States are already borrowing to pay for jobless benefits

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President Donald Trump walks on the South Lawn of the White House after arriving on Marine One on Sunday. A day earlier Trump took executive action to offer $400 per week in supplemental unemployment benefits, including 25% he said should be kicked in from the states.

President Trump backtracked Sunday on his executive order that requires cash-strapped states to contribute $100 of a reduced $400 a week supplemental federal unemployment benefit he is trying to implement through an executive order.

Trump told reporters that individual states might get waivers.

Trump’s executive order signed Saturday would use up to $44 billion from FEMA’s Disaster Relief Fund to continue enhanced unemployment benefits which had paid $600 a week until they expired at the end of July.

Rebecca Dixon, executive director of the liberal-leaning National Employment Law Project which closely follows the availability of jobless benefits, described the administration’s proposed benefit “an empty promise to unemployed people.”

“What we had was working for millions of people and supporting our struggling economy – and the support needed to be expanded to cover all unemployed workers,” Dixon said in a press statement.

Natalie Cohen, president of National Municipal Research, doubted Trump has the authority singlehandedly renew the program without congressional approval.

As for the drawdown of the Disaster Relief Funds, Cohen said, “Pray we don’t get any major late-season hurricanes or wildfires.”

Trump’s request for states to help pay for the reduced benefit of $400 a week comes at a time when 10 states already have borrowed from the federal government to continue paying regular state jobless benefits.

The National Conference of State Legislatures reports that California, Hawaii, Illinois, Kentucky, Massachusetts, Minnesota, New York, Ohio, Texas, and West Virginia have borrowed from the federal government because their respective unemployment benefits trust funds are exhausted. Those 10 states and the U.S. Virgin Island have collectively already borrowed $19.79 billion through Aug. 7.

Those states and another eight states -- Colorado, Connecticut, Delaware, Georgia, New Jersey, New Mexico, Pennsylvania, and Virginia -- have received advance authorization to borrow another $13.78 billion.

Trump told reporters Sunday evening before boarding Air Force One in Morristown, N.J. he issued the executive order because “we have to get money out to the people.”

Asked about the 25% share that states would have to contribute, Trump said, states would have the option to request 100% federal funding. “And it'll depend on the state,” he said. “And they'll make an application, we'll look at it, and we'll make a decision. So it may be, they'll pay nothing in some instances.”

Trump’s order is retroactive to August 1 and available for weeks of unemployment through Dec. 6 or until funds from the FEMA DRF funds have been depleted to a level of $25 billion. The administration plans to reserve the remaining $25 billion for natural disasters.

States would be able to use the money they received from the CARES Act’s Coronavirus Relief Fund to pay for their 25% share of the supplemental unemployment benefit.

The ranking Republican on the House Ways and Means Committee, Rep. Kevin Brady of Texas, issued a fact sheet Monday estimating “more than $80 billion of the CARES Act’s Coronavirus Relief Funds $150 billion remain available after being appropriated directly to state, territorial, tribal, and some local governments to cover costs incurred due to the COVID-19 emergency.”

The U.S. Treasury Department recently released a report from the department’s Office of Inspector General showing that many states had only spent a small fraction of the $150 billion as of June 30.

However, seven state and local government groups issued a joint statement on Aug. 3 emphasizing that the Treasury report provides an incomplete snapshot.

“We note that the CRF funds were not distributed until late April and that the next two months were spent in the development of ‘evolving’ Treasury guidance and FAQs that were not completed until the end of June,” the groups said.

The joint statement by the National Governors Association, the National League of Cities, U.S. Conference of Mayors, National Association of Counties, and others said that “state and local governments have moved expeditiously and responsibly in the use of funds and their timely deployment.”

Cohen said the administration’s suggestion that states use the same Coronavirus Relief Funds to pay for their share of supplemental unemployment benefits amounts to mixing up money that is already spent.

“It’s like setting aside your monthly rent but then, because you haven’t yet spent that allocation, you decide to buy a car with the money,” Cohen said in an email.

Senate Democratic Minority Leader Chuck Schumer said on the MSNBC Morning Joe cable TV show Monday morning he thinks the executive order on federal supplemental unemployment benefits “is not going to be able to be put into place for a month or two, if at all.”

“So here we're going to have through September, all these people not getting the money?” asked Schumer, who called the decision to reduce the benefit from its previous $600 a week a signal the administration has “no respect for the American people.”

Schumer said the impact of Trump’s executive orders “are going to be minimal at best.”

“So it may well be that the Republicans are willing to now sit down with us because they see what they were hanging their hat on, these executive orders are just being more or less regarded at best as ineffective and laughed at worst,” said Schumer. “And hopefully they’ll now come to the table.”

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