President Trump’s plan to provide an extra $400 per week in unemployment benefits to replace the $600 per week that expired last month could face legal, administrative and political hurdles, experts outside the administration say.
To participate, states would have to pay 25% of the cost, or $100 a week, according to Trump’s memorandum issued Saturday.
On Monday, California Gov. Gavin Newsom said California does not have the matching funds required to participate in the plan, which he estimated would cost the state $700 million per week.
In a later news conference Monday, Trump said, “We can terminate the 25% or we don’t have to do that so we will see what it is depending on the individual state.” He added, “A lot of money will be going to a lot of people very quickly.”
States also would have to set up a new way to pay the $400 weekly benefit at a time when most are struggling to keep up with their current backlog of claims. Since March, California’s Employment Development Department has processed 9.3 million claims, but still about 1.13 million claims are pending that have not been paid or denied.
Under Trump’s plan, anyone getting at least $100 a week in regular state unemployment benefits, or federal pandemic benefits, would get an extra $400 a week for weeks of unemployment ending August 1 through Dec. 6 — or earlier if the $44 billion in federal funds earmarked for the program runs out before then. That money could run out in six weeks, Georgetown University law Professor David Super said in a blog post.
Of the $400 per week, states would have to pay $100, or their residents would not get the remaining $300 per week coming from the federal government.
The memo also says states should “identify funds to be spent without a federal match” that would continue to pay the $400 per week through Dec. 27, if the $44 billion is depleted before Dec. 6. Newsom said this would cost California $2.8 billion per week.
The Trump plan would partially replace the $600 per week in federal Pandemic Unemployment Compensation that everyone on unemployment received on top of their state or pandemic unemployment benefits from April through July. That money came from Congress under the Cares Act. Under the Trump order, those getting less than $100 a week in regular or pandemic benefits would no longer get any federal supplement.
The Trump program is called “assistance for lost wages,” and run by the Federal Emergency Management Agency, with up to $44 billion from a federal disaster relief fund. Running and funding it through the regular federal-state unemployment system would require an act of Congress, which has been unable to agree on a new unemployment benefit and is on recess until September 7 unless a deal is reached sooner.
Democrats want to continue the $600 supplement through Jan. 31. Republicans have proposed reducing the payment to $200 for two months and then tying it to a worker’s prior wages for two months.
Trump’s memo says the $400-per-week extension must be paid “in conjunction with the State’s unemployment insurance system.”
However, “States cannot use their current Unemployment Insurance infrastructure to pay a benefit that is not authorized by Congress,” the National Employment Law Project, a nonprofit that advocates for workers, said in a press release.
That means states “will have to set up a new way to add these payments to existing benefits. As we know, states have been straining under the weight of the surge of applications, setting up a whole new Pandemic Unemployment Assistance program, battling an international fraud ring, and dealing with ever increasing directives” from the U.S. Department of Labor. “Setting up a new system entirely will be difficult, if not impossible,” the law project said.
Neither the EDD nor California Labor Commissioner responded to requests for comment on how long such a program would take to implement. Earlier, EDD said it would take three to five months to implement the Republicans’ proposal.
It appears that funding for Trump’s plan would be first come, first served. “States that have the most sophisticated systems may be able to stand up this program eventually, but those states that have been faltering due to decades of neglect or outright sabotage will be less likely to see any of this money,” the law project said. It added that “states with the most unstable and impenetrable systems also tend to be states with the highest populations of Black and Latinx workers.”
Trump’s memo said states could use money allocated under the Cares Act Coronavirus Relief Fund to pay their share of the weekly benefit.
Newsom said the state has already allocated more than 75% of California’s roughly $15 billion in Cares Act funding. There is no “identified resource of $700 million per week that we haven’t already obliged” and there is “no money sitting in a piggy bank” that could “could be reprioritized or reconstituted for this purpose. It simply does not exist.”
On Monday, Treasury Secretary Steven Mnuchin said in a call with governors that the states would have to pay the 25%, but Congress might reimburse them through legislation.
Under the Stafford Act, the law Trump used to authorize the program, “It’s illegal for the feds to pay 100% of the lost wages assistance,” said Maurice Emsellem of the law project.
Super argued in a blog post that the entire plan is illegal under that act.
Critics also say depleting the $70 billion disaster relief fund for unemployment benefits would leave less money to deal with hurricanes, wildfires and other catastrophes.
Two weeks ago, a group of Democrats in the California Legislature proposed extending the $600 expired benefit, minus whatever amount Congress might provide, with state funds borrowed from the federal government.
“We don’t have a bill,” said Assemblyman Phil Ting, a San Francisco Democrat who was part of the group. “Our hope is that between the Assembly, Senate and the governor’s office we have some agreement” on what the bill would say. “We are not exactly sure if the president’s idea is going to happen,” he said.