Here’s Why That $400 May Not Happen

Here’s Why That $400 Unemployment Check From Trump’s Executive Order May Not Happen

 


 

TOPLINE

On Saturday, President Trump signed an executive memorandum to extend the lapsed supplement federal unemployment benefits—that extra $600 per week—from the CARES Act at a reduced level of $400 per week; the directive that was met immediately with vehement backlash from Democrats as well as questions about its legality. Here’s everything you need to know.

 

 

KEY FACTS

 

•  The plan would reallocate $44 billion for unemployment benefits from the Department of Homeland Security’s Disaster Relief Fund—the same fund that covers emergency aid for hurricanes and wildfires—under the Stafford Act.

 

•  Then, state governors could set up a program to provide an extra $400 per week in unemployment benefits (retroactive to the first week of August, right after the CARES Act payments expired), with 25% of that payment (or $100 per week) provided by the states; Trump also noted that states could contribute more if they chose to.

 

•  The Committee for a Responsible Federal Budget estimates that the $44 billion would only last about five weeks, given the current levels of unemployment across the country, even though Trump’s memo says the benefits can continue through December 27, 2020.

 

•  That’s not to mention the fact that lowest-earning Americans would likely miss out on the new payments entirely because they would only be available to those receiving at least $100 per week (low earners, especially those who are self-employed or rely on tips, often don’t meet the income threshold for this level of benefit).

 

•  The biggest threat to Trump’s plan, however, is state finances, which are already stretched thin because of the pandemic: If states can’t contribute that 25%, they may opt out of the program entirely to avoid the extra fiscal and administrative burden.

 

•  It’s also unclear how quickly states could implement a new program if they chose to participate; Michele Evermore of the National Employment Law Project described the process to USA Today as an “administrative nightmare.”

 

 

WHAT WE DON’T KNOW

Whether states will be required to chip in the 25% in order to receive federal benefits. It’s not clear yet whether federal benefits will depend on that contribution, or if states that can’t come up with the money will still be able to pay out $300 per week from the federal government. During a press briefing on Monday, Trump said that the requirement for states to contribute might not be the same across the board. “Depending on the state, we have the right to do what we want to do. We can terminate the 25%, or we don’t have to do that,” he said. “It depends on the individual state.”

 

CHIEF CRITIC

Already, some governors have said the program isn’t feasible. New York Gov. Andrew Cuomo slammed it as a “nonstarter” on Monday, saying that “states can’t afford it” and predicting that “it will be challenged in court.” Gov. Gavin Newsom of California said the program would “create a burn . . . the likes of which even a state as large as California can never absorb.”

 

TANGENT

Trump issued this directive in the form of a presidential memorandum, which carries the force of law but nonetheless is different in a few important ways from an executive order, which must be recorded in the Federal Register and is required to cite the constitutional authority of the president.

 

BIG NUMBER

31.1 million. That’s how many Americans are currently receiving some form of government unemployment benefit, according to Thursday’s jobs report from the Labor Department.


FURTHER READING

Poorest Americans Unlikely To Qualify For $400-A-Week Unemployment Checks: Report (Forbes)

Trump Signs Order Extending Unemployment Benefits, But At A Reduced Amount (Forbes)

Mnuchin Says White House Is Willing To Put ‘More Money On The Table’ For Next Stimulus Bill (Forbes)

'Impossible': Democratic Governors Pan Trump's $400-A-Week Unemployment Benefit (Forbes)


I'm a breaking news reporter for Forbes focusing on economic policy and capital markets. I completed my master’s degree in business and economic reporting at New York University. Before becoming a journalist, I worked as a paralegal specializing in corporate compliance.

 


 

 

From IATSE Facebook post dated 8/13/2020