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Unsanitized: The COVID-19 Report for Sept. 2, 2020

Federal "Eviction Moratorium" Is a Leaky Boat
Plus, the payroll tax deferral begins

 

All evictions would not stop, nor would rent be canceled, under the
federal order issued yesterday by the Centers for Disease Control and
Prevention. (STRF/STAR MAX/IPx)

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.

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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.

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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)

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