How the New Executive Orders May Affect You
August 10, 2020
After Congress failed to reach an agreement on a second stimulus package, President Trump signed four executive orders on August 8, 2020. Although Democrats and Republicans seemed to agree that a second round of direct payments is necessary to help Americans and the economy, the parties’ differences on the cost of the overall bill and certain provisions resulted in failed negotiations. However, this week Democrats and Republicans have renewed their negotiations to come to an agreement on the second stimulus bill as a result of Trump’s executive orders.
Here’s a look at what Trump’s executive orders cover:1
Eviction Moratorium: The CARES Act initially provided an eviction moratorium for renters and homeowners struggling to meet payments due to hardships caused by coronavirus (COVID-19). Trump’s executive order indicates that top officials should consider renewing this moratorium, which expired on July 24.
Payroll Tax: The executive order defers the collection of payroll taxes from September 1, 2020, through December 31, 2020, for Americans earning less than $104,000 annually. Keep in mind that this is a tax deferral, which means the taxes will have to be paid at a later date; however, Trump is encouraging Congress to enact legislation that would make this a permanent tax cut. Although this may provide relief for certain Americans, some lawmakers are concerned about not collecting these payroll taxes because they help fund Social Security and Medicare. Also, some are skeptical that this helps the economy as it only helps those currently employed, not those who have lost their jobs.
Unemployment Benefits: Under the CARES Act, eligible Americans were provided an extra $600 weekly federal unemployment benefit in addition to state unemployment benefits. Some argued that these $600 weekly payments, which expired on July 31, provided a disincentive to work since some individuals were making more on unemployment than at their previous jobs, making this benefit difficult to pass by both parties. The new executive order extends the extra benefit at a reduced rate of $400 per week, which consists of $300 from the federal government and $100 from state governments. However, many states lack funding and may not be able to enter into this financial agreement with the federal government, which means that any unemployed person living in that state will not get the additional unemployment benefit.
Student Loans: Congress previously suspended payments on some federal student loans due to the virus. The new executive order will extend the deferments, which are set to expire at the end of September, through the end of the year.2 This part of Trump’s executive order will likely be implemented as it does not require funding from Congress, state governments, or the private sector.
With Trump focused on relief through payroll tax deferment, unemployment benefits, an eviction moratorium, and student loans, many may have noticed what it does not address: the second round of stimulus checks. Congress can still approve a stimulus package with stimulus payments and coronavirus relief through state and local aid (for example, funds to reopen schools safely and liability protection for schools and businesses).3
Although the recently signed orders seem to provide relief to Americans economically affected by the pandemic, the question remains whether Trump’s actions are subject to legal limitations. While it might seem like executive orders from the President will become law, the Constitution gives Congress control over federal spending, so some would argue that the President does not have legal authority to decide how money should be spent on coronavirus relief.4 The outcome of President Trump’s orders is still unknown, as the legal legitimacy of the orders may be called into question.
If you have any questions about how the recent executive actions can affect your personal financial plan and would like to speak to a Ronald Blue Trust advisor, please call 800.987.2987 or email [email protected].
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