Coronavirus stimulus: Extra unemployment benefits remain stalled as executive actions fail to replace negotiations
As Congress readies to meet again next week, the stalled stimulus negotiations return after the president's executive action nearly a month ago on unemployment benefits resulted in at best a half-remedy.
Since his memorandum was signed on Aug. 8, only seven of the 44 states eligible for the Lost Wages Assistance Program (LWA) have started distributing the additional $ 300 or $ 400 to the 27 million unemployed Americans who are get unemployment insurance.
Read More: Here's What You Need To Know About Eligibility for Unemployment Benefit
There are other issues as well, including future funding and stricter eligibility requirements, which have limited the effectiveness of the memorandum and underscore the need for greater efforts.
"Almost a month later, six to seven states are paying out," Michele Evermore, senior policy analyst with the National Employment Law Project, told Yahoo Money. "It really is best if Congress comes back to the table as soon as possible."
A total of 48 states are either moving forward or were already approved for the LWA (Lost Wages Assistance) program on Wednesday. Graphic: David Foster / Yahoo Finance
"It was very detrimental to the negotiations in Congress"
Treasury Secretary Steven Mnuchin this week reiterated his support for more unemployment benefits.
"We want to increase unemployment and make more payments for economic impact," Mnuchin said during a coronavirus crisis hearing on Tuesday. "Both were critical to the economic recovery."
However, Congress negotiations on the next stimulus package have been suspended since mid-August when Congress took a break. While negotiations are expected to start after Labor Day, Republicans and Democrats still disagree on how much the next package should be worth and the future of key provisions - including unemployment benefits.
So far, Republicans have been proposing additional benefits of $ 200 per week through September, eventually switching to unemployment benefits that replace only 70% of wages, while Democrats support the reintroduction of the $ 600 weekly bonus from the CARES bill.
Treasury Secretary Steven Mnuchin testifies before the House Oversight and Reform Subcommittee on the Trump administration's response to the coronavirus crisis on Capitol Hill in Washington, DC on September 1, 2020. (Photo by GRAEME JENNINGS / POOL / AFP via Getty Images)
The president's memorandum also slowed negotiations, according to Andrew Stettner, an unemployment insurance expert and senior fellow at the Century Foundation, a think tank. That gave cover to the GOP to take a break without reaching an agreement.
"It was very detrimental to the negotiations in Congress," he told Yahoo Money. “It was clearly a half a deal, it allowed them to say that they did something. They could leave town and not negotiate for a month. "
"An act of Congress would fix everything at once"
As unemployed workers wait to see what further help they may receive under a new aid package, they are left with the limited support from Trump's memorandum for the time being.
The handful of states that have started distributing additional benefits are on the verge of exhausting, or having exhausted, the initial funding they received. Under FEMA guidelines, approved states received enough money to provide recipients with "an initial three week commitment of required funding". Any further decision will be made weekly until the funds are used up.
Another problem with FEMA funding is that it is not just used to fund unemployment benefits. They're also funding disaster relief, which means they could go out sooner than expected.
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"Now unfortunately we don't have unlimited amounts of money to do that," said Mnuchin on Tuesday, "but the president wanted to move forward."
Under the LWA program, states can pay an additional $ 100 on top of the $ 300 in federal government benefits, which means that benefits are unevenly distributed across the country. South Dakota declined the additional benefit of $ 300 in total.
Read more: Coronavirus Stimulus Reviews: What Stops a Second Round Payment?
In addition, nearly 1 million unemployed Americans are not eligible for the additional benefits because they do not meet the minimum set in the LWA program. Those currently on unemployment benefits less than $ 100 per week are not eligible for the additional benefits.
These loopholes make it necessary for Congress to do something beyond the actions of the president, experts said.
"An act of Congress would fix everything in an instant," Evermore said. "And it would make up for everything almost immediately."
Denitsa is a writer for Yahoo Finance and Cashay, a new personal finance website. Follow her on Twitter @denitsa_tsekova.
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