With negotiations over new federal stimulus deadlocked, President Trump signed four executive measures that circumvent Congress's constitutional authority to tax and spend. Chaos in governing has been a trademark of the Trump Administration.
But in this case, these emergency steps can create more chaos. That's because they upend negotiations in Congress, trigger uncertainty over their legality, while also leaving many issues, such as providing additional assistance to small businesses, states, and schools unresolved.
Here are a few observations:
First, legal experts have stated that the President has to declare a national emergency for him to defer or postpone tax payments. But the White House economic team has stated repeatedly, even in the last several days, that the US economy is experiencing a self-sustained recovery. How is it possible for the president to claim there is a nationwide emergency when his economic experts argue the opposite? This mixed messaging creates confusion and uncertainty for everyone. It also gives ammunition to opponents, increasing the odds critics will challenge the legality of the measures. That by itself will create chaos as no one will know how or when the courts will decide.
Second, one of the executive measures creates a new unemployment benefit program. The new program offers an additional benefit of $400 per week, or one-third less than the program that expired on July 31. But millions of unemployed workers will not see the additional monies anytime soon.
That's' because the new program could take weeks to implement. It also requires states to pay one-fourth of the bill. But, states are operating with huge deficits so their participation in the program is doubtful, creating confusion over whether the millions of unemployed will ever receive additional aid.
Third, the deferral of payroll taxes are temporary, limited to people earning less than $100,000, and would need to be repaid. It’s hard to see how this would have much of an economic benefit, as people and businesses would face huge tax bills starting in 2021.
The White House did throw out a “carrot” saying that the repayment of payroll taxes could be rescinded. But that requires legislative approval from Congress. The odds of that occurring are close to zero since a majority of Republicans and Democrats were adamantly opposed to the idea of tapping entitlement funds.
Fourth, the four executive measures fail to address the funding issue for the Payroll Protection Program, which ran out, as well as the much needed federal assistance for states and schools. It's unclear if White House plans to cut-off negotiations on these critical issues. Meanwhile, House and Senate negotiators may wait to see if the executive measures are ruled legal or not by the courts before they re-start talks with the White House.
That raises the potential of extended delays, creating more chaos and confusion in the process. Without the benefit of additional federal support soon, many more small businesses will fail, states will be forced to layoff hundreds of thousands of workers and schools will not be able to open on time, if at all.
Chaos in governing does not solve problems. It creates more confusion than it settles.