President Trump bypasses Congress and introduces four new executive actions to address COVID-19
President Donald Trump signed four controversial executive actions on August 8 in an attempt to provide much needed economic relief during the COVID-19 pandemic. The executive order and three memoranda come after weeks of negotiations and tension between congressional Republicans and Democrats regarding a new stimulus bill. If successful and implemented, the actions would provide additional unemployment benefits, defer payroll taxes, extend the moratorium on student loan payments, and provide for the ability to halt evictions and foreclosures.
In order to address unemployment benefits provided during the pandemic, which expired on July 31, President Trump’s memorandum promises an additional $400 per week and additional benefits. However, how those unemployment benefits are offered differs greatly from the CARES Act. Under President Trump’s formula, each state would be required to pay $100 of the $400 unemployment benefit for each person. The remaining $300 would be provided by the federal government through the Department of Homeland Security’s Disaster Relief Fund. In addition, states will have to enter into a financial agreement with the federal government affirming that the state can pay the benefit, provide adequate oversight of the program, and sufficiently administer and deliver the benefit. The memorandum necessarily requires states to enter into a new system to deliver the benefits because Congress has not authorized additional federal assistance. The newly proposed program is slated to expire on December 6, 2020, or when federal funds reach $25 billion, whichever occurs first.
Memorandum on Deferring Payroll Tax Obligations in Light of the Ongoing COVID-19 Disaster
President Trump has directed the Secretary of the Treasury to defer payroll taxes paid during the period of Sept. 1, 2020 through Dec.r 31, 2020. The deferment applies to employees whose wages or compensation is less than $4,000 on a biweekly basis. According to President Trump, the action would allow employees to take home additional money each pay period but only temporarily since the action is not a tax cut or forgiveness.
Memorandum on Continued Student Loan Payment Relief During the COVID-19 Pandemic
Under the CARES Act, the student loan payment relief program is set to expire on September 30. President Trump’s new memorandum seeks to provide continuing cessation of payment and the waiver of all interest until December 31, 2020. The Secretary of Education will be expected to provide appropriate waivers and modifications to the Higher Education Act of 1965 to provide for such deferments. Similarly to the CARES Act, the deferment would only apply to loans held by the Department of Education and not private student loans.
Executive Order on Fighting the Spread of COVID-19 by Providing Assistance to Renters and Homeowners
Under the new executive order the “Secretary of Health and Human Services and the director of the CDC shall consider whether any measures temporarily halting residential evictions of any tenants for failure to pay rent are reasonably necessary to prevent the further spread of COVID-19 from one state or possession into any other state or possession.” The remainder of the order remains vague on additional details and does not expressly provide for additional financial assistance. Instead, the “Secretary of the Treasury and the Secretary of Housing and Urban Development shall identify any and all available federal funds to provide temporary financing assistance to renters and homeowners.”
It is likely that President Trump’s executive actions will face significant legal challenges in the coming weeks and pushback from both congressional Democrats and Republicans. It has already been asserted that Trump has illegally bypassed Congress and stripped it of its constitutionally mandated powers, including its ability to tax and spend. In addition, Democrats have asserted that the four executive actions do not provide any lasting or meaningful assistance to the country, citing that unemployment benefits have been cut and that no additional funding has been provided to state or local governments to assist in implementing new programs or to provide ongoing financial assistance to its citizens. We will continue to provide updates on all federal COVID-19 aid as additional information becomes available.
