Trump and your finances: Here’s what could change
When he took office, President Trump vowed to take a meat cleaver to regulations he says have stifled corporate America and the economy.
But consumer advocates say some of the Trump administration’s rollbacks of Obama-era financial rules, as well as its support for new legislation, will hit U.S. households squarely in the pocketbook.
The White House and Republicans in Congress also have enacted a sweeping tax overhaul that will result in cuts for some people but hikes for others and introduced legislation to repeal parts of the Dodd-Frank financial reform law.
The Trump initiatives scale back, or aim to reduce:
❚ Taxes: The average low- and middle-income household will realize annual savings of about $1,000 in the short term, according to the Tax Policy Center. Since the standard deduction will double, many lower-income Americans will pay no taxes while others gain from the expansion of the child tax credit. But most of the benefits go to the wealthy, the TPC says. And by 2027, households earning $40,000 to $75,000 overall would pay
billions more in taxes. Upper-middleclass households could be hurt because the deduction for state and local taxes will be capped at $10,000, and the mortgage interest deduction will be limited to home values up to $750,000.
❚ Protections for student loan borrowers: The Department of Education is rewriting Obama administration rules aimed at protecting students who attended career preparation programs at for-profit colleges but failed to earn projected incomes or claimed they were misled by schools. Under a rule scheduled to take effect last July, defrauded consumers could have asked the federal government to forgive their loans. Another regulation, partly in effect, denies college programs federal funding if graduates don’t earn enough to support themselves and repay their loans.
❚ Lawsuits by bank and credit-card customers: A rule passed by the Consumer Financial Protection Bureau (CFPB) and set to take effect next spring would have allowed customers of banks, credit-card companies and others to join in class-action lawsuits. Currently, many financial firms require consumers to resolve any disagreements through arbitration.
But the financial industry says customers typically win bigger payouts through arbitration than through classaction suits, which, they argue, mostly benefit lawyers.
❚ Protections for low-income borrowers: The Consumer Financial Protection Bureau said this week it will reconsider a rule that required payday lenders to determine if borrowers can afford to repay loans before approving them. The rule, set to take effect in August 2019, also would curtail repeated attempts by lenders to debit payments from a borrower’s bank account.
But thousands of payday lenders were expected to close as a result of the constraints, and the industry says it would cut off a vital credit pipeline for financially strapped consumers.
❚ Overtime pay: The Obama administration passed a rule that would have made an estimated 4.2 million more workers eligible for overtime pay. It raised the threshold at which executive, administrative and professional employees are exempt from overtime to $47,476 from $23,660. A federal judge struck down the regulation last year. The Trump administration is appealing, but Labor Secretary Alexander Acosta has indicated it went too far; he will seek a more modest increase in the threshold, making fewer workers eligible.
❚ Dodd-Frank financial reform: Since Trump took office, Congress has tried to chip away at the sweeping reform law enacted after the 2008 financial crisis. A bill passed by the House would weaken the CFPB, replacing its current funding from the Federal Reserve with appropriations from Congress and thus leaving it vulnerable to political squabbles.