Trump’s Threat to End Additional $600 Unemployment Checks Will Backfire



By: Simon Chandler

President Trump's mediocre approval rating could be heading lower if he pulls the plug on extended unemployment benefits. | Image: Nicholas Kamm / AFP
  • Donald Trump is planning to end the extra $600 unemployment checks on July 31, the National Economic Director Larry Kudlow has confirmed.
  • Kudlow claims the extra $600 is a disincentive to work, but the jobs still aren’t there for the vast swathe of the unemployed.
  • Cutting off support may hurt Trump’s election hopes.

The Trump administration intends to withdraw the additional $600 unemployment checks at the end of July, National Economic Council Director Larry Kudlow has confirmed.

Congress planned to offer the extra $600 as help for families during a period of economic freefall. Now, Kudlow argues it creates a “disincentive” to work.

However, it’s not certain how quickly the U.S. economy will return to normal. And with Donald Trump associating himself personally with stimulus checks, ending the extra $600 prematurely may hurt his re-election.

Larry Kudlow Confirms Donald Trump Doesn’t Like Being Too Generous

In May, reports circulated that Donald Trump wanted to end the extra $600 per week. On Sunday, Larry Kudlow confirmed this in an interview with CNN’s Jake Tapper:

The $600 plus-up … is in effect, a disincentive. I mean, we’re paying people not to work. It’s better than their salaries would get.

In particular, Kudlow clarified that the Trump administration would replace the additional $600 with a measure for rewarding people for returning to work:

The President is looking at a reform measure that will still provide some kind of bonus for returning to work, but it will not be as large. And it will create an incentive to work.

Elevated Unemployment Rate

There are two problems with Trump’s idea of removing the extra $600 in July.

The first is that 13.3% of the U.S. working-age population is unemployed. That equals around 21 million people. And according to the Federal Reserve’s Jeremy Kaplan, the jobless rate is likely to remain high for the rest of 2020:

Even with [jobs] growth, we’re going to end the year with an elevated unemployment rate.

Trump ending extra support in July would be disastrous for millions. The U.S. economy is not recovering at a speed that would provide close to 21 million people with work by August.

Donald Trump $600 unemployment checks tweet
Former U.S. Treasury economist Ernie Tedeschi comments on the likely impact of removing the $600 in July. | Source: Twitter

Secondly, Trump is wrong to think that unemployment support is a disincentive. Most people want to work. They will work if jobs are available. So cutting off a lifeline will just punish the majority for no good reason.

Kudlow himself agrees as he told Tapper:

I think people want to go back to work. I think they welcome the reopening of the economy, and I think they’re anxious to get out and about.

That said, Kudlow claimed that “at the margins, incentives do matter.” He added, “there’s already some evidence that this effect is taking place.”

But he didn’t share any evidence, which means we can only assume that what Donald Trump wants is to save money. Trump wants to save money by making the general population poorer.

Congress And Elections

Of course, an intention to do something doesn’t guarantee it will be done. Trump might want to end the extra $600 unemployment. But it seems Congress may opt to extend it.

Indeed, the House of Representatives passed the HEROES Act in May. It extends the extra $600 unemployment support to January 2021.

The Act needs to pass the Republican-majority Senate. If it passes the Senate, Trump will be in an awkward position.

But the president will also be in a difficult position if he succeeds in removing the $600. Doing this will put millions under strain. By extension, it could hurt his re-election chances in November.

Donald Trump approval rating $600 unemployment checks
Donald Trump’s approval rating, from a poll of polls. | Source: FiveThirtyEight

And with Trump’s approval rating hovering around 41%, he shouldn’t be taking any risks.

Disclaimer: The opinions expressed in this article do not necessarily reflect the views of CCN.com.

Markets Contributor for CCN living in London, UK. Has a Bachelor's degree in History and Archaeology from Reading University in 2006, and a Master's in Philosophy from King's College London in 2011. Email me | Follow Me on Twitter.