The $600 supplemental unemployment benefits, which had been distributed to millions of Americas who’ve lost income as a result of the pandemic, ended in July. And despite intense pressure to provide additional aid, Congressional lawmakers have so far been unable to come to an agreement on an extension.
Last week, President Donald Trump stepped in, issuing an executive memorandum to extend the supplemental unemployment benefits at a lower rate of $400. But that level assumes that states will kick in $100 of the benefits, and many states have said they don’t have the financial resources to do so for millions of out-of-work residents.
The memo essentially sets up a “lost wages” assistance program, which could cause further delays to implement. There’s also a question of whether there’s enough federal funding to provide $300 a week to millions of unemployed Americans for long—and if Trump has the legal authority to direct how those federal funds are used.
So, when could those who are unemployed expect to get additional benefits? And how much could those benefits be?
How much could supplemental unemployment benefits be?
The only guarantee made through the executive memo issued Saturday is that the federal government will provide enough to cover $300 in supplemental unemployment benefits per week. It’s unclear which states will be in a position to cover the other $100 per week.
It initially seemed that states would have to contribute at least a quarter of the payment to be eligible for federal funds. But on Monday, Treasury Secretary Steven Mnuchin clarified that states will not have to pay $100 per week in benefits in order to qualify for the $300 in federal unemployment benefits. “If there’s some states that really have problems, the President has the ability to waive the 25 percent entirely,” Mnuchin said on CNBC.
Where would the funds come from?
The executive action aims to redirect up to $44 billion of existing funding from the Department of Homeland Security’s Disaster Relief Fund to cover the federal portion of $300 per week in supplemental unemployment benefits.
For the state’s portion, the Trump administration has encouraged states to tap what remains of their share of the $150 billion in federal coronavirus relief funds approved through the CARES Act earlier this year, which was intended to help states cover unforeseen financial needs and risks created by the coronavirus pandemic.
According to a report by the Treasury’s Office of the Inspector General, $34.2 billion, or about one quarter, of that money had been spent through the end of June. But spending varied greatly among states. Some had hardly spent any of the funds, but others—including California, Colorado, New York and West Virginia—had already used nearly half or more. (Saturday’s executive memo states that “more than $80 billion” remains available, indicating that nearly another 25 percent of the Coronavirus Relief Fund dollars may have been spent since.)
On August 10, the Treasury Department updated its guidance to make clear that states are “fully permitted to use payments from the Fund to satisfy 100% of their cost share for lost wages assistance.”
But it’s not clear that states have enough left of those funds to cover it for long. And many states still face additional expenses related to the pandemic as well as large shortfalls in tax revenues as a result of business closures and job cuts. State governors in Texas, Florida, New York and New Jersey, among others, have already expressed concerns about being able to cover the $100-a-week portion for jobless residents.
When could supplemental unemployment benefits go out?
Whether it’s $300, or more, it’s likely it will take some time to get any additional payments distributed.
“I don’t think there will be a huge delay,” predicted White House economic adviser Larry Kudlow this week on ABC. “The Labor Department has been working with the states.”
But states have said it will take time to secure funding for their portion and also to set up the distribution of additional payments. There may also be legal challenges to the executive action (see below).
How long could the supplemental unemployment benefits last?
The Committee for a Responsible Federal Budget estimates that the $44 billion reallocated from the Department of Homeland Security’s Disaster Relief Fund would be enough funding to provide five weeks of benefits.
Once federal funds run out, the administration has indicated states would need to cover the costs to continue paying out the supplemental unemployment benefits through the end of the year. That may be difficult for many states.
Arkansas Governor Asa Hutchinson, for example, estimated it will cost about $265 million for the state just to pay for a quarter of the $400-a-week unemployment benefits, and noted that would also require state legislative approval. “The state of Arkansas can make that happen, but it would be challenging and would take some time,” Hutchinson said Monday.
He told the Associated Press that the state has about $250 million in federal coronavirus relief funds set aside, and the state could reallocate coronavirus funds in other areas. But part of the guidance he and other states are asking for is whether funds reallocated to pay for their share of the unemployment payments would later be replenished by the federal government, as they anticipate additional pandemic-related expenses.
Like many other states, Arkansas has struggled with a surge in coronavirus cases this summer that prompted a pause in easing restrictions on business re-openings. The Arkansas Health Department says that more than 50,000 residents have tested positive for coronavirus—the majority of them in the last two months.
Could Trump’s executive action face a legal challenge?
Yes, that remains a possibility, too. In his memo, President Trump invoked the Stafford Act, disaster relief legislation that allows for the President to direct any federal agency “to utilize its authorities and the resources granted to it under Federal law…in support of State and local assistance response and recovery efforts.”
It’s not clear, though, that redirecting federal funds toward supplemental unemployment benefits would qualify under the law.
“There remains a fair amount of ambiguity and uncertainty regarding the order’s implementation and ability to survive legal challenges,” wrote Alex Meier and Marc R. Jacobs from the law firm Seyfarth Shaw in a post. Their conclusion: “It is unlikely that any Americans will be receiving this $400 supplemental payment anytime soon.”
Democratic leaders have expressed similar concerns, with Senate Democratic leader Chuck Schumer calling it “an unworkable plan” Sunday in an interview on ABC.
Negotiations between lawmakers from both parties broke down last week on a coronavirus relief package. But party leaders have expressed hope in restarting talks again soon. An additional package would almost certainly include some supplemental unemployment aid.