A16 EZ RE THE WASHINGTON POST.MONDAY, AUGUST 10 , 2020
BY HEATHER LONGPresident Trump took the un-
usual — and highly controversial
— step Saturday of attempting to
provide additional economic re-
lief to millions of Americans on
his own, without the approval of
Congress.
At his golf club in Bedminster,
N.J., Trump announced he was
postponing payroll taxes through
the end of the year, extending the
unemployment “bonus” at $400 a
week (down from $600), helping
people “stay in their homes” and
waiving student debt payments
through the end of 2020. The
details, however, are not as gener-
ous as he made them sound.
He is ordering a payroll tax
deferral, not a cut, meaning the
taxes won’t be collected for a
while but they will still be due at a
later date. On housing, he in-
structs key officials to “consider”
whether there should be a ban on
evictions. He also insists that state
governments pick up the tab for
some of the unemployment aid.
It is likely that Trump will face a
legal challenge over these actions.
The Constitution gives Congress
the power of the purse. Any
changes to taxes or spending are
supposed to come from Congress.
Here’s a rundown of what
Trump actually did. He says he
signed four “executive orders,”
but in reality, only the one on
housing is an actual executive
order. The other three actions are
marked as “memorandum,”
which carries less heft.
- He delays payroll tax
collection for those making
under $104,
Trump instructs the U.S. Trea-
sury to halt collection of payroll
taxes from Sept. 1 through Dec. 31
for workers who earn less than
$4,000 every two weeks. (That’s
people earning under about
$104,000 a year.)
This will feel like a tax cut for a
few weeks because workers will
end up with larger paychecks
while the tax is not collected. But
it is technically a tax deferral,
meaning the taxes will still be due
at a later date.
The president called on Con-
gress (and presumptive Demo-
cratic presidential nominee Joe
Biden) to make the tax deferral a
permanent tax cut, but Trump is
acknowledging he does not have
the power to cut taxes on his own.
That would take action from Con-
gress.
Payroll taxes help pay for Social
Security and Medicare. Trump is
attempting to postpone the
6.2 percent tax that employees
pay in every paycheck for Social
Security. Employers are also re-
quired to kick in another 6.2 per-
cent that comes out of the compa-
ny’s pocket for each employee.
Congress already deferred
most employer payroll taxes for
the rest of 2020, so Trump is
attempting to defer workers’ pay-
roll taxes. This relief only applies
to people who are working and
collecting a paycheck, and it is
only temporary since the taxes
must still be paid. If the taxes were
not repaid, it would lower the
funds in the Social Security Trust
Fund.- Unemployment aid is (sort
of) extended at $
The United States currently has
more than 30 million people on
unemployment aid. They had
been receiving an extra $600 a
week from the federal govern-
ment on top of their state aid
(which averaged $330 a week),
but Congress set the federal fund-
ing to expire at the end of July.
Democrats want to continue at
the $600-per-week level. Republi-
cans proposed $200. They have
yet to agree.
Trump’s memo calls for federal
aid to restart at a level of $400 a
week. But there’s a catch: The
federal government is only paying
for $300 of that. States have to
kick in the other $100. Many
states are cash-strapped as they
fight the coronavirus, and there’s
concern governors won’t sign on
to do this.
There are also a lot of legal
questions about the money
Trump is attempting to use to pay
for this. He calls for $44 billion of
funding from the Department ofHomeland Security’s Disaster Re-
lief Fund that is normally used for
hurricanes, tornadoes and fires to
be shifted over to unemployment.
“The basic notion here is the
president is rejecting Congress’s
power of the purse,” said David
Super, a constitutional law expert
at Georgetown Law. “That is
something nobody who cares
about separation of powers can
let slide, even if they like what the
money is being spent on.”
Trump’s memo orders the aid to
last through Dec. 6 or until fund-
ing runs out. But on top of legal
questions, $44 billion would cov-
er less than five weeks of pay-
ments for 30 million unemployed
Americans. That isn’t enough
money to make it to October,
unless the number of people on
unemployment falls dramatically.- Top officials can ‘consider’
halting evictions
The United States has about
110 million renters, and many
have been hit hard by the layoffs
in retail, restaurants and hospi-
tality during the pandemic.
Trump’s executive order does lit-
tle to help them.
