Among the executive orders signed by Trump on Saturday, Aug. 8, 2020, after Covid-19 relief negotiations broke down (because Republicans refused to budge) is one extending federally-funded “enhanced” unemployment benefits (on top of state benefits) through the end of this year, but at $400 a week, instead of the $600 a week paid until July 31, which were funded by the $3 trillion relief bill Congress approved in March.
But Trump directed the federal government to pay only $300 of the $400, and dumped responsibility for the other $100 on states, declaring “it’s up to them whether they pay it.” Many probably won’t because states are reeling from plunging tax revenues, but if they don’t residents of those states won’t get the $300, either, and those who do must first qualify for the $100, which will disqualify many. And because these benefits haven’t been authorized by Congress, participating states will have to administer them through new, separate programs.
The White House maintains states can afford it because they’re “sitting on” money from the earlier relief bill. In reality, a fifth of the states are already borrowing from the Treasury to pay state benefits.
Meanwhile, Trump has stubbornly refused to include any state or local aid in the new relief bill, which Democrats have insisted on. He insists states have “mismanaged” their finances. This probably means they spend state funds on things he doesn’t like.
The federal money likely will come, at least in part, from the Department of Homeland Security’s Disaster Relief Fund. But that fund has only $44 billion, and that’s money that may be needed for hurricanes and other natural disasters. The bottom line is the benefits he just authorized by with a swipe of his pen probably won’t cost very much because few people will actually get them.
Update (8/10/20): The Labor Department revised the details on Sunday (8/9/20) so that state benefits will now count toward the $100, and because all states pay a state unemployment benefit (to those who qualify), this means the extended benefit is $300, not $400. In addition, the administration announced it will spend no more than $19 billion of the $44 billion disaster fund, which is enough for 63.3 million $300 checks. That’s only enough for about 2 weeks of benefits for everyone who was receiving them at the end of June, but this isn’t a meaningful figure, because at this point no one qualifies for the benefits authorized by Trump’s executive order. For more details, click here.
And states are reeling from plunging tax collections that are due to States actions to a large degree. Barbers and hair saloons pay taxes to the state. In a typical emergency a few barbers and salons may close for a few days. If they are damaged by fire they have insurance. There is now a speakeasy in America and they are barbers and other business that look closed from the street, but if you know the secret knock you can get your hair done, and it’s unlikely taxes are being colleted from this illicit work for state taxes.
And there is an incentive for states to get people back to work in how Trump is doing this. Not like he has not called for states to open up and get back to work.
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