Doug Holtz-Eakin, Former CBO Director and President of the American Action Forum joins Yahoo Finance's Zack Guzman to discuss the implications of President Trump's executive orders for coronavirus relief.

Video Transcript

ZACK GUZMAN: After talks had broken down between Republicans and Democrats over that fourth phase of stimulus to come here, and we got President Trump basically drawing his own card here, taking action himself with four executive orders. When we think about what he's trying to do outside of the negotiations that broke down, a lot to discuss there. And today we got the update from secretary of the Treasury Steve Mnuchin saying that he is open to restarting virus relief talks after those talks broke down. They had not talks with Democrats over the weekend.

He told CNBC we're prepared to put more money on the table. But right now, it does seem like that gap is still what it was about a week ago, with Democrats pushing for more than $3 trillion in aid and Republicans still sticking to that $1 trillion number. Both sides remain at odds right now over enhanced employment benefits and state and local government funding as well.

Here to chat what all of that looks like as we continue to watch these talks develop is Doug Holtz-Eakin, American Action Forum president and former director of the Congressional Budget Office as well. Mr. Holtz-Eakin, good to be chatting with you. I mean, saw President Trump go ahead with those orders a. Lot of question marks remain, though, about whether or not he has the ability to move forward with these.

It looks like one of them, unemployment benefits here, obviously, that's most watched right now by a lot of Americans who are unemployed. But looking like he wants to get through about $300 a week to unemployed workers. If the states come along and pay $100 of that a week, which would bring the total to about $400, obviously below the $600 they were getting before.

Also a moratorium on evictions. We're seeing similar things here in terms of federal student loans getting put on hold. So what's your take on what he's trying to do here and whether or not any of these are going to get through?

DOUG HOLTZ-EAKIN: Well, I think on the evictions and student loans, if you look carefully, those are orders for the agencies to study the issue. So we're not going to see any real action on those. He did-- does have the authority to defer the collection of payroll taxes. And he suggested we should do that.

But that doesn't get rid of your tax liability. You'd have to pay a big check probably next January. And so that might not look appealing to people.

And on the UI, he needs cooperation from the states for all of it. The governors would have to set up a new program to distribute the federal $300 a week. And they'd have to kick in the $100 a week for themselves. All of that would take a lot of time.

So my take on this is there's not likely to be any real change in policy because of these executive orders. But it may kickstart the negotiations one more time.

ZACK GUZMAN: Yeah, that's what seems like what a lot of people are saying here, because there's so much effort that would need to take place to get these orders into a place where it's actually putting money in the hands of workers who are now unemployed. And when you think about all the problems on that front, we had seen the negotiations kind of kick off here with Democrats in the House passing their own HEROES Act, which, I think, was to get out ahead of these negotiations and use it as an anchor point.

But now how much of this do you think is just President Trump basically trying to flip the negotiations on their head, with him and trying to say, look, I'm not the one blocking aid to Americans anymore. I'm trying to be proactive in getting something out the door. How does it put Democrats now maybe back on their heels a bit?

DOUG HOLTZ-EAKIN: Well, I think this is the intent. He's done this before, right? When things aren't going well, let's change the equation, go on offense. The president likes to do that.

And this, in particular, allows him to fly to any state, particularly a swing state, and say, hey, I tried to get you your money, but the governor wouldn't give it to you. So that's going to put a little pressure on people to get some action.

And it may force the Democrats to move a little bit. They've been particularly resistant to changing their position on state and local funding. They've stuck in a trillion dollars on the $600 a week benefit. Those sticking points shut down the negotiations the first time.

There's going to have more flexibility on both sides going forward. And I think he's trying to generate that with this move.

ZACK GUZMAN: Yeah, and it seems like from what we've heard and updates out of Speaker of the House Nancy Pelosi, saying that she's more open to compromise now. And that $600 a week before, it was kind of a non-nonstarter. But we'll see what happens on that front.

