The Eviction Moratorium was Never the Answer. Cash Is.

Trust the American people with the financial freedom to make their own decisions with money. One of those decisions will most certainly be paying the rent or mortgage.

The pandemic has been one massive disaster, containing within it a series of more disasters

One of those disasters was an epidemic of evictions in the United States as tens of millions of Americans either lost their jobs, or maintained at least one of their jobs but lost income as a result of pay reductions, fewer hours worked, or fewer customers. This nationwide loss of income was alleviated by boosted unemployment insurance checks, stimulus checks, and now child tax credit checks, but it wasn’t enough.

As a result, one of the first additional responses to the COVID crisis was to enact a moratorium on evictions. This response from the beginning was a “kick the can down the road” policy, and we have now arrived at the end of that road where the rent is finally due. What happened, what’s next, and what could we have done differently? The short answer is more of what worked.

The first kicking of the eviction can was on March 27, 2020. That’s when the CARES Act began the first eviction moratorium. That first one expired on July 24, 2020 and disallowed landlords from kicking out tenants until August 23, 2020. Because we were still smack dab in the middle of a pandemic at that time, and Congress wasn’t about to pass an extension, the CDC stepped in about two weeks after the first expiration with a new eviction moratorium. This new one was set to expire at the end of December but was extended to the end of January, and then extended again to the end of March, and then extended again to the end of June.

On July 31, 2021, landlords were finally free again to evict tenants, but three days later a new more targeted moratorium was put in place by the CDC which was immediately met with legal challenges. This was no surprise and part of the strategy. The Biden Administration knew the Supreme Court was unlikely to allow another extension, but they also understood that the court process itself would buy them time to distribute more of the $46.5 billion in rental assistance meant to get those behind on their rent caught up so they could stay in their homes.

In the three weeks the new moratorium was in place, the amount of that rental assistance distributed to renters grew from merely 7% to just 11%. With the Supreme Court having just struck down the latest moratorium, 89% of rental assistance funds remain undistributed. Considering that 15% of all renters owe back rent, and what’s owed is on average three months of rent, that’s approximately 11 million Americans now facing eviction unless all of that rental assistance is suddenly immediately distributed, and even then, it wouldn’t save everyone.

Direct Cash as a Direct Solution Free From Bureaucracy

Thankfully, there’s something else out there that will save at least some of these households from eviction – the new monthly child tax credit. Because of the lack of bureaucracy, it is a direct cash payment directly to every American family with children. Because it goes to all families except those with the highest incomes, it should reach all child-rearing households who are behind on their rent. Data also already exists to show just how much it is helping with the rent.

We know how the first CTC check was used. 47% of recipients spent it on food. 36% of recipients used it to help with household bills. Among households earning under $35,000 a year, 56% of the CTC was spent on household bills. For 29% of recipients, a majority of the Child Tax Credit went to pay rent. 17% of those with at least one child under age 5 spent their check on child care. Spending on child care further helps pay rent by better enabling employment.

As a result of their increased ability to afford to pay their bills, difficulty paying household expenses has already decreased by 8% among households with kids. Meanwhile, it has increased by 5% in households without kids, meaning that this is happening within an environment where they would otherwise be less likely to pay their bills.

Parents are extremely thankful for the boost they’re getting, with 90% of them agreeing that it’s helpful or making a huge difference in their lives. 70% of them believe it to be extremely important to keep the checks coming beyond December when the Child Tax Credit will expire unless extended. Asked how a permanent Child Tax Credit would help them, 57% of recipients said they could better afford their mortgage or rent, or move homes if desired.

Obviously, it’s working very well to get cash directly to the people who need it most, and in a far better way than policies like emergency rental assistance that seem to be finding it virtually impossible to actually help the people who need it most because of all the bureaucracy and conditions involved. The problem is that households with kids aren’t the only households that are behind on their rent as a direct result of the income loss that has resulted from the pandemic.

Boosted unemployment insurance and the stimulus checks were the two programs that did the most to prevent even more families from falling behind on their rent. The problem is that there were only three stimulus checks since the pandemic started destroying livelihoods, and then half the country canceled the unemployment boost early. This by the way has had virtually no impact on employment, but a very large impact on spending.

Economic Crisis Response

Here’s what we should have done instead: From the very beginning, one of the first things Congress should have passed into law was automatic stabilizers. This would have put checks on autopilot. Based on economic triggers, monthly checks would have started in combination with a weekly UI boost. These measures would have remained in place each and every month until automatically triggered off by an economy that had reached the point of being sufficiently recovered as determined by econometrics, not politics.

This response, because of being monthly, and because of being direct cash payments, would have enabled most every American to keep up on their bills as the pandemic ravaged the economy. This monthly income is what landlords should have been pushing for this entire time. Money to afford rent is good for the renter and good for the landlord. It’s also good for everyone else who benefits, like those whose job it is to maintain what’s being rented, and local governments who benefit from property taxes being paid.

An eviction moratorium was always going to end this way. All we did was postpone the inevitable reckoning. And it didn’t even prevent all evictions. People still got evicted regardless of the moratorium. It didn’t stop all of them. What does stop almost all evictions is renters paying their rent.

What’s so frustrating about all of this too is the amount of housing assistance that goes to even more people than federal housing assistance does, in the form of the home mortgage deduction which costs $200 billion a year. Asked how the Child Tax Credit is helping her, one recipient even made this direct connection.

“A lot of people are like, Well, I don’t have kids. Whereas for me, it’s like, I have kids; I don’t have a mortgage. So your mortgage tax credit doesn’t have anything in it for me. But that’s okay, because I know it does a lot for you. This does a lot for me.”

Lessons Learned From the Eviction Moratorium

Millions of Americans are now facing down the barrel of eviction from their homes while a pandemic still rages on around them. This is a disaster inside of a disaster, but it is man-made and thus entirely avoidable. Incomes were reduced because of a pandemic and because of the responses by lawmakers to counter the spread of the coronavirus.

We know what’s helping the most right now to keep families in their homes is the monthly CTC because rent is due every month. We know that what helped the greatest number of people over the entire course of this pandemic has been the stimulus checks, especially all those who lost incomes despite maintaining their jobs and thus not qualifying for any UI, which was about a third of the country.

We are the wealthiest country in the world with the largest economy. We have a responsibility to make this right by making people whole again. To our credit, we have accomplished perhaps the best economic response of all countries, but with millions of Americans now being evicted from their homes for the crime of losing income during a pandemic, it clearly still wasn’t enough.

We should look at the Child Tax Credit as a model that should be extended to all adults, at least until this pandemic is truly over. A return to the debate of automatic stabilizer checks as Wyden and 20 other senators have called for in addition to over 150 economists would be a great place to start.

This crisis is not over yet. It’s not even the only crisis. We live in a time of crises. As I write this, a hurricane is barreling towards me. A pandemic is just one disaster. Climate change is another. There are many others. There always will be. It’s time we reconfigure our safety net to better respond to disasters and build more resilience into all our lives. Direct cash payments are the answer, and they should be on auto-pilot.

Trust the American people with the financial freedom to make their own decisions with money. One of those decisions will most certainly be paying the rent or mortgage.

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