The extra $300 a week in federal unemployment benefits, on top of state UI, were designed to give people enough money to pay rent.
By Wolf Richter for WOLF STREET.
The US Supreme Court on Thursday lifted the temporary eviction ban, originally imposed by the Centers for Disease Control and Prevention (CDC) for 120 days starting in March 2020, but repeatedly extended first by the Trump administration, then by the Biden administration. It was finally-finally-maybe set to expire on October 3, 2021.
The Court said in the unsigned opinion that the ban exceeded the CDC’s authority to combat communicable diseases, and that it forced landlords to bear the costs of the pandemic.
The decision was expected. Even President Biden had acknowledged that the CDC’s latest extension of the eviction ban was legally iffy but the litigation would give the government time to distribute $47 billion to make landlords whole and get tenants off the hook.
“The CDC has imposed a nationwide moratorium on evictions in reliance on a decades-old statute that authorizes it to implement measures like fumigation and pest extermination,” the Court wrote. “It strains credulity to believe that this statute grants the CDC the sweeping authority that it asserts.”
The most important aspect of the national eviction moratorium is that it came of top of the extra $600 a week in federal unemployment benefits last year and an extra $300 a week this year, on top of the regular unemployment benefits. These extra unemployment benefits, on top of the regular state unemployment benefits, were specifically designed to give people enough money – in many cases more money than they had before – to pay rent and health insurance and other stuff.
The federal unemployment benefits also covered gig workers and workers that didn’t qualify for any other programs. Plus, there were the stimulus payments. There was money everywhere and anywhere. The whole thing was designed to allow people to spend money even if they lost their jobs.
Many people made more money under these programs than before, and it triggered a historic spike in retail sales. But with the eviction moratorium in place, people didn’t have to pay rent anymore, and could just spend on other stuff all this money they got to pay for rent. And they did.
But wait… There’s another layer of money now. The federal government has provided $47 billion in taxpayer money to states and local governments to make landlords whole and get tenants off the hook, now that they spent on cars, electronics, furniture, and other things all the money they got from the extra unemployment benefits designed precisely to allow them to pay their rent.
Governments have been slow to dole out this federal taxpayer money, $47 billion being quite a pile to give away willy-nilly. Rules have been eased to speed up the process. Landlords can now apply for a whole bunch of tenants at once. Etc.
The Court said in the case, brought by the Alabama Association of Realtors, that the CDC exceeded its authority with the eviction ban, but that Congress might have the power to impose it.
“The moratorium has put the applicants [the Alabama Association of Realtors], along with millions of landlords across the country, at risk of irreparable harm by depriving them of rent payments with no guarantee of eventual recovery,” the court said.
It pointed out that “many landlords have modest means. And preventing them from evicting tenants who breach their leases intrudes on one of the most fundamental elements of property ownership – the right to exclude.”
It’s easy to feel sorry for the plight of those tenants. But those tenants already got paid the extra unemployment benefits from the federal government, on top of the state unemployment benefits, on top of the stimmies, so that they could pay their rents.
But the eviction bans allowed those tenants to buy other stuff with this money instead of paying their rents. And now the taxpayer is paying $47 billion to landlords to make them whole and to get the tenants off the hook, in an economy where no one has to pay for anything anymore.
But this is not the end of the eviction bans. They live on in several states, including New York and California, and in many municipalities.
The whole idea of the eviction bans was that consumers don’t have to pay their debts and other obligations, such as rents, with the money that they received from the government precisely to pay those debts and other obligations, and that they could use that money to buy other stuff. And now the government is paying a second time for the same thing, this time to make landlords whole, in an economy that has gone nuts.
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