Trump attempts to wrest tax and spending powers from Congress with new executive actions

AUGUST 8, 2020

At a news event in Bedminster, N.J., Trump said the actions would provide economic relief to millions of Americans by deferring taxes and, he said, providing temporary unemployment benefits. The measures would attempt to wrest away some of Congress’s most fundamental, constitutionally mandated powers — tax and spending policy. Trump acknowledged that some of the actions could be challenged in court but indicated he would persevere.

Trump bemoaned how Democrats had refused to accept his demands during the recent negotiations but attempted to brush it aside, saying four measures he signed Saturday “will take care of pretty much this entire situation.”

But there were instant questions about whether Trump’s actions were as ironclad as he made them out to be. A leading national expert on unemployment benefits said one of the actions would not increase federal unemployment benefits at all. Instead, the expert said it would instead create a new program that could take “months” to set up. And Trump’s directive to halt evictions primarily calls for federal agencies to “consider” if they should be stopped.

Trump also mischaracterized the legal stature of the measures, referring to them as “bills.” Congress writes and votes on bills, not the White House. The documents Trump signed on Saturday were a combination of memorandums and an executive order.

The White House and Democrats have clashed for weeks about what to do with the $600 enhanced weekly unemployment benefit that expired at the end of July.

One of the measures Trump signed on Saturday aims to provide $400 in weekly unemployment aid for millions of Americans. Trump said 25 percent of this money would be paid by states, many of which are already dealing with major budget shortfalls. The federal contribution would be redirected from disaster relief money at the Federal Emergency Management Agency. Those funds are not likely to last more than two months, and Trump would not say when the benefits would kick in.

Another document signed by Trump on Saturday attempts to defer payroll tax payments from September through December for people who earn less than $100,000. The impact of this measure could depend on whether companies decide to comply, as they could be responsible for withdrawing large amounts of money from their employees’ paychecks in a few months when the taxes are due.

The president said that if he wins reelection, he would seek to extend the deferral and somehow “terminate” the taxes that are owed. He also dared presumptive Democratic presidential nominee Joe Biden to try to recoup those tax dollars if elected in November. The payroll tax funds Social Security and Medicare benefits, and it’s unclear where those programs will get funding if the taxes are deferred.

Two of the other executive actions are related to eviction protections and student loan relief. The plan related to housing only makes suggestions to federal agencies but does not halt evictions nationally. The measure on student loans aims to extend the relief granted by Congress in March through the end of the year.

As the economy deteriorated rapidly in March because of the pandemic, Congress passed the $2 trillion Cares Act. That law provided $600 in enhanced weekly unemployment benefits through July and protected millions of people from eviction through July. The White House and Democrats had spent the past two weeks working on a deal to extend those provisions, but talks collapsed on Friday.

Trump had tried to insist that Congress include a payroll tax cut as part of the talks, but Democrats and Republicans rejected the idea. Trump has sought repeatedly to cut payroll taxes, even before the novel coronavirus, and on Saturday he took his first unilateral action related to the tax, attempting to defer collection of these taxes.

Trump’s unilateral actions, if carried out, would provide only limited relief. The White House on Saturday authorized taking about $50 billion from the FEMA fund to pay for unemployment benefits, but that money will only last about five weeks before expiring, according to Democratic congressional aides and unemployment experts. Then the White House probably would again have to ask Congress for money.

“These policy announcements provide little real help to families,” House Speaker Nancy Pelosi (D-Calif.) and Senate Democratic Leader Chuck Schumer (D-NY) said in a statement following the executive actions. “Instead of passing a bill, now President Trump is cutting families’ unemployment benefits and pushing states further into budget crises, forcing them to make devastating cuts to life-or-death services.” They pointed out that Trump’s housing plan “provides no assistance to help pay the rent.”

Trump’s action on unemployment does not funnel additional money to the existing unemployment program, but instead creates a new program for “lost wages” that states will have to set up from scratch, said Michele Evermore, an unemployment expert at the National Employment Law Project. It could take months for such an effort to get off the ground, Evermore said, and states have already been overwhelmed in trying to set up the unemployment insurance programs.

Trump also signed an executive order stating that it was U.S. policy to minimize evictions and foreclosures. The order does not reinstate the federal eviction moratorium that expired last month or fund the billions in assistance Democrats have said is necessary to help people already behind on their rent.

Instead, the order calls on the Department of Health and Human Services and the Centers for Disease Control and Prevention to “consider” whether it was necessary to temporarily halt evictions. The Treasury Department and the Department of Housing and Urban Development “shall identify” federal funds to provide temporary assistance to renters and homeowners “who, as a result of the financial hardships caused by COVID-19, are struggling to meet their monthly rental or mortgage obligations,” the order says.

