Issued by President Donald Trump Saturday’s executive actions led to a growing source of support for an economic recovery that had stalled after talks with Democrats on additional pandemic stimulus measures were broken. broken.
Trump’s redirection of the disaster relief fund will provide $ 300 a week in federal aid to the unemployed – down from $ 600 weekly in the Cares Act, which expired in July. That amount is capped at $ 44 billion, with the current level of unemployment likely to end in a month or two.
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His other significant action could have a bigger impact: it reduces the September-year-end payroll tax for workers earning up to $ 8,000 a month, meaning more 600 dollars in the employee’s pocket. Economist Stephen Moore, an ally of Trump, said the $ 300 billion tax cut would help the economy. However, other economists say it is unlikely to provide as much stimulus as Trump could hope.
While these actions may completely defeat American relief, funds for the unemployed are much more limited than in previous months, and deferring payroll taxes will not help tens of millions of people. have lost their job. Additionally, the legitimacy of Trump’s actions is not entirely clear, and the moves do not include expanding aid to small businesses that are depleting previous bailout funds.
Ernie Tedeschi, an economist at Evercore ISI, said: “Definitely better than nothing, but it is not a good solution as Congress comes to a clearer legal and logistical compromise in their financial talks ”.
The impact of the payroll deferred depends on whether the employer will stop withholding money from American wages, with voters in turn pressuring Congress to eventually pass religion. law forgives the accumulated amount.
But employers can decide to simply do nothing in the face of uncertainty, for fear that if Congress does not act, they may be stuck trying to get their money back. to deal with their obligations to the Internal Revenue Service.
“The idea of reducing salary taxes and expecting companies to comply with executive orders, when they need their employees to pay them back later unless the salary tax cuts are done permanently, there’s no reason. both “. Diane Swonk, chief economist at Grant Thornton in Chicago. “And the problem is not the people on the payroll, it’s the people without the payroll.”
Trump said he was approving a $ 400 grant because he found an additional $ 600 weekly payout too high and discouraging people from returning to work – a recent rally call for many Republican lawmakers. The action’s text says 300 dollars will come from the federal government, while another 100 will come from the states.
Andrew Husby, an economist at Bloomberg Economics, estimates that the new benefits will amount to a rate of around $ 30 billion a month, meaning the amount could be depleted in less than two months and the situation. may require a different solution from Congress earlier. November election.
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While $ 400 “is still a fair amount, it’s certainly a cut feel in spending, ”says Husby. For payroll tax deferrals, “the net positive effect will be slightly less than the raw figure would suggest” as firms are uncertain about whether or not they should pay the tax.
Another hurdle is that if the unemployment rate starts to rise again, the new funds will be used more quickly, “so you’ll have more people getting less in a shorter time,” Joel. Naroff, president and founder of Naroff Economic, said Adviser.
– With the help of Justin Sink