The Washington PostDemocracy Dies in Darkness

President Trump’s attempt to bypass Congress on stimulus is offering only limited economic relief

From left, Treasury Secretary Steven Mnuchin, White House chief economic adviser Larry Kudlow and Scott Atlas, senior fellow at the Hoover Institution, listen as President Trump speaks during a coronavirus briefing. (Jabin Botsford/The Washington Post)
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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.

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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.

After negotiations with Democrats in Congress fell through, President Trump signed several measures Aug. 8, including one to restore some unemployment aid. (Video: The Washington Post)

For the majority of the 28 million unemployed workers who had been getting an extra $600 a week, relief remains elusive. Just last week, jobless benefit claims rose slightly compared with the previous week, to more than 1 million. It’s the 21st week that unemployment claims have topped 1 million during the pandemic.

“I don’t know when my next paycheck will come, unemployment has not been helpful, and I’m not sure when the furlough will end. It’s extremely stressful,” said Caleb Dunlop, 28, who lost his job in college athletics in western Washington state on July 1. Dunlop said he had $9 in his bank account after paying rent and utilities last month, and he missed payments for his medication for treating chronic depression.

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.

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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.

Unemployed workers on July 22 rallied outside Senate Majority Leader Mitch McConnell's house and the Capitol to demand an extension of the $600 relief payments. (Video: The Washington Post)

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.

About 20 states have said publicly they will apply for the program. Most are expected to need anywhere from “at least a few additional weeks to a couple additional months” to get the money out, said Evermore, who has been in regular contact with state unemployment officials. Some states may not be able to send the new payments out until the end of September, Evermore said.

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. The White House and congressional Democrats have not restarted meaningful negotiations since Trump’s executive actions, and congressional aides do not expect talks to resume until after Labor Day. 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.

“President Trump has provided relief for American workers, where Congressional Democrats have failed,” White House spokesman Judd Deere said in a statement.

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. Sales of previously owned houses skyrocketed in July by a record 24.7 percent, the National Association of Realtors reported Friday, thanks to cheap mortgage rates.

“The economy right now is in a very strong rebound, which in my view is a self-sustaining recovery,” Kudlow told reporters Thursday. “I’m not making this stuff up. These are the government statistics … the stock market is correctly portraying a V-shaped recovery."

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Kudlow has also said the administration’s actions to defer payroll taxes will provide a “gigantic” wage increase to as many as 140 million Americans. Trump’s order opened the door for those employees’ taxes to be deferred starting Sept. 1 through the end of the year, but it doesn’t absolve those debts outright — meaning Americans who defer may owe thousands of dollars in 2021 without an intervention by Congress.

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. Roughly 30 industry groups — representing auto part suppliers, restaurateurs, retailers and others — told the White House this week that the plan is “unworkable” from a technical and logistical standpoint.

Deere, the White House spokesman, said in a statement: “President Trump used the authorities available to him to give employers the opportunity to put more money in the pockets of their employees, and he encourages all employers to take advantage of this to support hard-working Americans.”

On evictions, the president’s executive action instructed federal agencies to “consider” whether additional moratoriums were necessary. The Federal Housing Administration temporarily extended its foreclosure and eviction ban, but that covers only FHA-backed properties — a tiny portion of the U.S. rental market, said Diane Yentel, president and CEO of the National Low Income Housing Coalition.

State and local eviction moratoriums across the country are expiring, and census data suggests that as many as 40 million Americans fear losing their homes by the end of the year, a sharp increase from typical numbers.

“If Congress does nothing, we are very likely to see millions of renters face displacement or eviction, starting in September and October,” Yentel said. Trump “literally did nothing to stop or prevent evictions. There’s no requirement to do anything.”

Trump said on Aug. 11 of his eviction order: “We are not letting people be evicted.”

Ernie Tedeschi, a former economist in the Obama administration, said that the recovery was to a large degree fueled by the extraordinary levels of federal support approved by Congress in March. With that support vanishing, Tedeschi said, the White House may be prolonging the depths of the recession and spreading pain unnecessarily.

“The broader picture is there are still people and many sectors who are hurting and not able to recover yet,” Tedeschi said.

Cyn Brunelle, 41, of Cranston, R.I., receives disability benefits, and her husband, Elijah Brunelle, 40, worked as a cook at a nearby nursing home. Because Elijah Brunelle has diabetes and asthma, his employer told him not to return to his high-risk job. When his unemployment benefits expired, he went from receiving $698 a week to $198 a week. The family is now struggling to make ends meet even though they have three roommates and their son, a high school senior, has taken an additional job washing dishes.

“We went from being able to afford groceries and afford transportation to really struggling hard just to afford anything,” Cyn Brunelle said. “It’s really hard, very difficult and very stressful.”