The President ensured a deadlock in negotiations by refusing to agree to substantial state fiscal relief. In so doing, he abandoned the deal he made to pass the fourth coronavirus relief act, in which Democrats agreed to expedite passage of further business subsidies with none of their priorities in exchange for his commitment, confirmed in a tweet, that he would promptly support new state fiscal relief. To ameliorate the political pressure to move forward further relief legislation, he announced on Saturday an initiative to use Federal Emergency Management Agency (FEMA) money to provide up to six weeks of addition enhanced unemployment benefits at a one-third reduction from the prior rate. Now the realities of state fiscal crises that he insists on ignoring have scrambled those plans and sent the Administration veering deeper into uncharted – and unlawful – territory to try to make his initiative seem viable.
As I explained
Saturday, his Presidential
Memorandum directed FEMA to establish a new program with $44 billion from
its Disaster Relief Fund to supplement unemployment benefits for many of the
workers that had been receiving Federal Pandemic Unemployment Compensation
(FPUC) before it expired in late July. This
initiative had several glaring shortcomings:
1. The $400 per week
that the Memorandum offered was a one-third reduction from previous
levels.
2. The President
excluded unemployed workers receiving less than $100 in regular unemployment
benefits, largely people who had worked at or near the minimum wage and especially
those in states with miserly unemployment compensation programs.
3. The funds
identified were only sufficient to pay about six weeks of enhanced benefits
even at the reduced rate.
4. The program required
financially strapped states to pay 25% of its benefit costs ($15 billion) and
probably all its administrative expenses.
5. As a new program,
it required extensive reprogramming of states’ often-antiquated unemployment assistance
computer systems, a task made considerably more difficult by the need to write
code to exclude those with benefits less than $100 and to account for the required
state match.
6. And the President raised
grave doubts about the legality of his actions by disregarding the conditions
the Stafford Act places on spending Disaster Relief Funds for unemployment
assistance.
Remarkably, in the last two days the Administration has
managed to make many of these problems worse.
The President’s announcement
was greeted with broad
public
criticism
on all these grounds. Almost immediately
it became clear that states could not fund the required match – a result of the
same fiscal crises the President’s negotiators refused to effectively address
in new relief legislation. Democratic governors
said
so
publicly,
and apparently Republican governors sent the same message to the White House in
private.
This triggered a flurry
of inconsistent announcements from the Administration. On leaving his golf course Sunday, the
President stated
that he had the option to fully fund the $400 weekly supplements if states
could not find matching money. Treasury
Secretary Mnuchin repeated
the President’s assertion.
This is incorrect. Because the President’s initiative does not,
and cannot, comply with the conditions on using FEMA funds for unemployment
assistance in section
410(a) of the Stafford Act, the President has had to claim that he is acting
under section
408(e). And section 408(g)(2)(A) imposes a special 25% state matching requirement for aid provided
under section 408(e). Although the
Stafford Act has numerous
waiver
authorities,
and elsewhere
allows the President to reduce or eliminate state matching requirements for
other forms of aid, none of those authorities come close to allowing waivers of
the state match for aid under section 408(e).
Perhaps realizing
this, Sunday evening the Department of Labor emailed states to “permit[ them]
to count their existing unemployment insurance (UI) weekly benefit payments
from state funds as their cost share requirement”. This raises two huge problems. First, as the Department admits, “this means
that an unemployed claimant will receive $300 per week in new FEMA-funded
benefits” rather than the $400 the President promised. The weekly supplement would be just half what
FPUC provided. For families at the brink
of eviction, foreclosure, or utility shut-offs, or those running out of food,
losing half of the supplement can mean the difference between austerity and catastrophe. This is sadly another example of the neglect
of acute poverty
in political, legal and policy discourse.
Even apart from
the parsimony of this new approach, it is not remotely legal. Because he is operating outside of the
Stafford Act’s authorization for unemployment assistance, the new benefit the President
envisions is not part of regular unemployment benefits. Therefore, moneys states spend on regular
unemployment benefits is not “the
non-Federal share” of the new benefit because it is not part of the new benefit. Similarly, states’ existing unemployment spending
is already mandated by state law and is already taken into account in lifting the
large federal tax that applies to employers in states without compliant
unemployment compensation systems. That
spending therefore is not “funds
made available by the State” for this new benefit. (A separate problem is that a large share of unemployment
benefits now are funded by the federal government, not the states.) Counting existing unemployment benefits as
the state match under the Disaster Relief Program also violates OMB Circular
A-87, which stipulates that “[t]o be allowable under Federal awards, costs
must [n]ot be included as a cost or used to meet cost sharing or matching
requirements of any other Federal award in either the current or a prior
period”.