Trump has said many times in
recent days that he wants to pre-
vent evictions, but his latest order
does not ban evictions. Instead,
Trump calls for Health and Hu-
man Services Secretary Alex Azar
and Centers for Disease Control
and Prevention Director Robert
Redfield to “consider” whether an
eviction ban is needed.
Trump also didn’t provide any
more money to help renters. The
executive order calls only for Trea-
sury Secretary Steven Mnuchin
and Housing and Urban Develop-
ment Secretary Ben Carson to see
whether they can find any more
funds to help out. It doesn’t prom-
ise more aid.
Many housing advocates and
landlords were surprised Trumpdidn’t do more to help renters.
The federal government owns the
vast majority of mortgages in the
nation through Fannie Mae, Fred-
die Mac and other entities. In
March, Congress passed a federal
moratorium preventing many
evictions, but it expired on
July 24. That moratorium covered
all renters living in places that
had a federally owned mortgage.
Many thought Trump probably
did have the authority to extend at
least that eviction ban, but he
chose not to do so.
There could be 30 million to
40 million renters at risk of evic-
tion in coming months, according
to a report last week by a group of
housing advocates and research-
ers. That compares with an aver-
age of 3.6 million evictions a year
before the coronavirus pandemic.- Student loan payments are
deferred until Dec. 31
Trump’s final memo waives all
interest on student loans held by
the federal government through
the end of 2020 and allows people
to delay payments until Dec. 31.
The Education Department
does have the authority to defer or
even cancel student loan pay-
ments to the federal government,
said Alexis Goldstein of Ameri-
cans for Financial Reform.
Trump used this authority to
temporarily cancel interest pay-
ments, which helps relieve the
financial burden on millions of
Americans. But the debt is not
canceled forever. Principal pay-
ments are due on Dec. 31 and full
payments are slated to restart
Jan. 1. - What happens next
There will probably be court
challenges to Trump’s actions,
making it unclear how quickly
any money would reach the un-
employed.
On top of that, it’s unclear how
many states will want to partici-
pate in this enhanced unemploy-
ment program or how many com-
panies will want to suspend pay-
roll taxes for employees only to
have to pay them in 2021.
Overall, this a limited action. It
still would take a deal between
Republicans and Democrats to
pass a broad economic aid pack-
age that would substantially ad-
dress the needs of small business-
es, renters, unemployed workers
and more.
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Details of Trump’s executive actions paint a less generous picture of aid
SUSAN WALSH/ASSOCIATED PRESS
President Trump signs a memorandum Saturday in Bedminster, N.J., where he announced he was postponing payroll taxes through the
end of the year, extending unemployment aid at $400 a week and waiving student debt payments through the end of 2020.it said “exacerbates people’s
a lready-heightened fears and
concerns” about their financial
futures.
On Saturday, Trump tried to
use the payroll tax announcement
to mount an attack on presump-
tive Democratic nominee Joe
Biden, arguing the former vice
president and his party would end
the deferral, “raising everyone’s
taxes and taking this away.”
Biden, however, countered by ac-
cusing Trump of trying to “under-
mine the entire financial footing
of Social Security,” with the effect
of putting Americans’ benefits “in
doubt.”
“I do think the more perma-
nent change, advocating for some
kind of permanent reduction or
elimination of part or all of the
payroll tax, would likely be tough
political ground for the president
to be on,” added Shai Akabas, the
director of economic policy at the
Bipartisan Policy Center.
House Speaker Nancy Pelosi
(D-Calif.) on Sunday insisted that
over the course of two weeks of
lengthy meetings with Mnuchin
and White House Chief of Staff
Mark Meadows, she and Schumer
had made significant concessions
to get a deal.
“We have to reach an agree-
ment,” Pelosi said on “Fox News
Sunday.” “Children are food-inse-
cure, families are at risk of being
evicted, the virus is moving like a
freight train.”
Pelosi repeated that Democrats
had offered to reduce the price tag
of their $3.4 trillion bill by $1 tril-
lion, largely by delaying the
length of proposed programs.
But Mnuchin said Democrats
had refused to come off their
$915 billion ask for money for
cities and states, a figure he
termed “ridiculous.” He claimed
that apart from that issue and a
dispute over the appropriate level
of unemployment insurance, all
other major matters had been
resolved. On Sunday, he called for
passing legislation on the 70 to
80 percent of issues where there
was agreement, while pursuing
the other issues at a later date.
