President Donald Trump told the White House staff to keep working on an executive order if Congress does not finalize a new stimulus package.
Here’s what you need to know.
Before departing for Ohio today, Trump tweeted: “Upon departing the Oval Office for Ohio, I’ve notified my staff to continue working on an Executive Order with respect to Payroll Tax Cut, Eviction Protections, Unemployment Extensions, and Student Loan Repayment Options.”
Trump wants at least these policies — a payroll tax cut, eviction protections, unemployment benefits and student loan repayment options — to be included in the next stimulus package. Trump is also keen on including second stimulus checks too. The Senate is expected to begin summer recess after tomorrow, although Congress may forgo recess to remain in session to finalize a stimulus deal. If not, Trump has said repeatedly that he may use executive orders if Congress doesn’t act. Based on Trump’s tweet, here are some policies that could be included in a Trump executive order:
Payroll Tax Cut
Trump has said repeatedly that he wants to suspend payroll taxes and wants a payroll tax cut in the next stimulus package. While Congress did not include a payroll tax cut in the Heals Act, Trump apparently is willing to pursue a payroll tax cut through executive order. By suspending or cutting payroll taxes for employers, an employer could save money to spend on other priorities and potentially forgo layoffs or furloughs. This could help spur an economic recovery and provide liquidity to struggling companies. Payroll tax holidays, by definition, exclude those who are unemployed or retired. They also result in less revenue for the federal government, particularly for Social Security and Medicare. Legal experts have raised questions, under Separation of Powers, whether a president and not Congress has the power to cut taxes. Under Article I of the U.S. Constitution, only Congress has the power to “lay and collect taxes.”
Previously, Trump has supported simplifying federal student loan repayment plans to avoid confusion among borrowers and make them easier to manage. Like most congressional Republicans and U.S. Secretary of Education Betsy DeVos, Trump has not supported immediate, outright student loan forgiveness. Many student loan borrowers have asked what the new stimulus package means for student loans. That said, the Heals Act includes a new student loan repayment proposal, but does not include outright student loan forgiveness. Sen. Lamar Alexander (R-TN), who chairs the Senate Health, Education, Labor and Pensions Committee, proposed a new student loan repayment plan in the Heals Act that, among other things, provides student loan relief to borrowers without income. Under Alexander’s plan, if you have no income, you would make no federal student loan payments until you earn income. If you have income, your monthly federal student loan payments would be based on 10% of discretionary income. Like current income-driven repayment plans, a borrower could receive federal student loan forgiveness after 20 or 25 years of student loan payments.
Will the student loan relief in the Cares Act be extended? Trump has said that student loans may be suspended for “additional periods of time.” The Cares Act provided multiple student loan benefits, including pausing federal student loan payments and setting interest rates to 0% on federal student loans through September 30. The Heals Act does not include any extension of the Cares Act student loan relief, although Alexander’s plan effectively pauses student loan payments for borrowers with no income. It’s unclear whether Trump’s potential actions would mirror Alexander’s plan or take an alternative path. Importantly, prior to the Cares Act, in the wake of the Covid-19 pandemic, Trump used a 60-day executive order to pause student loan payments, set interest rates to 0% for federal student loans and halt federal student loan debt collection.
Trump says that he wants to extend unemployment benefits. The $600 a week unemployment insurance benefit ended in July, and Congress did not agree to extend these supplemental benefits before the expiration. In 49 states, recipients received their final unemployment check on July 25, and in New York, recipients last received these weekly unemployment benefits on July 26. In the Heals Act, Senate Republicans proposed to would reduce unemployment benefits to approximately “70% wage replacement.” The wage replacement would equate to about $200 a week under this proposal. Many Republicans have believed that the $600 a week unemployment benefit creates a disincentive for recipients to return to work. Sen. Mitt Romney (R-UT) and other Senate Republicans proposed an alternative plan to extend unemployment benefits. However, Senate Majority Leader Mitch McConnell (R-KY) now said he would be willing to support $600 a week unemployment benefits if the White House agrees.
Trump says that he wants to protect Americans from losing their home through eviction as a result of Covid-19. The Cares Act placed a 120-day moratorium on evictions. However, that eviction moratorium expired on July 25, 2020. In the wake of the Covid-19 pandemic, states such as New York, California, Texas and Florida could experience the most evictions based on rent costs and unemployment rate. More than 40 million Americans have filed for unemployment benefits as a result of Covid-19, and many renters have been disproportionately impacted by Covid-19, including losing their job in industries such as travel and hospitality. Sen. Elizabeth Warren (D-MA) Protecting Renters From Evictions and Fees Act, which would halt evictions through March 2021. While not included in the Heals Act, the Senate could extend the provisions in the Cares Act if Congress decides to offer additional relief to renters. Rep. Maxine Waters (D-CA) also introduced the Emergency Housing Protections and Relief Act of 2020 in the House of Representatives to provide $100 billion in emergency relief to renters, extend the Cares Act eviction moratorium until March 2021, and provide $75 billion in relief for homeowners. It’s unclear whether Trump’s potential executive order would incorporate any parts of these proposals or include an alternative path.
When will Congress agree on the next stimulus package? It depends who you ask. Some say a deal could come next week, while others say Democrats and Republicans are too far apart. Based on this key stimulus timeline, Congress was expected to reach a deal by August 7. That now appears unlikely, which could push a stimulus deal to next week. It appears that Congress agrees on $1,200 stimulus checks. However, Trump has also noted that he wants second stimulus checks more than $1,200. If Congress can’t agree, it’s possible that Trump issues executive orders on these policy proposal, and potentially more.
This second stimulus check would pay the most
New stimulus today: second stimulus checks, unemployment benefits and more
15 secrets to refinance student loans
Second stimulus checks: 4 plans compared
5 student loan changes for 2020
Trump: Student loans may be extended for “additional periods of time”
Trump: Second stimulus checks may be higher than $1,200
What the new stimulus package means for your student loans
Stimulus: here are the latest numbers for second stimulus checks and more
Second stimulus checks may be less than $1,200
Second stimulus checks: your questions answered
Trump wants at least $2 trillion for next stimulus
Don’t expect student loan forgiveness in next stimulus bill
Student loan refinancing rates are incredibly cheap