National and Minnesota Report

It used to be in politics, the best way to get something done–when you lacked true power—was to let someone else co-opt your idea. This is because good public service doesn’t require the accolades, but rather the actual accomplishment for their constituents. The proposed legislation sponsored by Congresswoman Ilhan Omar (D-05MN) and fellow Reps. Alexandria Ocasio-Cortez (D-NY14), Rashida Tlaib (D-MI13), Pramila Jayapal (D-WA07), Mark Pocan (D-WI02), Ayanna Pressley (D-MA07), Veronica Escobar (D-TX16), Jesús “Chuy” García (D-IL04), and Grace Meng (D-NY06) to cancel all rent and mortgage payments during the COVID-19 Pandemic is something they should let Donald J Trump (R) coopt.

Now people, especially Democrats will ask why? We believe it is because its more about the issue than who gets credit. Mainly, because Trump always does things from a vested interest perspective and the fact, he, Jared Kushner and Ivanka Trump would directly benefit because they have extensive holdings in rental properties, is an important incentive to getting something like this done. When people used to say sarcastically, “it will take Congressional action,” they usually meant it was unlikely to happen, in this case it could, and Congressional action may not even be necessary. It might be as simple as an Executive Order. 

In this time of dramatic Monetary (actions by the Fed) and Fiscal (actions by Congress) Policy occurring, Trump, by fiat, could order the banks to consider the mortgages for rental properties paid and the banks that hold the mortgages carrying a loss on their ledgers. Then the Fed could do what they do and compensate the unpaid debt of affected lenders and a significant portion of this issue is resolved. The president could then also set up a facility for landlords to be credited for all unpaid rent through the banks just like the small business loans were processed. US treasury and individual banks. Since the total residential rent paid monthly in the US is about $52 billion a month, that plus commercial rents appears to be well under the total funds already provides by Congress to address the crisis and is available for Trump to use for this purpose because 1) he has the votes to acquit if impeached for discretionary use of funds, and 2) Democrats are unlikely to oppose it seriously. 

The problem is Trump only benefits on paper in this manner, and he is far greedier than that, so what else needs to occur is for him to follow his base instincts. So, his nature would be to make it a wholesale subsidy and universally cancel all rents and mortgages to a specific income bracket and cultivate their support through patronage, which is what all benevolent dictators seek, adoration. The best way to appeal to a narcissist is to play to their ego.

We consulted James Kielkopf, an economist and former Chief Economist at AgriBank during the Great Recession and also advised the Minneapolis Federal Reserve and asked, “How would this be accomplished?” Kielkopf rendered the following.

Donald J Trump has often argued as President, Article 2 of the Constitution gives him the power “to do anything he wants to as president.” He was much derided for this, but on February 5, upon being acquitted by the US Senate during his impeachment, he proved that he was correct: A US President can do anything he or she wants to do as president as long as 34 votes in the Senate exist to acquit if impeached. It is clear, and there are enough bootlicking Senators who will follow the president’s orders to implement any such decision. He has subsequently proven what he has meant by action. He successfully transferred $3.5 billion from the F-35 fighter jet program from the Department of Defense to the Department of Homeland Security to instead fund the wall being built on the border with Mexico, which was not authorized by Congress. This means that as a result of the impeachment and acquittal, a US president does indeed effectively not just have a line-item veto, but even something better, the discretion to move funds at-will from some programs allocated by law to other ones not specified by law. 

The upshot of this is a Congressional action of the kind Congresswoman Omar and others seek isn’t even necessary. Trump could, by fiat, do most of what she wants today, if he wanted to. So, the proposed legislation is merely an attempt to force the president to do something they believe he doesn’t want to do, but in this case they might be wrong, it’s just he hasn’t thought of it yet or no one has told him the idea or how he would benefit from it. 

The problem for Omar and her allies is they jeopardize to possibility of Trump being reelected given the fact Congress has already authorized $2.2 trillion, the easiest way to get enough people to follow the president’s orders in ways that would benefit hundreds of millions of voters and taxpayers would be to use a large part of that $2.2 trillion to accomplish most of what she is asking. 

Here are the specifics, in a back-of-the-envelope presentation:

Of the $2.2 trillion authorized in the stimulus, about $878 billion of it is allocated to loans to both small ($388 billion) and large ($500 billion) corporations. There are lots of itemized restrictions on where and how that money can be used, but, as explained above, since Trump has already demonstrated he has the ability to change such restrictions by presidential order or direction, those can be ignored. Instead this money can be used to provide debt and rent relief to both individuals and small businesses directly, for up to three months.  

There are approximately 128 million households in the US and about 64% of them owe a mortgage each month (81.9 million households), with an average payment of $1019 per month. (Sources: and This comes out to about $83.5 billion per month needed to cover all residential mortgage payments in the US, or $250 billion for three months. 

The median rent for all one- and two-bedroom apartments was $1075 as of December, 2019. (Source:  There were 48 million residential rental units, which times $1075 equals $51.6 billion per month or $155 billion for three months. Obviously, there is some overlap here because most of the residential rental properties also owe mortgages, so maybe it really isn’t necessary for the government to also cover mortgage payments for landlords who received rent. As a high-end estimate for our purposes, we can assume that the total expenditures needed by the US Treasury to cover all residential mortgage payments and leases is $135 billion per month or $405 billion for three months. This would be the total, upper-end cost to the US Treasury of guaranteeing that no one gets evicted for lack of payment during an extended stay-at-home order and that all debts to property owners and lenders are settled from the bottom all the way to the top, as renters pay property owners, who pay their lenders, who pay the owners of securitized mortgages in secondary markets such as pension and hedge funds. 

