Federal COVID-19 Relief Update
August 13, 2020
This past weekend, President Donald Trump took a series of executive actions aimed at providing federal support for individuals who continue to be impacted by the negative economic consequences of the COVID-19 pandemic. The presidential action follows a breakdown in negotiations between White House officials and Democratic congressional leaders who had been attempting to produce a legislative framework for a fifth COVID-19-relief bill.
All told, the president signed three memorandums and one executive order, the details of which are as follows:
Memorandum Authorizing Continued Federal Unemployment Benefits – The directive authorizes the Federal Emergency Management Agency to tap into the Disaster Relief Fund (DRF) to provide renewed federal unemployment assistance for individuals who lost their jobs due to the coronavirus pandemic. Benefits will begin from the week of unemployment ending August 1, 2020.
The original memorandum, as signed by the president, authorizes the federal government to provide a $300 weekly benefit and requires states to provide $100 in state matching funds (for a total of $400). However, after a number of governors indicated that their states would be unable to meet the cost-sharing requirement, the Trump administration agreed to modify the terms of the directive. Pursuant to guidance released this week by the U.S. Department of Labor, states will have two options to provide enhanced federal benefits, as follows:
For the $400 per week benefit, states are required to contribute 25 percent ($100) and the federal government will cover 75 percent of the cost ($300). States are encouraged to satisfy the 25 percent state match requirement and provide the additional $100 in benefits either through allocations of the state’s Coronavirus Relief Funds (CRF) or other state funding. For the $300 per-week benefit, FEMA will fund the entire amount and states may choose to simply satisfy the 25 percent state match, without allocating additional state funds, with the state funding used to pay regular state UI unemployment benefits.
The new federal unemployment payments are slated to end on December 6, 2020 or when the balance of the DRF reaches a certain specified level (whichever occurs first). The benefit replaces the $600 in federal unemployment payments that were authorized by the CARES Act and which lapsed back on July 31.
Memorandum on Deferring Payroll Tax Obligations – The memorandum instructs the Department of the Treasury to temporarily halt the collection of payroll taxes – effective from September 1 through December 31. The deferral of payroll tax obligations will apply to any worker whose wages or compensation during any bi-weekly pay period is generally less than $4,000, calculated on a pre-tax basis.
Memorandum on Student Loan Payment Relief – The directive requires the Department of Education to waive all interest on student loans held by the federal government though the end of 2020. The memorandum also allows individuals to delay student loan payments through the end of the year.
Federal COVID-19 Relief UpdateThe order directs the Department of Health and Human Services and the Centers for Disease Control to “consider” whether a ban on evictions is needed. The previous congressionally mandated eviction moratorium expired on July 24.
President Trump’s order also requires the Department of Housing and Urban Development to take action to promote the ability of renters and homeowners to avoid eviction and foreclosure. The order requires similar action on the part of the Federal Housing Finance Administration. Notably, the federal agencies covered by the directive are not required to dedicate any existing resources to help prevent evictions/foreclosures.
Outlook
A number of legal scholars and members of Congress from both parties have openly questioned the constitutionality of the president’s actions. However, it remains unclear if the orders will ultimately be challenged in court.
In the meantime, the president’s top advisors and Democratic congressional leaders have signaled an openness to returning to the negotiating table. Unfortunately, the two sides remain far apart of the overall scope and price tag of a fifth COVID-19-relief bill, with aid to state and local governments remaining as perhaps the biggest point of contention in the negotiations. While congressional Democrats have continued to push $915 billion in direct aid to states, localities, tribes, and territories – per the terms of the House-passed HEROES Act – administration officials have offered $150 billion in relief funds.