Congress in Recess
With surging COVID-19 infection rates across the country and no deal reached yet to provide economic assistance to millions of unemployed Americans, both the House and Senate adjourned for their August recess. Senators and Representatives are now in their home districts and will not return to work until early September. While Congress is in recess, leadership in the House and Senate has indicated that both chambers are under a 24 hour notice to return to Washington, D.C. for a vote if a deal seems within reach. However, given the relative time constraints coupled with the looming presidential election, any agreement on further COVID-19 relief will now be tied to a continuing resolution to get the government past the new year. It is expected that a continuing resolution would maintain funding for government agencies at their current levels until after the 2020 election or possibly until the end of January, 2021.
President Signs Four COVID-19 Executive Actions
On August 8, President Trump signed three memorandums and one executive order to provide or extend COVID-19 relief to individuals and businesses. The Disaster Relief Memorandum was issued to the Secretary of Labor, the Secretary of Homeland Security, and the Administrator of the Federal Emergency Management Agency and provides for supplemental unemployment payments at up to $400 per week. The Tax Memorandum was issued to the Secretary of Treasury and temporarily defers the collection and payment of certain payroll taxes from compensation paid between September 1, 2020 and December 31, 2020. A third Education Memorandum was issued to the Secretary of Education and extends student loan payment deferment and reductions of student loan interest rates to zero until December 31, 2020. The Executive Order directs various Cabinet and Executive Agency heads to find means of limiting evictions and foreclosures.
The Tax Memorandum
The president instructed the U.S. Treasury to halt collection of payroll taxes from September 1 through December 31 for workers who earn less than $4,000 every two weeks or those earning less than $104,000 a year. It is technically a tax deferral, meaning the taxes will still be due at a later date. President Trump said if he is reelected, he would make the cuts permanent. The Treasury Department is expected to issue guidance on whether or not employers are mandated to participate in the pay role tax deferral. Most legal experts have stated that employers do have discretion to defer payroll tax collections or continue withholdings. Congress has already deferred most employer payroll taxes for the rest of 2020. Therefore, any attempt to defer workers’ payroll taxes which would lower the funds in the Social Security Trust Fund, would require an act of Congress. To view the tax memorandum, click here.
The Disaster Relief Memorandum
The President’s memo calls for federal aid to restart at a level of $400 a week. However, the federal government will only cover 75% of the costs associated with this benefit. State governments will be responsible for the remaining 25%, subject to an agreement between the federal government and the state with regards to the program and funding. Many states find this compromise very troubling as they already view themselves as being cash-strapped due to the economic fallout from COVID-19. Funding from the Department of Homeland Security’s Disaster Relief Fund ($44 billion) that is normally used for hurricanes, tornadoes and massive fires would be shifted over to help pay for the unemployment insurance. The federal government has also requested that states begin to reconsider how they use the Coronavirus Relief Fund ($80 billion) and if it can any way serve as a state’s match requirement. Some governors have questioned openly if they can even provide the matching funds given the dire state of their local economies. If the funding for federal and state resources is provided, it is only expected to last for 6 weeks. It also remains uncertain whether individual states would be required to have their state legislative bodies approve these agreements. To view the disaster relief memorandum, click here.
The Executive Order on Evictions
The Presidents executive order does not ban evictions. Instead, it calls for Health and Human Services and Centers for Disease Control and Prevention to “consider” whether an eviction ban is needed. The executive order calls for Treasury Secretary Mnuchin and HUD Secretary Carson to consider, identify, review, and take action necessary to minimize, to the greatest extent possible, residential evictions and foreclosures during the ongoing COVID-19 national emergency. This includes providing federal funds to landlords to avoid tenant eviction or foreclosure. However, the executive order contains no requirement to provide additional aid. The Secretaries are directed instead to identify federal funds that could be used to provide temporary financial assistance to renters and homeowners who are struggling to make monthly payments as a result of financial hardships caused by COVID-19. It also mandates that the Director of Federal Housing Finance Agency to consult with the Secretary of Treasury in order to review existing authorities and resources that may be used to limit evictions. To view the executive order on evictions, click here.