Economy

Trump’s Fake Unemployment Program Could Instantly Run Out of Funds

JM Ashby
Written by JM Ashby

Because Republicans in Congress refused to renew the pandemic unemployment program or pass any other additional stimulus at all, Trump signed an executive order instructing the Federal Emergency Management Agency (FEMA) to use disaster relief funding to create an alternative unemployment program.

Only six states are distributing the funding under Trump's program as of today with 34 other states expected to join them in the next two to three weeks, but the program may be depleted as soon as the each state's program comes online.

Only $44 billion has been previously appropriated by Congress for FEMA and the benefits of Trump's program will be back-dated to August 1st.

States have until September 10 to apply for the Lost Wages Assistance program through the Federal Emergency Management Agency. It's working alongside state workforce agencies to distribute the payments, retroactive to August 1.

The weekly federal supplement is $300, but states were given the option to kick in another $100 under revised guidelines from the Trump administration. A provision also mandates that people must receive at least $100 in weekly benefits to qualify for federal aid, which could exclude many part-time and gig workers.

However, experts say the program could provide only six weeks of unemployment aid once states get it up and running, which is expected to be in September at the earliest for many.

More:

To fund LWA payments, the administration is tapping into $44 billion of the Disaster Relief Fund, an amount that will only be enough to extend additional benefits to early September. Delivering the $300 per week to the approximately 24 million Americans eligible will cost more than $7 billion a week, depleting the $44 billion in just six weeks. However, the Disaster Relief Fund only has $68 billion in it in total right now, and the Executive Memorandum and subsequent guidance indicates that LWA will be cut off if the unobligated balance falls below $25 billion. That means that if any natural disasters, such as the “derecho” storms in Iowa, require FEMA relief, the total amount available for LWA will be reduced. It’s not surprising that FEMA has decided only to release the first three weeks of LWA payments to states given the near certainty that the money in the Disaster Relief Fund will be needed for its original purpose.

If the benefits of Trump's program are back-dated to August 1st, and if each state has only received three weeks worth of money (or even the full six weeks), that means the program will end with one single check in the mail for the vast majority of people who are eligible. From one point of view it might be fair to say the program is already effectively dead if all available funding has already been spoken for even if it hasn't been mailed yet.

It's not as if receiving a one-time check in the mail for about $900 (minimum) to $1,800 (maximum) is bad a thing, but at the same time this is a joke.

That amount of money would certainly help me, but if you're someone who already went a month without pay and you've lost your home or gone further into debt since then, it's not a significant consolation. It's not an adequate replacement for a legitimate program passed by Congress in any case.

House Democrats passed a stimulus bill in May that renewed the pandemic unemployment program through the end of the year.

Hurricane Laura caused up to $12 billion in property damage last week, by the way, so it remains to be seen what effect that could also have on Trump's depleted program.

  • muselet

    I’m not the first to say this, but using disaster relief funds to supplement unemployment insurance is absurd, especially in the middle of Atlantic hurricane season and with California having a terrible wildfire season.

    It’s a stunt, nothing more and nothing less.

    Again I say, the GOP needs to go extinct.

    –alopecia