Table of Contents
- 1 1. Is Another Stimulus Package on the Way?
- 2 2. Will Student Loan Deferment End?
- 3 3. Will the Payroll Tax Deferral Be Extended?
- 4 4. What Will Happen to Protections for Renters and Homeowners?
- 5 5. When Will Jobs Come Back?
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The first debate between President Donald Trump and his Democratic challenger Joe Biden last week didn’t hit on a lot of pocketbook issues affecting Americans.
They were, in fact, barely mentioned.
But one thing is clear: Americans haven’t been feeling good about their finances for a while. More than half have been anxious about their money since the beginning of the coronavirus pandemic, according to a NextAdvisor survey, and 54% of unemployed workers said they had no plan to cope with the end of enhanced unemployment benefits when they expired in July.
The third quarter of the year has ended with unemployment at a relatively high 7.9%, and Congress has yet to reach a deal on the next coronavirus relief package.
No new stimulus checks have been authorized. An eviction cliff looms as mortgage forbearance options begin to expire. More than a trillion dollars in student loan debt will become due again in January. A majority of households with children are juggling financial stress and caregiving while many schools across the country remain closed, according to a recent survey.
So what’s the plan?
“For a lot of people who didn’t think that politics matter or policies matter, I think we’re learning now more than ever that they do. The decisions that our elected leaders make matter. They trickle down to us,” says Farnoosh Torabi, NextAdvisor contributing editor and host of the “So Money” podcast.
The acrimonious first debate between the two men vying for the presidency did not provide answers to any of those open issues. And it’s unclear, after President Trump tested positive for the coronavirus last week, that the two remaining presidential debates will even take place.
But there will be at least one more debate between the two camps: Vice President Mike Pence and the Democratic nominee for VP, Kamala Harris, are meeting Wednesday in Salt Lake City for their own, and only, debate.
With this being possibly the only time the two sides will discuss financial topics, here are five issues we want to hear about at the VP debate.
1. Is Another Stimulus Package on the Way?
The House of Representatives, the Senate and the White House have been negotiating a new stimulus package for weeks now, but it’s unlikely they will reach a compromise before Election Day, Nov. 3. Trump tweeted Tuesday that negotiations around a new stimulus bill are over and that Republicans will resume talks only after the election, leaving many wondering what’s next.
Before negotiations broke down, the Democratic-majority House had passed last week a new version of the Heroes Act it previously approved in May—and which also went nowhere. The new measure would provide $2.2 trillion in new stimulus spending.
But the House went on a break following that, and the Republican-controlled Senate likely won’t vote on the proposal. Republicans favor a smaller $1 trillion stimulus, and the White House is somewhere in between the two sides.
“What I’d like to know from the candidates is how they propose the executive and legislative branches should get together and what they should be coming together to do in terms of an additional stimulus bill,” says Jill Schlesinger, a certified financial planner and host of the “Jill on Money” podcast. “That’s the number one issue to be on the lookout for.”
One thing that Democrats and Republicans seem to agree on is the need for a second stimulus check of up to $1,200 per taxpayer and extra money for dependents. But no legislation to authorize another round of payments has moved forward. If you haven’t received a stimulus check from the March stimulus legislation, the Internal Revenue Service just extended the deadline to register for one to November 21. (The IRS also has a resource and guidance page that explains all the rules and regulations, like who counts as a dependent and how old you have to be to qualify.)
Enhanced Unemployment Benefits
The $600 extra in unemployment benefits, paid weekly by the federal government on top of regular unemployment benefits from individual states, ended in July. After Congress failed to agree on a plan to extend them, President Trump ordered a stop-gap measure of $300 in enhanced unemployment pay for six weeks, but that money began running out in the beginning of September.
Millions of Americans are still unemployed, and there’s currently no additional funding for unemployment benefits until the end of 2020.
In their current proposal, Democrats want to maintain enhanced unemployment benefits at $600 per week on top of states’ benefits — just like the Coronavirus, Aid, Relief, and Economic Security (CARES) Act did in March — but Republicans want that figure to be significantly smaller.
