Trump’s Executive Actions Are a Grand Illusion

My last blog tried to explain the differences between the $3.4 trillion HEROES Act passed by the Democratic-controlled U.S. House in May and the $1 trillion HEALS Act passed by the Republican-controlled Senate in late July.  I had hoped to provide readers with a guide to evaluate the ongoing negotiations between House and Senate Democratic leaders and the White House, represented by Treasury Secretary Steve Mnuchin and Chief of Staff Mark Meadows. 

Those talks ended last Friday and on Saturday, President Trump issued one executive order and three memoranda (which carry less weight).  He said these actions, “will take care of pretty much this entire [coronavirus relief] situation.”  Clearly, Trump either doesn’t understand the problems or he lied.

I obtained copies of these documents and will attempt to explain the four major areas where they claim to provide relief.  But first it might be best to highlight some of the challenges after certain provisions of the CARES Act that was passed in March expired.

  • Thirty million Americans were collecting an extra $600 per week federal unemployment insurance supplement at the end of July when this payment expired.  These dollars added to a state benefit, which, according to Goldman Sachs, averages $370. 
  • A survey by the U.S. Census Bureau found that 24 million Americans claim they won’t be able to pay their next month’s rent without the supplemental federal benefits.
  • The COVID-19 Eviction Defense Project, estimated that 110 million Americans are renting and around 23 million – or 20% – are at risk of being evicted by Sept. 30.
  • Although the economy supposedly added 1.8 million jobs in July and the unemployment rate dipped to 10.2%, these jobs numbers were down sharply from May (2.5M) and June (4.8M).
  • The U.S. now has more than 5 million confirmed coronavirus cases and over 160,000 deaths.  States that opened their economy early have delayed further opening, and in some cases have pulled back.  This virus is definitely not under control.

To address these problems the president is attempting to do the following, although some aspects of his plan may not be legal.

Payroll tax deferral – This memorandum directs that payroll taxes for workers making less than $104,000 per year be deferred through December 6, which would add almost $250 per month to the paycheck of someone making $48,000 per year.  The extra received, however, would have to be repaid in December.  Oh, but Trump promised, “If I’m victorious on November 3rd, I plan to forgive these taxes and make permanent cuts to the payroll tax.”  

This deferral does nothing for the unemployed and could seriously weaken an already stressed Social Security trust fund, which could run out of surplus as early as 2033 if a bad recession continues.  Permanently cutting this tax would decimate the Social Security and Medicare systems, so I expect Trump’s comments will be walked back.

Lost wages assistance – This memorandum provides that the $600 per week unemployment insurance supplement that expired at the end of July will be replaced starting August 1 with a $400 payment, $100 of which must be paid by the states.  Trump is taking $44 billion from the $70 billion FEMA Disaster Relief Fund for the federal share, just as hurricane season is starting.  States are directed to use the $80 billion remaining in the CARES Act’s Coronavirus Relief Fund to meet their obligation. 

But here’s the problem.  At current unemployment levels, the $44 billion of federal funds will be exhausted before October according to the Washington Post’s Heather Long and the states will be on the hook for the remaining obligation of $400 per week for their unemployed until December 27.  They are already begging for more assistance from the federal government as their tax revenues have cratered.  States need something like the $900+ billion assistance that was in the Democrats HEROES bill, not another burden on their already strapped budgets.

Renters and homeowner’s assistance – This executive order is illusory.  It merely directs several cabinet members, including the Secretary of Housing and Urban Development to determine if “any measures temporarily halting residential evictions” are necessary to prevent the spread of Covid-19 and to identify any federal funds which are available to provide temporary assistance to renters and homeowners.  No doubt, evictions are already underway after the CARES Act moratorium expired last month and it appears that foreclosures can begin in September.

Student loan payment relief – This memorandum continues both suspending loan payments and temporarily setting interest rates to zero percent on student loans, which under the CARES Act are due to expire September 30.  This applies to loans held by the Department of Education and lasts until December 31, 2020.

Under careful analysis, the president’s grand scheme to circumvent Congress and subvert the separation of powers is woefully inadequate to address the massive economic problems caused by the coronavirus and is subject to strong legal challenges.  Yet, that’s exactly what those who concocted it are hoping will happen.  Republicans for the most part don’t want to provide any additional relief to struggling Americans.  So, what better than to create an illegal illusion of relief with executive actions and then blame the Democrats for blocking them when they go to the courts to preserve the separation of powers.

Former President Harry Truman said it best, “How many times do you have to get hit over the head until you figure out who’s hitting you.”  Of course, he was talking about Republicans.

About eeldav

I am a retired corporate attorney who has lived in both Europe and Asia. While working my responsibilities took me to over 40 countries in Europe, the Middle East, Africa and Asia.
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1 Response to Trump’s Executive Actions Are a Grand Illusion

  1. Vicky Bell says:

    After all I see and read, your explanation’s are the ones I understand so easily.
    Thank you for all your time and effort you put in to your blog👍🏻

    Like

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