Coronavirus stimulus: Funding for extra unemployment benefits ordered by President Trump is running out
States will soon run out of funds to provide additional unemployment benefits for millions of Americans under the memorandum signed by the president in early August.
"The benefits to individuals are likely to suddenly cease," the Arizona Department of Economic Security director reportedly told reporters on a call. "It is likely that after the sixth week the availability of these funds will be somewhat compromised in the future."
Read More: Here's What You Need To Know About Eligibility for Unemployment Benefit
On Aug. 8, Trump signed several executive orders to avoid deadlocked negotiations with Democrats over a new stimulus package amid the coronavirus pandemic. However, the resulting Lost Wages Assistance (LWA) funding, which provided additional unemployment insurance of $ 300 to $ 400, is capped at up to $ 44 billion, which has been diverted by the Federal Emergency Management Agency (FEMA) .
According to Andrew Stettner, unemployment insurance expert and senior fellow at the Century Foundation, each state will likely be allocated a portion of the money for about six weeks as 48 or the majority of states apply for or approve the program.
A total of 48 states are either moving forward or have already been approved for the Lost Wages Assistance (LWA) program. Graphic: David Foster / Yahoo Finance
"Most workers will be paid by the end of September [the additional benefits] and maybe some will be absent by October," said Stettner. "I think the people in Arizona will get all their money in September."
Arizona was the first state to begin issuing LWA additional benefits in mid-August, and Grand Canyon State may be the first state to run out of funding. Most states will not distribute the funds until September, and some may even disburse them in October, as providing unemployment insurance through an executive directive (as opposed to legislation) is logistically difficult.
"Whether people receive this payment in September or October, they will only receive a certain amount," said Stettner. "Most people will get five or maybe six weeks."
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"Unfortunately we don't have unlimited amounts of money"
When approving the LWA, the states initially receive three weeks of funding. All additional costs are approved weekly until funds are used up.
"It's really unclear whether states that got it up and running faster will get extra weeks or if they are putting money aside for each state to have fourth, fifth, and sixth weeks," said Michele Evermore, senior policy analyst, National Employment Law Project, said Yahoo Money.
Read more: Coronavirus Stimulus Reviews: What Stops a Second Round Payment?
Experts initially estimated that LWA funds would likely be depleted in five weeks once states began distributing them, meaning unemployed Americans may see their last $ 300-400 benefits run out sometime in September or October.
Treasury Secretary Steven Mnuchin confirmed the limited funding in recent congressional statements.
"The president has used executive force to increase unemployment to as much as $ 400 per person," Mnuchin said during a hearing on Tuesday. "Now unfortunately we don't have unlimited amounts of money to do that, but the president wanted to move forward."
U.S. Treasury Secretary Steven Mnuchin testifies before the House Select subcommittee on the coronavirus crisis on September 1, 2020 on Capitol Hill in Washington, DC. (Nicholas Comb-Pool / Getty Images)
President Trump said he would like to unlock an additional $ 300 billion for stimulus measures - but needs action from Congress to do so.
"Now we have $ 300 billion in an account - an account that we didn't use - $ 300 billion," President Trump told reporters on Friday. “And we are ready to take advantage of that. I would be willing to post it subject to Congress and use it as an incentive. "
Negotiations between the GOP-backed White House and Congressional Democrats on another round of sweeping stimulus laws are expected to resume next week when Congress returns from the summer recess. The impending expiration of the LWA funds is an added incentive for Congress and the White House to get a deal that would bring more relief to Americans.
"When states reach the end of their utility," observed Evermore, "it will actually be a huge incentive for Congress and the White House to come back to the table."
Denitsa is a writer for Yahoo Finance and Cashay, a new personal finance website. Follow her on Twitter @denitsa_tsekova.
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