August 10, 2020
As many of you are likely aware, over the weekend President Trump signed four executive orders (EOs) that were framed/intended to provide further relief from the impacts of the COVID-19 crisis, which focused on:
- Payroll taxes
- Unemployment benefits
- Eviction protections
- Federal student loan relief
Overall, in addition to bypassing Congress on some of these issues, the EOs are likely not to provide the kinds of meaningful and immediate relief impacted workers, families and businesses need. For example:
- On payroll taxes, one of the EOs calls for a payroll tax deferral, rather than a payroll tax cut—which is what Congress passed and President Obama signed into law in 2012 (payroll taxes fund Social Security and Medicare). It should be noted that the payroll tax cut then provided workers with about $40 extra in their paychecks. Since this new EO would be a deferral through the end of the year—and since it many experts believe this to likely illegal given that the power to tax under the constitution belongs to Congress—most employers may likely decide to continue to collect and set aside payroll tax obligations, meaning that workers would not see any benefit from this EO. In addition, for workers currently unemployed, this EO would provide no benefit/support at all to them.
- On unemployment benefits, the second of the four EOs calls for redirecting $44 billion the Department of Homeland Security’s to create a federal-state matching UI system, which if implemented, would provide unemployed workers with a weekly bonus of $400, instead of the $600 that the CARES Act provided, for about five additional weeks. However, creating such a system may not only take states months to implement but also would only work if states were to kick in $100 in extra UI support, which is required to trigger the $300 federal match. In addition, the potential support provided through this EO would bypass those receiving less than $100 in UI support currently, which would be our lowest income workers. Ultimately, considering that many states are facing deep fiscal challenges right now, it is hard to see many be willing/able to attempt to roll this out. And as with the payroll taxes EO, experts have questioned the legality of this unilateral move.
- On evictions protections, the third EO does not implement a new moratorium on rental evictions like those found in in CARES ACT. Instead it directs HUD, Treasury, HHS, and the CDC to look within current law for ways to protect renters/shift existing resources to back the efforts in this EO up.
- On student loans, the final EO calls for waiving all interest on federal student loans through December 31st, which should result in no payments on these loans being due between now and then. Currently, the CARES Act has suspended federal student loan payments through the end of September and so this EO would extend that out through the end of the year. Unlike the EOs on payroll taxes and unemployment benefits, experts believe that the administration has the power to implement this EO, which they did just prior to the passage of the CARES Act when they suspended federal student loan payments for 60 days.
As negotiations continue between leaders on Capitol Hill, and new/promising information emerges, we will make sure to keep you updated as soon as possible. In the interim, if you have any question please feel free to reach out to myself or anyone on the policy team.