The House and the Senate haven’t been able to come to terms on the next stimulus bill. This month promises to be busy with next year’s spending bill, the possible vote for a new member of the Supreme Court, and the upcoming election. With everything on the agenda, it’s possible we may not see a vote on another stimulus bill until after the start of the fiscal year on October first, or possibly not until after the election.
However, there are still several issues that remain unresolved and need to be addressed sooner, rather than later.
Here are three big topics that need to be addressed:
1. Expanded Federal Unemployment Benefits
Resolving the issue with expanded unemployment benefits is the biggest issue that needs to be addressed. Both parties were in favor of supporting expanded benefits, even if they didn’t agree on how much. The Democrat-led House was in favor of resuming the $600 weekly benefit that was included in the CARES Act, while the Republican-led Senate was in favor of a lesser benefit in the $300 per week range.
In the end, they couldn’t reach an agreement on a new bill and President Trump signed a Presidential Memorandum that provided $300 per week for unemployed workers. However, President Trump’s action was limited. This act required using FEMA funds and states had to opt-in to the program. The total amount of funds are limited to six weeks of benefits and some states have already run out of money under this program. This leaves unemployed workers only able to receive their state unemployment benefits, which range from around $300 – $500 per week.
The program also used FEMA funds at a time when there are several major wildfires and tropical storms causing chaos. FEMA will likely need an injection of cash to cover the responses to these disasters.
A resolution is needed on this issue – and the sooner, the better.
2. Payroll Tax Deferral
Like the expanded unemployment benefits, the payroll tax holiday was brought into being with another presidential memorandum. Those who are earning less than $4,000 per bi-weekly pay period (or $104,000 per year) are eligible to have the Social Security portion of their payroll taxes deferred from September 1 through the end of the year. This represents 6.2% of their salary.
However, President Trump doesn’t have the authority to change the tax law—he only had the authority to defer these taxes. This is an important distinction. Instead of this being a payroll tax waiver, this is only delays when the payroll taxes are due.
In other words, this payroll tax deferral could end up causing workers to have more money withheld from their paychecks next year unless the payroll tax deferral is made permanent by Congress.
Because President Trump couldn’t change the tax laws by himself, the payroll tax deferral is optional. Many employers have opted out of the program due to the complexity and uncertainty surrounding it. However, it is not optional for many employees, including federal employees and military members who are required to participate. This could potentially put these employees in a bind next year if the money is recouped from their future paychecks.
Congress will have the power to waive these future payroll tax obligations should they choose to vote this into law. But that would come at the expense of funding Social Security. Either way, having clarity will help the millions of workers who are required to participate in the payroll tax deferral better plan for the upcoming months.
For those who are impacted, the best course of action right now is to plan to have that money recouped in the first four months of 2021.
3. Eviction Moratorium
The CARES Act included an eviction moratorium that expired at the end of July. Things were looking bleak for a few weeks. However, the Centers for Disease Control and Prevention (CDC) issued an eviction moratorium to prevent the spread of Covid-19. This moratorium spans from September 1, through the end of the year.
This moratorium applies to renters who earn less than $99,000 per year ($198,000 for joint filers) and have lost income due to the Covid-19 pandemic.
Renters must also certify that they have used their best efforts to look for housing assistance, cannot pay their rent due to lost income or extraordinary out-of-pocket medical expenses, they have tried to pay as much of their rent as possible, and if evicted, they would likely become homeless and be required to live in a shared living space.
Renters who meet these criteria must contact their landlord to stop the eviction process.
However, the CDC order does not prevent late fees, let renters off the hook for back rent, or stop evictions for other reasons. It also does not supersede state laws.
This program helps renters who have been impacted by the pandemic, but it doesn’t do anything to help landlords who have to continue paying their mortgage.
This is an issue where Congress can step in to draft a more powerful solution.
What About Another Stimulus Check?
To date, the primary reason another stimulus bill hasn’t been passed is due to the high cost of the proposed bills. Both parties and houses of Congress have openly petitioned for another extended unemployment benefits, small business relief, funding for education, funding for coronavirus testing and vaccines, and other measures to support the economy. But the bill has been too high to make it through both houses of Congress.
While there is some support for another stimulus check, it would add several hundred billion dollars to any proposed bill. And there may not be enough support to include another stimulus check in a future spending bill.
Right now, the focus will likely remain on next year’s spending, the Supreme Court seat, and the upcoming election.