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Unsanitized-090220
All evictions would not stop, nor would rent be canceled, under the federal order issued yesterday by the Centers for Disease Control and Prevention.
First Response
Unsanitized gets results. That is my biased takeaway at the federal response to our story yesterday about the uncertain future for tens of millions of renters facing eviction, including Migreldi Lara of Reading, Pennsylvania. Within hours, the Centers for Disease Control and Prevention issued an emergency order barring evictions for non-payment of rent until the end of the year. This will definitely help some people like Migreldi survive, for now. However, it’s not as rosy as it seems.
The nationwide order uses the CDC’s authority under the Public Health Service Act. It positions eviction moratoria as a public health measure preventing the spread of COVID-19, both by allowing individuals to isolate and preventing large congregations in homeless shelters or shared housing. You can see the order as an application of President Trump’s executive action to deal with evictions and foreclosures, announced last month. (The CDC order says nothing on foreclosures for home owners.)
To become eligible, renters would have to sign a declaration form and present it to their landlord. It states that the renters earn less than $99,000 a year ($198,000 for joint households) and that they’re unable to pay full rent despite making efforts to obtain rental assistance. They also need to declare that they will make full efforts at partial payments, and would become homeless if they were evicted.
The last section of the declaration is crucial: “I understand that any false or misleading statements or omissions may result in criminal and civil actions for fines, penalties, damages, or imprisonment.” Who knows what landlords might do to prove that a renter lied on their form: hire a private investigator? Take the tenant to court? This could put a lot of renters in legal jeopardy, and just the intimation of criminal and civil penalties could be enough to keep renters from triggering this.
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The order does not and could not cancel rent or relieve people of the obligation to pay, nor does it provide rental assistance for past due amounts. CDC simply doesn’t have that authority. Landlords could still charge fees and interest on unpaid rent, and after the order runs out on December 31, ask for all of the past due payments upon threat of eviction. At best this delays the reckoning, which is good but not a sustainable solution.
Perhaps the most important, tenants could still be evicted under the eviction moratorium. Any evictions for something other than non-payment of rent would be allowable. This is precisely the issue housing advocates have with California’s eviction moratorium, passed on Monday. As I explained yesterday, landlords are ruthless enough to harass renters or use any pretext to get them out of the house, claiming loud music or structural damage or some other violation of the lease. Renters usually don’t have the expertise or the resources to defend themselves in housing court. “Landlords will figure out non-payment reasons to kick out non-paying tenants,” I wrote yesterday. I don’t know why a health order would allow evictions for other reasons if the important thing is the safety of residents to have shelter, but this CDC order does have that shortcoming.
Landlords have also been known to retaliate against tenants, and those who present this declaration to stay in the rental unit for the rest of the year would be prime targets. You could envision a landlord cutting the hot water or boring a hole in the house to let cool air in, or just delay repairs. I heard yesterday about precisely this scenario from a housing advocate in Florida. You’d think destroying your own property wouldn’t be an ideal option for a landlord, but it happens.
There are criminal penalties for violating the eviction ban, but the CDC doesn’t have a police force to enforce this order. Landlords are better equipped than tenants to work on the edges of the law. And anyway, the Trump administration got what they wanted out of this: headlines in the papers claiming an eviction moratorium, for an order that could still allow evictions. Actually making sure it happens? That sounds like liberal good government pabulum.
Non-Deferred Deferral
Yesterday was the opening of the payroll tax deferral, part of Trump’s executive actions in lieu of an agreement with Congress. (By the way, Speaker Pelosi and Mnuchin had a phone call yesterday, and that agreement just isn’t happening.) Honestly if half a dozen businesses take the bait on this it would be a lot.
Here is the IRS order on this. Readers of Unsanitized will know that this is a deferral of the employee-side payroll tax for workers making $104,000 a year or less, from September 1 to December 31. These taxes will now be due between January 1 and April 30, 2021. That’s a little better than owing a lump sum in January; workers will in theory get a little more now (6.2 percent to be exact) and a little less later. But it’s not a tax cut, just a facsimile of one, conveniently lining up with the presidential election. There will be penalties on May 1, 2021 if the taxes go unpaid.
No business will do this because it doesn’t take turnover into account. If an employee quits at the end of the year, there’s no salary to draw from to pay back the deferred taxes; it then comes out of the business’s pocket. No business would risk that, especially large employers where the above scenario could happen thousands of times between now and April. The liability for paying the taxes appears to be with the employer, not the individual.
The IRS rule didn’t come until 4 days before the September 1 launch, giving businesses practically no time for implementation. That won’t stop the federal government. Rouhgly 1.3 million federal employees will get the temporary boost in their checks starting in mid-September, only to get less money starting in January. Those workers should just set aside the money they’re getting now because they’ll have to pay later. Meaning that this is all being done for perception, not reality. The stimulative effect this fall approaches zero.
Days Without a Bailout Oversight Chair
160.
Today I Learned
- The news here, beyond Mnuchin saying fiscal stimulus is important, is that Senate Republicans are going to vote on a bill next week that spends half as much as their initial offer. (Bloomberg)
- I wrote about this overpriced ventilator deal, and now the government is canceling it, saving at least $400 million. (ProPublica)
- Health and Human Services is spending $250 million on a PR campaign. (Politico)
- The start of the school year is delayed in New York City, the last big city to go forward with in-person classes. (New York Times)
- Ominous statement from Fauci that a vaccine could be approved before the trial is over. Why is he destroying his credibility like this? (Kaiser Health News)
- I know you have to freak out about the election to keep your card-carrying liberal status but voters are far more concerned with the pandemic, not crime. (Reuters)
- I’m already done with Tenet, the savior of the movie theater business, but it’s finally coming out. (Wall Street Journal)
- Someone used prerecorded footage in work Zoom calls for a week and no one noticed. (Boing Boing)
