In early August, President Trump signed a series of executive orders aimed at providing economic relief to people struggling with lost earnings during the coronavirus pandemic. These allowed him to briefly play the hero, doing for struggling Americans what Congress couldn’t or wouldn’t do.
But as the pandemic drags on, it’s clear that Trump’s interventions were grossly inadequate to the scale of the crisis. If Congress doesn’t act boldly and quickly on behalf of the tens of millions of Americans now experiencing acute financial distress, the economy is headed off a cliff and huge numbers of people will needlessly suffer.
Trump’s executive actions included student loan deferral and an eviction moratorium that basically amounted to rent deferral. Both are better than nothing, though they both also fall short: deferral is not forgiveness, and these measures essentially kick penalties down the road.
In his executive memorandum, Trump also noted that the CARES Act, which had provided an automatic $600 a week federal unemployment check on top of regular state unemployment, had expired in July without renewal or replacement from Congress, leaving tens of millions of people without money or options. In response to this failure, Trump ordered FEMA to step in and give unemployed workers $300 a week. This benefit is called Lost Wages Assistance (LWA).
But the LWA has proven insufficient for four reasons. First, the difference between $300 and $600 a week is stark. The $600 benefit was a considerable booster shot that kept twelve million people out of poverty and even lifted some out of it. The $300 LWA is certainly preferable to making people survive on state unemployment benefits alone — which is actually not possible anywhere in America — but it doesn’t have nearly the same ameliorative effect.
Consider that average rent for a two-bedroom apartment in the United States is over $1,300. The $600 benefit results in $2,400 a month, which means a single parent would be paying more than half of their federal unemployment check to rent, then using what’s leftover plus weekly state unemployment benefits for groceries, utilities, etc. That’s hardly tenable to begin with, but if the federal benefit plummets to $300 a week, or $1,200 a month, that’s not even enough to cover rent. The state benefit has to make up the difference and cover all other living costs. That’s a dramatic difference.
Second, not everyone who was eligible for the $600 benefit is eligible for the LWA payment. This means that the federal government isn’t disbursing half of the benefits it was previously disbursing, but instead far less — an analysis by the Century Foundation actually shows that the federal payout is about a quarter of what it would be if the $600 a week benefit were renewed by Congress. Tens of thousands of people are boxed out of federal unemployment benefits entirely in the transition from the $600 benefit to the LWA.
Third, the LWA rollout has been really slow. While the money for the benefits comes from the federal government, the benefits themselves are distributed through chaotic and dysfunctional state unemployment systems. The overwhelming majority of states that signed on to the program (which not every state did) either said they would start paying out the $300 LWA in mid-September or later, or gave no date at all, reporting that they needed to reprogram their computer systems.
The sluggish inefficiency has left many people relying solely on state unemployment benefits ever since the $600 federal unemployment benefit expired in July. “That means most people on UI are now are forced to get by on the meager benefits that are in place without the extra payment, benefits which are typically around 40% of their pre-virus earnings,” writes Heidi Shierholz at the Economic Policy Institute. “It goes without saying that most folks can’t exist on 40% of prior earnings without experiencing a sharp drop in living standards and enormous pain.”
And fourth, the LWA benefit was intended to be a stopgap measure until Congress approves another coronavirus relief package, which means it only lasts for six weeks. For those who accessed the benefit early, that time is already up. For others, their weekly income will be temporarily elevated, providing only a brief moment of respite, before it plummets back down to unsustainable levels. And Congress still hasn’t budged.
Meanwhile, many workers are exhausting their state unemployment benefits, which are often capped at six months. They can roll over to an extended benefits program, but it will last just over three months. Likewise, workers who are not eligible for ordinary state unemployment benefits (like gig workers) have been receiving a federal unemployment check, but that benefit is set to expire at the end of the year. All of this means that come the end of 2020, if significant and decisive action is not taken, there will be hell to pay.
Congress must pass a bold coronavirus relief package before that happens. In fact, Congress must act immediately. Right now there are millions of people struggling to make ends meet through no fault of their own, victims of circumstance who’ve lost their ability to work for a wage, or have seen their earnings dwindle for other “Covidepression”-related reasons, and are struggling to access adequate relief from a broken system. The US government has already failed them, but every day that passes without comprehensive legislation makes the problem worse.
In truth, the best way to save the economy from collapse and make people’s lives livable for the duration of the pandemic is to give every American $2,000 a month until the crisis is over, essentially “deep-freezing” the economy so it can thaw out when the crisis passes. Unfortunately, our politicians are too shortsighted and austerity-minded to do what needs to be done. At the very least, Congress must renew the $600 a week unemployment benefit — and it must do so now.