I just read Trump’s executive order — it’s actually a memorandum — on unemployment, and it is a watered-down version of what could have been.
Watered Down!
Don’t get me wrong. I am happy for those on unemployment to be getting some extra assistance right now if the administration can pull this off, but I think you will understand by the end that this is a watered-down version of what could have been if stimulus talks had been successful, especially in terms of how long this $400 weekly will last, because it ain’t until the end of the year.
I will do the math later on that to show you just how short-term this is.
But let’s back up. So earlier today Trump did in fact sign the executive orders for payroll tax deferral, eviction moratorium, unemployment, and student loans.
I told you what the president said about each of these executive orders.
The actual text of these executive orders is now online, and I have now printed them all off and am reading through them, as I read through them I note that there are some differences between the actual text and what the president said.
For example, about the payroll tax deferral, the president said it would kick in in September but then he seemed to correct himself and claim that they would actually shoot for August, Trump’s words were super confusing there in the press conference, but the text of the executive order actually says September, so I’m not sure what he meant by August.
I will be going over the executive order that I know many of you are interested in namely the one on unemployment, and it’s technically a “memorandum” which is technically different than an executive order, but that’s more of a technical thing, it still has the force of law. It says that the federal government will pay those eligible for it — and based on what I’m reading not everybody eligible for the $600 would be eligible for the $400, which is an extra $300 per week federal kick-in with call on states to kick in an additional $100 per week on top of normal benefits.
I’m going to cover who’s eligible for the extra $400 weekly, whether or not the $400 payments under the executive order would be retroactive, when the program ends, all that stuff.
Challenges
But first let me just say that I believe that Trump will be challenged on this memorandum for the extra $400 weekly. I foresee legal challenges, challenges from states who will say, “You can’t do this,” maybe political challenges from Democrats even though that would look really bad, but who knows, anyway I can really see that happening because although this presidential memorandum has the force of law it is not federal law. Some states’ unemployment may come back and say, no, this isn’t law.
But I’m going to walk through the memorandum for what it says, but please keep in mind that what Trump did today is fraught with difficulties to say the least, this isn’t how things should be, a deal should have been cut with this, the unemployment, and all the rest including stimulus checks not these piecemeal presidential actions that are a watered-down version of a true legislatively-enacted stimulus.
Who’s Eligible For the $400/Week?
For example, who’s eligible for this extra $400 per week? It’s not simply everybody on unemployment. It’s not. The FPUC, the extra $600 weekly, you could be collecting a dollar of unemployment from your state and you would be eligible for it.
Section 4 of this memorandum says that to be eligible in a given week for the $400 for that week, you must receive at least $100 per week of unemployment compensation, which includes the PUA for freelancers, the extension the (PEUC) and all that, $100 minimum for that week.
But here in California, the minimum weekly UI benefit is only $40. So a person receiving less than $100 in unemployment wouldn’t be eligible per this text. In my opinion this is leaving out potentially some people who need it the most, and that’s unfortunate.
Is the $400/Week Retroactive?
Now, let’s talk about whether this would be retroactive or not. The answer to this question is yes, the executive order says that the $400 payment per week, which as I mentioned in my last video would be $300 from the feds with states kicking in $100, would be to eligible claimants from the week of unemployment ending August 1, 2020, so this would be retroactive to pick up where the CARES Act left off.
Bigger question is are states going to be on board with this and if they are on board with this when are they going to be able to pull this off? I imagine that just like last time, some states will be able to pull this off rather quickly and other states will really struggle. Some states may not even agree with this approach at all, we’ll have to see.
Now let’s talk about the funding which informs how long these payments would last. Well, for one thing, these payments would terminate if there is actual federal legislation enacted for enhanced unemployment benefits. But what about beyond that?
Now, if I were a novice at this, I would look on the last page here in Section 6 where it says “Termination”, I would see a lot of mumbo jumbo, but I would see a date that says “December 6, 2020,” and I would tell you that these payments will be made through December 6, 2020.
I am not a novice. I read the rest of the paragraph, which says “The lost wages assistance program shall be available for eligible claimants until the balance of the DRF reaches $25 billion or for weeks of unemployment ending not later than December 6, 2020, whichever occurs first, at which time the lost wages assistance program shall terminate.”
What is the DRF?
Let me cover it real quick and then I’ll tell you my estimate of how long this money under this executive order will last, and it’s nowhere near December 6, I think the December 6 is just there for optics.
So what this executive order says is that to pay for the unemployment boost, states would tap into the Coronavirus Relief Fund (CRF) for their $100 per week, CRF was $150 billion originally allocated in the CARES Act and more than $80 billion still available. Out of this fund the executive order is calling on states to use their allocation from this fund to pay $100 per week unemployment.
Now for the federal piece, $300 per week, when combined with the state $100 per week gets you to $400 per week, the Executive Order directs up to $44 billion from another fund, the Department of Homeland Security’s Disaster Relief Fund (DRF), to cover the $300 per week.
How long is this money going to last under this executive order?
So the DRF according to the executive order currently has $70 billion in it. $70 billion less the $44 billion allocated under this executive order is $26 billion, I imagine they rounded down to $25 billion on this last page.
Now, let’s do some math here, back of the napkin.
According to the weekly unemployment data, how many people are collecting unemployment benefits? 30 million roughly, including both the regular unemployment that’s the 16.3 million number in the July jobs report, plus the millions on PUA, pandemic unemployment assistance.
Track with me here. 30 million receiving benefits and so would therefore be entitled to the $400 weekly, of which $300 weekly is from the federal DRF. 30 million times $300 per week, that’s the federal kick-in out of the DRF. What is 30 million times $300 per week? That product is roughly $9 billion weekly out of the DRF.
This executive order says that payments will stop once the DRF only has $25 billion in it, meaning that it only allocates $44 billion from the DRF to these payments.
So what’s $44 billion divided by the $9 billion per week. That’s less than 5 weeks, folks. That’s the weeks ending August 1, August 8, August 15, August 22, August 29. This only gets us through August by my math. By my math. Haven’t seen this worked out anywhere else yet, but that’s my math.
So no, this is not a $1,600/month deal, so don’t be fooled.
Now, caveat here. Included in that 30,000,000 sum are those receiving less than $100 in normal unemployment benefits on a weekly basis and so would be excluded from the $400 and therefore the $300, so it might actually be a bit more than 5 weeks, but my point is apart from further action, this ain’t lasting long.
And then what? what happens when the DRF hits $25 billion, and then this terminates?
What happens then? Another executive order for Trump to come in and save the day again? Where’s that money gonna come from?
Congress finally going to get in gear by that point? Oh, I forgot, they’ll still be on recess.
The Situation Our Politicians Have Left Us In
This is the situation our politicians have left us in.
As I’ve been saying all week, these Trumpian measures would be merely watered-down versions of a true stimulus, and that is exactly what I see in this memorandum on unemployment signed into law by the president.
I’m glad it’s something, but it’s not ideal in the least and not what it should be.
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