President Trump Announces Executive Actions
On August 8, President Trump signed four Executive Orders (EOs) after last-ditch negotiations between White House officials and Democratic leadership failed to produce a new coronavirus relief package at the end of last week. The administration put together these orders in an effort to sustain millions of Americans facing uncertainty as crucial benefits and programs created through the CARES Act expire. The orders direct the federal government to:
- Institute $400 weekly expanded unemployment aid payments (funded 75% by the federal government and 25% by states);
- Identify Treasury and HUD funds to provide temporary financial assistance to renters and homeowners who are struggling to meet their monthly rental or mortgage obligations during the pandemic;
- Defer student loan payments and interest on federal student loans until December 31; and
- Defer payroll tax payments for individuals earning under $104,000.
Up until the end of July, the federal government provided millions of Americans receiving unemployment insurance with an extra $600 a week on top of their state aid, which averages about $330 a week nationally. Both Democratic and Republican leaders included an extension of the federal unemployment in their most recent Covid-19 relief proposals. Still, during negotiations, the two sides could not agree on the proper amount for the federal government to allocate. Democrats wanted to continue at the $600 a week level. Republicans proposed $200 per week.
President Trump's order would roll out a $400 weekly payment; however, the federal government would only fund 75% percent of the cost, requiring the states to put up the remaining 25%. Under the executive action, the unemployment aid would be paid in part by drawing funding from the Department of Homeland Security's Disaster Relief Fund, which is typically used to respond to natural disasters such as hurricanes, tornadoes, and wildfire outbreaks. The benefits are scheduled to remain in place until December 6, or until the disaster fund's balance drops to $25 billion. The fund currently has a balance of $70 billion.
Evictions and Foreclosures
The President's executive order does not reauthorize the eviction moratorium for properties with government-backed mortgages that expired at the end of July and was initially put in place by the Cares Act. Instead, it directs the departments of Treasury and Housing and Urban Development to see if they can find additional funds to help support renters and homeowners who are struggling to keep up with their monthly payments.
The EO also calls for Health and Human Services (HHS) and the Centers for Disease Control and Prevention (CDC) to "consider" whether an eviction ban is reasonably necessary to prevent further spread of Covid-19. Finally, the order directs the Federal Housing Agency to "review all existing authorities and resources that may be used to prevent evictions and foreclosures for renters and homeowners."
In the memorandum on the Payroll Tax, the administration instructs the Treasury Department to halt the 6.2% Social Security tax on workers who earn less than about $104,000 a year. This deferral would be in effect from September 1 through December 31. While the tax code does give the Treasury secretary the authority to delay tax fillings and collections following a presidentially declared disaster, the President would need congressional approval to make the tax deferral a permanent tax cut. President Trump has pledged to pursue a permanent reduction to the payroll tax if he wins reelection in November.
The final memorandum offered by the administration follows up on a provision included in the CARES Act that gave most borrowers with federal student loans six months of protection from their monthly payments, interest-free. This deferral was set to expire on September 31, but due to the President’s executive memorandum, all interest on student loans held by the federal government will be waived through the end of 2020. The debt, however, is not canceled forever, principal payments will be due on December 31, and full payments are scheduled to restart on January 1. Notably, borrowers whose loans are held by private lenders are not covered by this executive order. Congressional action would be required to reimburse the lenders of these loans.
While we appreciate the administration’s attempt to address some of the drastic challenges facing Americans in this unprecedented time, it is critical for Congress to pass bipartisan legislation to protect our most vulnerable citizens, including providing renters and landlords with emergency rental assistance. It is also important that at this time lawmakers provide flexible grants for states, counties, and cities, set aside funding to support people experiencing homelessness, protect low-income homeowners at risk of losing their homes, and support small businesses to ensure that communities can continue to thrive after the threat of coronavirus has passed. Congress and the administration must work together to reach a deal on the next coronavirus relief package as soon as possible.