The Biden administration’s new moratorium on evictions postpones yet again the crisis of debt that looms over millions of American households where the rent or mortgages are months overdue. But instead of solving the main problem of mounting indebtedness to landlords and banks, the new moratorium seems likely to make it worse. And the threat of a federal court order reversing President Joe Biden’s two-month moratorium could force the administration and Congress to fix the same basic problem they should have been working to fix all along.
Congress imposed the original moratorium in early 2020 as the coronavirus pandemic began spreading rapidly and much of the nation went into shutdown mode. Tens of millions of workers were displaced from their jobs, and even with two big federal stimulus payouts to individuals, many used all available cash to buy food and other essentials rather than pay rent. Landlords effectively got stuck with those bills — even though they remained on the hook for their own business loans and other operating expenses.
One estimate suggests the outstanding bills owed by more than 6 million renters could be around $27.5 billion. A federal aid package to landlords was supposed to disburse around $46 billion, but only a tiny fraction has reached them so far. Which means landlords are still absorbing the costs unfairly.
When Biden considered whether to impose a new moratorium and extend the burden on landlords, what likely weighed most heavily on his mind was the prospect of 6 million Americans facing potential homelessness. Nevertheless, days of protest on the Capitol steps by Rep. Cori Bush of St. Louis certainly played a role in focusing Biden’s thoughts on the world of hurt about to descend on those millions facing eviction. Bush certainly can tout that as at least a short-term victory.
For the long term, however, it’s clear that one moratorium after another is not going to solve the problem at hand. With each successive month of rent left unpaid, renters’ debts will only get deeper. At some point, the moratoriums will end, and those debts will come due.
Mass bankruptcy and homelessness certainly are an option — resulting in a catastrophe not witnessed in this country since the 1929 Great Depression when shantytown “Hoovervilles” were erected in major cities.
The U.S. Supreme Court has made clear it will not tolerate more moratorium extensions without congressional approval. All it takes is one federal judge issuing an injunction on Biden’s new moratorium in coming days, and a true crisis will be at hand.
Congress can no longer afford to kick this can down the road. The path to avert this crisis promises to be expensive and politically complicated, but it requires ensuring that landlords are made whole for their mounting losses while helping renters clear their debts and stay in their homes.
