Over the weekend, President Trump signed an executive order and issued three memoranda that provide another round of economic relief to Americans during the coronavirus. As expected, the bickering has begun. Democratic negotiators have instantly responded with sharp criticism.
For the benefit of our readers and small business owners, we’re going to focus primarily on 2 key areas of the executive orders: The enhanced unemployment benefit and the controversial payroll tax cut.
Enhanced Unemployment Benefits
What it is: Following Trump’s memorandum, the federal government would contribute $300 of the $400 payment. Individual states would be on the hook for the remaining $100 per person per week. That would be retroactive from Aug. 1.
How it’s funded: Trump is seeking to use unspent FEMA funds to pay unemployment benefits.
“I am directing up to $44 billion from the [Disaster Relief Fund],” Trump’s memorandum says. “At least $25 billion of total DRF balances will be set aside to support ongoing disaster response and recovery efforts and potential 2020 major disaster costs.
Experts predict this year’s hurricane season will see an “extremely active” series of storms. According to the National Oceanic and Atmospheric Administration, hurricanes can cost upwards of $22 billion per storm.
Payroll Tax Cut
This has been a focus of Trump’s administration from the start of the pandemic. The payroll tax cut seeks to defer your federal tax withholding. That means employees would take home more money per paycheck – temporarily. Now, since this is a deferral and not tax forgiveness, workers would still have to pay those taxes after the deferral period passes without paying additional interest or tax. The memo includes language to explore other ways of eliminating the deferred tax altogether.
NOTE: President Trump’s memorandum covers a four-month period from Sept. 1, 2020, through Dec. 31, 2020, for people earning less than $100,000 a year, or less than $4,000 every two weeks (pre-tax).
The memo’s language specifies that Steven Mnuchin, as Treasury secretary, can exercise his authority to “defer the withholding, deposit, and payment of the tax.” According to the US Code cited, Mnuchin could extend this for one year.
What to Expect
Stimulus check discussions could begin again this week, with Democratic asking to meet to reach an agreement.
“We are ready to meet the White House and Republicans halfway,” said White House Trade Advisor, Peter Navarro. “We’ve said that from the start.”
If the talks resume, the legislation could go to a vote in one chamber as soon as Tuesday or Wednesday. Both chambers must vote before the legislation lands on Trump’s desk for his signature. If a deal is reached in the coming weeks, it’s also possible that the executive action will be voided.
For more information, we’ve looked at how soon you might get your second stimulus check and compared the HEALS, CARES, and Heroes stimulus proposals. Until then let’s keep our fingers crossed!