Week Ending August 14, 2020

Congress Has Yet to Reach a Deal on State and Local Aid

Congress, the White House negotiators and the GOP are still far apart and unable to reach an agreement on any further COVID-19 pandemic relief despite the dire need for additional federal support to respond to the worsening public health and deteriorating fiscal conditions at the national, state and local levels. Instead of new federal funding to states, localities and school districts and needed health and safety protections, White House negotiators walked away from the table so President Donald Trump could issue four administrative actions that fell far short of what’s needed. The one new executive order (EO) and three executive memorandums deal with Social Security payroll taxes, Unemployment Insurance, evictions, and student loan relief that many criticized as weak and ineffective. AFSCME President Lee Saunders issued a statement calling the executive actions a “stunt that will do next to nothing to fix any” of the problems we face as a nation.

• Congress Has Unfinished Business – The House of Representatives passed the Heroes Act (H.R. 6800) on May 15, 2020, but the Senate has done nothing. The Heroes Act provides urgently needed aid to states and localities, protects workers on the front lines, and gives front-line workers premium pay, needed unemployment and food assistance and subsidizes 100% of the cost of COBRA health care for those who have lost their jobs. The House-passed bill includes more than $1.2 trillion to states and local governments and school districts to help replace huge revenue losses that are causing deep budget shortfalls and to help prevent layoffs of the front-line heroes, as well as increased federal Medicaid funds to states and funding for schools.

• The Economy Is Getting Worse, Not Better – State revenues remain in an enormous downward slide,as documented state by state by NPR and others. More than 5 million jobs are on the line, with more than 1.1 million already lost, according to BLS. For the 20th week in a row, more than 1 million people filed for unemployment insurance benefits. We don’t want students and school employees going back into schools without the resources needed to enable learning or a safe environment. 

• Trump Executive Actions Miss the Mark– The Trump executive actions issued on Aug. 8 include no new aid to states and municipalities, no increase in Medicaid funding to states, no increase in funding for education, no new OSHA safety standard, no new funding for election security, and no new protections needed to respond to the pandemic. Instead:
  1. On Payroll Taxes, Trump instructs the U.S. Treasury to halt collection of payroll taxes from Sept. 1 through Dec. 31, 2020, for workers who earn less than $4,000 every two weeks (about $104,000 a year), but it’s not clear this will help workers. Most believe employers will continue to withhold the taxes since they are supposed to pay it back later. Trump said he would like to permanently waive the tax, but acknowledged he lacks the power to do so since only Congress has the power to levy taxes. If the taxes are not paid back it will severely weaken the Social Security Trust Fund and lead to a reduction of Social Security benefits.
  2. On Unemployment Insurance, the Trump order will extend pandemic Unemployment Insurance benefits, but at a level that is less than the amount previously granted by Congress, and without secure funding. There are more than 30 million people on unemployment aid who were each receiving an extra $600 a week from the federal government on top of their state aid, but the federal funding expired at the end of July. The Trump action calls for federal aid to restart at a level of $400 a week, but the federal government will only pay for $300, leaving cash-strapped states to pick up the remainder. On top of that there are administrative complexities for the states to make the system work, leaving some to believe the benefit is unworkable and won’t be implemented. In addition, some have raised legal questions over whether Trump has the power to provide partial funding by repurposing $44 billion in funding appropriated by Congress to the Department of Homeland Security’s Disaster Relief Fund for hurricanes, tornadoes, massive fires and other natural emergencies.
  3. On Evictions, the United States has about 110 million renters, and many have been hit hard by the layoffs due to the pandemic, but Trump’s order does little to help them. Congress passed a federal moratorium in March preventing many evictions, but it expired on July 24. That moratorium covered all renters participating in federal housing programs or living in housing that had a federally backed mortgage. While Trump has authority to extend the eviction ban, he chose not to do so. Instead, he calls for the Secretaries of Treasury and Housing and Urban Development to help if they can, but without the promise of any more aid. It is estimated that 30 million to 40 million renters are now at risk of eviction in the coming months.
  4. On Student Loan Payments, the Trump order would deferloan payments until Dec. 31. The action is intended to waive all interest through the end of 2020 on student loans held by the federal Department of Education and allows people to delay payments until Dec. 31, but the order does not apply to private loans, nor is the debt canceled. Principal payments are still due on Dec. 31 and full payments are slated to restart Jan. 1.

What You Need to Know: The Senate must act as soon as possible and pass a plan that provides at least $1 trillion in direct, flexible aid to state and local governments, increases funding for Medicaid, and provides additional support for schools to ensure safety and to meet the needs of students learning remotely. It’s not an option to allow more Americans to lose their jobs and essential public services to be shut down. Communities can’t afford to wait. Congress must fund the front lines immediately.