LEXINGTON, Ky. – There is no immediate pandemic-related financial relief on the way.
What You Need To Know
President Trump’s memoranda leaves lots up to states
Guidelines could take weeks or months to implement
A million Kentuckians are on unemployment
Leaders blame partisanship for failed negotiations
President Donald Trump signed one executive order and three memoranda after the United States Senate was unable to agree on a second COVID-19 stimulus package.
The President’s order and memoranda did not cut taxes, reinstate the federal unemployment program, issue new stimulus checks or forbid evictions or foreclosures. The actions did create a new unemployment benefit that pays $400 a week in federal unemployment benefits but requires states to come up with $100 per week to the individual at the same time.
States could request money from FEMA, which typically requires a 25 percent federal disaster funds match. The President’s order directs states to use the Coronavirus Relief Fund to provide the match, most of which is unspent, but doing so would derail states’ previous plans for that money. States that use the Coronavirus Relief Fund to pay their 25 percent would have enough money to pay roughly five weeks of benefits, and it could take weeks or months to implement the plan.
Ohio Gov. Mike DeWine (R) said Sunday his office is “looking at it” to determine if Ohio has the money to supply the 25 percent match. White House economic adviser Larry Kudlow told CNN the Trump administration planned to talk with state officials this past Monday to find out how many can come up with the match. Kudlow admitted states had not agreed to the match before President Trump signed the memorandum. Connecticut Gov. Ned Lamont (D) said it would cost his state $500 million to provide the extra benefit through the rest of 2020.
Senate Majority Leader Mitch McConnell, R-Kentucky, praised President Trump’s actions, attributing the stalwart in negotiations to partisanship.
“Struggling Americans need action now,” McConnell said in an issued statement. “Since Democrats have sabotaged backroom talks with absurd demands that would not help working people, I support President Trump exploring his options to get unemployment benefits and other relief to the people who need them the most.”
A temporary delay in payroll tax liability means some people could see more money in their paychecks, but, as a deferral and not a tax cut, it will have to be paid back. The President addressed the delay in payroll tax liability by directing the treasury secretary to stop collecting some Federal Insurance Contributions Act (FICA) taxes on wages from Sept. 1 through the end of the year.
Nearly 8 percent of one’s salary is withheld for FICA, which funds both Social Security and Medicare, and employers match that withholding, meaning the total deduction is more than 15 percent. The CARES Act passed this past March allowed employers to defer their FICA payments until next year.
Al Tompkins of the Poynter Institute broke it down this way: a person making $50,000 a year earns $961 a week, and 961 times 7.65 percent is $73 a week. Kudlow said it would mean about $1,200 per worker by the end of the year. Such a deferral would affect only people who are working, and it will have to be repaid.
Opponents of this idea, Democrat and Republican, claim it only helps working people and hurts the already strained Social Security and Medicare budgets.
The “eviction moratorium” executive order recommends the government does all it can to help tenants but does not block evictions.
“The Secretary of Health and Human Services and the Director of CDC shall 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 from one State or possession into any other State or possession,” according to the order.
Also, according to the order, “The Secretary of the Treasury and the Secretary of Housing and Urban Development shall identify any available Federal funds to provide temporary financial assistance to renters and homeowners who, as a result of the financial hardships caused by COVID-19, are struggling to meet their monthly rental or mortgage obligations.”
The President signed an order deferring federal student loan payments and interest through the end of the year, allowing debtors to put off paying student loans. While not forgiving student loans altogether, it does not impose a penalty for waiting longer to pay them back.
The orders do not provide new help for small businesses, such as the Payroll Protection Program (PPP), which expired this past weekend. Since April, it has infused $500 billion into the economy.
Senate Republicans suggested in the waning hours of negotiations extending the PPP for businesses with fewer than 300 employees who lost 35 percent or more of their revenue in the pandemic. The bill would set aside billions for lenders to loan businesses with fewer than 10 employees that have lost more than a third of their business.
“Before the jobless benefits expired, Senate Republicans tried several times to extend them while talks continued,” McConnell said. “But Leader (Chuck) Schumer declared that nobody could get help unless all of Democrats’ demands were met. Then the President’s team worked hard to bridge differences on many of the policies that would rapidly help American families — money to safely re-open schools, money for testing, more direct payments for households, another round of the PPP, legal protections, and more. But Democrats have continued to block all of it while holding out for non-COVID-related liberal demands like a huge tax cut for rich people in blue states and a massive slush fund for state and local governments that is many times the size of the actual coronavirus shortfall they are projected to face.”
United States Representative and House Budget Committee Chair John Yarmuth, D-Louisville, said President Trump’s “plan to force states” to pay the additional $100 in unemployment benefits would cost Kentucky $100 million each week because there are a million Kentuckians on unemployment.
“The President’s unworkable executive actions show that he is more interested in scoring headlines than actually helping the American people,” Yarmuth said. “Even if these measures could be implemented, they would slash vital aid for working families, endanger Social Security and Medicare, and do nothing to help get the virus under control. Their shortcomings exemplify why coronavirus relief must come from Congress because we are the only branch with the power to provide real support.”
Yarmuth added that more relief is needed and said Congress must continue holding the Trump administration accountable while working to pass bipartisan coronavirus relief legislation that fully responds to the crises facing American families.
“Incompetence and executive overreach have become synonymous with the Trump Administration,” Yarmuth said. “This time, President Trump is threatening our democracy and also jeopardizing American lives and livelihoods.”
Jason Bailey, executive director of the Kentucky Center for Economic Policy, questioned the legality of President Trump’s actions. He said even if President Trump’s actions prove legal, they are “wholly inadequate to the needs Kentuckians and our economy face,” adding the order and memoranda will leave the state with a recession that is “unnecessarily deeper, longer and more painful.”
“The President’s actions are inadequate to the scale of the problem that we face as a state here in Kentucky and as a nation,” Bailey said. “There’s not nearly enough of the relief people, communities, and the state and local governments need. There’s no money for state or local governments facing these huge budget shortfalls. There’s no money for the people who face potential eviction in the coming weeks, no extension of the moratorium on evictions; we’ve got no money for food assistance. It includes things that are legally questionable.”
Bailey said the guidelines outlined by President Trump’s plan would be challenging to implement and do not address people’s needs. He added the “most important thing” is continuing the $600 weekly unemployment payments.
“In Kentucky, one out of every two people say they have lost household employment income, either through the loss of a job, by having their hours reduced or having their wages cut,” Bailey said. “We have got to be providing relief directly to individuals. The $600 a week that was provided for people in the CARES Act has now ended. Congress let that expire. People are beginning to become more desperate to find the money for basic needs, stay in their homes, pay their bills, provide food, and the things that families need.”