Since Congress decided to go home for a break, President Trump has signed an executive order to begin payroll tax cuts. Congress had come to a standstill in their debate and failed to reach an agreement about a new stimulus package for the economy. One of the four executive orders signed on Saturday was allowing employers to stop collecting payroll taxes.
A Payroll Tax Cut
President Trump has long declared that he wanted to temporarily suspend payroll taxes. Payroll taxes are the taxes taken out of an employee’s salary for Social Security and Medicare benefits. On Saturday, President Trump signed an executive order that temporarily ended payroll taxes from August 1 until the end of the year.
This action is not likely to increase an employee’s paycheck because employers are likely to hold on to the money since they are unsure that they will not be responsible for it next year. Instead, the executive order merely delays the taxes, which will be due after the start of the new year. Even though the collection of these taxes is delayed, there will not be any interest charged on the loan. Jobless employees do not pay these taxes.
Reduced Unemployment Benefits Extended
A couple of weeks ago, after seeing back then that it would be difficult to pass a new bill because of strong disagreement between the parties, President Trump had mentioned that he might use an executive order to give people what they need. On Saturday, he did just that.
The existing amount given to unemployed people because of coronavirus was $600 per week. That benefit expired on July 31. The executive order that President Trump signed will reduce it to $400 per week. The reason for the reduction is that it was felt that the unemployed were receiving more than they would if they were working. This was looked at as a disincentive to go back to work.
Another executive order that has been signed by President Trump extends the rent and mortgage moratorium from the CARES Act. This also ended on July 31 and has put millions of people in jeopardy of losing their rental space or home. It was expected that many people would be evicted if it was not extended. The new executive order extends the eviction moratorium until August 31, 2020.
Student Loan Payments Deferred
Another big issue in the stimulus package dealt with repaying student loans. The CARES Act stopped the requirement of having to make loan payments through September 30. Many people are still unable to get work because of coronavirus. President Trump signed another executive order extending this date until the last day of the year – December 31, 2020.
Although these executive orders have been signed, there is a possibility that they may not hold. Congress has the responsibility of controlling the expenditure of money, so there could be legal problems when Congress returns. Despite that possibility, nearly all people affected are likely to be very thankful that something was finally done to help them.
The debate in Congress is largely over the size of the bill and who the recipients of the money will be. Back in May, the Democrats had passed the HEROES bill which involved $3.4 trillion. The Republicans believed this to be unnecessary overkill and have tried to limit the cost of the stimulus package to $1 trillion. Hopeful of a possible compromise, both sides have tried alternate measures. The Republicans offered two smaller packages that covered some essentials to try to get them passed to help people in urgent need. Pelosi said that they might be willing to come down $1 trillion, but – still no deal.