“We don’t have to get every-
thing done at once, what we
should do is get things done for
the American public now, come
back for another bill afterwards,”
Mnuchin said.
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[email protected]roll tax break came after the
White House pressed Congress
for months to include the tax cut
as part of a new congressional
coronavirus relief package. But
the idea repeatedly ran into politi-
cal resistance, including among
Republicans, who questioned at
times if it would create new fiscal
headaches for Social Security and
the government’s rapidly increas-
ing deficit.
Trump on Saturday forged
ahead, deferring but not forgiving
Americans’ payroll taxes from
September 1 until the end of the
year. Trump stressed he would
seek to make the changes perma-
nent, telling reporters he would
try to “terminate” the payroll tax-
es Americans rack up between
September and the end of the year
if he is reelected.
“This will mean bigger pay-
checks for working families,” he
promised at a news conference in
Bedminster, N.J.
But experts said that business-
es are unlikely to begin deferring
tax payments or boosting work-
ers’ checks by next month — or,
perhaps, at all. As they await addi-
tional guidance from the Trump
administration, many are bracing
for the gargantuan task of re-
thinking their payment systems,
said Mike Trabold, the director of
compliance at Paychex, a pay-
ment-processing company. He
added that federal law also holds
companies responsible if the tax-
es aren’t properly paid to the U.S.
Treasury on time.
“I think what most employers
are going to do is not pass this on
to their employees,” added Josh
Bivens, the director of research at
the left-leaning Economic Policy
Institute. “They’re not going to
give money to the worker because
the government is at some point
going to come back for it.”
Instead, the costs of Trump’s
political gambit could prove
great, thrusting the hot-button
issue of Social Security and the
future of federal entitlement pro-
grams into the election main-
stream. Retirement benefits his-
torically are sacrosanct in Ameri-
can politics, and Trump’s mere
suggestion that he may seek per-
manent reforms to the way they
are financed raised immediate
concerns that it could lead to
lasting changes to the monthly
checks paid out to seniors.
The AARP, for one, criticized
Trump in a statement for actionssaid Andy Stettner, an unemploy-
ment insurance expert at the Cen-
tury Foundation.
The White House rejected the
accusation that its policies would
disproportionately hurt the poor-
est Americans. A spokesman add-
ed that the $100-a-week limit was
aimed at curbing fraud and mak-
ing sure those who are receiving
the federal benefit have already
qualified for an unemployment
program. “It’s utter nonsense to
suggest that the Trump adminis-
tration is somehow targeting
poor people,” said Judd Deere, a
White House spokesman. “The
president is acting where the
Democrats are putting people’sfutures at risk.”
One of Trump’s other executive
orders was aimed at minimizing
evictions and foreclosures. But
the order does not reinstate a
federal eviction moratorium that
expired last month. Instead, it
calls on the Department of Health
and Human Services and the Cen-
ters for Disease Control and Pre-
vention to “consider” whether it is
necessary to temporarily halt
evictions. The action fell short of
what housing advocates said is
needed to keep millions of Ameri-
cans in their homes.
Trump’s directive on the pay-contribution, saying: “The 25 per-
cent from the states — they can
either take that out of the money
we’ve already given them or the
president can waive that.”
According to the president’s di-
rective, the aid should run
through Dec. 6 or until funding
runs out. But $44 billion would
cover less than five weeks of pay-
ments for the ranks of the 30 mil-
lion Americans who are currently
unemployed, several economists
noted.
But top administration offi-
cials on Sunday appeared con-
fused about when the first checks
might be paid. Mnuchin said the
jobless benefits could be available“immediately,” but White House
economic adviser Larry Kudlow
said on CNN that the payments
could take a couple of weeks.
Even if state governments sign
on to the program, the jobless
benefits might be out of reach for
Americans in greatest need: Only
out-of-work Americans receiving
more than $100 a week in state
unemployment insurance are eli-
gible for the federal aid. That
means those at the bottom of the
income distribution — particular-
ly workers who rely on tips and
the self-employed — could see no
additional federal benefit at all,ance and has not rehired half of
the workers who had lost jobs by
the end of April, a fact White
House officials acknowledged
Sunday.
