Trump’s attempt to bypass Congress on stimulus is offering, at best, only limited economic relief

 

WASHINGTON POST

Just two weeks after President Trump approved executive actions aimed at bypassing stalled stimulus negotiations with Congress, only one state has said it is paying new jobless benefits, few evictions have been paused, and leading employers have made clear that workers will not benefit from the president’s new payroll tax deferral.

After talks with congressional Democrats faltered, the president on Aug. 8 signed four executive actions aimed at staving off further economic turmoil. They included a $300-per-week benefit for jobless Americans, after the previous enhanced benefits expired in late July. Trump also directed a deferral of payroll taxes, as well as a halt to evictions and a suspension of student loan payments.

But Trump’s directives have so far produced limited economic relief for Americans hurt by the coronavirus pandemic, despite promises by top White House aides that help would come within weeks. By Friday, only Arizona had started sending the extra $300 to its residents.

Business leaders say they are unlikely to implement Trump’s payroll tax order

Auto part suppliers, clothing sellers, retailers, restaurants and a torrent of top businesses signaled Tuesday they are unlikely to implement President Trump’s order deferring payment of workers’ payroll taxes, threatening an early blow to a policy the White House has touted as a major form of economic stimulus.

Roughly 30 industry groups, led by the U.S. Chamber of Commerce, described Trump’s executive action as potentially “unworkable,” stressing in a letter to the administration and top congressional leaders that technical and logistical challenges are likely to prevent them from passing any extra income back to their employees as the president intended.

“Therefore, many of our members will likely decline to implement deferral, choosing instead to continue to withhold and remit to the government the payroll taxes required by law,” the groups wrote.

Lawmakers of both parties continue to express an unwillingness to end the payroll tax, given its impact on the budget and federal entitlement programs such as Social Security and Medicare.

Thirteen states have been approved to give the enhanced payments, and some, including Montana and Kentucky, will kick in a $100 match, meaning out-of-work residents there could get up to $400 in enhanced benefits. Many other states either have said they’re applying or have not said whether they will move forward and offer the payments. South Dakota has turned down the jobless benefits.

Trump and his economic team have repeatedly suggested that the executive actions largely render talks with Congress unnecessary, with the president saying that they would “take care of pretty much this entire situation.” National Economic Council Director Larry Kudlow boasted that the orders had led to a dramatic increase in the stock market, while Treasury Secretary Steven Mnuchin said after the orders were signed that the new unemployment payments would arrive “immediately." The next day, Mnuchin said the payments would be arriving “within the next week or two.” Kudlow also said at the time that the benefits would take “about two weeks” to be paid out.

The administration’s assessment of the timing of the benefits has almost certainly proved too optimistic. So far, only Arizona has reported sending the extra $300 week on top of traditional state unemployment benefits, according to Michele Evermore, an unemployment expert at the National Employment Law Project, a nonprofit.

Numerous governors have complained that the program is too complicated and could take several more weeks to set up. The White House also stipulated that people receiving less than $100 per week in unemployment benefits from their states are not eligible for the extra $300, effectively preventing as many as 1 million jobless Americans from receiving the benefit. And guidance from the Federal Emergency Management Agency — which manages the disaster relief fund that’s being tapped for the payments — suggested the extra benefit would last only three weeks.

Exacerbating the delays are financial and technical challenges, requiring states to update computer systems that in some cases are decades old. Similar upgrades kept some Americans from receiving their jobless aid for weeks or months earlier in the pandemic, as labor officials struggled to implement the new programs authorized under the $2 trillion Cares Act.

State unemployment officials have said that it would be easier if Congress adopted a new coronavirus aid package rather than piecemeal programs that require constant computer fixes. There appears to be little chance of that happening soon. Many economic experts say the absence of a deal with Congress is sharply limiting the recovery and is hurting unemployed Americans, given the administration’s challenges in implementing the new jobless benefits.

White House officials say they acted rapidly to help the unemployed, without ceding to Democrats’ demand to provide up to $1 trillion in aid to states, cities and tribal governments; Trump officials said that would be a bailout to blue states and localities that mismanaged their budgets. Mnuchin said this week that the White House was not willing to go along with Democrats’ “unreasonable” demands.

But the lack of urgency in reaching a deal on an aid package also reflects the White House’s view that no more federal help is needed to stimulate the economy. Kudlow has repeatedly said that the United States has now entered a “self-sustaining” recovery. Stock markets — one of Trump’s favorite economic indicators — have soared even without an additional federal stimulus package.