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The Presidents 4 “Gifts”of Economic Relief

The Presidents 4 “Gifts”of Economic Relief

Aug 28, 2020 | Posted by Julia Prescott | Budgeting & Cashflow, Health & Wellness, Taxes |

I want to chat about President Trump’s “Executive Orders” that he signed August 8, 2020, because Congress could not agree on the next Economic Relief Act. I have Executive Orders in quotes, because there were 4, but only 1 was an Executive Order. 3 were merely memorandums which are not as strong as an Executive Order. They are more suggestive than anything else.

  1. Memorandum: Delay Payroll Tax for people making less than $104,000/ year.

This memo states that President Trump would ask the U.S. Treasury to stop collection on payroll taxes from 09/01/2020 – 12/31/2020. This will “feel” like a tax cut, because the 6.2% of your pay that is normally taken for Social Security and Medicare will remain in your take home pay. There is a big problem with this, besides removing funds from two already severely underfunded programs, you will still have to pay this 6.2% when you pay your taxes in April. This will likely cause you to have a large payment due with your tax return. In other words, instead of paying a little bit every pay check, you will owe a lump sum April 2021. Trump has “asked” congress to make this a permanent tax cut, but there is not much force behind that. The President does not have the power to make tax cuts. (Below, I will discuss the powers of the 3 branches of Government.)

2. Memorandum: Extend Unemployment Aid $400/ week

Democrats want his aid to remain at $600/week and the Republicans want to lower it to $200/week, so President Trump met in the middle. This memo also has some hidden issues. President Trump wants the Federal Government to pay $300/month and wants the states to kick in the extra $100. The states are currently cash strapped and likely won’t be able to meet this request. They have to agree. The President does not have the power to force states to do this. The other major issue with this memo is President wants to use the $44 Billion set aside for Homeland Security’s Disaster Relief to fund this. That money is designated for Hurricanes, Tornados, fires and other natural disaster relief. This would wipe out this fund as we are entering hurricane season not to mention the widespread fires occurring in California. President Trump stated that the Federal Government would pay this $300/week until December 6th OR until the $44 Billion runs out. The last I looked there were $30 Million people unemployed which would mean $44 Billion would barely get us to mid October. It is less than 5 weeks of funds. This memo is also unconstitutional. Congress has the power of the purse. The President cannot direct funds in this way.

3. Executive Order: President Trump stated that officials may “consider” halting evictions.

This order does not ban or stop evictions. It asks Human Service Secretary, Alex Azar, and CDC Director, Robert Redfield, to “consider” whether and eviction ban is necessary. It provides no funds to help with this issue, but asks Treasury Secretary, Steven Mnuchin, and Housing & Urban Development Secretary, Ben Carson, to just look and see if they can maybe “find” funds to help. Here is the frustrating part. The President actually does have the power to halt evictions. The vast majority of mortgages are owned by Freddie Mac and Fannie Mae (and various other government entities). President Trump could ban evictions by giving mortgage forgiveness. This would help 30-40 million people that are at risk for eviction. (Typically, 3.6 million people are at risk in a non-coronavirus environment.)

4. Memorandum: Student Loans Deferred until 12/31/2020

This memo waives all interest on student loans, and defers principal payment until the end of the year. The Education Department does have the authority to defer or cancel student loan payments. This effectively cancels all the interest between 09/01/2020 and the end of the year, but the principal payments would still be due 12/31/2020.

These 3 memorandum and 1 executive order are arguably weak and more of a show of attempting to help than actually economic aid and relief. The one place the President had the power to help (halting evictions), he asked for review and consideration, not actual action. The Democrats and Republicans will have to continue to duke it out in congress if any real relief is to occur.

Quick Government Lesson on Separation of Powers:

Executive Branch – PresidentLegislative Branch – CongressJudicial Branch – Supreme Court
Commander & Chief of the armed forcesRaises Military & Arms ItReviews the actions of the other branches to make sure they are upholding the constitution
Makes Treaties with other Countries (w/ Congressional Approval)Declares War 
Nominates Federal & Supreme Court JusticesEstablishes and Runs the Post Office 
Executive Orders that have the power of lawMakes Laws  
Pardon Criminals for Federal OffensesRegulates Commerce Between States (Water, Air & Highways) 
Convene Congress for Special SessionsPower of the Purse – Collects Taxes & Decides How to Spend It for the General Welfare of the Country 
Veto Laws Made by Congress (must veto the whole thing, no line item vetos)Promotes Progress of Science and Arts – Makes Patent Laws Naturalization – Controls how people become citizens Bankruptcy Laws Maritime Laws – Laws about oceans and waterways 
 Eminent Domain – Has the power to take land from private ownership if they pay fairly for it 

Another important separation of power is that between States and Federal Government:

State Government

  • Must give full faith and credit to other states which means any law in one state is respected by all the states. Ex. If you are married in Georgia then All the other states consider you married or if you are convicted of a crime in one state that conviction stands in all the states.
  • Regulate Commerce within the state
  • Make sure all citizens are treated the same whether they are from in or out of state
  • Establish State Government and hold elections
  • Provide (Make Laws) for the health, welfare, and safety of the state and citizens of the state
  • Maintain State Militia
  • Ratify Constitutional Amendments

Federal Government

  • Makes money
  • Regulates Commerce Between States
  • Runs the Mail
  • Declares War
  • Raises the Army
  • Conducts Foreign Affairs
  • Establishes Rules of Naturalization
  • Establishes Courts

Both State & Federal Government

  • Power to Tax
  • Eminent Domain – Can take private property for government use if compensate the owner fairly
  • Make Laws
  • Establish Courts
  • Borrow Money
  • Charter Banks and Corporations
Tags: congresseconomic reliefexecutiveExecutive orderjudiciallegislativememorandumseparation of powers
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About Julia Prescott

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Julia Prescott has contributed 29 entries to our website, so far. View entries by Julia Prescott.

Welcome to Playground Financial Planner

Through my blog, I plan on connecting with other stay-at-home moms and women out there to help educate them about financial literacy and planning. It is our job to be our spouse’s or partner’s support system in protecting our families against financial crisis and strengthening our financial position in the process.

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