Trump Wants to Cut Enhanced Unemployment Benefits: Report

Trump Wants to Cut Enhanced Unemployment Benefits: Report

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Plus: Trump threatens funding to states over mail-in voting
Wednesday, May 20, 2020

Trump Opposes Extending Enhanced Unemployment Benefits: Report

The enhanced unemployment benefits provided by Congress for laid-off workers as part of the $2.2 trillion CARES Act are shaping up to be a major point of contention as lawmakers engage in an increasingly partisan debate over a next round of coronavirus aid.

President Trump reportedly expressed opposition to extending the $600-a-week increase in unemployment benefits, which comes on top of benefits already provided by states, during a closed-door lunch with Senate Republicans on Tuesday, The Washington Post’s Seung Min Kim reports.

Democrats have proposed extending the aid, which is set to expire at the end of July, through January 2021, but Republicans — some of whom balked at the initial boost — have said they worry that some workers are making more in unemployment than they would at their jobs, giving them little incentive to return to work. A paper from University of Chicago researchers found that 68% of jobless workers eligible for unemployment insurance will get benefits greater than their lost earnings, according to The Hill.

Trump reportedly also did not say that he would reject a coronavirus bill that extends the jobless benefit, but Sen. Lindsey Graham told the Post that the president agrees that that is hurting the recovery.

It’s not clear whether Trump would want to eliminate the enhanced payments or possibly lower or cap them. Some Republicans have floated the idea of allowing people to continue getting some level of benefits for a set period of time when they return to work.

That’s a significant concern for the Trump administration as it pins its hopes for a swift economic rebound — and the president’s reelection prospects — on the reopening of states rather than additional federal stimulus. “It’s a transition to greatness,” Trump told reporters after his Senate lunch Tuesday. “It’s the third quarter, and then it’s going into the fourth quarter. I think the fourth quarter is going to be really good. But I think that, above all, next year you’re going to have a tremendous year.”

By contrast, Federal Reserve Chairman Jerome Powell reiterated this week that a full recovery might take until the end of 2021 and the Congressional Budget Office projects that unemployment will average 9.3% next year, similar to the elevated levels seen during the 2007-2009 recession.

A steep cut for jobless workers: More than 36 million people have filed for first-time unemployment benefits over the past two months. The Treasury Department reported that spending on unemployment benefits rose to $48.4 billion in April, up $45 billion from February. A recent report from the Brookings Institution found that those payouts offset just over half of the estimated $80 billion in private wages and salaries lost last month. And many economists worry that allowing the enhanced benefit to expire could undercut any recovery by leaving consumers facing a dire cash crunch. Ending the benefit boost would reportedly reduce the incomes of about 25 million Americans by half.

The bottom line: “Trump’s own motives on this issue might be colored even more by his desire to declare the coronavirus pandemic over, and the economy in full recovery,” Ed Kilgore writes at New York Magazine’s Intelligencer. “You don’t need enhanced UI benefits if the economy is racing back towards full employment and will soon once again be the greatest economy in the history of the human race, at least in Trump’s mind.”

But Trump may be undercutting the chances of the strong rebound he wants and likely needs to help his chances of winning another term in November. In any case, with the Senate leaving later this week for its Memorial Day recess and Republicans still urging a “pause” before any additional legislation, talks on a new package aren’t likely to go anywhere for a couple of weeks — and there are still plenty of other issues to be hashed out as well, from aid to state and local governments to stimulus payments to households.

Trump Threatens to Withhold Federal Funding to Michigan and Nevada Over Mail-in Voting

President Trump threatened Wednesday to “hold up” federal funding to Michigan and Nevada after those states announced plans to expand mail-in voting options in response to the coronavirus pandemic.

Trump has vigorously opposed expanded voting by mail and in a series of tweets Wednesday he again, without evidence, tied such ballots to voter fraud and election cheating. He also incorrectly claimed that Michigan had illegally sent absentee ballots to 7.7 million people.

Michigan Secretary of State Jocelyn Benson responded by noting that the state had sent applications, not ballots, just as Republicans had done in a number of states. “By mailing applications, we have ensured that no Michigander has to choose between their health and their right to vote,” Benson said Tuesday in announcing the move. (Axios notes that a new study found that Wisconsin counties that saw more in-person voters per location during its primary this year had higher rates of positive Covid-19 tests two to three weeks later compared to counties with fewer in-person voters.)