Because this expenditure has already been authorized by Congress, and US debt and deficit increased already, if the president were to use $405 billion of the loan and grant assistance to large corporations to instead compensate the creditors of renters and mortgagors for up to three months, no additional inflation or other negative outcome of too much government spending can possibly occur either. In fact, since paying down debt, private as well as public, is always deflationary because it retires dollars from circulating in the economy, it helps, not hinders, the power of monetary authorities to provide other kinds of stimulus in the economy later on as well. And there would still be resources available to expand this same action to small businesses and commercial mortgagors of commercial properties that rent to small businesses. 

The upshot of this idea means Omar and her fellow Congresspersons could get what they seek if they were to forgo this action and encourage Trump to follow his own base self-interest.

Here is what Omar called for in her press release on Friday

Rep. Ilhan Omar (D-MN) unveiled the Rent and Mortgage Cancellation Act, a bill to institute a nationwide cancellation of rents and home mortgage payments through the duration of the coronavirus pandemic. The bill would constitute a full payment forgiveness, with no accumulation of debt for renters or homeowners and no negative impact on their credit rating or rental history. The legislation will establish a relief fund for landlords and mortgage holders to cover losses from the cancelled payments and create an optional fund to fully finance the purchase of private rental properties by non-profits, public housing authorities, cooperatives, community land trusts, and states or local governments—in order to increase the availability of affordable housing during this downturn.

 The bill is cosponsored by Reps. Alexandria Ocasio-Cortez (D-NY), Rashida Tlaib (D-MI), Pramila Jayapal (D-WA), Mark Pocan (D-WI), Ayanna Pressley (D-MA), Veronica Escobar (D-TX), Jesús “Chuy” García (D-IL), and Grace Meng (D-NY). 

 “The coronavirus crisis is more than just a public health crisis—it’s an economic crisis. Minnesotans are losing jobs, getting their hours reduced, and struggling just to put food on the table. We must take major action to protect the health and economic security of the most vulnerable, including the millions of Americans currently at risk of housing instability and homelessness,” said Rep. Omar. “Congress has a responsibility to step in to stabilize both local communities and the housing market during this time of uncertainty and crisis. In 2008, we bailed out Wall Street. This time, it’s time to bail out the American people who are suffering.” 

 “Housing is a critical determinant of public health, and that has never been more true than during the COVID-19 pandemic,” said Rep. Pressley. “We must take bold, urgent action that meets the scale and scope of this crisis, and keeps families whole. By cancelling rent and mortgage payments for the duration of this public health emergency, the Rent and Mortgage Cancellation Act affirms that housing is a human right and ensures that no person or family is forced to choose between putting food on the table and keeping a roof over their head during this unprecedented crisis.”

 The Rent and Mortgage Cancellation Act is also endorsed by People’s Action, Center for Popular Democracy, Minneapolis Regional Labor Federation, Take Action MN, National Coalition for the Homeless, PolicyLink, Public Advocates, National Domestic Workers Alliance, Action Center on Race and the Economy, Islamic Relief USA, Citizen Action of New York, Citizen Action of Wisconsin, Community Voices Heard NY, Jane Addams Senior Caucus IL, KC Tenants MO, LUCHA AZ, Maine People’s Alliance, New Jersey Citizen Action, Northwest Bronx Community and Clergy Coalition NY, ONE Northside IL, People Organized for Westside Renewal CA, Progressive Leadership Alliance of Nevada, PUSH Buffalo NY, Reclaim Philadelphia PA, San Francisco Rising CA, Washington CAN VOCAL NY, Housing Justice for All New York , New York Communities for Change, Organize Florida, Texas Organizing Project, Make the Road NV, Make the Road PA, New Florida Majority Alliance of Californians for Community Empowerment Action, Arkansas Community Organization Detroit Action Spaces In Action MD, Churches United for Fair Housing NY, One Pennsylvania Housing Now! CA, and Our Future West Virginia.

 “We cannot allow this public health crisis to worsen the housing crisis we are already in. Displacement does not make our communities stronger. Increased homelessness does not make our communities stronger. Right now, we should be focused on protecting the vulnerable from COVID-19, and not risk making more people vulnerable. Because this is not a matter of ‘if’ people will pay their rent- this is about how we formalize the reality that the rent is already cancelled because people can’t pay,” said Jeremiah Ellison, Minneapolis City Council Member.

 “The Coronavirus pandemic exposes our failures to consider and guarantee housing as a human right, and the current emergency deepens the wounds of racial and economic inequity in housing. Due to layoffs and mass unemployment, even more renters are making choices between food and rent, accruing debts, and at risk of being forced from their homes. The Rent and Mortgage Cancellation act offers the only solution that can meet the scale and depth of our immediate needs related to housing, and establish a new framework for longterm recovery. Congress must act to suspend rents and mortgages, and to prevent a 2008-style disastrous real estate bonanza,” said Tara Raghuveer, Homes Guarantee Campaign Director, People’s Action. 

 “On April 1st, millions of tenants were unable to pay rent. In two short weeks, rent and mortgage payments will be due again. With no clear end to this crisis in sight, it is impossible for families to prepare for the economic fallout that will come if we are expected to continue to pay rent while we are unable to earn income. Representative Omar’s bill to cancel rent and mortgages for the duration of the housing crisis would mean that the millions of families across the country who have lost their jobs are able to stay in their homes and not go into crushing debt during this crisis. Cancelling rent and mortgages also ensures that undocumented people who were locked out of federal relief have a level of reprieve. Relief cannot wait. We need Congress to pass this bill by April 30th,” said Dianne Enriquez, Co-Director of Community Dignity Campaigns at the Center for Popular Democracy.

   You can read the full bill text here and find more details on the bill here.