Coronavirus stimulus: Extending extra unemployment benefits through executive order 'would really be a nightmare'

Denitsa Tsekova
·Reporter
·4 mins read

President Trump signed several executive orders to address various issues related to the coronavirus pandemic after negotiations with Congressional Democrats over a new stimulus bill fell apart.

The immediate implications of the executive orders are unclear, and the unilateral route may be particularly messy when it comes to extending extra unemployment insurance (UI) benefits that expired after July.

“An executive order [on extra unemployment benefits] would really be a nightmare,” Michele Evermore, senior policy analyst at the National Employment Law Project, told Yahoo Money before the executive directives were announced. “It would just end up resulting in people thinking they're getting a benefit but states being unable to figure out how to do it in many cases.”

US President Donald Trump speaks during a news conference in Bedminster, New Jersey, on August 7, 2020. (Photo by JIM WATSON / AFP) (Photo by JIM WATSON/AFP via Getty Images)
US President Donald Trump speaks during a news conference in Bedminster, New Jersey, on August 7, 2020. (Photo by JIM WATSON/AFP via Getty Images)

Evermore said that enacting extra UI benefits through an executive order would take even longer than Congressional legislation — which experts say would take weeks to implement — because states can only administer benefits defined under the Social Security Act or by Congress. Benefits issued by an executive order aren’t authorized by the Employment and Training Administration, which manages unemployment compensation services for the Labor Department.

“States would have to set up a whole different system to pay out that piece of benefits,” Evermore explained. “I've heard from state agencies that getting the money this way would be difficult, if not impossible, to administer.”

Read more: Here’s what you need to know about unemployment benefits eligibility

On Saturday, Trump claimed that one of his executive orders would implement $400 in extra weekly unemployment benefits for jobless Americans — partially extending the extend the now-expired $600 provided by the CARES Act — until the end of the year, though it’s not clear if or when that would happen.

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Unemployed Americans see a drop in their unemployment benefits between 52% to 72% without the extra $600, according to an analysis by Evercore ISI. Graphic: David Foster / Yahoo Finance

“You should always take what the administration says with a grain of salt,” Gbenga Ajilore, a senior economist at the Center for American Progress, a non-profit for public policy research and advocacy, told Yahoo Money. “I wouldn’t be surprised if the administration tries it and then backs out because of the difficulty.”

A previous GOP proposal to extend emergency jobless benefits at 70% of a worker’s lost wages, instead of sending each jobless American the same flat amount, was immediately complicated by the antiquated unemployment systems in most states.

“What the president outlines is likely legally and logistically impossible to execute in nearly every state,” House Ways and Means Committee Chairman Richard E. Neal (D-MA) said in a statement on Saturday, “not to mention that the proposed funding falls far short of what would be required.”

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I don't know what CARES Act money they're talking about’

Another issue with any new executive orders to provide more stimulus amid the ongoing coronavirus pandemic would be funding.

White House Economic Adviser Larry Kudlow suggested that they could use leftover funds from the CARES Act, though that would likely be less than the $1 trillion offered in the original GOP proposal.

“Probably as much as a trillion dollars was obligated but unspent through the March CARES Act,” Kudlow told Bloomberg News on Friday morning. “We’d be able to repurpose it.”

Asked about funding for the promised executive orders, President Trump was optimistic but vague.

“We have the money,” he said on Friday evening. “We have plenty of money.”

Experts aren’t sure what money the president could use for funding an executive order on extra UI benefits.

“I don't know what CARES Act money they're talking about,” Evermore said. “The administration has limited powers of reprogramming money that was appropriated by Congress.”

Denitsa is a writer for Yahoo Finance and Cashay, a new personal finance website. Follow her on Twitter @denitsa_tsekova.

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