In addition,
because this new benefit is outside the unemployment compensation system, states
may not
lawfully spend unemployment compensation funds to administer it. These costs likely will be substantial because
considerable reprogramming of state UI computers will be necessary. States are already facing a cumulative $555
billion budget shortfall (not counting the shortfalls of localities, whom
states may feel the need to assist). Many
states have shrunk their workforces and limited outside contracting, including
the kind that would be required to reprogram their UI computers. Some states also may have legal problems
spending money not in their budgets to administer this new, short-lived
program. Given the lawlessness of the
Administration’s actions to date, it seems possible it will simply instruct
states to spend UI administrative funds on this new program in spite of the
federal statute. States reportedly have
been told to expect formal guidance at the end of the week.
Media accounts
have focused on the risk of litigation over the legality of the President’s
actions. That is real, but several other
consequences spring from this sort of rampant lawlessness. States may be leery of providing these
benefits for fear that they might not be reimbursed in the first place or that
they may later be handed a large bill for all or the state share of these
costs. Having been burned this Spring when
private assurances of flexibility were contradicted by rigid official
interpretations of the CARES Act’s Coronavirus Relief Fund, states are
disinclined to trust an email from DOL until confirmed in formal guidance. The Supreme Court has implied that
separation of powers concerns may preclude honoring financial commitments not
authorized by Congress. In addition,
individual federal civil servants may feel apprehensive about participating in
a program disbursing federal funds contrary to limitations imposed by
Congress. A federal employee who does so
is subject to employment action,
including dismissal, under the Anti-Deficiency Act and can, if they act “knowingly
and willfully”, face criminal
penalties. This will probably not
stop the program from going forward: as
we saw when the President ordered aid to Ukraine put on hold, if one official will not take
an action that she or he regards as unlawful, someone else can usually be found
who will. We should not want a civil
service, however, in which the key to advancement is blithely following orders
one knows, or should know, are unlawful.
In all this
tumult, it is easy to lose sight all that the President could have done to
relieve hardship in this crisis. Although section 408 does not authorize
unemployment assistance programs that depart from statutory conditions, it does
provide the President wide latitude to offer housing assistance. Contrary to the Administration’s claims,
nothing in his executive order
on evictions and foreclosures offers any protection to any vulnerable renters
or homeowners. It tells various
officials to see what they can do to help, but if the Administration’s lawyers
had identified anything it had the power to do without legislation one assumes
that would have been in the order. If
the President had devoted the $44 billion to housing assistance, he could have
done some real good.
Section
403 of the Stafford Act also allows FEMA to make “contributions to State or
local governments” to aid in disaster relief.
The $44 billion is far less than state and local governments need, but
it would help.
As a time when
food prices are rising,
households need more food assistance. The
Families First Coronavirus Relief Act authorized
the Administration to provide supplemental allotments under the Supplemental Nutrition
Assistance Program (SNAP) to compensate for those costs. The Administration chose to implement this
legislation in a way that targets aid on the least-poor SNAP recipients and
gives nothing at all to roughly the poorest
35% of households. Moreover, the
Administration is now pulling back flexibility that the Families First Act allowed
states to adapt
SNAP administrative requirements to current conditions.
Most importantly,
the President could return to the negotiating table with congressional
Democrats. He is claiming
that Democrats “want to meet to make a deal”.
Literally, that is true: the Democrats
did not walk away from the table and have never expressed any reservations
about returning. Now that his gambit of
trying to legislate unemployment benefits without Congress is falling apart, he
should resume negotiations and move forward to a deal.
Even if he were to
do so, and even if his negotiators came prepared to reciprocate to the
Democrats’ concessions, no legislation likely could be drafted and passed by
Congress before the end of next week. Once
one accounts for the time states will require to revive FPUC and implement any
changes in the final deal, unemployed workers will have gone more than a month
since their last FPUC payment before the next one arrives. That is still probably less time than it would
take for unemployed workers in most states to receive anything under the
President’s new FEMA program, but it is much too long.
The immediate harm
to families, and the near-term harm to the economy, are all too real. Additional delay only makes it worse.
@DavidASuper1