Trump’s COVID-19 actions and the limits of executive power

Article II of the U.S. Constitution states, among other things, that "the executive Power shall be vested in the President" and that "he shall take Care that the Laws be faithfully executed." Because no specific constitutional provision authorizes the president to issue executive orders or memoranda, the authority rests on the president's inherent authority to set policy and to provide uniform standards for the executive branch. Executive directives have been used extensively by presidents since the time of President George Washington, who is reported to have issued the first executive directive in 1789, so there is nothing unusual about their use.

Directives based on the president's appropriate authority will be upheld by the courts, and therefore have the effect and force of law. But limits on a president's authority exist. First, if Congress has expressly or impliedly granted the authority to the president, the action will be supported by a presumption of validity and will be upheld providing the president doesn't stray from the grant of authority. Second, if Congress has done neither, the authority must be predicated on the president's independent constitutional authority to be upheld. Finally, if the president's action is incompatible with the expressed or implied constitutional authority of Congress, the president's authority is at its weakest. See Youngstown Sheet & Tube Company v. Sawyer, 343 U.S. 579 (1952) (Jackson, J., concurring). Courts are likely to strike down the executive action unless Congress is constitutionally disabled from acting on the subject.

On Aug. 8, President Donald Trump issued an executive order and three presidential memoranda tied to fighting the financial effects of COVID-19. These actions may be challenged as exceeding his authority or simply ignored as political window dressing with little practical effect.

I. Executive Order on Fighting the Spread of COVID-19 by Providing Assistance to Renters and Homeowners

The executive order is not likely to present legal challenges. But it also is not likely to have any meaningful or immediate practical impact on achieving its stated purpose of providing assistance to renters and homeowners. The executive order is not the "bold step" in that direction claimed by Trump.

The executive order has four working parts. Section 3(a) states that the secretary of Health and Human Services "shall consider whether any measures temporarily halting residential evictions of any tenants for failure to pay rent are reasonably necessary to prevent the further spread of COVID-19" from one state to another. Section 3(b) directs the secretary of the Treasury and secretary of Housing and Urban Development to "identify any and all available Federal funds" to provide temporary financial assistance. Notably, it doesn't require the funds to be used to alleviate the financial hardship, which would present legal challenges. Section 3(c) directs the secretary of HUD to "take action, as appropriate and consistent with applicable law, to promote the ability of renters and homeowners to avoid eviction or foreclosure." Section (d) provides that the director of the Federal Housing Finance Agency to "review all existing authorities and resources that may be used to prevent evictions and foreclosures."

The Coronavirus Aid, Relief, and Economic Security (Cares) Act contained a temporary moratorium on the eviction of certain renters, which has expired. Without legislative concurrence, vulnerable renters are still at risk of eviction unless the states provide otherwise.

II. Memorandum of Continued Student Loan Payment Relief During the COVID-19 Pandemic

This memorandum is directed to Secretary of Education Betsy DeVos. The CARES Act provides, among other things, broad relief for eligible student borrowers, but this relief expires on Sept. 30. The memorandum extends the relief an additional three months. It provides that the secretary of Education "shall take" action "to effectuate appropriate waivers of and modifications to the requirements and conditions of economic hardship deferments described in section 455(f)(2)(D) of the Higher Education Act, as amended" so as to continue to provide the temporary deferment of payments and waiver of interest on student loans until Dec. 31.

The executive action provides a real short-term benefit to those eligible borrowers described in the authorizing statute cited by Trump. Notably, the memorandum does not forgive the loan, but only defers payment and waives interest on the loan for an additional three months. But the memorandum falls well short of meeting Trump's stated goal: "It is therefore appropriate to extend this policy until such time that the economy has stabilized, schools have re-opened, and the crisis brought on by the COVID-19 pandemic has subsided." The term of the stated timeline is wildly unrealistic.

III. Memorandum on Authorizing the Other Needs Assistance Program for Major Disaster Declarations Related to Coronavirus Disease 2019

The memorandum is directed to the secretary of Labor, secretary of Homeland Security, and administrator of the Federal Emergency Management Agency to provide continued supplemental unemployment benefits from the Homeland Security's Disaster Relief Fund. Trump directs that funds be redirected from FEMA to pay for the extended benefits and that states cover some of the costs. The memorandum presents practical and legal problems.

More than $70 billion currently exist in the emergency assistance fund. The memorandum directs "up to $44 billion from the DRF at the statutorily mandated 75 percent Federal cost share be made available for lost wages assistance to eligible claimants." Trump then calls "on States to use amounts allocated to them out of the CRF [Coronavirus Relief Fund established by Cares], or other State funding" to provide the remaining 25% "for weeks of unemployment ending no later than December 27, 2020." States "should also identify funds to be spent without a Federal match should the total DRF balance deplete to $25 billion."

The secretary of Homeland Security, acting through FEMA, "authorizes the Governor to provide a $400 payment per week, which shall reflect a $300 Federal contribution, to eligible claimants." The financial assistance ends when the DRF fund reaches $25 billion on Dec. 6, or on the enactment legislation for "unemployed or underemployed individuals," whichever occurs first.

Trump arguably is acting unconstitutionally by doing an end run around Congress. The appropriations clause of the Constitution gives Congress the exclusive power over the purse, not the president. Trump's redirection of funds appropriated by Congress is like his diversion of funds from the Department of Defense, which were intended for defense and military uses, to finance the construction of the wall on the Mexican border. The appropriateness of that diversion is still being litigated. Action under the memorandum may suffer the same challenge. In addition, the Stafford Act, cited as authority in the memorandum, may be problematic because the statute applies when individuals are not eligible for regular unemployment compensation.

Practical considerations also exist. Most state budgets are in freefall. States that planned to use pandemic disaster funds for purposes other than unemployment relief are certain to object. In the end, many states may find it unacceptable to participate. On Aug/ 11, it was reported by senior aides to Trump that the memorandum didn't mean what Trump and the memorandum said. States are not required to participate, so the actual benefit is $300, not $400. This throws additional confusion and chaos into the administration of the directive.

IV. Memorandum on Deferring Payroll Tax Obligations in Light of the Ongoing COVID-19 Disaster

This payroll deferral memorandum is directed to Treasury Secretary Steven Mnuchin. He is directed "to use his authority to defer certain payroll tax obligations with respect to the American workers most in need." The plan only applies to employees on the payroll, and thus does not apply to the unemployed.

The deferral covers a four-month period, Sept. 1 through Dec. 31. Eligibility is limited to any employee whose wages or compensation "payable during any biweekly pay period generally is less than $4,000, calculated on a pre-tax basis." Mnuchin "shall explore avenues, including legislation, to eliminate the obligation to pay the taxes deferred."

This memorandum is objectionable for policy and legal reasons. It poses a threat to Social Security and Medicare, which is funded by payroll taxes. Both programs currently face long-term financing shortfalls under the scheduled benefits and financing. The deferral adds to this shortfall problem. From the taxpayer's perspective, the deferral results in the obligation ultimately becoming due in the form of a balloon payment. If the employee who received the deferral is unable to satisfy the payment obligation at the end of the deferral, the IRS may simply add the deferred amount as income to the employee's income tax obligation. Employers might also find themselves exposed to liability when the employee can't pay. As a result, most well-advised employers are likely to say "thanks, but no thanks" to participating in the deferral program.

The words written by William Shakespeare and spoken by Macbeth after hearing of Lady Macbeth's death seem appropriate to capture these directives: "It is a tale ... full of sound and fury, signifying nothing." But this doesn't mean legal challenges won't be forthcoming to their implementation. 