President Trump, in announcing his executive measures on Saturday, said he was bypassing Congress to deliver emergency pandemic aid to needy Americans. But his directives are rife with so much complexity and legal murkiness that they’re unlikely, in most cases, to bring fast relief — if any.
Because Congress controls federal spending, at least some of Mr. Trump’s actions will almost certainly be challenged in court. They could also quickly become moot if congressional leaders reach an agreement and pass their own relief package. Speaker Nancy Pelosi of California on Sunday dismissed Mr. Trump’s actions as unconstitutional and said a compromise deal was still needed. Treasury Secretary Steven Mnuchin said he would be open to further talks with Democratic leaders: “Anytime they have a new proposal, I’m willing to listen.”
Mr. Trump’s executive steps on Saturday focused on four areas: extending supplemental unemployment benefits, suspending some payroll taxes, extending relief for student loan borrowers and offering eviction relief. Of the four, the student loan memorandum seems likely to be the least controversial and the easiest to carry out.
But his various executive actions did not include several forms of relief that have been part of recent negotiations, including lump-sum payments to citizens and additional relief for small businesses.
If all of Mr. Trump’s directives take effect, here’s how experts believe they could play out.
The expiration at the end of July of the extra $600 a week in federally paid unemployment benefits, supplementing whatever eligible Americans get from their state, created an urgent crisis for the estimated 30 million people relying on that cash.
Mr. Trump described his action as creating “an extra $400 per week in expanded benefits.” But policy analysts said the plan laid out in Mr. Trump’s memo was so complicated, and potentially costly, for states that people won’t get that money quickly, if at all.
“Nobody is going to see this money in August, and we’ll be lucky to see it in September,” said Andrew Stettner, a senior fellow at the Century Foundation, a public policy research group.
The plan is full of caveats. First: It actually translates to an additional $300, not $400, for recipients because the federal government would pay for only 75 percent of cost. States would have to kick in the other 25 percent, or $100 per recipient, per week.
States can use the benefits they’re already paying to meet that criteria, a White House official said. But some people currently get less than $100 a week from their states, and they would be left out entirely unless their state agreed to increase their payments. That means the hardest-hit recipients, with the least financial support, “wouldn’t get anything at all from this,” Mr. Stettner said.
There are two more major catches. A big one is that the federal money is likely to vanish quickly. Mr. Trump directed the Federal Emergency Management Agency to use up to $44 billion from its Disaster Relief Fund, which usually pays for emergency help after catastrophes like hurricanes and earthquakes, to cover the federal portion of the payments.
Michele Evermore, a senior policy analyst for the National Employment Law Project, projected that at current claims’ rates, the $44 billion would run out in about five or six weeks. The Committee for a Responsible Federal Budget, a research organization, also estimated that the money would last just five weeks.
Also, state governors must opt in and request the aid and must agree to distribute it through their regular unemployment insurance system as a supplemental payment. That’s a heavy demand on state systems that are already “stressed to the point of breaking,” Ms. Evermore said.
A FEMA spokeswoman did not answer questions on Sunday about whether any states had contacted the agency to formally seek the federal aid. Gov. Andrew M. Cuomo of New York said that the president’s executive measures were on “shaky ground legally” and that asking states facing financial crises to increase their unemployment benefit payments is “just laughable.”
FEMA said the program would be applied retroactively to the week ending Aug. 1 and would last until Dec. 6 or until the authorized disaster funding is depleted, whichever comes first.
You would still owe your payroll taxes under the terms of the president’s memorandum, and so would your employer, if you have one. What might change would be when some of the taxes for the period from Sept. 1 to Dec. 31 are due.
If you are not self-employed, what usually happens is that your employer pays half of the 12.4 percent in Social Security payroll taxes that most people owe and then withholds the other half from your paycheck. For the four months that are now in question, the withholding of the employee share — 6.2 percent — would stop, which means you would see more money in your paycheck.
This would only be true, however, for people who earn under $4,000 every two-week pay period, according to the memorandum, or about $104,000 a year. Those who earn more than that would still be subject to withholding, up to the annual limit of $137,700. And because the cap is per individual and not per household, two-income families who are well into the higher income tax brackets might have at least one working adult qualify.
At some point soon, the Internal Revenue Service will presumably issue guidance saying when the money is due, under what the White House is calling a “deferral” of these taxes. But the order also states that the Treasury Department shall “explore avenues, including legislation, to eliminate the obligation to pay the taxes deferred.”
Such a measure would face long-shot odds. Meanwhile, pity the payroll processors who have to interpret the memorandum. Mike Trabold, director of compliance at Paychex, outlined a number of scenarios in an interview. Employers could decide to be conservative and continue to withhold on their employees’ behalf. Or employers could stop withholding the money starting Sept. 1, and let those workers deal with the consequences of potentially owing money later, assuming the taxes eventually come due.
Then, some employers might formally let some employees continue to withhold even if all the other workers are getting the extra money in their paychecks. Or an employer might try to do the reverse — say, give an enraged employee, perhaps one threatening to sue, the opportunity to take home the 6.2 percent extra, even if the company chooses to continue withholding on all other employees’ behalf.
Assuming the income cap is itself legal, Pete Isberg, vice president for government relations at another payroll specialist, ADP, said that employers would need some flexibility. After all, an employee might show up for a new job on Sept. 15 having already earned too much elsewhere to be under the income cap. Other employees have side income throughout the year. Still more of them may simply make adjustments via a W-4 withholding form on their own, no matter what sort of default withholding strategy their employer selects.
The self-employed face their own questions, since they pay both halves of the 12.4 percent. Minnie Lau, a certified public accountant in San Francisco, is keeping her advice simple for most people who do not urgently need the boost in pay. “I am still telling clients not to spend the money, if they’re thinking this will be forgiven,” she said. “Because it literally hasn’t been yet.”
Here, the White House memorandum aims to extend relief by three months.
Under the terms of the CARES Act, the Education Department and its loan servicers put all federal student loan borrowers into administrative forbearance. That means there are no payments due through Sept. 30 on federal loans that the government controls. Interest is not accruing either, though there was no outright loan cancellation associated with the relief. People can keep making principal payments if they choose to.
If the memorandum holds — and it’s not clear who would stand against providing relief to millions of people who borrowed to pay for higher education — the forbearance will last through Dec. 31. The Department of Education has not yet said how it might carry out the memorandum. It has an extensive FAQ page about how pandemic forbearance works (according to the prevailing CARES Act rules) on its website.
The president’s executive order on assistance to renters doesn’t offer much immediate hope for people on the brink of losing their housing.
Until its expiration during the last week of July, an eviction filing moratorium that the CARES Act put into place protected millions of Americans. They included people who lived in public housing, qualified for the Section 8 rental assistance program or rented from landlords with certain kinds of federally backed mortgages.
Now that the federal freeze has expired, those renters have no governmental protection unless state or local officials have put their own moratoriums in place. The order directs various federal agencies to consider what they can do with existing authority or budgets to help further, but immediate relief for desperate renters seems unlikely via this order.