The President signed four executive orders to aid the nation as it struggles to recover from pandemic shutdowns. The executive orders were created after congress failed to reach an agreement for a second relief package. All four orders are highly targeted relief measures that will assist Americans directly with financial and policy measures.
The largest order grants a nationwide payroll tax holiday. The tax holiday will be retroactive from August 1st through the end of the year. The President said he will make the payroll tax cut permanent if he wins the election in November. A payroll tax cut will give most wage earners a boost in take-home pay of between 7 to 8 percent.
The President also extended student loan interest forgiveness which was an important part of the relief bill that stalled in congress. Many colleges have shut down campuses without adjusting tuition rates. The CARES Act included relief for student debt holders and this executive order extends that.
Next was a moratorium on evictions. In light of shutdowns, many unemployed workers are unable to make rent and mortgage payments and that has created a large scale threat to the housing industry.
“it’s not their fault that this virus came into the world, it’s China’s fault.”President Trump
Using executive orders to eliminate the payroll tax is causing quite a stir. Opponents on the left and right have both questioned the President’s authority to make such a change without approval from Congress. However, a recent Supreme Court ruling on DACA has shuffled the reality of who’s responsible for undoing orders. After the President tried to end the unconstitutional DACA program the US Supreme Court blocked his efforts. That ruling paved the way for this payroll tax cut which, although questionable in terms of authority, will now be met with the same rules of repeal.
Politically, the Biden campaign will have to address it’s plans for the future of the payroll tax cut. The deferral technically ends at the end of the year but the President has said he would make the cut permanent. Likewise, Biden will likely want to restore the payroll tax similar to his comments regarding the 2019 tax cut.
That puts the Biden campaign in a jam. They’ll be faced with an immediate decision regarding a tax raise that amounts to about 7% off of take-home pay. A tax raise immediately after inauguration would not play well considering the cut was made as a relief for pandemic shutdowns. Ending the tax cut would not play well and trying to scrape back Q3 and Q4 payroll tax from strapped citizens might be politically undoable.