The nation’s governors are expressing concerns about the costs to states imposed by President Trump’s effort to provide extra unemployment benefits for the millions of workers who have lost their jobs due to the coronavirus pandemic – and whose $600 per week in enhanced unemployed payments expired at the end of July.
Trump signed a memorandum Saturday that attempts to allow states to use disaster-relief funds to pay enhanced unemployment benefits of up to $400 per week, with federal funds providing $300 and states covering the remaining $100. But many state officials say that with tax revenues plunging due to the crisis and social safety net costs soaring, they don’t have the money to participate in the plan as proposed.
“We appreciate the White House’s proposals to provide additional solutions to address economic challenges,” a statement released Monday by the National Governors Association said. “[H]owever, we are concerned about the significant administrative burdens and costs this latest action would place on the states.”
As an alternative, the NGA – led by Govs. Andrew Cuomo (D-NY) and Asa Hutchinson (R-AR) – said that Congress and the Trump administration should negotiate a relief package that does not impose “new administrative and fiscal burdens on states,” while noting that the governors’ group has previously requested $500 billion from the federal government in unrestricted state aid.
Questions about the Trump plan: Treasury Secretary Steven Mnuchin said over the weekend that the plan would be easy to implement and that states could get it up and running immediately. On Monday, he said that it might take one or two weeks to make operational. But some governors doubt the plan will ever get off the ground. “It’s not workable in its current form,” Kentucky Gov. Andy Beshear (D) said Monday.
Some states are waiting for further guidance from the Trump administration on how to proceed, even as officials say they have doubts about the proposal. “The program appears woefully insufficient relative to the scale of the crisis, unworkable in its proposed form, and a bad deal for workers, employers, and states,” said a spokesperson for Washington Gov. Jay Inslee (D).
Money is an issue: Aside from the important legal and logistical questions about Trump’s memorandum, most state officials are worried about how they could pay for the new benefits, which would operate outside of the existing unemployment system.
California Gov. Gavin Newsom (D) said the plan would cost his state about $700 million a week, which it could not afford. Gov. Cuomo said the additional cost – which he pegged at $4 billion through the end of the year for his state – was like “handing a drowning man an anchor.”
The White House has hinted at workarounds on the cost issue. President Trump said Sunday that states could apply to have the federal government cover the full $400 weekly cost, although that may violate federal regulations. The Labor Department said Monday that states could include their normal unemployment benefit payments as part of the $100 contribution or use leftover Coronavirus Relief Funds to cover the cost. But state officials say most of those funds have already been obligated.
A short-term fix: The Trump unemployment plan revolves around redistributing about $44 billion in unspent funds at the Federal Emergency Management Agency. Critics have noted that if all states participate, the money would last a little more than a month – and asking if all of the legal and fiscal wrangling makes this the right path to take.
“It’s going to take a long time to set up, and it’s not going to last a long time at all,” Josh Bivens of the left-leaning Economic Policy Institute told The Washington Post.