WASHINGTON (CN) — Negotiations to continue much-needed economic assistance for millions of Americans hamstrung by the Covid-19 pandemic stalled out in Congress last week prompting President Donald Trump on Saturday to attempt to bypass lawmakers by issuing a host of executive actions reinstating relief.
There are four executive actions. The first directs an additional federal unemployment insurance benefit to be renewed at $400 per week, less than the last level previously agreed upon under the Cares Act at $600.
Upon signing them from his country club in Bedminster, New Jersey, President Trump said: “I’m taking action to provide an additional or extra $400 a week and expanded benefits, $400. That’s generous but we want to take care of our people.”
Trump said the federal government would pay 75% of the benefit, leaving the states to pay for 25%, although many states are struggling with financial difficulties due to the Covid-19 pandemic and are unlikely to have the funding to cover it.
Senate Minority Leader Chuck Schumer and Speaker of the House Nancy Pelosi were unable to strike a deal with Treasury Secretary Steve Mnuchin and White House chief of staff Mark Meadows on this before the benefits expired late last month.
President Trump claimed “will take care of pretty much this entire situation, as we know it.”
Trump administration officials previously this week proposed $400 weekly benefits to continue for four months after coming up from their initially proposed $200 to $300 allotment. Democrats did not budge however, sticking instead to the $600 allocation proposed in the $3 trillion Heroes Act passed by the House two months ago.
The Heals Act, introduced by Republicans on July 27, offered a flat $200 weekly benefit that would expire by the end of September and then, in October, be replaced with a 70% federal match on wages capped at $500 per week.
A reporter asked the president why he chose to reduce the benefit from the previous $600.
“This is the money they need, this is the money they want, this gives them a great incentive to go back to work,” Trump said.
The unemployment insurance executive order proposes paying for the extension by drawing on an $8 billion pool of unspent funds leftover from the last round of relief negotiations.
The president’s other executive actions include one that reups the moratorium on evictions previously approved under the Cares Act.
A memorandum signed by the president Saturday prolongs a suspension on payments for student loans, extending relief for the nearly 42 million student borrowers who collectively owe over $1 trillion.
The president waived interest on all federal student loans in March in a surprise announcement during a press conference at the White House. This ultimately led to Democrats calling for a total waiver on all student loan payments through Sep. 30. During negotiations for the next round of relief over the last month, Democrats called for a waiver on all payments through Dec. 31.
Trump’s order undercuts his party’s own proposal for student loans repayment, at least for now.
In a relief plan proposed by Senator Lamar Alexander, the Republican suggested tacking onto the Heals Act a modification to the repayment structure altogether. Republicans offered a standard 10-year repayment plan for borrowers or one that was based on their income. Indebted students could opt to remain with their current loan agreements but if they wanted to revise them, the 10-year repayment or income-based options would be all that are available under the proposal.
And in a final memorandum — and the one met with the most contention on Capitol Hill — President Trump unilaterally proposed a payroll tax cut.
A payroll tax is the levy on a worker’s paycheck for Social Security and Medicare. When Trump first floated the idea at the top of relief negotiations this summer it was widely unpopular with Republicans and Democrats balking in equal measure. The GOP ultimately did not include it in any of their proposed stimulus packages.
The president noted the shaky legal ground his executive actions stand on.
“If we get sued, it’s somebody that doesn’t want people to get money,” Trump said Saturday. “And that’s not going to be a very popular thing.”
The executive branch does not have authority to interfere with taxation – that is the purview of Congress under the Constitution. But the memorandum does act as a sort of end-run.
According to the newly issued directive, a “national economic emergency” will be declared, allowing the IRS to immediately end collection on payroll taxes. The IRS deferred tax payments once this year already because of the pandemic when it extended Tax Day from April 15 to July 15. Saturday’s memorandum sets the expiration date at the end of the year.
Trump’s economic adviser Stephen Moore essentially previewed the payroll tax cut in an op-ed for the Wall Street Journal, noting one of the more unpopular aspects of the cut: leaving employees on the hook to pay those taxes later.
To avoid that, Saturday’s executive action includes a pledge to have the Treasury secretary find a way to “eliminate the obligation” to pay the deferred taxes.
Senator Ron Wyden said in a statement Saturday that a payroll tax deferral would drain funding out of Social Security.
“This fake tax cut would also be a big shock to workers who thought they were getting a tax cut when it was only a delay,” the Oregon Democrat said. “These workers would be hit with much bigger payments down the road.”
Senate Majority Leader Chuck Schumer, a New York Democrat, said this week that if Trump issued executive orders, litigation would be likely.