Coronavirus stimulus: Funding for extra unemployment benefits ordered by President Trump is running out
States will soon start running out of funding for extra unemployment benefits being provided to millions of Americans that was made available under an executive memorandum signed in early August.
“It is likely that the benefit will stop abruptly for individuals,” Arizona’s director of the Department of Economic Security reportedly said on a call with reporters. "It is likely that after the sixth week there will be some amount of jeopardy to the availability of these funds going forward.”
Read more: Here’s what you need to know about unemployment benefits eligibility
On August 8, Trump signed several executive orders in an attempt to bypass stalled negotiations with Democrats about a new stimulus bill amid the coronavirus pandemic. However, the resulting Lost Wages Assistance (LWA) funding that provided $300 to $400 in extra unemployment insurance is limited to up to $44 billion redirected from the Federal Emergency Management Agency (FEMA).
With 48 or the majority of states applying or being approved for the program, each state will likely get allocated a portion of the money to cover about six weeks, according to Andrew Stettner, an unemployment insurance expert and senior fellow at the Century Foundation.
“Most workers will end up getting paid [the extra benefits] by the end of September and maybe a few will dip until October,” Stettner said. “I think people in Arizona will get all their money in September.”
Most states won’t distribute funds until sometime in September, and some may even begin paying them out in October given the logistical challenges of providing unemployment insurance through aexecutive directive (as opposed to legislation).
“Whether people get that payment in September or October, they're only going to get a certain amount,” Stettner said. “Most people are going to get five or maybe six weeks.”
‘We, unfortunately, don’t have unlimited amounts of money’
When approved for LWA, states initially receive three weeks of funding. Any extra after that is approved on a week-by-week basis until the funds deplete.
“It’s really unclear whether states that got it up running faster will get additional weeks or if they’re setting money aside so that every state will get the fourth and fifth and sixth week,” Michele Evermore, a senior policy analyst at the National Employment Law Project, told Yahoo Money.
Read more: Coronavirus stimulus checks: What’s stopping a second round of payments?
Experts initially estimated that the LWA funds would likely be depleted in five weeks once states started distributing them, meaning that jobless Americans may see their last $300 to $400 in extra benefits dry up at some point in September or October.
Treasury Secretary Steven Mnuchin acknowledged the limited funding in recent Congressional testimony.
“The president extended, through executive authority, enhanced unemployment up to $400 per person,” Mnuchin said during a hearing on Tuesday. “Now we, unfortunately, don’t have unlimited amounts of money that we can do that, but the president wanted to move forward.”
President Trump indicated that he would like to unlock an extra $300 billion for stimulus measures — but needs Congressional action to do so.
“Now, we have $300 billion in a — an account that we didn’t use — $300 billion,” President Trump told reporters on Friday. “And we are willing to use that. I would be willing to release it, subject to Congress, and use that as stimulus money."
Negotiations between the GOP-backed White House and Congressional Democrats over another round of wide-ranging stimulus legislation are expected to progress next week as Congress returns from summer recess, and the imminent expiration of LWA funding is an added incentive for Congress and the White House to made a deal that would provide more relief for Americans.
“If states are reaching the end of their benefit,” Evermore noted, “that will actually be a real big incentive for Congress and the White House to get back to the table.”
Denitsa is a writer for Yahoo Finance and Cashay, a new personal finance website. Follow her on Twitter @denitsa_tsekova.
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