August 12, 2020 – As of Tuesday, official negotiations regarding economic stimulus between Congressional leaders and the administration have not restarted. The following provides some context for how the President’s executive actions might impact these ongoing negotiations.
Over the weekend, President Trump signed four executive actions related to the stalemated stimulus legislation negotiations. The most important of these actions was an executive order to redirect emergency funds from FEMA to the states as a replacement for special unemployment benefits which expired at the end of July. Under the CARES Act, the federal government was providing unemployed individuals with $600 per week of enhanced unemployment benefits on top of their normal state benefits. The Democrat negotiators have been pushing to extend that benefit through the remainder of the year. Republicans have argued that this amount may serve to disincentivize returning to work for many individuals and wanted to provide about $200 per week in enhanced benefit instead. The President’s executive action allows the states to fund $100 per week in enhanced benefit in exchange for $300 more in federal money for a total of $400 per week. While there may be significant hurdles for some states to implement this solution, it nevertheless signals that the President would favor an enhanced unemployment benefit which is higher than the Senate proposal in the HEALS Act. It remains unclear if states will opt in to this program and how long it will take them to do so. On Monday, Treasury Secretary Steven Mnuchin said that he expected states would be able to implement the benefits within one to two weeks.
This move would appear to take some pressure off of Republicans to reach an immediate deal. The President has acted unilaterally to replace most of the lost unemployment benefits and can blame the states if they fail to efficiently implement the plan (or decide not to participate). If states do participate, the plan could run out of funds in as quickly as five or six weeks. This might push legislative urgency out to September when Congress faces a government shutdown if they don’t pass a spending bill before the end of the month, thus creating an opportunity to add COVID related provisions to must-pass legislation.
Formal negotiations did not resume on Monday, but both sides indicated willingness to return to the table.