This is my stimulus update for Monday, August 10.
Now, I’ve been talking about Trump’s memoranda and executive order all this past week, I’m going to share some more thoughts at the end but first let’s talk about this.
Trump’s Tweet This Morning
This morning Trump tweeted, “So now Schumer and Pelosi want to make a deal. Amazing how it all works, isn’t it? Where have they been for the last four weeks when they were ‘hardliners’ and only wanted bailout money for Democrat-run states and cities that are failing badly? They know my phone number!”
Now, I haven’t heard any more of this. I’ve seen reports that anonymous Democratic aides have denied that Pelosi and Schumer have had any contact with the White House since the stimulus talks failed on Friday.
And I saw Chuck Schumer this morning on MSNBC saying that he’s waiting for the Republicans to come back and say yes.
And of course on CNBC this morning, Mnuchin accused the Democrats of being the bad guys here, saying that Republicans are not the one holding up a stimulus bill.
Mnuchin said agreement was reached on things like stimulus checks.
He said that he thinks if a targeted PPP bill, Paycheck Protection Program bill, were put before Congress that it would pass.
So Mnuchin sounded somewhat hopeful, we know that from what Pelosi and Schumer have said so far, they would reject a piecemeal bill, but like I always say anything can happen.
Mnuchin has tried to paint state and local aid, which Trump has repeatedly called bailout money for mismanaged states, as well as unemployment as the only two issues of contention during the stimulus negotiation, while Democrats claimed that the differences went beyond that.
So this is basically the exact same thing that they’ve said the past two weeks while they were negotiating.
Look, I want just as much as you do a true stimulus relief bill, with stimulus checks to pass Congress and be signed by the President. But that’s not that’s not what’s on the table right now.
Can Trump Sign an Executive Order for Stimulus Checks?
Now, many of you have asked me if Trump could simply sign an executive order for stimulus checks.
No. He can’t.
The president through an executive order cannot spend money that Congress has not appropriated.
This is why his executive order on unemployment that actually spends federal money is on shaky authority. And moreover, if the next stimulus check is going to be a CARES Act-type stimulus based on your tax return, Trump can’t just create another tax credit via executive order because remember the CARES Act stimulus check was technically an advance payment of a 2020 tax credit, and Congress, not the President, has the power to tax.
Is another true stimulus bill still on the table? Not at this time. Could it be in the future? Sure, Congress is on recess until September, could be called back, but unless there is a top-down deal having been negotiated, which was attempted and did not happen over the past couple weeks, they’re not coming back.
September Appropriations Bills
Now, as I’ve said, we know in September that Congress will be working on the fiscal year 2021 appropriations bills before the end of the government’s fiscal year on September 30, the accounting period for the federal government begins on October 1 and ends on September 30, and when Congress gets back from their August recess, they start working on the next fiscal year’s appropriations bill.
Unless talks pick up again some time in August, the September fiscal year appropriations bill would probably the next shot at seeing another round of stimulus checks included.
However, my fear is that if Trump is able to pull off, say, the unemployment memorandum, and if the August jobs report which will be released the first week of September, looks good, that could incentive Republicans in Congress to say forget it, we don’t need more stimulus.
I’m not one to bust out the calendar and do all that and tell you when you “might expect your stimulus check” because I know how this works, I know anything can happen or not happen.
I refrained from predicting that you will get your second stimulus check in August because I know the game.
Challenges to Trump’s Executive Actions
Now, Trump’s executive actions, three memoranda and one executive order.
So we’ve talked about how Trump’s executive actions will inevitably face many, many challenges. Challenges from states, challenges from Democrats calling them absurd, challenges from businesses very suspicious about Trump’s desired payroll tax deferral.
I told you that as a business owner with employees myself, I’m not so sure about this about this payroll tax deferral, I think it could open up my business to potential liability, despite what the memorandum says, it could open up my employees to a surprise tax bill next year, and Trump says he wants to forgive these amounts, but like I said in my video yesterday, he can’t do that via executive order, and I doubt Congress would go along with any legislation to that effect that could have a harmful effect on Social Security.
This is just one example of the many challenges Trump will face with these memorandum as well as the executive order, which I am in the whole calling his executive actions.
So you all remember Peter Navarro, right? Trump’s trade and manufacturing guy that basically distracted us with a claim that Trump wants $2 trillion in another stimulus relief bill? Well, he was on NBC News yesterday, unsurprisingly, defending President Trump’s executive actions, saying, “The Lord and the Founding Fathers created executive orders because of partisan bickering and divided government.”
That may be so, Peter, but an executive order cannot spend money that Congress has not appropriated, hence why Trump’s presidential actions are fraught with difficulties.
Will States Be Able to Swing the $100/Weekly?
And with respect to the memorandum for $400 weekly unemployment, many states have now signalled that they’re not sure if they will be able to afford the $100 kick-in weekly.
Ohio Republican Governor Mike DeWine was asked on CNN if Ohio could afford the $100 kick-in, and the governor replied, “The answer is, I don’t know yet.”
Many states, as I’ve said before here on the channel, are broke, but yet there is that Coronavirus Relief Fund that was instituted by the CARES Act that the memorandum specifically says that states should tap into.
On Twitter, New York Democratic Governor Andrew Cuomo tweeted, “Executive orders can’t replace legislative actions. States can’t pay 25% of unemployment costs. It’s simply impossible.”
Now, the way I read Trump’s memorandum on unemployment, a close reading would indicate that a state would have to be on board with the $100 state kick-in in order for the feds to kick in $300.
However, Secretary of the Treasury Steven Mnuchin claimed yesterday that “the 25 percent ($100) from the states — they can either take that out of the money we’ve already given them or the president can waive that.”
So Mnuchin was essentially stating that the President could choose to waive the requirement that the state kick in $100, and the Feds could still kick in the $300. I do not see that in the memorandum, but perhaps Mnuchin is speaking to the president’s intent rather than simply the cold language of the memorandum, but of course I would like to see that in writing somewhere.
There is also confusion not only among people like you and me when the extra unemployment might be paid, I told you that even assuming that Trump’s memorandum on unemployment is able to survive all the challenges that it will inevitably face, it could be a while before the $400 weekly is actually paid.
Mnuchin, on the one hand, claims that the money could be paid pretty much immediately, states are ready to go.
But yesterday on CNN White House Economic Advisor Larry Kudlow said that the payments could take weeks to be enacted.
I personally believe that Kudlow is closer to the right answer here than Mnuchin, but here’s my take: nobody knows except each individual state A) if they will roll this out and B) if they will roll it out, when they plan to roll it out.
Also remember that you’d have to already be receiving at least $100 in unemployment from your state for a given week, and that’s before the $100 or $300 kick-in, but includes things like the PUA, but you’d have to be receiving at least $100 in unemployment, normal benefits in a given week including the PUA to even be eligible for the plus-up.
What I’m Looking For This Week
This week I’m looking for two things, one, the state of Trump’s executive actions, looking for the challenges and pitfalls, I’ve already covered a lot of them, and two, I’m looking for signs that negotiations could resume, I’m not optimistic about that, but that’s what I’m looking for.
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