A few days ago President Trump announced a moratorium on evictions through January. But what seems like an enormous relief to renters has two big problems. First, although tenants had to make only partial payments (“as circumstance may permit”) to remain safe from eviction, the wording was a little unclear about what happens in January. Do you have to pay all the cumulative rent you owe in one lump sum? Do you get to repay it over time? Or do you not have to repay it at all? And what about interest and penalties? None of this was clear.
Second, the moratorium merely passes along the payment problem from tenants to landlords, who still have to pay the mortgage on their property even though they aren’t receiving enough rent to cover it. What happens when they go bankrupt?
An eviction moratorium is a fine idea, but the truth is that it’s only a band-aid. What’s really needed are cash payments to those out of work. That way, tenants can pay landlords and landlords can pay their mortgages. As you can see in the chart below, even with some recent improvement we still have about 12 million workers unemployed thanks to COVID-19. If we restored the $600 weekly unemployment bonus to these people, it would solve the eviction problem almost completely and would cost about $200 billion. That would be only a tenth of a rescue bill that clocked in at $2 trillion, which seems the most likely size if Republicans can ever stop fighting over it.
This is by far our most urgent priority. If we truly want to avoid an eviction armageddon, the only way to do it is by providing cash at the bottom of the pyramid. Then the renters can pay the landlords; the landlords can pay the bank; the bank can keep making loans; and investors can build more apartments. It’s the circle of life.
UPDATE: Charts are fine, but for a more personal and heartwrenching look at the cost of evictions, check out this CNN video:
CNN’s Kyung Lah speaks with residents in Houston who are facing financial hardship as a result of the coronavirus pandemic. Unable to pay their rent, they now face eviction. https://t.co/uLdLoFTDEI pic.twitter.com/2o8zLGjKDq
— CNN Tonight (@CNNTonight) September 3, 2020