliver just over $ 400 billion in total relief. JPMorgan Chase economist Michael Feroli wrote in an email note Monday that the initiatives could raise “less than $ 100 billion” in incentives.

That is in contrast to the $ 1 trillion aid package proposed by the Republican-led Senate as the more than $ 3 trillion support bill passed by the Democratic-led House of Representatives.

Overall, the president’s orders would add up to 0.2% of GDP, a “negative amount”, according to estimates by Lydia Boussour, senior U.S. economist for Oxford Economics.

Millions of unemployed Americans could be financially squeezed this month after the expiration of a $ 600 weekly supplement to unemployment benefits, the abolition of nationwide eviction moratoriums and the end of the Paycheck Protection Program, which supports small businesses.

Some of the measures proposed by Trump would take time to set up and could be challenged in court, experts said. “They will not do anyone any good in this here and now,” Zandi said in an interview.

The president’s efforts also may not reach all workers who rely on help. For example, the $ 400 weekly supplement on unemployment benefits would only apply to people who receive at least $ 100 in state unemployment benefits and could exclude some low-income workers. The added benefits, which would be funded by $ 44 billion from the Disaster Relief Fund, would only last about five to six weeks, Feroli estimates.

And the program would put more pressure on states – which already saw their budgets during the crisis – by requiring them to pay 25% of the $ 400 supplement.

A measure that would delay workers’ share of the Social Security tax from September to December is not expected to have a significant impact on spending because it helps people who are still working, Boussour wrote. Workers would later still owe the taxes.

Trump’s policy change on housing may not immediately bring relief to people who are left behind on their rent or mortgage payments.

The president asked the heads of Housing and Urban Development and the U.S. Treasury to look for ways to provide assistance to tenants and homeowners and to investigate legal actions that could help prevent developments and objects – instead of spelling out concrete actions.

The measure most likely to become a reality is the extension of a free time on federal student loan payments, Zandi said. That is set to expire September 30; Trump’s move would extend it by the end of the year.

The move could save lenders $ 15 billion to $ 20 billion, Zandi estimates. “For the students, that’s a big deal, but for the macroeconomics in a crisis, it really does not matter.”