Government Lending

Trump signs directives on evictions, unemployment and payroll tax deferral

Employees would have to repay deferred taxes next year – unless Trump is reelected

President Donald Trump signed an executive order and three memorandums in a ballroom of the Trump National Golf Club in Bedminster, New Jersey, on Saturday aimed at providing relief to Americans suffering from the economic fallout of the COVID-19 pandemic.

The single executive order was touted by Trump as an extension of the eviction moratorium in the CARES Act that expired in July, but it only directs various federal departments and agencies to “consider” and “review” ways to keep renters in homes using existing government programs.

One memorandum deferred through the end of the year, for employees making less than about $100,000 a year, the payroll taxes that are used to fund Social Security and Medicare – but it doesn’t cancel the taxes. Workers would have to make a lump-sum payment of the deferred tax to the government next year.

During his remarks prior to signing the documents, Trump said there was one way to make sure employees didn’t have to pay it back.

“If I’m victorious on November 3rd, I plan to forgive these taxes and make permanent cuts to the payroll tax,” Trump said, without saying how Social Security and Medicare would then be funded. “I’m going to make them all permanent.”

It’s not clear if employers would cooperate with the plan and pass on the tax deferral to workers because companies could be on the hook to pay the money if a staffer quits. As the president signed that memorandum, he expressed confidence there would be no need to pay it back because he was likely to be reelected.

“This is your deferral of payroll tax obligations, which we’re going to end up terminating eventually, right?” Trump said.

Another memorandum the president signed would provide a $400 a week extra payment for people receiving unemployment benefits, but it requires states cash-strapped by the pandemic to kick in a quarter of the payment. It also means state unemployment agencies would have to reprogram their systems, which could delay its implementation even if states agree to participate.

The money would come from a Federal Emergency Management Agency fund used to provide aid to Americans in disasters such as hurricanes, the memorandum said. The $600 a week payment that was part of the CARES Act expired at the end of July.

Another memorandum extended deferred payments on student loans until the end of the year. Under the CARES Act, the program would have ended in September.

Trump repeatedly referred to the four signed documents as “bills,” but only Congress can pass bills, which the president then decides whether to sign or not. According to the Constitution, only Congress can levy taxes and authorize spending. Because of the COVID-19 emergency, Trump has the power to delay, but not cancel, tax obligations.

Trump got pushback from both parties.

Sen. Ben Sasse (R-NE) called Trump’s directives “unconstitutional slop” in a statement. “President Obama did not have the power to unilaterally rewrite immigration law with DACA, and President Trump does not have the power to unilaterally rewrite the payroll tax law,” Sasse said.

Nancy Pelosi (D-CA), speaker of the House of Representatives, called the directives “absurdly unconstitutional.”

“Either the president doesn’t know what he is talking about – clearly his aides don’t know what he is talking about – or something is very wrong here,” Pelosi said in a CNN interview.

Trump acknowledged his action on Saturday to redirect funds was likely to spark lawsuits, similar to last year when he took funds authorized by Congress to upgrade miliary bases and ordered it to be spent on building a wall on the border with Mexico.

The wording of the executive order addressing evictions is as follows:

The Secretary of Health and Human Services and the Director of 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 Secretary of the Treasury and the Secretary of Housing and Urban Development shall identify any and all available Federal funds to provide temporary financial assistance to renters and homeowners who, as a result of the financial hardships caused by COVID-19, are struggling to meet their monthly rental or mortgage obligations.

The Secretary of Housing and Urban Development shall take action, as appropriate and consistent with applicable law, to promote the ability of renters and homeowners to avoid eviction or foreclosure resulting from financial hardships caused by COVID-19. Such action may include encouraging and providing assistance to public housing authorities, affordable housing owners, landlords, and recipients of Federal grant funds in minimizing evictions and foreclosures.

In consultation with the Secretary of the Treasury, the Director of FHFA shall review all existing authorities and resources that may be used to prevent evictions and foreclosures for renters and homeowners resulting from hardships caused by COVID-19.

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