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Trump's pandemic relief orders are limited in scope
Aug 09, 2020 1 min, 22 secs
An order for supplemental unemployment insurance payments relies on state contributions that may not materialize.

Trump said the payments would be funded 75% by the federal government and 25% by states.

Ariel Zetlin-Jones, associate professor of economics at Carnegie Mellon University’s Tepper School of Business, said several states have already depleted their unemployment compensation trust funds and have requested federal loans to keep making payments.

Trump’s order, he said, is likely to exacerbate the debt burden for states and prove costlier in the long term because state governments borrow at higher costs than the federal government.

Under the president’s order, employers can defer collecting the employee portion of the payroll tax, including the 6.2% Social Security tax on wages, effective Aug.

Democrats and some Republicans are against any change to the payroll tax because it could deplete the Social Security and Medicare Trust funds.

Both programs were already in dire condition before the pandemic, with Medicare expected to become insolvent in six years and Social Security unable to pay full benefits starting in 2035.

Trump offered no explanation how the government would fund Medicare and Social Security benefits that the 7% tax on employee income covers.

Trump’s executive order extended a moratorium on student loans backed the federal government, which was initially passed by Congress and would have expired on Sept

The order does not cover loans from private lenders since the government would have repay those providers and the president lacks the authority to direct funds for such a purpose

The order also does not amount to student loan forgiveness, which House Democrats have proposed in a pandemic relief package, but which Republican lawmakers have rejected

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