CLYDE, OHIO – AUGUST 06: U.S. President Donald Trump speaks to workers at a Whirlpool manufacturing … [+]
The Hill reported that White House Chief of Staff Mark Meadows has said that President Trump is preparing “aggressive” executive action if lawmakers are unable to reach a deal on the next stimulus package in the next few days.
Treasury Secretary Steven Mnuchin and Meadows have been meeting with Congressional Democrats to hammer out an agreement on the next stimulus package. Senate Leader Mitch McConnell (R-KY) has been conspicuously absent from those negotiations because many Senate Republicans are against additional stimulus. The process has been that Mnuchin and Meadows will negotiate with House Speaker Nancy pelosi (D-CA) and Senator Chuck Schumer (D-NY) and then update Senator McConnell.
The two sides have made progress but still remain far apart on several key areas.
Today, Meadows reiterated the idea that President Trump could take executive action to try to implement additional stimulus.
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Earlier today, President Trump tweeted this:
It’s not clear how this would be done but his team is now researching what could be done in these four key areas:
- Payroll tax cut
- Eviction moratorium
- Unemployment benefits
- Student loan repayment
If the President and his team are able to figure out how to offer additional stimulus through executive action, what would these look like?
Payroll tax cut
President Trump has long been a fan of a payroll tax cut. At a Virtual Town Hall at the Lincoln Memorial on May 3rd, he said that he would not accept a stimulus package that didn’t include one.
Ultimately, the payroll tax cut was not included in the HEALS Act as Senator McConnell worked to keep the cost of the bill as low as possible. President Trump responded by blaming Democrats.
The payroll tax refers to FICA, FICA, which is short for Federal Insurance Contributions Act, and it has two parts – Social Security and Medicare.
The Social Security tax rate is 6.2% of your earnings up to what is known as the Social Security wage base. The Social Security wage base is $137,700 for 2020.
If you earned $100,000 in 2020, you would pay $6,200 into Social Security.
The Medicare tax rate is 1.45% of your earnings but has no limit. If you earned $100,000 in 2020, you would pay $1,450 into Medicare.
In total, you pay a FICA tax of 7.65% on your earned income. If you earned the median income in America of $63,000, you would get an additional $4819.50 per year. It’s not clear how long the cut would be for but it’s not inconsequential.
Also in negotiations, Republicans offered to include an eviction moratorium that would last through December 15th. The previous eviction moratorium, created by the Cares Act, protected renters who were in buildings that had mortgages secured by the federal government. Landlords were not able to initiate eviction proceedings but that moratorium ended on July 31st.
During negotiations, we learned that Republicans proposed a $400 per week federal unemployment insurance benefit through December 15th. This is higher than the $200 per week benefit included in the HEALS Act, introduced by Senator McConnell on Monday, but less than the $600 per week benefit that Democrats are hoping for.
The previous $600 per week unemployment insurance benefit created by the Cares Act expired on July 31st and House Democrats hoped to extend it through January 2021. The included it in the Heroes Act, which they passed back in May.
Earlier in the week, Senator McConnell said that he would be willing to support unemployment benefits at the $600 per week level.
Student loan repayment
On Monday, Senator Lamar Alexander (R-TN) proposed his piece of the Heals Act called the Student Loan Repayment and FAFSA Simplication Act.
The bill, as it relates to student loans, made it so that if you have no income, you did not have to make a monthly payment on your student loans. If you did earn an income, your monthly payment would not be greater than 10% of your income after necessities such as food and housing.
The Cares Act put federal student loans into administrative forbearance with an interest rate of 0% through September 30, 2020.
Secretary Mnuchin and White House Chief of Staff Mark Meadows continue to meet with Senator Schumer and Speaker Pelosi but it’s not likely that they will reach an agreement by tomorrow.
If President Trump’s team is able to find a path forward to offer up some relief to Americans through executive action, it’s possible that he will take that step.
On July 31st, enhanced federal unemployment benefits and the eviction moratorium expired and time is running out for Americans who are truly struggling.