• Trump signs executive order and three memoranda as Congress fails to agree
  • Adds a new program to replace expanded unemployment benefits of up to $400 a week.
  • Federal student loan payments deferred, interest waived
  • No extension of federal eviction moratorium
  • Payroll tax deferred for employees earnings below $100K a year

President Trump announced over the weekend plans to push through coronavirus relief measures via executive action after talks failed in Congress on Friday. "We’ve had it," he said in a press briefing Saturday at the Trump National Golf Club. "And we’re going to save American jobs and provide relief to the American workers, and I’ll be signing these bills in a very short period of time." The U.S. crossed 5 million cases of COVID-19 yesterday with over 150,000 deaths recorded. The unemployment rate was at 10.2% in July, far above pre-pandemic levels. 

The differences between the Republicans and Democrats seem to center on aid for states and local governments and unemployment benefits. One reason the debate has dragged on is because, while the Democrat-controlled House of Representatives passed a Phase 4 stimulus package in May, the "HEROES Act," the Republican-controlled Senate didn't pass its preferred Phase 4 bill, the "HEALS Act," until late July. A major point of disagreement is that the Republicans are looking to spend around $1 trillion in the next package, while the Democrats believe at least $3.5 trillion is required (they have offered to cut HEROES Act bill by $1 trillion if the Republicans increased theirs by the same amount). 

Here's what the executive order and memoranda Trump signed include:

  • $400 a week in additional money to people receiving unemployment benefits, $300 of which will be provided by the federal government and $100 of which will be provided by state governments. To qualify for the additional funds, unemployed people must have earned less than $104,000 per year ($2,000 per bi-weekly pay period * 26 pp / yr) and be getting at least $100/week in unemployment benefits. The payments will be paid for with funds taken from FEMA, and will be capped at $44 billion. The payments will be retroactive through August 1, when the $600 a week unemployment expansion ended, and the program is slated to last through December 6. Because the relief is emergency aid, not unemployment insurance payments, implementation delays are likely as states will need to create new systems to pay it. In addition, President Trump directed states to use the remaining money from the CARES Act to fund their $100 a week portion of the payments, but many states have already allocated this money, meaning it would have to be pulled from some other program in states' already strained budgets. Finally, the funds may not last through December 6, with the Committee for a Responsible Federal Budget estimating that the $44 billion will last only until August 29.
  • Deferring payments and waiver of all interest on federal student loans until the end of 2020 (moratorium was set to expire September 30).
  • No extension of CARES Act federal eviction moratorium which expired July 24. Treasury and Housing and Urban Development instructed to identify funds to provide temporary financial assistance to renters and homeowners struggling to meet their monthly rental or mortgage obligations and "promote the ability of renters and homeowners to avoid eviction or foreclosure."
  • Payroll tax deferred for Americans earnings less than $100,000 per year ($8,000 a month) from September 1 until December 31. It will have to be paid next year. "If I'm victorious on November 3, I plan to forgive these taxes and make permanent cuts to the payroll tax," he said. However, experts say eliminating a tax permanently would require an act of Congress.

But will investors and economists see this as a sufficient replacement for a full-fledged deal in Congress? It's unlikely, since it leaves out a lot, like money for reopening schools and additional testing, but hope remains as negotiations are expected to continue. There are questions about what the president can do without Congress approval according to the law. People on both the right and left also question if payroll tax holidays are the relief required at the moment since it only helps those who are working, consumers will still worry about spending since it will have to be paid later, it is poorly targeted and will compromise funding for social programs.