Even though governors and mayors across the country have gained great power in 2020 – consider the lockdowns and mask mandates – the federal government has also gained power in some aspects.

To be sure, the federal government already had great power, especially when it comes to spending and making war overseas.  We have also had an administrative state for a long time, where bureaucratic alphabet agencies are allowed to essentially write their own laws.

With the fear of a virus in 2020, the federal government is spending more money than ever, and it is doing so through Federal Reserve monetary policy.  We have also seen the power of the “health” agencies. Much of this power already existed, but it has become more obvious now.  For example, the FDA can just arbitrarily approve or disapprove (i.e., prohibit) of certain drugs and treatments.

Unfortunately, it has gone way beyond medicine.  The CDC issued a nationwide order that halts “residential evictions to prevent the further spread of COVID-19.” That’s right.  The CDC is now playing national landlord, effectively destroying property rights for the millions of landlords everywhere.

It would have been hard to imagine a halt on evictions in February 2020, let alone the orders coming down from the CDC.  But here we are in the year 2020, where the CDC director gets to issue a statement that has far-reaching implications for rental housing everywhere in the country.

This is partially Trump’s fault.  He may be doing this for political reasons.  He doesn’t want to see people thrown out of their residence right before the election.  I think, even from a political standpoint, he is miscalculating.  If anything, the eviction moratorium is probably making more people mad and resentful.  I just don’t know how much they’ll blame Trump.

The left sometimes accuses Trump of wanting to be a dictator.  Yet, when he actually does something somewhat dictatorial, they don’t oppose him.  They have no trouble with him acting like a dictator as long as it is violating property rights.  Of course, these were the same people clamoring for Trump to implement a national shutdown and a national mask mandate.

When property owners complain about having to keep people who don’t pay their rent, you may hear a response that this CDC directive does not give a green light to renters to not pay their rent.  They have to fill out a form and show that they have been adversely impacted and are unable to pay.

But it really does give a green light not to pay rent for many.  It is not hard to imagine that millions of people will take advantage of this and stop paying rent or start paying a reduced amount.

If you own a property and are renting it out for $1,000 per month, it would be easy for a tenant to say that they can only afford to pay $500 per month.  If you were the property owner, what would you do? If you don’t accept this offer, you are risking getting nothing.  You have may have your own mortgage to pay.  You certainly still have to pay property taxes and other expenses. If the person pays you nothing, how long will it take to get an eviction now?

I wrote previously about regime uncertainty.  While I put a bigger focus on government shutting down private businesses arbitrarily, there is big concern for real estate too.

Who will want to be a property-owning landlord at this point?  I know there are many still willing to take the risk.  I also know there are many who want to get out of this business because they would be severely hurt by having a tenant not paying rent for many months straight.

Being a landlord doesn’t mean you’re rich.  It is a very slow path to building wealth for most people.  They hope that a tenant can cover the monthly expenses, on average, while the mortgage slowly gets paid down over a long period of time.  I have at least 4 close friends who are landlords, and they are all middle class.  I was a landlord up until a few years ago. I rented out a condo that I had lived in for 8 years.  I didn’t want to sell in 2010 when the housing market was down.  I ended up selling a couple of years ago. With what is going on now, I am glad that I did.

What Happened to UBI and Welfare?

There is another unbelievable aspect of this whole moratorium on rent.  It is being done at a time when we have had unprecedented levels of welfare.

Since March 2020, we have had stimulus checks go out to most American adults for $1,200 a piece, plus another $500 for children.

For most anyone who lost their job, they were getting a bonus $600 per week from the federal government for unemployment.  This was on top of state unemployment, which meant unemployed people were collecting close to $1,000 per week.  Something around two-thirds of those on unemployment were getting paid higher in unemployment benefits than they were making at their job.

The extra $600 per week ended at the end of July.  With Trump’s directive (again, no pushback of being a dictator by the left on this one), the unemployment is $300 to $400 extra per week in most states on top of regular unemployment.

There is also still talk of another so-called stimulus bill, but this may not happen because of political party fighting.

So here is the big question.  If Americans have been given stimulus checks and massive unemployment benefits, then why can’t they pay their rent?

This just shows why every libertarian should be against any concept of a Universal Basic Income (UBI).  It isn’t a clean replacement for the welfare state.  It is an added piece of welfare to the welfare state.

Renters tend to be people on the lower-income scale.  There are obviously a lot of exceptions, but I am just saying this generally speaking.  But anyone who lost their job this year who was on the lower-income scale would have been making more money than they were before.  So there is no reason they couldn’t pay rent.

Unemployment didn’t impact middle and high-income earners as much, but it certainly did impact many. These people tend to be homeowners.  The halt in evictions doesn’t do them any good.  They need a halt from getting evicted by their mortgage holder.  They could really use a moratorium on paying property taxes.  Couldn’t we all?

Now, there are, no doubt, some people who are renters who were previously making a good middle class salary, or maybe even more.  Someone may have been earning $90,000 per year previously, and now is collecting unemployment for half that amount.  This theoretical person may actually have trouble making the rent payments.

But this person is accustomed to living on $90,000 per year.  This person may be renting a 2,500 square foot house for $2,000 per month.  Why should the landlord have to subsidize this?  Even if the person has a family, there is no reason he couldn’t move to a 1,000 square foot apartment.  Maybe he won’t like it, but the landlord not getting paid doesn’t particularly like it either.

In conclusion, this CDC directive is a vast overreach of power, and it is a violation of property rights.  It also doesn’t make any sense when put in context of the UBI-like stimulus and unemployment benefits we have already seen.  If the federal government wants to bail out renters, why not just get the Fed to create the money and pay it all?  This is a somewhat rhetorical question, but maybe I shouldn’t give out these ideas because someone may take it seriously.

This will have an impact in the future.  There is far less incentive for someone to become a landlord and provide housing for those who can’t afford to buy.  This will result in less housing and higher prices for tenants. It will also lead to a request for maximum security deposits.

California, the leftist paradise that it is, has the biggest homeless problem in the United States. Housing costs are enormous there. If you want to put the rest of the country on a course to be like California with widespread homelessness, I can think of no better action than what the CDC just did.