What do Trump's executive actions mean for $600 unemployment aid?

Lauren Aratani
·5 min read
<span>Photograph: Rex/Shutterstock</span>
Photograph: Rex/Shutterstock

Donald Trump unveiled four executive actions meant to bolster the economy on Saturday after Congress failed to reach an agreement on a new coronavirus stimulus package.

Trump praised himself for stepping up with the actions, saying that they will “take care, pretty much, of this entire situation”, but the reality is – of course - more complicated. Here is what you need to know about Trump’s stimulus executive actions.

What are Trump’s executive actions?

Trump unveiled issued executive actions, including three memorandums and one executive order, meant to assist Americans affected by the economic downturn.

One memorandum halts federal tax collection for anyone whose bi-weekly pre-tax paychecks are below $4,000. A second memorandum boosts unemployment insurance by $400 a week, though cash-strapped state governments are expected to foot a fourth of the bill. The last memorandum defers the collection of student loan payments and waives interest fees on student loans until the end of the year.

The last executive action is an order that calls on the heads of the Department of Health and Human Services and the Centers for Disease Control and Prevention to “consider” a moratorium on evictions.

Are the executive actions legal?

It is unclear. The US constitution gives Congress the power to spend money and set taxes, while the president can approve or veto those decisions. Through his executive actions, Trump is trying to step around Congress, which could be unconstitutional.

Related: Trump signs order for coronavirus relief, with lower level of extra aid for jobless

Democrats in Congress have suggested that they are too busy trying to negotiate the stimulus package to do something about the executive actions even if they are unconstitutional. “Right now we want to address the needs of the American people,” the speaker of the House, Nancy Pelosi, told CNN. “As my constitutional advisers tell me, they’re absurdly unconstitutional.”

Do the executive actions include a second stimulus check?

No. Trump does not have the ability to fund a second round of stimulus checks without Congress.

Instead, Trump opted to implement a payroll tax holiday that would pause collection of federal taxes for people whose bi-weekly paychecks are $4,000 or less. Americans pay 6.2% of their paychecks in a tax for social security and 1.45% of their paychecks go to the Medicare tax. The holiday would begin on 1 September and end on 31 December.

A payroll tax holiday is, of course, much different from checks that go directly into the pockets of Americans. For one thing, the holiday is just a deferral period – only Congress can turn the deferral into a tax cut – meaning that most employers will probably continue to withhold the same amount from their employees’ paychecks in case they have to pay the tax once the holiday is over.

Secondly, even if the deferral turns into a tax cut, it only benefits people who are collecting a paycheck, leaving out those who are out of a job or who cannot work.

What do the executive actions do to unemployment insurance?

Trump called for a “lost wages assistance program” that would use money from the Department of Homeland Security’s disaster relief fund, typically used for natural disaster relief, to provide unemployed Americans an additional $300 a week. The program is expected to last until the fund, which the White House says has more than $70bn, reaches $25bn, or 6 December, whichever comes first.

The memorandum says that an extra $400 would ultimately be given to unemployed Americans, with the expectation that states will shoulder $100 a week to top off the federal government’s $300. This is unlikely to happen as most state budgets have been completely decimated by the downturn.

Experts say that the program will probably take months to implement since, unlike the extra $600 Congress included in the Cares Act – funds that expired at the end of July – the program expects states to set up a new system instead of operating within existing unemployment systems.

Will the executive actions help homeowners and renters?

Not really. The executive order instructed federal officials to consider whether evictions were necessary and asked the Department of Housing and Urban Development and the treasury department to identify funds that could be used to help renters and homeowners.

In the Cares Act, Congress instituted a federal eviction moratorium, which expired in July, and even that only benefited those living in federally assisted properties.

Related: California landlords are locking out struggling tenants. A 'tsunami of evictions' may be next

State governments have had the most power in enacting and enforcing eviction moratoriums during the pandemic, but many of the moratoriums have since expired, leaving millions at risk of homelessness without further assistance.

A statement from the National Low Income Housing Coalition said Trump’s executive order “is an empty shell of a promise that does nothing to prevent evictions and homelessness and acts only to mislead renters into believing that they are protected when they are not”.

When can we expect to see the actions taking effect?

The timeline for the rollout of the additional unemployment benefits and executive order for rents and homeowners is unclear. The former requires coordination from state governments, while the latter requires action from departments and agencies within the federal government.

The payroll tax holiday is set to begin on 1 September, but employers will probably choose to continue withholding federal taxes from their employees’ paychecks, anticipating that they will need to be paid at a future date.

The pause on student loan payments is under way and will last until the end of the year, per Trump’s memorandum.

Is Congress still negotiating its stimulus package?

Over the last two weeks, Democrats and Republicans in Congress have been negotiating a stimulus package that could pass the Democratic-controlled House and Republican-controlled Senate, but to no avail. Talks paused on Friday, with both sides blaming each other over the weekend for stalling talks. When and if they will go back to the negotiating table is uncertain.

The price of the stimulus package has been the sticking point in negotiations, with Democrats advocating for the $3.5tn Heroes Act the House passed in May while the Republicans push a package closer to $1tn.