Here’s why there’s a backlog of claims for unemployment and why it’s only getting worse.
President Donald Trump signed an executive order and issued three memoranda Saturday, including one that will provide an additional $400 per week in unemployment benefits to millions of out-of-work Americans following the economic fallout from the coronavirus pandemic.
But there’s a catch: It’s unclear whether Trump has the authority to extend unemployment benefits by executive order while side-stepping Congress. States have been asked to cover 25% of the costs. And it could take months for states to implement.
He directed the use of funds from FEMA’s Disaster Relief Fund, which would be capped at $44 billion, creating confusion among unemployment experts. The move could potentially bypass approval from Congress, some lawyers say, but it also leaves the door open to other challenges.
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This could create issues with the Stafford Disaster Relief and Emergency Assistance Act, which includes a program that provides assistance to people who don’t qualify for traditional unemployment, according to Michele Evermore, a senior policy analyst at the National Employment Law Project, a think tank that advocates for labor and employment legislation.
“This is an administrative nightmare,” says Evermore. “States are going to have to set up a new program aside from regular unemployment insurance. It could take months for states to implement this.”
It also brings into question how the funds will be dispersed.
“It’s such a gamble. No one has ever seen anything like this,” says Indivar Dutta-Gupta, co-executive director at the Georgetown Center on Poverty & Inequality. “You can’t pay unemployment benefits under the Stafford Act unless a person isn’t eligible for any other jobless benefits. They’re running into legal problems.”
That could create more headaches for states. They might not be able to use the unemployment system to pay out the funds since it could be illegal under the Stafford Act, according to Dutta-Gupta. State unemployment offices would either have to create a new system to disperse the funds, or other government entities might be called on to assist, including the tax system or human services agencies, he says.
“They can’t call it an unemployment benefit under the Stafford Act, but it starts looking and smelling and sounding a lot like an unemployment benefit real quickly,” says Dutta-Gupta. “And even more so if it’s administered by the same unemployment agencies. They probably can’t do that if they want it to be upheld.”
States asked to kick in 25%
Trump’s order would allow states to provide up to $400-per-week in expanded benefits, 75% of which would come from the federal government’s disaster relief fund. States would have to pay the remaining 25% of the cost. That means the federal contribution will provide only $300, while states will be expected to fund the extra $100, experts say.
States may pay for their portion of the benefits by using money provided to them under a coronavirus-relief package passed earlier this year, the executive order says.
The $300 would partially restore the $600 unemployment benefit that expired in late July. Democrats wanted to extend the full $600 benefit, but Republicans balked, arguing it was a disincentive for some Americans to return to work because they would receive more in unemployment than they earned on the job. Republicans wanted to bring the benefit down to $200. Trump’s decision to order $400 in benefits splits the difference.
Americans face a drop in their unemployment benefits at a time when coronavirus cases are spiking again and more states are pausing their reopenings, trends that threaten to derail the nation’s economic recovery when millions are already out of work.
State governments across the country have to race to catch up with escalating demand for unemployment assistance. Many lacked the technology to deal with the massive wave of layoffs and furloughs, experts say, creating issues for their computer systems.
States with the most unstable systems also tend to be in the South, and those with the highest populations of Black and Latinx workers, according to Evermore.
States can’t use their current unemployment insurance infrastructure to pay a benefit that isn’t authorized by Congress, says Evermore. The language in the memorandum says that these benefits must be paid “in conjunction with the state’s unemployment insurance system,” which means that states will have to set up a new way to add these payments to existing benefits, she added.
“Can he allocate disaster relief funds to pay for something that looks like an unemployment insurance benefit? It’s unclear,” says Evermore. “This is just a false promise to the American people, and a way to dodge responsibility for the breakdown in negotiations in Congress.”
The extra aid could last just weeks
More than 25 million people had received the $600 weekly bonus. With the enhanced unemployment aid capped at $44 billion from FEMA’s Disaster Relief Fund, Andrew Stettner, senior fellow at The Century Foundation, estimates that the additional aid will last just over a month, or about $10 billion per week, if the same number of people receive the bonus and if every state participates.
“It’s a difficult proposition for states to implement in a short period of time,” says Stettner. “States had already struggled to get unemployment money in the hands of out-of-work Americans. This will disappoint workers. They think they’ll get that $400 next week, but they’re not.”
The funds from the Stafford Act are “discretionary in character,” says Jonathan Turley, a law professor at George Washington University. But they were designed primarily for natural disasters from hurricanes to droughts to fires, he added.
“There is no question that this is a circumvention of Congress, which raises obvious concerns over the separation of powers,” says Turley.
President Barack Obama, for instance, announced a similar circumvention when Congress refused to approve changes to immigration and health care laws, Turley explained. The Trump administration has prevailed on other discretionary fights including the funding of a border wall.
Congress has approved billions of dollars under vague conditions, Turley added, but the latest executive order on expanded jobless benefits has created confusion over a potential cost-sharing program that binds states to pay a quarter of the costs.
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“There is a difference between discretionary funding and discretionary legislating,” says Turley. “The Constitution is designed to force compromise. However, that only works if the two branches have no alternative but to seek a compromise. President Trump is claiming that much of this money is unspent funds previously approved by Congress. That would be an issue for the courts.”
Contributing: David Jackson and Michael Collins, USA TODAY.
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