Trump extends unemployment benefits, defers payroll tax

 

 President Donald Trump signed executive orders on Saturday partly restoring enhanced unemployment payments to the tens of millions of Americans who lost jobs in the coronavirus pandemic, as the United States marked a grim milestone of 5 million cases.

Negotiations broke down this week between the White House and top Democrats in Congress over how best to help Americans cope with the heavy human and economic toll of the crisis, which has killed more than 160,000 people across the country.

Trump said the orders would provide an extra $400 per week in unemployment payments, less than the $600 per week passed earlier in the crisis. Some of the measures were likely to face legal challenges, as the U.S. Constitution gives Congress authority over federal spending.

“This is the money they need, this is the money they want, this gives them an incentive to go back to work,” the Republican president said of the lower payments. He said 25% of it would be paid by states, whose budgets have been hard hit by the crisis.

Republicans have argued that higher payments were a disincentive for unemployed Americans to try to return to work, though economists, including Federal Reserve officials, disputed that assertion.

Trump’s move to take relief measures out of the hands of Congress drew immediate criticism from some Democrats.

“Donald Trump is trying to distract from his failure to extend the $600 federal boost for 30 million unemployed workers by issuing illegal executive orders,” said Senator Ron Wyden, the top Democrat on the Senate Finance Committee. “This scheme is a classic Donald Trump con: playacting at leadership while robbing people of the support they desperately need.”

The Democratic-majority House of Representatives passed a coronavirus support package in May which the Republican-led Senate ignored.

Democratic presidential candidate Joe Biden called the orders a “series of half-baked measures” and accused Trump of putting Social Security “at grave risk” by delaying the collection of payroll taxes that pay for the program.

Trump also said he was suspending collection of payroll taxes, which pay for Social Security and other federal programs, an idea that he has repeatedly raised but has been rejected by both parties in Congress. He said the suspension would apply to people making less than $100,000 per year.

U.S. President Donald Trump speaks after signing executive orders for economic relief during a news conference amid the spread of the coronavirus disease (COVID-19), at his golf resort in Bedminster, New Jersey, U.S., August 8, 2020. REUTERS/Joshua Roberts

His orders would also stop evictions from rental housing that has federal financial backing and extend zero percent interest on federally financed student loans.

Trump initially played down the disease’s threat and has drawn criticism for inconsistent messages on public health steps such as social distancing and masks.

He spoke to reporters on Saturday at his New Jersey golf club, in a room that featured a crowd of cheering supporters.

FAR APART

Nearly two weeks of talks between White House officials and congressional Democrats ended on Friday with the two sides still about $2 trillion apart.

House Speaker Nancy Pelosi had pushed to extend the enhanced unemployment payments, which expired at the end of July, at the previous rate of $600 as well as to provide more financial support for city and state governments battered by the crisis.

Pelosi and Senate Minority Leader Chuck Schumer on Friday offered to reduce the $3.4 trillion coronavirus aid package that the House passed in May by nearly a third if Republicans would agree to more than double their $1 trillion counteroffer.

White House negotiators Treasury Secretary Steven Mnuchin and Chief of Staff Mark Meadows rejected the offer.


The $1 trillion packages that Senate Majority Leader Mitch McConnell unveiled late last month ran into immediate opposition from his own party, with as many as 20 of the Senate’s 53 Republicans expected to oppose it.

Trump did not rule out a return to negotiations with Congress.

“I’m not saying they’re not going to come back and negotiate,” he said on Saturday. “Hopefully, we can do something with them at a later date.”

Democrats have already warned that such executive orders are legally dubious and would likely be challenged in court, but a court fight could take months.

Trump has managed to sidestep Congress on spending before, declaring a national emergency on the U.S.-Mexico border to shift billions of dollars from the defense budget to pay for a wall he promised during his 2016 election campaign.

Congress passed legislation to stop him, but there were too few votes in the Republican-controlled Senate to override his veto - a scenario that would likely play out again with less than 90 days to go before the Nov. 3 presidential election.

The last payroll tax cut for American workers was pushed through by the Obama administration in 2011, despite concerns that the cut would increase the federal deficit. The theory was then - as now - that the benefit would offset any costs. After the first round, Congress renewed the temporary payroll tax cuts in 2012.

In response to the Executive Order, Sen. Ron Wyden (D-OR) tweetedThis scheme is a classic Trump con: play-acting at leadership while robbing families of the support they need. This "plan" fails to reinstate supercharged unemployment and would throw already overburdened state programs into chaos, making it harder to get benefits out the door.

We're living through a once-in-a-lifetime upheaval, and wherever we end up on the other side won't be the same place we started from. How we work, where we work, and the skills we need will all change. 

Fortune Analytics got an exclusive look at Salesforce's proprietary data to learn how the pandemic is impacting workers during—and after—the crisis. 

Since early May, the Salesforce Research Consumer and Workforce Research Series has published biweekly polls of the public. And the company's Customer & Market Insights group regularly conducts surveys among decision-makers (director level or higher). Fortune Analytics got special access to both datasets. 

Here's what we found.

Newsletter-Red-Line-15

The numbers to know 

69%

  • ... of U.S. workers say the pandemic will permanently change the nature of work in their own career. 

59%

  • ... of U.S. remote workers say they miss going into the office. 63% say they've grown closer to their family during this time, and 67% are interested in incorporating more remote work post-pandemic. 

