Trump’s efforts to bypass congress with a list of executive orders over the weekend will do little to help the economy, according to economic experts.
A temporary extension of unemployment benefits, deferment of payroll taxes, suspension of federal student loans, and potential eviction relief will do very little to help the economy much, even if the legal questions of these moves can be solved.
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.
Compare that to $3 trillion proposed from the House and $1 trillion from the Senate, and Trump’s orders add up to 0.2% of GDP, a “negligible” amount according to a senior U.S. economic expert from Oxford Economics.
Considering the time it would take to set up and the possible challenges in courts, the measures signed by Trump do nothing to help people in the here and now.
The unemployment would disinclude any workers not already receiving at least $100 unemployment benefits from states and would last only 4 to 5 weeks. It would also burden states with a 25% requirement of the $400 supplement. See more on that here.
Employers are also grappling with the order to delay payroll taxes. Should they continue withholding the money from workers expecting bigger paychecks or pass it on and potentially put themselves or their employees at risk of a big end-of-year bill from the IRS.
“The more I read about this, it’s a holiday. Unless it gets passed by Congress or signed into law, people are going to be responsible for making up the FICA difference when they file their tax return,” said Jon Schausten, director of payroll and human resources information systems at OneAmerica. He was referring to the Federal Insurance Contributions Act, the formal name of the payroll taxes that fund Social Security and Medicare.
See more on employers’ dilemmas at Chicago Tribune.
Also more at Reuters.