2. Will Student Loan Deferment End?
At the end of August, Trump signed an executive order extending the temporary freeze on federal student loan repayment and interest charges through the end of the year.
This was essentially a three-month extension of student loan relief under the CARES Act, which was originally set to expire on September 30.
So if you have federal student loans, you don’t have to worry about either principal or interest accruing until January 2021. Still, questions remain about what happens after the deferment period.
Borrowers collectively have more than $1.5 trillion in student debt, most of it held by the federal government. The resumption of repayments on that vast outstanding debt is a major economic issue for many voters.
3. Will the Payroll Tax Deferral Be Extended?
Beginning in September, some workers saw their paychecks increase, thanks to an executive order deferring payroll taxes. Those taxes haven’t been eliminated, though — their payment has just been postponed.
Typically, 6.2% of an employee’s total earnings go toward Social Security, but the deferral postpones the withholding of those Social Security taxes until January 2021. If that deadline is not extended, people who got the deferment will have to pay those back taxes next year.
Keep in mind you’ll see a difference in your paycheck only if your employer opted into the program.
4. What Will Happen to Protections for Renters and Homeowners?
Millions of Americans across the country have been struggling to make rent and mortgage payments as a result of the coronavirus pandemic. New research says that 30 to 40 million renters in America are at risk of losing their homes over the next several months.
And just under 3.7 million homeowners are in forbearance programs as of mid-September, down 22% from May’s peak of 4.7 million, according to recent data from Black Knight, a mortgage technology and data firm. That’s equivalent to 7% of all active mortgages.
Here’s a breakdown of the renter and homeowner protections introduced this year and of what’s to come as we grapple with the ongoing effects of the pandemic:
Americans financially affected by COVID-19 this year were given the option to hit the pause button on federally-backed mortgage payments by entering into forbearance under the CARES Act. This means homeowners with eligible mortgages could claim up to 180 days of temporary suspension on all or part of their mortgage payments.
The act took effect at the end of March, which means any forbearance agreements made then have already expired or may expire very soon. More than 2 million forbearance plans were set to expire in September, according to Black Knight.
There’s the option to extend a forbearance for another 180 days, but the request has to be made before the initial forbearance period ends. It’s not automatic.
Recent data say roughly six million homeowners have been in forbearance at one point or another since the onset of the pandemic.
Unlike federal agencies, private lenders are not required to provide forbearance. Last June, Schlesinger told NextAdvisor that “even if you don’t have a loan backed by a federal entity, it’s definitely worth your energy to reach out to your lender and ask for forbearance.”
“If you simply do nothing and miss payments, you’ll hurt your credit and chances of getting a loan in the future,” she said.
Eviction Ban and Rental Assistance
Renters across the nation are protected from evictions through the end of the year, as long as they complete the necessary paperwork and meet certain eligibility requirements.
Federal eviction protections expired in late July under the CARES Act, but the U.S. Centers for Disease Control and Prevention used its public health authority to introduce a temporary eviction moratorium in order to limit the spread of COVID-19.
Other than the new House proposal, which extends the moratorium, there’s been no word on whether the measure will continue past 2020. The updated Heroes Act sets eviction protections for renters and financial support for residential landlords to compensate for rent shortfalls.
5. When Will Jobs Come Back?
A little over half of the jobs lost in March and April have been added back to the economy, but with uncertainty due to the coronavirus still very much dominating the nation, a full recovery still appears far away.
One of the top priorities for the next president will be bringing jobs back.
Both candidates are promising millions of jobs through infrastructure investments, but have different approaches.
Trump plans to cut more taxes and regulation to spur job growth, according to his campaign agenda. Biden vows to increase taxes on the wealthy (anyone making more than $400,000 a year) and corporations, and argues more government spending will help Americans during this period of high unemployment.
“We need to talk about how we’re going to get people back to work.” Torabi says. “I think it’s great that they want to propose stimulus and all these tax breaks, and I know we have to put Band-Aids on things right now, but what’s the longer-term plan?”