On Saturday, August 8, President Donald Trump issued an executive order and three executive memoranda as negotiations for an additional bipartisan COVID-19 relief plan stalled in Washington. These actions follow more than two weeks of extensive negotiation between Republican and Democratic lawmakers.
This article summarizes the contents of these executive actions, and highlights expected challenges surrounding the issuances.
Overview and Expected Challenges
White House officials recommended that President Trump proceed with executive actions to address four areas of deadlock between the White House and Congress:
- Renter and Homeowner (Eviction) Protection
- Needs Assistance Program
- Deferral of Payroll Tax Obligations
- Student Loan Payment Relief
The contents of these actions have drawn considerable political scrutiny. Specifically, opponents of the actions argue that aspects of the actions may conflict with Congress’ power to tax, spend, and appropriate under the U.S. Constitution. Litigation opposing the actions has not, however, been commenced as of the writing of this update.
Renter and Homeowner Protection
The Executive Order on Fighting the Spread of COVID-19 by Providing Assistance to Renters and Homeowners (Not yet codified in the Federal Register) provides steps to be taken for housing protection.
The CARES Act (Public Law 116-136) placed a moratorium on late fees, and evictions until July 25 for all single-family mortgages insured by the Federal Housing Administration. The Executive Order does not follow the same format, but rather announces that it is the policy of the United States to minimize residential evictions and foreclosures during the ongoing COVID-19 national emergency to the greatest extent possible. In addition, the Order instructs:
- The Secretary of Health and Human Services and the Director of CDC to 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;
- The Secretary of the Treasury and the Secretary of Housing and Urban Development to identify Federal funds to provide temporary financial assistance to renters and homeowners;
- The Secretary of Housing and Urban Development to take appropriate action, to promote the ability of renters and homeowners to avoid eviction or foreclosure.
- The Director of Federal Housing Finance Agency to review all existing authorities and resources that may be used to prevent evictions and foreclosures resulting from hardships caused by COVID-19.
Needs Assistance Program
The Memorandum on Authorizing the Other Needs Assistance Program for Major Disaster Declarations Related to Coronavirus Disease 2019 aims to provide up to $400/week in enhanced unemployment benefits.
The directive follows the July 25th expiration of $600/week enhanced unemployment benefits under the CARES Act. Unlike the CARES Act, the Memorandum requires states to pay 25% - or $100 per week - for claimants to receive the full benefit.
Additionally, the Memorandum directs the Federal Emergency Management Agency to assist in providing benefits by using the $45 billion funding allocated to the Department of Homeland Security Disaster Relief Fund. This portion of the action has come under especially intense scrutiny.
While the Memorandum identifies the Stafford Act (42 U.S.C. 5121 et. seq.) and the Declaration of a National Emergency Concerning the Novel Coronavirus Disease Outbreak (Proclamation 9994 of March 13, 2020) as authorities, critics have argued that the President is not empowered with the legal authority to dictate how federal funds be spent. In his August 7 press conference, President Trump acknowledged that he expected legal challenges to this portion of the Memorandum.
Deferral of Payroll Tax Obligations
In the Memorandum on Deferring Payroll Tax Obligations in Light of the Ongoing COVID-19 Disaster, President Trump deferred the employee portion of the payroll tax under the Federal Insurance Contributions Act from Sept. 1 through the end of the year. Under the Memorandum, the deferral will be made available with respect to any employee whose bi-weekly (or equivalent) pre-tax compensation is less than $4,000.
In addition, the Memorandum authorizes the Secretary of the Treasury to issue implementation guidance and to explore avenues to eliminate the obligation to pay taxes deferred pursuant to the Memorandum.
Student Loan Payment Relief
The Memorandum on Continued Student Loan Payment Relief During the COVID-19 Pandemic extends through the end of 2020 the portion of the CARES Act which placed federal student loans into administrative forbearance with an interest rate of 0%.
The memorandum directs the secretary of Education to take action to effectuate the appropriate waivers under the Higher Education Act of 1965 (20 U.S.C. 1087e(f)(2)(D)), and to provide such deferments to borrowers as necessary to continue the temporary cessation of payments and the waiver of all interest on student loans.
Under the Cares Act, forbearance was set to expire September 30th.
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