President Donald Trump has announced his plans for an executive order to extend COVID-19 economic … [+] relief.
Editor’s note: This is a developing story and will be updated as details about the executive order emerge.
President Donald Trump has announced an executive order to extend economic relief after lawmakers were unable to reach an agreement on new stimulus package.
The orders include extending enhanced unemployment benefits and the federal eviction moratorium, imposing a payroll tax holiday and further suspending federal student loan payments.
The executive order comes a week after federal unemployment benefits and a federal eviction moratorium expired.
Though Republicans and Democrats were able to make some progress in the past week regarding the components of a new stimulus package, they largely disagreed how much the next round of relief should cost. The White House rejected a $2 trillion proposal from Democratic leaders on Thursday.
With the U.S. economy still reeling—Friday’s jobs report showed the unemployment rate at 10.2%—the president determined he needed to step in and provide interim relief.
Here’s what’s included in the executive order, according to Trump’s comments during a Friday night press conference in Bedminster, New Jersey:
Trump’s executive order extends enhanced unemployment benefits through the end of the year. The president didn’t specify the amount of those benefits.
The CARES Act expanded unemployment benefits dramatically and provided an additional federal payment boosting state benefits. That boost, called Federal Pandemic Unemployment Compensation (FPUC), gave unemployed Americans an additional $600 per week, on top of their regular state unemployment benefits. FPUC expired at the end of July.
The HEROES Act, proposed by House Democrats in May and used as their focal point during negotiations, would extend FPUC at $600 per week through the end of this year.
GOP members largely pushed back on the proposal, arguing that the benefit would be a “disincentive” to return to work for those who made more money on unemployment than they did while working. Instead, Republicans pushed for $400 for 20 weeks or 70% replacement of previous wages with a $600 cap.
Experts, however, are already sounding the alarm on how Trump’s executive order to extend unemployment benefits might play out. Jacob Leibenluft, a senior fellow at the Center for American Progress who previously served on the National Economic Council at the White House, raised his concerns on Twitter.
“Why is this a terrible idea? First, states/localities are facing desperate funding crises now, so they need that money (and much more) to address public health and prevent layoffs of teachers and other public employees. This would make those funding crises even worse,” Leibenluft tweeted.
Leibenluft added that it would be difficult for states to pass new legislation to implement the new FPUC terms, and that there’s not enough money remaining from the CARES Act—which is how the White House plans to provide the extended benefits—to fund all states entirely.
A payroll tax holiday will be retroactive to July 1 and go through until the end of the year. Trump mentioned a possibility of extending the payroll tax delay beyond that.
A payroll tax cut reduces the amount taken out of workers’ paychecks to fund federal programs such as Social Security and Medicare, but the benefits of a payroll tax cut can be limited and depend on a worker’s income and employment status. In this case, Trump would delay collecting taxes — meaning they would eventually have to be paid back later. Further details on his plan to impose the payroll tax holiday have yet to be released.
Trump, who has long advocated for a tax cut to be included in the next stimulus package, was faced with opposition from both Democrats and Republicans. Democrats argued it would do nothing to help the millions of unemployed Americans, and Republicans described it as “problematic.” The White House eventually dropped its request for the payroll tax cut, but has now made an about-face.
More than 16 million Americans are currently unemployed, according to the most recent jobs report, and 1.2 million Americans filed jobless claims last week, marking the 20th straight week that more than one million people have applied for aid. A payroll tax holiday will have no effect on those individuals.
The executive order extends a federal eviction moratorium that expired last week. Trump did not specify how long the moratorium would last.
The CARES Act prevented landlords or housing authorities from filing eviction actions, charging nonpayment fees or penalties or giving notice for tenants to vacate. Those orders only applied to federally subsidized and federally backed housing, and expired on July 24.
An August report from a group of housing experts estimated that 30 to 40 million Americans could be at risk of eviction, stating the U.S. “may be facing the most severe housing crisis in its history.” Communities of color, which are disproportionately rent-burdened, would be the hardest hit by the eviction crisis. The experts called for “meaningful, swift and robust government intervention” to prevent long-term negative effects of the COVID-19 housing crisis.
The CARES Act previously suspended some federal student loan payments, with zero interest, through September 30. Perkins Loans and Federal Family Education Loans not owned by the U.S. Department of Education, along with private student loans, were not included in the forbearance.
Student loan borrowers working toward Public Service Loan Forgiveness under provisions in the CARES Act had the months of forbearance count toward forgiveness. Borrowers participating in student loan rehabilitation also had the suspended months count toward pulling their loans out of default.
The CARES Act provided Americans with one-time direct economic impact payments, also referred to as stimulus checks. These payments were as much as $1,200 per individual, or $2,400 for a couple filing jointly, and provided additional money for qualifying dependents under 17.
As the pandemic has raged on and Americans continue to ride the economic downturn, another round of stimulus checks has been a source of heated debate in Washington. Both Democrats and Republicans agreed that the next stimulus package should include more direct payments to Americans, but couldn’t agree on how much those payments should be.
Democrats are pushing for $1,200 per family member, up to $6,000 per household. Republicans proposed another round of stimulus payments in their HEALS Act that would follow the same provisions as the CARES Act, but would remove the age cap for qualifying dependents.
Trump’s executive order does not include provisions to provide another round of stimulus checks to Americans. As negotiations have reached a standstill in Washington, it’s unclear if another stimulus package will be passed and signed into law in the near future.
I’m a Personal Finance Reporter for Forbes Advisor. Previously, I covered personal finance at other national web publications including Bankrate and The Penny Hoarder.
I’m a Personal Finance Reporter for Forbes Advisor. Previously, I covered personal finance at other national web publications including Bankrate and The Penny Hoarder. I’ve been featured as a personal finance expert in outlets like CNBC, Yahoo! Finance, CBS News Radio and more. When I’m not digging up the best ways to manage your money, I’m out traveling the world. Follow me on Twitter at @keywordkelly.
News – Trump Announces Executive Order Plan To Extend COVID-19 Economic Relief