President Donald Trump announced over the weekend that if Congress wouldn’t extend the $600 enhanced unemployment insurance, he would do something himself.
“I’m taking action to provide an additional or an extra $400 per week in expanded benefits,” Trump said Saturday at his golf club in New Jersey.
But $400 is not $600, which is what the benefit was until it expired at the end of July. And it turns out the extra $400 is actually just $300, unless states feel like adding another $100. And the money isn’t technically an unemployment benefit, possibly because it’s legally dubious. And it could take weeks for states to deliver.
The president’s memorandum tells governors they can apply to set up a brand-new “lost wages assistance program” through the Federal Emergency Management Agency. The program would operate in tandem with state unemployment systems, some of which took weeks and months to deliver federal benefits earlier this year.
If any laid-off workers watching the president’s news conference over the weekend thought they were about to get paid, they might wind up disappointed.
“It’s setting up workers’ expectations that they’re going to get a benefit that there’s almost no way they’re going to get,” said Michele Evermore, an unemployment insurance expert with the National Employment Law Project.
The president’s announcement is partly a negotiating tactic on a broader coronavirus relief deal, as the memorandum says the new wage assistance program “shall terminate upon enactment of legislation providing” federal unemployment benefits.
A senior White House aide told HuffPost on Monday that there was “no movement” on a deal right now. “But it’s all hands on deck at Treasury and Labor to get money out to people as soon as they can,” the aide said.
In addition to the lost wages program, the president also ordered the Treasury Department to defer payroll tax withholdings, which would give workers more take-home pay ― but it wouldn’t actually waive their tax liability, meaning they would have to pay it back later.
Negotiations on a sweeping deal remain a problem. Democratic leaders say they’ve come down $1 trillion from their initial $3.5 trillion request, but Republicans say the reduction is mostly budget gimmickry — Democrats just changed the expiration of some programs to temporarily lower the cost.
Republicans and Democrats are still at odds on the unemployment benefits, but they’re also still fighting over money for state and local governments, a liability exemption for companies that reopen, and a write-off for state and local property taxes.
“The Democrats demanded a ransom of state and local money and other unnecessary things like SALT,” a senior GOP aide told HuffPost on Monday, referring to a Democratic push to reduce a limit on a federal tax deduction for state and local tax payments. “Once it became clear they wouldn’t get those, they lost interest in bipartisan items like money for testing and schools.”
The president boasted that his action would provide $400 supplemental payments, with states kicking in $100 of that sum ― a scheme that turns out to be a bit of a sham.
An internal U.S. Labor Department memo sent to state workforce agencies on Sunday says states could count $100 of an unemployed person’s current state benefit as the extra contribution. It will be entirely up to states whether they want to actually kick in an extra $100, meaning the president’s memorandum effectively offers just $300.
“This option requires no new expenditures of state funds beyond what the state would already be paying out from state funds in regular unemployment compensation benefits,” the document says.
Workers receiving less than $100 in state benefits would be ineligible for the Trump bump, meaning people who are receiving partial benefits while working part-time jobs would be out of luck.
Elisabeth McGowan of New York City applied for unemployment back in April after getting furloughed from her job as a news editor. She said it took the New York Department Labor four weeks to finally pay her claim, so she got a part-time job as a barista, which she has continued. Because of her wages, her state benefit amounts to about $90 per week.
People could still get the full $600 while receiving partial states benefits. McGowan, 23, said the extra money allowed her to help her parents pay their expenses. Now it’s gone.
“I can’t help them anymore. They’re facing huge financial problems,” McGowan said.
She would be ineligible for the president’s extra $300 unless New York figures out how to increase her state benefit.
States can’t even get started on the program until they get some guidance from the federal government on what to do. The memo to workforce agencies said the Labor Department would hold a conference call with state unemployment administrators on Tuesday as a precursor to more formal guidance later this week.
A spokesperson said the Labor Department “will be issuing more formal guidance in the next few days to further assist states in understanding [how the] grant program administered by the Federal Emergency Management Agency intersects with the UI program and delivery of benefits.”
Federal disaster law allows the government to set up a special disaster unemployment assistance program, but the law specifies that nobody can receive the benefits unless they have been deemed ineligible for regular state benefits. That’s likely why the new program is overseen by FEMA and is technically not an unemployment insurance program, even though it will operate exactly like one.
Unemployment policy experts say the difficulty states have had so far this year, which in some states resulted in massive lines of people desperate for help with unresolved claims, are a clue to what will happen with Trump’s plan. More than 20 states are still failing to submit monthly reports on the federal benefits programs that Congress created in March, according to Wayne Vroman of the Urban Institute.
“Some states are going to be able to do it quickly, some are going to struggle just like they have with the pandemic benefits,” Vroman said.
CORRECTION: An earlier version of this story said the Labor Department sent states guidance on the lost wages assistance program on Monday. The memo, which was not formal guidance, was sent on Sunday.
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