COVID-19 ALERT: August 8, 2020 Presidential Actions

On Saturday, August 8, 2020, President Trump unilaterally issued one executive order (which is law if the Constitution or a statute gives the President the power to issue such order) and three memoranda (whereby the President is not required to cite legal authority) in order to provide financial assistance during the COVID-19 crisis. Legal challenges are expected. In the meantime, congressional Republicans and Democrats appear willing to continue negotiating for a mutually agreeable COVID-19 stimulus relief package.

• EVICTION ORDER– In order to minimize evictions, the President directed that certain governmental agencies make money available to assist renters and homeowners facing financial distress as a result of COVID-19. He further directed the Centers for Disease Control and Prevention and the Department of Health and Human Services to determine whether halting evictions is necessary to control the spread of the virus.
  • POTENTIAL CHALLENGES – May the President distribute funds without congressional approval? Will legal challenges delay disbursement? Is the President legally permitted by Constitution or statute to unilaterally put a moratorium on evictions?

• UNEMPLOYMENT MEMORANDUM– Using Disaster Relief funds from the Department of Homeland Security, the President authorized the federal government to pay $300 per week to those on unemployment. In the Unemployment Memorandum, the President “called” on states to enter into a financial agreement with the federal government for this relief and to further contribute $100/week for a total of $400 per week for each person unemployed. However, on Sunday, August 9, 2020, President Trump commented that upon entering into this agreement with the federal government, it is “possible” that some states would not have to contribute.
  • POTENTIAL CHALLENGES– It is estimated that this federal relief fund may run out in approximately 5 weeks. Then what? May the President distribute funds without congressional approval? Will legal challenges delay disbursement?

• STUDENT LOAN MEMORANDUM– President Trump ordered the Secretary of Education to extend relief for student loan borrowers through the end of the calendar year. Earlier this year, interest rates were reduced to zero and student repayment was deferred until September.

• PAYROLL TAX MEMORANDUM– Notwithstanding resistance from both congressional parties during stimulus talks, President Trump ordered the deferral of payroll tax collection for those who earn less than $100,000 a year commencing September 1, 2020 and lasting until December 31, 2020. The President stated that the deferred taxes could be forgiven and the payroll tax reduced permanently if he were reelected.
  • POTENTIAL CHALLENGES– How will the deferral help the unemployed? Will employees actually see an increase in their paychecks in the coming months? Who will be responsible for paying the deferred taxes if they are not forgiven? Can the President authorize the Treasury Secretary to actually forgive the payment of taxes? How will Medicare and Social Security (which are funded by payroll taxes) be funded if the payroll tax is forgiven? 

The President’s actions appear to have further muddied the waters on already complicated issues. As we await either a negotiated resolution between the Executive and Legislative branches or judicial intervention regarding the President’s power to issue the forgoing order/memoranda, attorneys at Obermayer will continue to monitor this rapidly changing situation and issue further updates.

This alert is intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have. We are fully operational during this pandemic and stand ready to assist as you navigate this ongoing and developing COVID-19 situation.