Trump threatens to pull unemployment benefits from all states for the first time in history

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Donald Trump’s administration is threatening to withdraw federal funding for unemployment assistance in all 50 states as part of the president’s nationwide campaign against “fraud” in government spending.

In a letter to the governors of 53 states and territories, acting Labor Secretary Keith Sonderling warned that the federal government would use “every available tool” to combat “waste, fraud and abuse” within state-run unemployment insurance programs, including “withholding administrative funds from states” for the first time in history.

There is no single national program for unemployment support, though the federal government partners with state agencies to support temporary financial assistance to out-of-work Americans. Nearly 2 million people are currently receiving those benefits, while roughly 229,000 people are filing initial jobless claims every week, according to the Labor Department.

But most unemployed Americans face bureaucratic hurdles to receive those benefits. Most states provide roughly six months of payments to qualified Americans. Those programs are typically covered by individual states through state unemployment taxes paid by employers, but the federal government provides support for administrative costs.

Without that support, the loss in funding could force state-run systems to shut down.

open image in gallery The Trump administration is threatening to withhold federal support for state-run unemployment insurance programs as part of the president’s war on alleged ‘fraud’ ( AFP/Getty )

“We are officially putting governors on notice,” Sonderling said in a statement Wednesday.

“The American people will no longer tolerate the blatant waste, fraud and abuse of their hard-earned tax dollars — no state should allow it either,” he added. “If states allow it, they will suffer the consequences. This department is no longer afraid to use every lever available to ensure taxpayer money is protected.”

Trump has appointed Vice President JD Vance to lead a Task Force to Eliminate Fraud, ostensibly designed to root out abuse but fueled by the administration’s politically motivated crusade against Democratic-led states.

But advocacy groups and members of Congress have accused the Trump administration of disguising Republicans’ long-running campaign to slash social services with a veneer of “anti-fraud” enforcement.

Vance delivered a similar warning over Medicaid funding last month after slashing tens of millions of dollars to state programs. His task force has withheld $1.4 billion in federal funding after “a sweeping crackdown on fraud operations” in California, Minnesota and other states, according to the White House.

“When people steal billions of dollars from the Medicare program, that is theft from you, and it’s also theft from the people who use the Medicare program to pay their bills,” Vance said during a rally in Missouri last month.

That same week, the Trump administration announced a nearly $1.8 billion compensation fund for the president’s allies, a project that the Department of Justice claims has been abandoned while keeping the door open to provide multi-million dollar payments to January 6 rioters and other aggrieved “victims” of “government weaponization.”

open image in gallery Vice President JD Vance has similarly threatening states over Medicaid spending while critics accused the administration of disguising attacks on social services with the veneer of an ‘antifraud’ crusade ( Getty )

The Department of Agriculture has also recently threatened to withhold funding from states that don’t provide data on participants in the Supplemental Nutrition Assistance Program, including their immigration status.

Until federal courts intervened, the Trump administration intended to freeze funding for the program altogether during last year’s government shutdown, warning that the “well has run dry” and no benefits were to be delivered.

In a letter to administration officials in March, Democratic Senators Ron Wyden and Jeff Merkley said the government’s alleged anti-fraud campaign is “not going after the real fraudsters” but is instead cutting off “vital funding for services that seniors, people with disabilities, and children rely on to survive and thrive in their communities.”

The Trump administration’s latest target has singled out alleged unemployment fraud in the aftermath of the COVID-19 pandemic, when millions of Americans relied on government aid in the wake of economic chaos during the public health emergency during Trump’s first term.

The unemployment rate peaked at a historic high of 14.8 percent in April 2020.

In his letter to states, Sonderling said the consequences of alleged fraud during the pandemic “are still playing out.”