Trump authorises extending special unemployment benefit

Donald Trump has directed the federal government to provide extra payments to the unemployed, and called on the states to help out.

Donald Trump signed four executive orders extending coronavirus economic relief on Sunday. Picture: AFP

US President Donald Trump has directed the federal government to provide $US300 ($419) a week in extra payments to the unemployed, and called on states to fund an extra $US100 in weekly benefits.

The measure was one of four Mr Trump signed on Saturday (Sunday AEST) to extend coronavirus aid after negotiators for the White House and Democrats in congress failed to reach a deal.

The $US300 partially restores an added $US600 unemployment benefit that expired July 31.

Mr Trump said he was reducing the additional jobless benefit to give the unemployed “an incentive to go back to work”.

The order signed by Mr Trump authorised states to pay $400 a week in added benefits, but only funded 75 per cent of that. It was uncertain how states would respond. Many have seen revenues fall amid fallout from the pandemic, and have asked congress for help to avoid cuts to services and more lay-offs of first responders.

Democrats contend the added benefit is still needed at the $US600 rate, as the pandemic has forced many companies out of business, leaving fewer job prospects for the unemployed.

Republicans said the benefits were so generous that some people had stopped looking for work, a point Mr Trump made in supporting the reduced special benefit. “There was difficulty with the 600 number because it was a disincentive,” he said.

The additional jobless benefits will be paid from the Disaster Relief Fund, the government’s primary source of money for emergency costs, usually from natural disasters. Mr Trump’s action sets aside $US44bn from the fund, which currently has a balance of about $US70bn.

The extra weekly benefits would be available until December 6, about a month after the November 3 general election, or until the disaster fund’s balance drops to $US25bn, according to the executive action.

Mr Trump signed the executive orders at his golf club in Bedminster, New Jersey, where he was spending the weekend. The other actions would temporarily defer some payroll taxes, extend a policy cutting interest on student-loan payments and aim to help some struggling renters and homeowners.

The orders came after negotiators struggled for weeks to bridge the divide between a Democratic $US3.5 trillion aid bill, passed by the House of Representatives in May, and Senate Republicans’ $US1 trillion proposal unveiled two weeks ago. Talks between the White House and Democratic leadership ended on Friday with no agreement and no plans to meet again.

House Democrats discussed the expected executive actions and state of negotiations on a Saturday afternoon conference call before Mr Trump’s announcement. During the call, House Speaker Nancy Pelosi criticised Republicans and called them “desperate,” according to a person familiar with the call.

In a roughly 40-minute speech, Ms Pelosi outlined Democrats’ negotiating positions and said the executive actions “don’t make that much difference” in helping people. Tom Malinowski, who won a GOP-held seat in 2018, said representatives in competitive districts especially need a deal on legislation that will help people, noting that if congress and the White House can’t reach an agreement, everyone will be blamed.

Republicans, frustrated with the failure to reach a deal with Democrats last week, applauded the executive action, even though many in the GOP had been opposed to a payroll tax cut. “I am glad that President Trump is proving that while Democrats use laid-off workers as political pawns, Republicans will actually look out for them.,” said Senate majority leader Mitch McConnell.

Democrats objected to the President’s actions, saying the Constitution gives Congress the key power of appropriating money. “This is blatantly and absurdly unconstitutional,” Representative Jamie Raskin said of Mr Trump’s actions on unemployment benefits and the payroll tax. “The president is literally trying to steal away the powers that congress has over spending and taxing.”

Mr Trump directed the Treasury Department to defer the 6.2 per cent Social Security tax on wages for employees making less than about $US100,000 a year. That suspension would last from September 1 through December 31. If employers stop withholding those taxes, it would deliver an increase in take-home pay just as Mr. Trump is running for re-election but also create a looming liability in 2021 because the taxes would still be due eventually.

Mr Trump had asked Congress to cut payroll taxes, but lboth parties dismissed the idea. Instead, they prefer another round of stimulus checks, more targeted incentives for struggling companies to retain workers and keeping some additional payments for unemployed people.

The tax deferral is legal under a tax code section that gives the administration the authority to pause tax deadlines after a presidential disaster declaration. It’s the same law the government used to delay the April 15 tax-filing deadline to July.

The payroll tax change doesn’t change the underlying obligation, which means that workers and perhaps employers would still be on the hook for the taxes eventually. Mr Trump said he would press Congress to turn the deferral into an actual tax cut.

“This fake tax cut would also be a big shock to workers who thought they were getting a tax cut when it was only a delay,” said Senator Ron Wyden.

It’s far from certain that employers would actually stop withholding and submitting the payroll taxes. That’s because they may be concerned about having to withhold more taxes from workers next year, or about being stuck with the obligation themselves. That could happen in the case of a worker who benefits from the tax suspension now but then leaves a job before the money can be recouped from future paychecks.

Mr Trump also said Americans with federally held student loans would be able to suspend monthly payments through December 31, and that the government would waive interest on the loans during that period. Monthly payments have been suspended since spring under the Cares Act, which had called for payments to resume after September 30. The new action applies to most but not all of the 43 million borrowers with federal student loans. It would exclude those with loans held by private lenders with a federal guarantee.

Mr Trump said he would extend a moratorium on evictions that applied to properties with government-backed mortgages, or about one-third of renters. But the executive order Mr Trump signed on Saturday didn’t specifically extend the moratorium, which expired in July. Instead, he instructed his administration to take “all lawful measures to prevent residential evictions and foreclosures” related to the pandemic.

The president didn’t prescribe those steps, instead leaving it to the Health and Human Services Department, the Treasury Department, and the Housing and Urban Development Department to find funds and use existing programs and powers to help keep people in their homes.

A White House spokesman said the agencies were considering measures to prohibit evictions of any tenants due to the pandemic.

The Wall Street Journal