“The President cannot create new money with an executive order. These EOs simply show the limitations of the President’s legal authority,” said Jack Smalligan, a former official at the Office of Management and Budget and now a senior policy fellow at the Urban Institute, a centrist think tank.

Senior members of Trump’s administration cast doubt on the feasibility of these maneuvers as recently as this week. On the topic of extending unemployment benefits, Larry Kudlow, the director of the White House National Economic Council, said on Monday: “I don’t think that can be done administratively. I think that requires an act of Congress.”

Senate Majority Leader Mitch McConnell (R-Ky.), who mostly stayed out of the recently negotiations between the White House and Democrats, praised Trump’s move.

“Struggling Americans need action now,” he said in a statement. “Since Democrats have sabotaged backroom talks with absurd demands that would not help working people, I support President Trump exploring his options to get unemployed benefits and other relief to the people who need them the most.”

Democrats, however, attacked Trump’s actions.

“This scheme is a classic Trump con: play-acting at leadership while robbing families of the support they need,” Sen. Ron Wyden (D-Ore.) wrote on Twitter. “This ‘plan’ fails to reinstate supercharged unemployment, and would throw already overburdened state programs into chaos, making it harder to get benefits out the door.”

Some experts have said the president has no legal basis to unilaterally extend unemployment benefits. The president on Saturday told reporters, “We have a lot of money that was unspent,” referring to the Cares Act.

House Democrats in May passed a $3.4 trillion bill that they wanted to serve as the next economic relief measure, but it was rejected by the White House and Senate Republicans as too costly. Congressional Democrats in recent days had tried to seek a compromise, saying they were willing to cut $1 trillion off their stimulus package but that the White House’s negotiators rebuffed their overtures.

As the president acknowledged at his news conference, the executive orders leave unaddressed multiple critical needs. Bipartisan support had grown on Capitol Hill to provide hundreds of billions in additional funds to help schools safely reopen; for a second round of $1,200 stimulus payments; and a replenishing of funds for the Paycheck Protection Program, among other issues. Trump accused Democrats of blocking these programs from being funded, but he may face political blowback for failing to secure those initiatives in an election year.

Some experts have expressed confusion over the legality of a plan to unilaterally extend federal unemployment benefits. White House officials have studied using leftover money approved by Congress for use by the FEMA. But it is unclear if the administration can repurpose those funds for unemployment benefits without violating the Antideficiency Act, a federal budgeting law.

“States cannot pay unemployment insurance benefits in a way that has not been authorized by Congress through enactment of legislation,” said Michele Evermore, an unemployment insurance expert at the National Employment Law Project. “By definition, states’ administration of unemployment insurance must conform to federal law — and there is no federal law on the books allowing for an additional sum.”

The executive orders also amount to at least a partial about face from Trump’s promises as a presidential candidate, when he panned executive orders. “We don’t want to continue to watch people signing executive orders because that was not what the Constitution and the brilliant designers of this incredible document had in mind,” Trump said in March 2016. “We need people that can make deals.”

The “Heroes” Act passed by House Democrats in May would have extended the enhanced $600 unemployment benefit through January, but the White House and Senate Republicans sought to change the formula for these benefits so that — in many cases — the weekly payment came to about $200 a week. Republicans eventually changed their offer and told Democrats they would agree to about $400 a week in benefits. But those talks collapsed in part because of a broader disagreement about aid to struggling states.

The unemployment rate in February was 3.5 percent, near historic lows, but it jumped to more than 14 percent in April when large parts of the country shut down because of the pandemic. The unemployment rate in July was 10.2 percent, but more than 30 million Americans are still collecting jobless aid and many parts of the economy remain dislocated.

The White House and Congress approved roughly $3 trillion in emergency spending and tax cuts earlier this year in response to the pandemic, but many Republicans have signaled in recent weeks that they are not comfortable with more spending.

The White House and Senate Republicans didn’t act for several months after the House Democrats passed their bill. Then, a few weeks ago, the White House and some Senate Republicans finally made their counteroffer — a $1 trillion measure that would offer another round of stimulus checks, more money for small businesses, schools, and a lower level of enhanced unemployment aid, among other things.

Pelosi said last week that Democrats had offered to reduce their proposal by $1 trillion, but Treasury Secretary Steven Mnuchin said a $2 trillion package was still too large.

In attempting to redirect congressionally approved spending and changing tax policy, the limits of Trump’s powers could come under more scrutiny. That could be challenged if Congress objects strenuously enough or someone finds a way for the judiciary to get involved. Trump cites statutory authority in most of the actions, and some of his new actions appear to be only instructions to his Cabinet secretaries and department heads to look for ways to address certain problems. Others involve more questionable actions such as the suspension of tax payments and transfers of money Congress has appropriated for another use.

Courtesy/Source: Washington Post