A New York law that protects renters or tenants facing financial difficulty from losing their homes amid the COVID-19 pandemic may cause the U.S. economy to collapse.
According to Peter Morici, an economist and business professor at the University of Maryland, “debt that the government encouraged people to take on by giving them ‘a holiday’ on their rent” serves as the issue at hand, as reported by Fox Business.
“This is the thing that could bring the economy down,” Morici said.
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Gov. Andrew Cuomo signed the Tenant Safe Harbor Act into law back in May. It forbids courts from evicting residential tenants who have experienced financial hardship during the COVID-19 pandemic.
Fox Business explained that approximately two-thirds of NYC residents are renters or tenants. The Community Housing Improvement Program said that 25 percent of them haven’t paid rent since March.
— Peter Morici (@PMorici1) July 12, 2020
According to Morici, without that rental income, many landlords will not be able to pay their tax bills and mortgages.
“Whenever you talk about suspending rent or suspending mortgages, there’s always someone on the other side of that IOU – someone that’s not getting paid,” Morici explained.
Above 700,000 of the city’s workers lost their jobs due to the pandemic. Also, Morici said debt won’t be limited to rent.
“It’s really much bigger,” he said. “It’s also credit card debt, auto loans, mortgages, and so forth.”