50% 

  • ... of U.S workers say they're considering a career change given their current work situation. 49% want to work in a less volatile role or industry than the one they currently work in.

48%

  • ... of business leaders think technology spending at their company will increase due to the pandemic. Only 11% think tech spending will decrease.

39%

  • ... of U.S. adults felt isolated in July, down from 46% in May. 42% of Gen Zers felt isolated in July, the most out of any generation, compared to 49% in May.

22% 

  • ... of U.S adults are extremely concerned about their physical health during the pandemic. 21% are extremely concerned about their mental health.
Newsletter-Red-Line-15

The big picture

  • Americans believe their work lives aren't going back to normal. About 7 in 10 U.S. workers say the pandemic will permanently change the nature of work in their own careers. Half are considering a career change, and 2 in 3 are interested in incorporating more remote work after the pandemic. 
  • People are under once-in-a-lifetime levels of stress. When you mix a pandemic with unemployment levels above the peak of the Great Recession, you get a once-in-a-generation degree of hardship. Americans are concerned about losing their job (59%), their physical health (82%), their mental health (68%), and their long-term finances (83%). 
Newsletter-Red-Line-15

A few deeper takeaways

Alternate text

1. Americans are worried about, well, everything.

We are living through a deadly pandemic that has already claimed the lives of more than 150,000 people in America. It's no surprise that 82% of U.S. adults say they're concerned about their physical health. But it's also taking a toll on mental health, at 68%. For those who are extremely concerned about either, the percentages are incredibly close: 22% say that's the case about their physical health, and 21% say the same thing about their mental health.

The jobless rate (11.1%) remains above double digits, and 59% of U.S. adults are concerned about their job security. The economic power in America has quickly shifted from employees to employers: It was easier to job-hop and not have to put up with a bad employer when the economy was strong before COVID-19. Expect employers to ask for more production and perhaps even chip away at benefits—like 401(k) matches. 

Alternate text

2. Your business needs to go all-in on the Internet.

Some academics and publications have suggested the pandemic would create a wave of migration from urban cores to the 'burbs. Meanwhile, we're seeing a migration wave from IRL to the web.

Among U.S. adults, 47% are on the Internet more since the start of the pandemic, compared to just 6% using it less. We see similar numbers for streaming videos (41% vs. 7%), online shopping (43% vs. 10%), and social media usage (41% vs. 8%).

Fortune Analytics has told readers for months that the pandemic is pushing the jump to digital years into the future. Make sure your work and business are following suit.

Alternate text

3. People want their employers to heavily clean their offices.

Remote employees would like to see their employers take steps to prevent the spread of the virus before returning to the workplace. 40% say enhanced cleaning procedures would have a major impact on their decision to return, and 35% said the same thing about daily wellness checks. 

Many employers are already doing some of these, such as temperature checks—but we aren't seeing employees return in masse. That suggests that these procedures alone won't bring people back. Much of that hangs on the pandemic itself ending. 

Alternate text

4. One bright spot in all of this: tech spending.

Employers are scrambling to cut costs, but there is one big exception: tech spending. As consumers move online and workforces stay remote, companies have been pushed to spend more on tech.

As the economy has improved somewhat, perhaps you'd think that might have reversed a little. Nope, it's actually going up more. In early April, 19% of decision-makers told Salesforce they expected to cut tech spending in the future, but when asked again in July, only 11% still expected to do so.

 After failing to reach a deal with the U.S. Congress for a fresh round of coronavirus pandemic relief, President Donald Trump signed a series of executive orders aimed at pumping up America’s pandemic-hit economy.

U.S. President Donald Trump signs executive orders for economic relief during a news conference amid the spread of the coronavirus disease (COVID-19), at his golf resort in Bedminster, New Jersey, U.S., August 8, 2020. REUTERS/Joshua Roberts

The orders are likely to face some legal challenges.

UNEMPLOYMENT RELIEF

Trump’s order cuts enhanced federal unemployment benefits - a lifeline for the tens of millions of Americans thrown out of work during the pandemic - from $600 to $400 per week. Democrats had been lobbying to extend the original $600 a week enhanced benefits, which expired on July 31.

Trump proposes taking most of the money from the coffers of the Federal Emergency Management Agency - $44 billion, according to the order - with 25% of the money coming from states.

It’s not clear how Trump will convince state governments, whose revenues have been hard hit by the crisis, to pony up their proposed share.

Trump called the reduced payments “generous.”

A PAYROLL TAX CUT

Trump’s first order waives the payroll tax that funds Social Security in a bid to inject extra money directly into salaried employees’ pockets. Trump has been pushing the idea for a while but it has found little support in Congress from Democrats or his fellow Republicans.

The executive order says the cut comes into effect on Sept. 1, but Trump said it “most likely” would be retroactive to Aug. 1 and translate into “bigger paychecks for working families.”

EVICTIONS

Trump’s order protecting homeowners and renters from evictions is unlikely to face a challenge from Democrats; indeed, House of Representatives Speaker Nancy Pelosi this week encouraged the move. But it isn’t clear how it will be executed.

The order directs authorities to provide “temporary financial assistance” to renters and homeowners “struggling to meet their monthly rental or mortgage obligations.”

Even Trump seemed a little hazy on the order’s ultimate effects, saying “we don’t want people being evicted and the act that I am signing will solve that problem - largely, hopefully, completely.”

STUDENT LOANS

Trump said that interest on student loan payments - frozen since March - would be suspended until the end of the year.