Analysis of President Trump's Executive Actions, Relief Negotiations
With COVID-19 negotiations stalling over the past week, President Trump took executive action Saturday to provide some narrow relief. The orders aim to deliver additional jobless benefits, payroll tax relief, slow evictions, and assist with student loan repayment. Democrats and some Republicans have questioned the legality of these actions. The actions include:
Extended unemployment benefits – Trump diverted $44 billion from the Federal Emergency Management Agency (FEMA) to provide $400 a week in enhanced unemployment benefits. The federal government would provide 75 percent of the payment, with the states providing the rest. Trump’s memo orders the aid to last through December 6th, or until funding runs outs, which could be much sooner than December 6th with tens of millions on unemployment.
Payroll Tax Deferral – The president instructed the Treasury Department to halt collection of payroll taxes from September 1st through the end of the year for workers who earn less than $4,000 every two weeks (around $104,000 per year). During the signing, Trump called on Congress and Democratic Nominee Joe Biden to commit to making the deferral a permanent tax cut. The president also mentioned hoping to make this deferral retroactive to August 1st and promised he would seek to relieve the tax liability if reelected.
Eviction Moratorium – Less binding than the other actions, Trump’s memo to the Department of Health and Human Services (HHS) and the Centers for Disease Control and Prevention (CDC) calls on those agencies to “consider” whether an eviction ban is needed. This action does not reauthorize the moratorium included in the CARES Act or explicitly halt evictions. The president also said his directive to extend a moratorium on evictions would include financial assistance from the Department of Housing and Urban Development (HUD) for struggling renters and homeowners.
Student Loan Relief – This memo waives all interest on federally held student loans through the end of 2020 and allows people to delay payments until December 31st.
Both Sides Still Willing to Pursue Additional Relief
On Sunday, negotiators from both sides said they were still willing to continue negotiations on a relief package. Speaker Pelosi said negotiators still needed to reach a deal and assured her side was open to meeting “halfway.” Secretary Mnuchin said on the prospects of continued negotiations, “Any time they have a new proposal, I'm willing to listen.” Negotiators still have a number of priorities not addressed through Trump’s actions, including aid for states and localities, funding for schools to reopen, and implementing a COVID-19 liability shield. It is currently unclear how negotiations may progress, but we should know more early this week.
What this Means for Timing on the Next COVID Relief Package
It is very difficult to predict if a package will come together this week. Arguably, both parties recognize how critical it is to our nation, and the economy, to pass the measure prior to going on recess. At the same time, they are far apart on several key pieces and a deal may prove to be elusive to reach. One option could be to pass a small “skinny bill,” which covers the narrow issues that the parties can agree upon, pushing a broader deal down the road. But, even the likelihood of a skinny bill passing is in question, given the broader dynamics on reaching an agreement.
Of note, if a deal is not reached this week, it is likely that both parties will walk away and recess until their national conventions conclude (Democratic August 17-20, Republican August 24-27). Under this scenario, the parties would return in September and presumably work to reach a much larger agreement that would cover another round of COVID relief and a large appropriations package to fund the government through the remainder of the year.
