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“President Trump issued four executive orders (EO) on Saturday as a response to the stalemate in Phase 4 negotiations on Capitol Hill,” note TD Securities analysts. “The EOs target payroll taxes, UE insurance, evictions and student loans.”

Key quotes

“On payroll taxes, the President postponed collection through the end of 2020 for those making less than ~$100k/year. However, it is unclear whether employers will actually stop withholding payroll taxes given the potential for future liabilities to accumulate.”

“On UE insurance, the President lowered enhanced benefits to $400/week from $600. The government would finance 75% of payments via $44bn from the disaster relief fund, which means funds will run out in about a month. The other 25% is expected to be funded by states, but given strained finances, it is unlikely most states would be able to help.”

“While the EOs don’t lower taxes or appropriate new funds, they could be legally challenged. It adds another wrinkle to the Phase 4 talks, with Congress still apart on issues like state aid and the total price tag ($2tn vs $1tn). The EOs should increase pressure to reach a deal in coming weeks, which is needed before a Sep 30 shutdown.”