President Uses Executive Orders Too Authorize Extending Unemployment Benefits and More
President Trump signed four executive orders Saturday. These orders provide additional jobless benefits, suspend the collection of payroll taxes, avoid evictions and assist with student-loan payments.
Here is a breakdown of the Executive Orders:
The administration plans to roll out a $400 weekly payment, funded 75% by the federal
government and 25% by states. It remains unclear if the states will go along with this plan, given that many of them are facing budget shortfalls due to the coronavirus-sparked recession.
Under the executive action the additional jobless benefits will be paid from the Disaster Relief Fund, the government’s primary source of money to pay for emergency costs. The extra weekly benefits would be available until December 6, 2020, or until the disaster fund’s balance drops to $25 billion, according to the executive action.
This executive order directs the Department of Treasury and the Department of Housing and Urban Development (HUD) to identify funds to provide temporary financial assistance to renters and homeowners who are struggling to meet their monthly rental or mortgage obligations. The order also directs HUD to take action to “promote the ability of renters and homeowners to avoid eviction or foreclosure.”
It falls short however, of reauthorizing the eviction moratorium set in the Cares Act which expired at the end of July. The moratorium applied only to properties with government-backed mortgages, covering just one-third of renters. Pressure is mounting in Washington to find a way to prevent a wave of evictions—and the resulting domino effect of defaults and foreclosures by landlords.
Regulators could potentially instruct the government-sponsored mortgage corporations Fannie Mae and Freddie Mac to offer landlords forbearance on their monthly mortgage payments if their tenants are unable to pay rent, assuming they do not evict their tenants. But Fannie and Freddie are overseen by the Federal Housing Finance Agency (FHFA), which is an independent government agency. The executive order directs the FHFA to “review all existing authorities and resources that may be used to prevent evictions and foreclosures for renters and homeowners.”
Other government housing agencies such as the Federal Housing Administration (FHA) do fall under the President’s authority and could potentially be used to help prevent evictions, however, FHA is not technically permitted to spend money without it being appropriated by Congress.
The President directed the Treasury Department to defer the 6.2% Social Security tax on wages for employees making less than about $100,000 a year. That suspension would last from Sept. 1 through Dec. 31. Under the executive order the taxes would still be due by employers and employees. The President said he would press Congress to revert the deferral into an actual tax cut.
The tax code gives the Treasury Secretary authority to delay tax filing and collection after presidentially declared disasters. The administration already used this authority to postpone a series of spring tax deadlines until July 15 and used it again Friday to delay some excise-tax collections. It is far from certain that many employers will stop withholding payroll taxes given the potential for future liability.
Student Loan Payment
The Cares Act gave borrowers with federal student loans a six-month suspension of their monthly payments, interest-free. The law applied to roughly 35 million borrowers whose loans are held by the federal government. However, the law excludes about eight million borrowers whose loans are held by private lenders with a government guarantee. This payment moratorium is set to expire September 30. Saturday’s executive order would extend the payment moratorium and zero-interest until the end of the coronavirus crisis.
For those wanting to know what all this means right now we can’t be sure just how things will shake out. Open questions include: will court actions delay, or cancel any of these orders? Will some all or none of the states go along with the requirement to pay 25% of the expanded and yet reduced federal unemployment benefits? Just how will these orders be implemented?
It will take time for more information, along with rules and regulations to be propagated that spell out just how to take advantage of the benefits covered by the executive orders, so stay tuned to our website as we will do our best to keep you informed.