Democrats pounced on the
confusion from Trump’s executive
directives, arguing that the White
House should resume negotia-
tions on a broader relief package.
Those talks had collapsed last
week after both sides dug in on
what they believed the package
should entail and how much it
should cost.
The stalemate resulted in the
expiration of a critical economic
lifeline to millions of Americans
— an extra $600 each week in
unemployment benefits that Con-
gress approved in March.
“Unfortunately, the president’s
executive orders, described in one
word, could be paltry, in three
words, unworkable, weak and far
too narrow,” Senate Minority
Leader Charles E. Schumer
(D-N.Y.) said Sunday on ABC
News.
In response to the expiring aid,
Trump on Saturday signed an or-
der that would offer $400 a week
in federal unemployment bene-
fits. To pay for the program, the
president said he would tap
$44 billion in federal funds that
are allocated for natural disaster
relief such as a hurricane or wild-
fire.
But states would have to con-
tribute $100 a week to each work-
er’s check, with the federal gov-
ernment putting up the rest. Be-
yond the legal questions sur-
rounding the maneuver, many
states are facing severe budget
deficits as they fight the coronavi-
rus, and several economists and
lawmakers said governors may be
unlikely to sign on to the pro-
gram.
States are currently asking the
federal government to offer as
much as $1 trillion in new aid to
cover budget gaps. Asked if Ohio
could afford the new unemploy-
ment insurance expense, Gov.
Mike DeWine (R) replied on CNN:
“The answer is, I don’t know yet.”
On Twitter, New York Gov. An-
drew M. Cuomo (D) said: “Execu-
tive Orders can’t replace legisla-
tive actions. States can’t pay 25%
of unemployment costs. It’s sim-
ply impossible.”
On “Fox News Sunday,” Trea-
sury Secretary Steven Mnuchin
suggested that the administra-
tion could be flexible on the stateand economists signaled Sunday
in the absence of a guarantee that
the payroll taxes actually will be
absolved, businesses would be un-
likely to alter worker paychecks.
“It’s a little bit of a leap of faith
on an employer’s part,” said Pete
Isberg, the vice president of gov-
ernment affairs for ADP, which
processes payments for 40 mil-
lion workers and 800,000 busi-
nesses.
Isberg said it may take months
for some businesses to implement
a system that can defer payroll
taxes for a few months, delaying
any potential boost to the econo-
my. “It’s not clear employers
broadly will adopt this,” he added.
“It’s not clear employees will want
to take it even if they qualify.”
Unable to swing a deal with
Democrats, Trump resorted to ex-
ecutive actions as concerns in
Washington intensified about the
economic distress — and the po-
litical fallout — caused by the
pandemic.
“The Lord and the Founding
Fathers created executive orders
because of partisan bickering and
divided government,” White
House economic adviser Peter
Navarro said on NBC News on
Sunday.
But Trump’s attempts to cir-
cumvent the partisan logjam on
Capitol Hill instead may be illus-
trating the limits of executive
power — and the costs that can
come from invoking it. In this
case, a more long-lasting legisla-
tive solution may have been de-
layed with the White House de-
ciding to act on its own, said
Daniel Hemel, a law professor at
the University of Chicago, in an
interview Sunday.
“It’s a Band-Aid on an open
wound,” Hemel said. Trump “can
do it, legally, but to provide real
lasting relief he needs help from
Congress — and if anything he
made that less likely yesterday.
Most of us won’t see more money
in our paychecks, and the millions
of families on unemployment will
still be in crisis come September.”
The coronavirus pandemic has
had a devastating impact on the
U.S. economy, forcing many busi-
nesses to close and lay off work-
ers. Certain sectors, particularly
travel, hospitality and retail, have
been hit hard. The country has
more than 30 million Americans
collecting unemployment insur-
STIMULUS FROM A
Democrats call for White House to resume talks on long-term economic relief
ALEX WONG/GETTY IMAGES
House Speaker Nancy Pelosi, right, said she and Senate Minority
Leader Charles E. Schumer, left, made significant concessions in
two weeks of relief talks with top White House officials.“It’s a Band-Aid on an open wound. ... To provide
real lasting relief he needs help from Congress.”
Daniel Hemel, law professor at the University of Chicago