Trump Signs 4 Executive Orders as Stimulus Talks Stall: But Will It Include a Second Stimulus Check?
4 takeaways from Trump’s executive orders, and what it means for small businesses and the workforce
After weeks of negotiation, Congress has come to an impasse on additional stimulus funding to help workers and businesses impacted by the COVID-19 pandemic.
On Saturday, President Donald Trump bypassed Congress and signed 4 executive orders to continue payments and provide relief for workers.
The orders cover:
- Additional unemployment benefits, partially funded by the federal government,
- Payroll tax deferral,
- A moratorium on evictions, and
- Temporary suspension of student loan payments
Congressional leaders suggest the president doesn’t have the legal authority to extend benefits through executive order and it encroaches on Congress’ control of federal budgets. The orders are likely to be met with legal challenges.
Extended federal unemployment benefits
The executive order offers $400 per week for workers on unemployment, which is a third less than the $600 per week people were receiving under the CARES Act. The $600 per week expired on August 1 and was fully funded by the federal government.
The $400 benefit begins August 1 and extends through December 27, 2020. The federal government will pay 75% of the cost of the continued benefit, with states picking up the tab for the other 25%.
To help cover the cost to states, funds available from the Disaster Relief Fund would be provided to states to supplement their payments.
A total of $44 billion will be set aside in previously allocated disaster relief funding to help the states with their portion of the payments. However, it will be the state’s decision to determine how much — if any — additional dollars they provide to unemployed workers.
In some states, workers could be eligible only to receive 75% of the funds provided by the federal government. A clarification on the unemployment benefit was provided by the White House shortly after the news conference outlining the executive orders.
The lower unemployment insurance supplement is in response to Trump’s and the Republicans’ concerns that enhanced benefits served to dis-incentivize workers from returning to the job. CNN reported that, when combined with state benefits, about two-thirds of workers on the program earned more than they did on their former jobs, according to a University of Chicago study published in May 2020.
Low-wage industries hit hard by the pandemic — like the hospitality, retails, and restaurants — have had the most difficulty getting staffers to return to work under these economic conditions. Some argue the increased unemployment benefits keeps nonessential workers at home to slow the spread of the virus.
The Wall Street Journal reported the unemployment rate fell from 11.1% in June to $10.2% in July, with employers adding an additional 1.8 million jobs to the economy. But unemployment claims remain historically high. In June, the number of people who have permanently lost their job rose by 588,000 to 2.9 million since February.
Payroll tax relief
Trump also signed an executive order that provides payroll tax relief for certain workers.
Employers can defer a certain amount of payroll taxes from August 1 to September for employees who earn less than $100,000 per year. Specific details of the program have to be revealed, but provided the deferral includes Social Security taxes, workers can expect to take home an additional $60 per week.
Employees who qualify must earn less than $4,000 bi-weekly. It’s unclear whether employers will still be required to make matching contributions for taxes and FICA during their current payroll cycles or will be allowed to defer their portion of the payments as well.
Some experts suggest Trump does not have the authority to eliminate payroll taxes: only Congress may do so.
The language of the executive order outlines deferment of the taxes, which may be allowed. The order states that the Secretary of the Treasure to “explore avenues, including legislation, to eliminate the obligation to pay the taxes deferred pursuant to the implementation of this memorandum.”
Forbes reports Trump, who has discussed payroll tax relief throughout his administration, was quoted as saying, “If I am victorious on November 3rd, I plan to forgive these taxes and make permanent cuts to the payroll tax. … I’m going to make them all permanent.”
Moratorium on evictions
The original hold on evictions under the CARES Act expired on July 24. While some states have enacted their own freeze on evictions, many American families were unprotected. The executive order requires all the federally financed, single- and multi-family dwellings be covered.
The order references the Centers for Disease Control’s (CDC) and the Department of Health and Human Services’ (HHS) conclusion that the “growing and disproportionate unemployment rates for some racial and ethnic minority groups during the COVID-19 pandemic may lead to greater risk of eviction and homelessness or sharing of housing.”
The order directs HHS to determine “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.”
When pressed as to whether or not the freeze on evictions will extend beyond federally-financed housing, White House economic adviser Larry Kudlow told CNN, “The health secretary has the authority, working with the CDC to declare it an emergency. And, therefore, there will be no evictions.”
Student loan payment suspension
The final executive order suspends student loan payment requirements through the end of 2020. Student loan debt relief was scheduled to expire September 31, 2020. The new order directs U.S. Secretary of Education Betsy DeVos to extend the student loan benefits outlined in the CARES Act until December 31, 2020.
This includes a pause in all payments of federal student loans, eliminating interest during the deferral time, halting collections, and counting non-payments toward the required 120 monthly payment necessary for public service loan forgiveness.
Another stimulus check in the making?
Many Americans are hopeful to get an additional stimulus check from the federal government. For some, the $1,200 provided under the CARES Act provided a necessary lifeline to cover rent and other expenses.
Unless Congress acts, however, there will be no additional stimulus payments. While Trump can issue executive orders, Congress controls federal spending and only they can legislate additional payments.
Appearing Sunday, Treasury Secretary Steve Mnuchin said a legal challenge to Trump’s executive orders would delay financial help to millions of Americans. He added “We’ve cleared with the office of legal counsel all these actions.”