%1

Experts said that U.S. President Donald Trump’s weekend attempt to sidestep stalled congressional negotiations over the next coronavirus aid package will do little to boost the economy, experts said, Reuters reported. Trump’s executive order and presidential memoranda, introduced on Saturday, would temporarily extend enhanced unemployment benefits at a reduced amount of $400 a week, defer payroll taxes for some workers, suspend federal student loan payments and potentially provide eviction relief. Even if he can overcome the legal questions surrounding his actions, the efforts may not pack much punch, economists say. Mark Zandi, the chief economist at Moody’s Analytics, calculated the orders could provide just over $400 billion in total relief. JPMorgan Chase economist Michael Feroli wrote in an email note on Monday that the initiatives could contribute “less than $100 billion” in stimulus. That’s versus the $1 trillion aid package proposed by the Republican-led Senate or the more than $3 trillion aid bill passed by the Democrat-led House of Representatives. Altogether, the president’s orders would add up to 0.2 percent of GDP, a “negligible amount,” according to estimates from Lydia Boussour, senior U.S. economist for Oxford Economics. Millions of jobless Americans could be financially squeezed this month after the expiration of a $600 weekly supplement to unemployment benefits, the winding down of eviction moratoriums across the country and the end of the Paycheck Protection Program, which supported small businesses.

The nation’s governors raised concerns on a bipartisan basis Monday about implementing President Trump’s new executive action aimed at extending enhanced unemployment insurance, and called on Congress to act instead, the Washington Post reported. But on Capitol Hill, negotiations showed no signs of life as Democrats and Republicans traded accusations about their failure to reach a deal during two weeks of talks that collapsed on Friday. In their statement, the governors pointed to “significant administrative burdens and costs” associated with attempting to implement a new plan Trump announced over the weekend, which would attempt to provide $400 weekly emergency unemployment benefits, with states required to apply for the funds and pay a quarter of the cost. The statement was issued by National Governors Association chairman Andrew M. Cuomo, the Democratic governor of New York, and vice chairman Asa Hutchinson, the Republican governor of Arkansas. "The best way forward is for the Congress and the administration to get back to the negotiating table and come up with a workable solution,” the pair wrote. Read more. 

In related news, two days after President Donald Trump moved to implement scaled-down coronavirus relief to prod Congress into action, Republicans and Democrats remained deadlocked over a stimulus plan and gave no indication they were ready to head back into negotiations, Bloomberg News reported. Treasury Secretary Steven Mnuchin said yesterday that he’s spoken with “several Democrats,” but not House Speaker Nancy Pelosi or Senate Democratic leader Chuck Schumer since their last negotiating session ended on Friday without any breakthrough. Starting off the week, the two sides exchanged blame but no new ideas for restarting talks. Senate Majority Leader Mitch McConnell on the chamber’s floor accused Democrats of trying to gain “political leverage over the president of the United States” to push for a big stimulus package that he said includes non-coronavirus items. Schumer followed him, saying Democrats “remain ready to return to the table” but Republicans need to “meet us there halfway.” Read more. 

Additionally, the Labor Department said that the federal government spent nearly $250 billion on extra $600-a-week unemployment benefits from early April to the end of July as millions of workers were laid off because of the coronavirus pandemic, the Wall Street Journal reported. Workers who permanently lost their jobs, were furloughed or had their hours cut were able to tap $600 in federal unemployment benefits on top of the amount they qualified for from the state, under a relief law Congress passed and President Trump signed in March. The benefits expired on July 31. Trump on Saturday signed an executive order that would replace the larger payments with $300 a week in enhanced unemployment benefits, and called on states to provide another $100 a week. The White House remained deadlocked yesterday over a broader pandemic relief deal with Democratic lawmakers, who said the president’s moves over the weekend were an unconstitutional breach of congressional spending powers. Individuals tapping regular state programs, the largest source of benefits, at the beginning of August saw weekly payments decline to near the $332 average weekly payment made under those programs in the past year. Self-employed and gig workers — who don’t usually qualify for unemployment assistance — saw a steeper decline in payments. Read more. (Subscription required.) 

The Federal Reserve released detailed data yesterday on its first-ever attempt to get loans to midsize businesses, and the figures show that the program is reaching a diverse set of borrowers, the New York Times reported. The numbers run through July 31 and account for $92.2 million in loans, which is about half of what the so-called Main Street program has backed so far, based on more recent data cited by a Fed official last week. The program’s 13 loans through July 31 went to a range of companies — including a dentist, a concrete company, a lighting company, a roofing company and a casino. The smallest loan, for $1.5 million, went to Pablo Alfaro Group, a Florida real estate company. The largest, for $50 million, went to an entity associated with Mount Airy, the Pennsylvania casino. The Main Street program is a new effort for the Fed, and it has gotten off to a rocky start. First announced in late March as part of the Fed’s broad pandemic response package, the program is meant to funnel loans to midsize businesses, especially those who are too big for government small-business loans but too small to tap stock and bond markets to raise money. The Fed is protected against losses on the loans by funding from the Treasury Department, money Congress earmarked to support the Fed’s emergency lending push in its coronavirus response legislation. Lawmakers have questioned why it took so long to get the program running — Main Street did not purchase its first loan until July 15 — and why so little of its $600 billion capacity is being used.

The White House has pitched its payroll tax holiday as a boon to American workers that would fatten their paychecks and provide a jolt to the economy. But for companies large and small, the presidential intervention poses difficult legal and logistical questions that only add to the uncertainty that executives and workers are contending with during the pandemic, the New York Times reported. Since Trump, in an order he signed on Saturday, is only suspending the tax, not cutting it, the money that companies would cease to withhold from their employees’ earnings would have to be paid next year, barring legislative action. For companies, this would require some complex accounting maneuvering. For employees, it could mean an unwanted tax bill in 2021, making the break more of a headache. “This is not a holiday, because there’s a bill at the other end of it,” said Isaac Boltansky, an analyst with the research firm Compass Point. The Treasury Department is expected to release guidance about how the payroll tax suspension will work. Thus far, businesses have been cool to the idea. The U.S. Chamber of Commerce said in a terse statement on Saturday that Trump’s executive actions, though “well intentioned,” were “no substitute for congressional action.”

U.S. House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin yesterday said that they were open to restarting COVID-19 aid talks, after weeks of failed negotiations prompted President Donald Trump to take executive actions that Democrats argued would do little to ease Americans’ financial distress, Reuters reported. Discussions over a fifth bill to address the impact of the coronavirus pandemic fell apart on Friday, a week after the expiration of a critical boost in unemployment assistance and eviction protections, exposing people to a wave of economic pain as infections continue to rise across the country. Trump on Saturday sought to take matters into his own hands, signing executive orders and memorandums aimed at unemployment benefits, evictions, student loans and payroll taxes. Both Pelosi and Mnuchin yesterday appeared willing to consider a narrower deal that would extend some aid until the end of the year, and then revisit the need for more federal assistance in January. The House passed a $3.4 trillion coronavirus support package in May that the Republican-led Senate ignored for weeks before putting forward a $1 trillion counteroffer. Democrats, pushing hard to keep a $600 per week unemployment benefit, which is a supplement to state jobless payments, and deliver more funds to cash-strapped states and cities battered by the pandemic, had offered to meet Republicans halfway to close the $2 trillion gap — a move the White House rejected. On Sunday, Mnuchin urged lawmakers to accept the money the administration was willing to lay out now to help schools reopen, boost local coffers and help the jobless, even if it fell short of Democrats’ goals.