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States wary of Trump's move for them to kick in on federal aid

Yueqi Yang, Bloomberg News on

Published in Political News

A day after President Donald Trump took executive action to offer $400 per week in supplemental unemployment benefits, including 25% he said should be kicked in from state coffers, governors are pushing back.

The leaders of states including New York and Michigan said Trump's plan ignores the cash-strapped reality of most states, which have deep budget holes as a result of the coronavirus pandemic.

New York Gov. Andrew Cuomo said the president's order was based on "shaky ground legally" and it was "impossible" for states to pay.

"The concept of saying to states 'you pay 25% of unemployment insurance' is just laughable," Cuomo, a Democrat, said on a call with reporters on Sunday. "The whole issue here was getting states funding."

Michigan Gov. Gretchen Whitmer, also a Democrat, said Trump is ordering states "that are facing severe holes" in their budgets to pay 25% of the funding while the federal government cuts funding for unemployed workers.

"His refusal to provide full federal funding to states across the country to help us combat this virus will hurt the brave men and women on the front lines," Whitmer said in a statement.

 

Unlike the federal government, which can run massive budget deficits, many states must balance their budgets each year -- and if there's a revenue shortfall, they must cut services, raise taxes or use other tactics.

Democrats and Republicans are trillions of dollars apart on overall spending and on key issues. Trump's executive actions to bypass the Congressional impasse may face legal challenges, although House Speaker Nancy Pelosi and Senate Democratic Leader Chuck Schumer stopped short of saying that Democrats would attempt to stop them in court.

White House economic adviser Larry Kudlow defended Trump's order Sunday on CNN's "State of the Union," saying estimates from the Treasury Department show states will be able to provide the extra dollars, because they haven't spent all the money that was allocated to them under the CARES Act passed in March.

Asked how many states will be able to pay, Kudlow answered, "We will probably find that out today and tomorrow as we make our canvass."

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