Did Donald Trump just repeal Article 1 of the constitution on Saturday? After looking at the details, I published a hot take on Twitter that seems to be standing up to the test of time. So my short answer: no.
Longer answer: No, but it’s worrying.
Longest answer:
The president’s executive order postpones payroll tax collection until next year under Section 7508A of the Internal Revenue Code, which allows for tax collections to be postponed for the victims of natural disasters. But since this is Trump, there are several problems. Section 3101 of the IRC puts payroll taxes on individuals, who get relief. But employers are still responsible for collecting the tax under Section 3102(b).
So why would businesses would want to stop collecting the tax? After all, there’s a big chance that they’ll be responsible for the uncollected sums come January 2021. And the uncollected funds will go to their employees, not to them. They’d have to claw back that money somehow, or take a double hit, paying out today’s payroll taxes to employees in the form of wages and then paying them again to the federal government.
In other words, it’s a mess! But it’s not an unconstitutional mess.
The unemployment insurance is a different wrinkle. What the President aims to do here is redirect $44 billion of the $70 billion in FEMA’s Disaster Relief Fund to the Federal Additional Unemployment Compensation Program. It’s not clear that he can do this, but I suspect that the courts will allow it. After all, a pandemic certainly qualifies as a natural disaster. Paying it through unemployment insurance is, well, unorthodox, but SCOTUS has been pretty lenient so far with this sort of thing.
That won’t last long. Here’s a back-of-the-envelope calculation. In June, the Feds spent $80.4 billion on unemployment insurance for roughly 17.6 million unemployed people. So, figuring that outlays go down by 33% 50% (from $600 to $400 $300, with the states picking up $100) and the number of unemployed falls another 10%, then the DRF will be exhausted on September 5th September 16th.
Of course, there’s another problem, which is that the states have to kick in roughly $15 billion in order to enable the feds to spend that $44 billion. The President is talking about waiving that, but there he really doesn’t seem to have any statutory authority, no matter how tenuous.
In other words, it’s a bad policy (why cut benefits at all?) that relies on a benign hurricane season (good luck with that) and dumps us right back into the soup next month. But it’s not clearly unconstitutional. This is not the John Yoo strategy, not yet.
Still, it’s worrisome. First, it’s worrisome that the executive felt no need to compromise with the legislature. Second, it’s worrisome that they’d break a bunch of norms to get leverage in negotiations. It adds more weight to Juan Linz’s argument about the dangers of a presidential system. (President Obama’s DACA and DAPA orders can be interpreted in the same light.) And third, it’s worrisome that Congress is looking increasingly unable to check the president.
The failure modes are piling up.
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