But when we look at all those things, we haven't even talked about what they do agree upon, which is also very important when we think about getting aid to Americans out there, mainly that $1,200 stimulus check that we saw come through in the last wave of this, in the CARES Act. But that's something they do agree upon, but still not coming here until both sides agree to get this phase four stimulus passed. So, I mean, when you think about that and the size of that, as well as PPP here and relief for small businesses, I mean, there's still a lot that even with President Trump's executive orders would not be addressed.

So how important are those things as well, when we think about the economic recovery we're seeing falter a bit now?

DOUG HOLTZ-EAKIN: Well, I certainly think that there has come to some agreement on some of the smaller issues. And PPP and $1,200 checks aren't small issues. But that's pretty settled.

It's the three pillars. It's the UI benefit. It's state and local funding. And on the Republican side, it's business liability protection. Those are places where no one has moved. And that's going to have to happen to get a bill and get some real relief to individuals.

I think, in the end, this will be as effective, as it makes people feel safe to go to work, safe to conduct commerce, safe for businesses to open themselves. And there's some things in there that could really help on that front. There's a workplace tax credit and some things in the Senate bill.

But until they really deal with that, there really isn't any amount of checks or any amount of UI benefit that's going to restart the economy. You have to get to the issue of the public health mission.

ZACK GUZMAN: Yeah, and that's also, that's another key part of this as well, and testing and frontline workers and support for hospitals also something that Democrats have been pushing for quite a bit here. But when you think about all of these things coming together, I mean, you know these issues well from your time at CBO. I mean, what should we think about the probability of both sides actually getting to an agreement when the gap is so large there?

When we're talking about $1 and $3 trillion, meeting in the middle sounds easy on paper. But when you raise all these issues about the elements of this next round, what's your take on how we're operating in a very short timeline here? It's already August 10. And those unemployment benefits rolled off at the end of last month.

DOUG HOLTZ-EAKIN: Sometimes you have to fail before you can succeed. And in the last crisis and recession, we saw the TARP talks, the sort of bailout of the financial services industry, fall apart completely before they finally got to yes and got it over the finish line. This feels the same to me.

You might think, well, we don't have to move on the UI benefit. We don't have to move on business liability. And it turns out you're wrong. You do. And that's what you learn when it all falls apart.

So I fully expect them to restart talks. I fully expect them to get to a deal. It's just not always very pretty.

ZACK GUZMAN: Yeah, and when we talk about the recovery right now faltering-- because both sides, I would like to believe, would want to see this recovery maintained and gain some steam. That's not what we saw when we looked at the latest jobs report, a noted downtick in jobs added. Some people fearing we could eventually return to maybe job losses at the next report here.

So when we think about the most important piece of aid that needs to come through right now, it seems to be when we talk to economists on this show, including President Obama's former chair of Council of Economic Advisors, saying that the state and local aid here is very important, when you have states cutting back at a time when the federal government is trying its best to really spur this recovery and move forward. So is that, in your mind, the most important thing that needs to come through now? What can we not miss in phase four?

DOUG HOLTZ-EAKIN: So I read it a little differently. Certainly, the jobs number was smaller than in the past. But this is about what I expected. I don't think anyone should have realistic-- realistically thought that we were going to get a recovery that didn't involve some headwinds and setbacks-- regional outbreaks, re-emergence of the virus in the fall. We are going to have to learn how to operate the economy in the face of that virus for the foreseeable future.

And so this is actually good progress and can continue to be good progress, again, if I think the money is spent intelligently. Help people make their workplaces safe, even though the virus is out there. Get serious about the testing regime so that people feel comfortable going to work and going to the store. Those are more important to me than the size of the checks.

And on the state and local government, we saw really rapid layoffs early in March and April. But that's stabilized at this point. So there is a need for the states and localities. But I don't think there's anything sitting out there that guarantees we go back down.

We are making progress. And we can make better progress if we take care of the intersection of the economics and public health missions.

ZACK GUZMAN: Yeah, it's a big ask right now, especially where talks are for the moment. But Doug Holtz-Eakin, American Action Forum president and former director of the CBO, appreciate you taking time to chat.

DOUG HOLTZ-EAKIN: Thanks, Zack.