President Trump’s signature was barely dry when cash-strapped governors nationwide cried foul over his executive order to provide $400 of additional unemployment benefits a week for the country’s jobless, after negotiations on a new coronavirus stimulus package failed between the White House and Speaker Pelosi and Senate Minority Leader Schumer. The hitch for the governors? States have to fund 25 percent of the benefits.
Governor Newsom estimated that the extra $100 of benefits funded by California would cost $700 million a week. “There is no money sitting in the piggy bank,” said Newsom. Coming up with the money, “would create a burden the likes of which even a state as large as California can never absorb without massive cuts to important services or further burdening businesses and individuals,” he said at a presser.
We hate to admit this, but he’s probably right. The state’s budget — whether for spending for necessary programs or even frivolous ones — is all but spoken for. Moreover, 75 percent of the money California received from the CARES Act fund, which President Trump proposed that states use, has been spent or allocated, said Newsom.
So, will unemployed Californians ever see the additional benefits? First, it’s not clear if the executive order can legally stick. Only the House has the power of the purse, and the order already has Democrats and even some Republicans up in arms. Then there’s the implementation, which looks to be a nightmare. The San Jose Mercury News reported that the state would have to reprogram a primitive computer system that is already “haunted by tech gremlins such as freezes and glitches as it reels from a tsunami of claims from workers who have lost their jobs …” The state still uses Cobol, the decades old programming language that those of us of “a certain age” still remember way back from school.
So, if the state doesn’t have the money or the technology to deliver on the extra $100, do jobless Californians miss out? Not necessarily, concluded business channel CNBC. Based on its review of a Department of Labor memo detailing the requirements, states with empty coffers like California can count the first $100 they pay in weekly benefits toward the 25 percent requirement — which means that Californians would receive only $300 in added benefits, not $400.
This could prove politically embarrassing for Newsom. Governors of neighboring states like Doug Ducey of Arizona and Jared Polis of Colorado, while cautious, believe that it’s doable in their states, at least for a few weeks.
The governor still has some options to reduce the $700 million, staring with helping to create as many jobs to the extent possible – especially essential jobs or jobs where people can work from home. As governor, he has the power through executive order to suspend California’s most onerous laws and regulations – like the minimum wage requirements — that are holding back job creation in the state. He could also provide relief from the niggling fees and taxes that are relentlessly draining Californians of their hard earned savings and paychecks. Putting an extra $100 a week in the hands of unemployed Californians is easier if you don’t take it away in the first place.
Rowena Itchon is senior vice president of the Pacific Research Institute.