Millions of unemployed residents could see $400 a week more in their weekly unemployment payments — possibly by the end of the month — thanks to the executive order President Donald Trump signed Saturday.
Trump said the money should be available in a “very rapid” fashion.
Experts have raised questions whether Trump’s action will withstand likely legal challenges — spending is supposed to originate in Congress — but Trump maintained he’s not concerned.
Nationally, the aggregate weekly benefit is $364. States with averages well below the national aggregate include Florida, $252, Missouri, $269, and South Carolina, $277.
It’s likely that anyone now receiving regular state unemployment benefits or benefits under the new federal Pandemic Unemployment Assistance program would be eligible for the additional payment. PUA was created in March to provide aid to those who do not qualify for regular state programs, such as independent contractors or gig workers.
Trump’s order would partly revive a benefit the nation’s unemployed workers had received from late March until late July. He announced his plan at a news conference at his Bedminster, New Jersey, golf club, saying that states would pay 25% of the cost of the new unemployment benefit. The federal government, which had paid for the entire $600 benefit, would pay the rest.
Trump said states would be asked to be “using existing funding, such as the tens of millions of dollars available to them through the coronavirus relief fund.”
Trump was asked which governors had said they would agree to this plan.
“If they don’t they don’t…That’s going to be their problem. I don’t think their people would be too happy. They have the money,” he said.
Trump did not say where any of the new federal money would come from, since Congress has not provided any more funds for this purpose. And it was not immediately clear whether the $400 would be available if states were unable to pay a one-fourth share, or how long the payments would be available.
Democrats immediately fired back, saying the Trump order was flawed. Sen. Ron Wyden, D-Oregon, top Democrat on the Senate Finance Committee, said he had heard “grave concerns from states about this proposal and they are simply going to opt out. Their budgets have been crushed. They cannot afford a 25 percent match.”
Trump took the extraordinary action after marathon negotiating sessions on a broad economic relief package crumbled.
Democrats held out for restoring the full $600. Republicans wanted an amount more in line with what people were earning, saying the $600 when added to regular unemployment payments allowed too many people to earn more not working than on their job.
Asked why he settled on $400, Trump said “This gives them a great incentive to go back to work…there was difficulty with the 600 number because it really was a disincentive.”
The president also signed other orders aimed at boosting an economy whose comeback has largely stalled. Rising rates of infection and death tied to the covid pandemic have help stifle robust economic growth.
Trump also deferred payroll taxes until at least the end of the year, forgave student loan interest and debt and extended the moratorium on evictions.
The unemployment benefit is often cited by economists as one of the most effective ways of stimulating a sluggish economy.
Cutting the payroll tax is regarded as less effective, since people have to be working to pay the tax. Trump’s order defers the tax from August 1 retroactively through the end of the year for those earning less than $100,000.
Workers and employers each pay 6.2% for Social Security until their income reaches $137,700, and 1.45% in most cases for Medicare. The highest earners pay another 0.9% in Medicare tax.
“It’s not going to reach people who are out of work or are receiving disability,” since they are not working and paying the tax anyway, said Chye-Ching Huang, senior director of economic policy at the Center for Budget and Policy Priorities, a progressive Washington research group.
In 2011-12, payroll taxes were cut 2 percentage points to 4.2%.