President Trump signed a number of executive orders to circumvent a congressional impasse over another round of government relief and stimulus. Yuval Levin and Adam C. White provide a detailed critique of this return to Obama-era policymaking without regard to the constitutional issues. Their critique does not let Congress off the hook for the mess.
From a state policy perspective, the most important of the orders is the one on “lost wages assistance.” Federally funded unemployment payments of $600 per week expired at the end of July. Other federal benefits will continue until Dec. 27, but this extra unemployment payment has been the center of discussion since enacted in April. Supporters noted how beneficial the additional benefits have been for the unemployed, as evidenced by their continued consumption spending. Opponents have been concerned the benefits, equivalent to earning $15 an hour for 40 hours of work, discourage work because they are far more generous than what most recipients could earn at their job. This assumes we know the number of available jobs an unemployed person might otherwise take, but that’s an open question driven in part by government-ordered shutdowns.
Trump’s order on unemployment insurance would use money from the federal Disaster Relief Fund to cover unemployment benefits of $300 per week if states pledge to pay another $100 per week. That would bring the total benefit to $400 on top of whatever an unemployed person receives from the state.
There’s $70 billion available in the DRF, but the executive order would not allow the balance to dip below $25 billion “to support ongoing disaster response and recovery efforts and potential 2020 major disaster costs” like those from hurricanes. If the available money isn’t depleted before then, the payments would expire Dec. 6, but states could continue making payments until Dec. 27.
States would have the option to use their share of money from the $150 billion Coronavirus Relief Fund. North Carolina hasn’t appropriated $552 million of its $4.1 billion but has another $351 million waiting on congressional approval of flexibility to be distributed. They could also use other state funds to cover the state share. Whatever is used, states must also designate a source of funds to cover the entire $400 per week after federal funds are depleted or expire.
North Carolinians remain eligible for state benefits of half their income up to $350 per week for up to 12 weeks. Federal benefits through the Pandemic Emergency Unemployment Compensation program last another 13 weeks. The Richmond Federal Reserve Bank reported that 708,000 people received benefits through the state or one of the two federal programs during the week ending July 4, even though only 308,000 received state unemployment insurance.
The executive order places authority for state actions and requests with the governor, but the General Assembly would first need to appropriate money from the Coronavirus Relief Fund, Unemployment Trust Fund, General Fund, or other sources. House Speaker Tim Moore, R-Cleveland, and Senate President Pro Tem Phil Berger, R-Rockingham, on Tuesday sent a letter to Gov. Roy Cooper promising the legislature would provide the funding for the state’s share.
Cooper previously complained about the use of disaster money to cover unemployment from what he declared a disaster that has justified multiple executive orders over the past four months. He also demonstrated his disregard for business owners and teacher pay raises if it advances his political agenda. So, it came as a surprise when he agreed to the offer. Cooper sought to bargain for higher state benefits for a longer period in his response, in which he also argued against using CARES Act money for the state share.
North Carolina’s unemployment benefit value and duration are part of the reason North Carolina is better positioned than most states to take advantage of the president’s offer. The legislature will return in early September to appropriate needed funds, and maybe Congress will reach a compromise in the meantime. Those people who can’t return to work because of the shutdown or because their employer has gone out of business will still get assistance for a few more weeks.