President Trump issued executive orders last weekend that he promised would help jobless workers. He made this move, he said, because of the stalemate in Congress over the next coronavirus stimulus package. But these orders are just more false promises from a president who has hurt millions with his mishandling of the coronavirus pandemic.
One of the orders addresses the looming eviction crisis, while others would extend more limited federal unemployment assistance, defer workers’ contributions to the payroll tax, and extend student loan relief. In many cases, it is likely that the president does not have the authority to make the changes he wants. In other cases, the orders will help very few people, especially in the short term. In all cases, the orders provide no new funding to help struggling workers.
Trump says his Executive Order on evictions and foreclosures will keep vulnerable renters and owners in their homes. The order says, “It is the policy of the U.S. to minimize, to the greatest extent possible, residential evictions and foreclosures during the ongoing COVID-19 national emergency.” The president says that the orders are needed because of inaction by Congress. “Unlike Congress, I cannot sit idly and refuse to assist vulnerable Americans in need,” he said in the White House announcement.
But the president’s words are misleading and the order is toothless. It does not extend the moratorium on evictions at federally backed properties. That protection was part of the CARES Act passed in March, but it expired on July 24. That moratorium covered about 30% of American renters. HUD Secretary Ben Carson has the authority to extend the federal eviction moratorium but has declined to act.
Instead, Trump’s executive order instructs the Secretary of Health and Human Services (HHS) and the Director of the Centers for Disease Control and Prevention (CDC) to study whether evictions would promote the spread of COVID-19. It also directs the HUD Secretary to examine all resources, measures and authorities that HUD can bring to bear to minimize evictions during the pandemic.
Finally, the president’s order does not provide any new funds to help low-income renters avoid eviction. It says the Secretary of HUD shall take actions to help people avoid eviction and foreclosure. These actions can include providing assistance to public housing authorities, affordable housing owners, landlords, and other federal grant recipients. But it does not provide any funds for this assistance, instead directing the Secretaries of HUD and the Treasury Departments to “review all existing authorities and resources” that may be used to prevent evictions and foreclosures.
The president also issued a memorandum to extend the federal unemployment boost. Under the CARES Act, unemployed workers received $600 weekly on top of their state unemployment benefit. That benefit ran out at the end of July. Trump is authorizing a new program called the Lost Wages Assistance Program (LWA). It will provide those out of work with $400 per week. The federal government would pay $300 of that, with the states paying $100. Only people out of work due to the pandemic and collecting at least $100 in weekly state unemployment benefits would be eligible for this unemployment boost. A state’s governor must make a request to the federal government to participate in the program in order for renters there to receive assistance.
President Trump will pay for this lost wages assistance by diverting $44 billion from FEMA’s Disaster Recovery Fund (DRF). The DRF is used for relief and rebuilding after natural disasters, like hurricanes, wildfires and floods. Although the memorandum calls for keeping $25 billion in the DRF for ongoing relief efforts and new disasters this fall, it is likely not enough as we enter the peak of hurricane season.
There are a lot of problems with this memorandum. It is very likely unconstitutional. The Constitution gives Congress the power of the purse. The president cannot just shift money away from a program Congress has funded by law. This is especially true when those funds would be going to a new program that Congress never authorized.
There are a lot of problems with this memorandum. It is very likely unconstitutional.
The most important problem is that the lower amount of the federal benefit will leave a lot of people short. Republicans in Congress had opposed the CARES Act $600 weekly benefit boost because a lot of low-wage workers made a little more on unemployment than at their jobs. Republicans say that this discourages people from going back to work. But this is not a real argument, since in every state people lose their unemployment benefits if they refuse work. Congress could also phase in reductions to the benefit as unemployment drops if they are worried about people not going back to work.
Most states now are calling for financial assistance from the federal government, so few will be able to afford the program. States, counties and cities are facing growing costs from fighting the coronavirus. At the same time, the tanking economy has slashed state and local tax revenues that pay for services.
State and local aid is one of the big obstacles to a new pandemic stimulus package. Democrats have called for aid to state and local governments to keep essential services going during the pandemic. Republicans are opposed to “bailing out” what they say are mismanaged states and cities. Few states will be able to afford to participate in this program.
Even if this move proves legal, it will be months at best before workers would see any benefits. State unemployment systems varied and many are antiquated. They are all also keyed to Congressional approval of funds, which is lacking here. It will take the states a long time to integrate this program into their systems.
President Trump also issued a Memorandum deferring worker payroll tax payments. The president claims this will put more money in the pockets of American workers as they get back on the job. Workers will have this tax deferred from September 1 through December 31, 2020. The memorandum also calls on the Treasury Secretary to explore the authorities needed to forgive this tax obligation. But this move will just hurt workers, and is strongly opposed by both Republicans and Democrats in Congress.
The payroll tax pays for Social Security, Medicare and Medicaid. This is basically cutting funds from the key programs that senior, disabled and low-income persons depend on for income and healthcare. At the end of the deferral period, workers will still be on the hook for any taxes they did not pay. That will either show up later as a larger hit to their paychecks or less back in their tax returns.
The payroll tax pays for Social Security, Medicare and Medicaid. This is basically cutting funds from the key programs that senior, disabled and low-income persons depend on for income and healthcare.
This move is also very likely unconstitutional. Only Congress can set tax policy. The Constitution gives Congress, not the president, the power to tax and raise revenues.
The final Memorandum issued by Trump extends student loan payment relief. It extends the suspension of payments and provides a waiver of all interest through December 31, 2020. This is the only order where the president very likely has the authority to take this action. It is also the only order that will have a positive impact on a lot of people.
These executive orders are cruel political gamesmanship. Trump does not have the authority for most of the orders, which will surely be challenged in court. Workers will not get immediate relief for lost wages. Because there are no new resources to back up these executive orders, Social Security, Medicare, disaster relief and other critical programs will be raided to cover the cost. These orders place new burdens on state and local governments when they are struggling to tamp down the pandemic and open their businesses.
And most critical to low-income renters, these orders will not halt evictions even in federally backed properties. The Democratic House passed the HEROES Act in May. It includes $100 billion for emergency rental assistance and a national moratorium on evictions and foreclosures. It also extends the $600 federal unemployment benefit boost through January and provides another round of individual stimulus checks. If the Senate adopts these housing provisions and extends the full unemployment benefit, the nation may be able to hold off a wave of evictions.
When September rent comes due in a couple of weeks, millions of families will have to figure out how to pay the rent with no unemployment benefits or rental assistance. Trump is just raising false hopes with a cheap bargaining move. This is not the way to help the millions of people struggling to keep a roof over their heads in the middle of a deadly pandemic.