Trump did not specify what kind of funding he might withhold, and he has not always acted on such threats. The president would surely face legal challenges if he sought to follow through in this case.

Elie Honig, a legal analyst and former federal prosecutor, told The Hill that Trump may be able to withhold federal funding, but the money “must relate substantively to the state-level policy at issue" and that any new restrictions would only apply to new funding, not money that is already flowing to states. It’s also unclear if the president has the power to withhold funds without congressional approval.

Trump himself reportedly voted by mail earlier this year and in 2018.

Small Business Relief Program May Get Overhaul

From the moment the Paycheck Protection Program began operating in early April, critics have charged that it could end up hurting the small businesses it is supposed to help.

Most notably, the requirement that small business owners spend all of the money they receive within eight weeks while dedicating at least 75% of the funds to labor costs in order for the loans to become grants has made participation in the program difficult if not impossible for some potential aid recipients. Many small businesses with sizable overhead costs but low labor costs, such as independently owned restaurants, are worried that they won’t be able to satisfy those conditions, leaving them with loans that have to be paid back, despite being closed for months.

In response to those complaints, lawmakers in the House are working an overhaul of the PPP, which has received about $670 billion in funding from Congress so far. The legislation will reportedly give small businesses up to 24 weeks to spend the money and eliminate the requirement that most of the funds be used for labor costs.

The bill appears to have bipartisan backing and could be voted on next week. The Small Business Administration said Saturday that more than 4 million loans worth $513 billion have been approved since April 3, leaving more than $100 billion available for additional lending.

Fiscal Flashes

$16 Billion in Aid for Farmers: The U.S. Department of Agriculture released details Tuesday on the Coronavirus Food Assistance Program, which will provide up to $16 billion to farmers and ranchers impacted by the coronavirus pandemic. The assistance is targeted at producers who have experienced a decline in commodity prices of 5% or more due to the coronavirus, and who now face problems including excess production, shipping difficulties and increased marketing costs. The aid will flow through two channels: $9.5 billion that was provided specifically for farmers in the CARES Act in March; and $6.5 billion provided through the Commodity Credit Corporation Charter Act to reimburse farmers experiencing market disruptions. There will be a payment limit of $250,000 per person or entity. Agriculture Secretary Sonny Perdue said the payments would “help keep farmers afloat while market demand returns as our nation reopens and recovers.”

Long waits at the IRS: The Internal Revenue Service is struggling to keep its staff safe and its offices open amid the coronavirus pandemic, resulting in a massive backlog of requests for help at the tax agency. Despite efforts to bring staff back to their workplaces, illnesses among employees and widespread fears of infection have made it impossible to run the agency at anything like its normal strength. “I don’t think I can think of a word to overstate the negative impact on our mission,” an IRS manager told The Washington Post. “The backlog of work is incredible.” (Washington Post)

Trump orders agencies to ease rules: President Trump issued an executive order Tuesday that directs federal agencies to modify or eliminate regulations “that may inhibit economic recovery” as the country begins to ease restrictions on activities related to the coronavirus. The order provided no specific instructions, however, worrying some watchdog groups while pleasing anti-regulation activists on the right. (Roll Call)

$4,000 training credit for workers: A bipartisan group of senators — Amy Klobuchar (D-MN), Ben Sasse (R-NE), Cory Booker (D-NJ) and Tim Scott (R-SC) — released a bill Wednesday that would provide a $4,000 tax credit to aid retraining for workers who lost their jobs due to the coronavirus. The credit would apply to training programs that include apprenticeships, certificates and two- and four-year programs. (CNBC)

Map of the Day: State Sales Taxes

Sales taxes account for nearly a quarter of all state and local receipts overall and are second only to property taxes as a source of revenue for state and local governments. There is considerable variation on the implementation of sales taxes, however, with some states relying on them heavily to fund operations while others avoid them altogether. This Tax Foundation map shows the variation across the country, ranging from Washington State, which gets nearly half its revenues from sales taxes, to New Hampshire, which along with a handful of other states imposes no sales taxes at all.


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