- Another 4.4 million people filed for unemployment last week meaning that now, nearly 20% of Americans are unemployed.
- Meanwhile, states are running out of unemployment funds and other fiscal reserves.
- Despite pressure from Democrats, the most recent stimulus bill does not provide any money to states.
- In an interview, Mitch McConnell said he would rather see states go bankrupt then give them more money, a remark that was criticized by both Democrats and Republicans.
Mitch McConnell Says States Should File for Bankruptcy
Senate Majority Leader Mitch McConnell (R-KY) drew bipartisan criticism Wednesday after saying that he would prefer to see states file for bankruptcy than borrow money from the federal government.
The remark, made during a radio interview, came one day after the Senate passed an interim $484 billion stimulus package. The House is expected to pass the bill Thursday afternoon.
Despite pressure from Democrats, the new legislation went forward without any funding for states.
“I think this whole business of additional assistance for state and local governments needs to be thoroughly evaluated,” McConnell told Hewitt.
“I would certainly be in favor of allowing states to use the bankruptcy route. It saves some cities. And there’s no good reason for it not to be available,” he added. “My guess is their first choice would be for the federal government to borrow money from future generations to send it down to them now so they don’t have to do that. That’s not something I’m going to be in favor of.”
McConnell’s words quickly sparked outrage, especially among Democratic governors.
New York Gov. Andrew Cuomo slammed McConnell’s statement, calling it “one of the saddest, really dumb comments of all time.”
“You talk about one issue where you think you can get past partisanship and pettiness and you talk about communities where people are dying, and you say they are blue states,” he added. “How am I supposed to reopen if you want me to declare bankruptcy?”
Some Republicans also condemned the Majority Leader’s remarks as well.
“McConnell’s dismissive remark that States devastated by Coronavirus should go bankrupt rather than get the federal assistance they need and deserve is shameful and indefensible,” Rep. Pete King (R-NY) said on Twitter.
“To say that it is ‘free money’ to provide funds for cops, firefighters and healthcare workers makes McConnell the Marie Antoinette of the Senate.”
It is unclear how serious McConnell is about this idea, or how viable it would be. States do not have the power to declare bankruptcy, and allowing them to do so would require a change in federal law.
As Bloomberg explains, the idea was floated before during the 2008 recession, but it “drew widespread disdain from Wall Street investors, public employee unions and both Republican and Democratic governors, who said it would unsettle the bond market and cause even the most fiscally sound states to face higher interest rates because of the risk the debt could be wiped out in court.”
At the same time, Democrats have said they will push for funding in the next stimulus bill— a move President Donald Trump said he would support. After a meeting with Cuomo Tuesday, Trump said that states will need assistance.
“And I think most Republicans agree too, and Democrats,” he added. “And that’s part of phase four.”
States Running Out of Money
McConnell’s remarks underscore the dire situation states are finding themselves in when it comes to money.
With more than 26 million people filing for unemployment since mid-March, states are quickly running out of unemployment funding. There is also increased demand for other social safety-net programs that are either wholly or partially state-funded.
At the same time, the impetus of coronavirus-related spending has fallen on states, as the Trump administration continues to put the bulk of the work and responsibility in the hands of governors.
On top of all that, the economic shutdowns have also significantly decreased tax revenues. According to reports, sales taxes revenue—which is the biggest source of revenue for most states— has tanked because businesses are shut down and consumers are staying home.
Income tax revenue has also gone down because more and more people are becoming unemployed and thus not paying income taxes. That is also not helped by the fact that tax filing deadlines have been extended.
Unlike the federal government, the vast majority of states cannot deficit spend if they run out of money. Currently, 46 states and DC have laws that require them to keep a balanced budget, and the four states that do not still have pretty strict rules.
That means in order for states to get more money without federal help, they would either have to raise taxes, make significant budget cuts, or both.
But now is the worst possible time for that. Already, tens of millions of people cannot make ends meet, much less pay higher taxes. On top of that, governments need all the money they can get to pay for social services and other expenses they are already struggling to pay
On April 11, the National Governors Association wrote a letter asking Congress to approve $500 billion in funding for financial assistance to states.
“The recently passed federal CARES Act contained zero funding to offset these drastic state revenue shortfalls,” they wrote. “To stabilize state budgets and to make sure states have the resources to battle the virus and provide the services the American people rely on, Congress must provide immediate fiscal assistance directly to all states.”
The governors also said that they wanted the stimulus bill to be amended to allow the money given to states exclusively for coronavirus response to be used to replace lost revenue as well.
While $500 billion might seem like a lot to McConnell, that was the exact amount of money that Congress gave to bail out corporations in the $2 trillion stimulus package in March.
See what others are saying: (The New York Times) (Bloomberg) (The Wall Street Journal)
Jan. 6 Committee Prepares Criminal Charges Against Steve Bannon for Ignoring Subpoena
The move comes after former President Trump told several of his previous aides not to cooperate with the committee’s investigation into the insurrection.
Bannon Refuses to Comply With Subpoena
The House committee investigating the Jan. 6 insurrection announced Thursday that it is seeking to hold former White House advisor Steve Bannon in criminal contempt for refusing to comply with a subpoena.
The decision marks a significant escalation in the panel’s efforts to force officials under former President Donald Trump’s administration to comply with its probe amid Trump’s growing efforts to obstruct the inquiry.
In recent weeks, the former president has launched a number of attempts to block the panel from getting key documents, testimonies, and other evidence requested by the committee that he claims are protected by executive privilege.
Notably, some of those assertions have been shut down. On Friday, President Joe Biden rejected Trump’s effort to withhold documents relating to the insurrection.
Still, Trump has also directed former officials in his administration not to comply with subpoenas or cooperate with the committee.
That demand came after the panel issued subpoenas ordering depositions from Bannon and three other former officials: Chief of Staff Mark Meadows, Deputy Chief of Staff Dan Scavino, and Pentagon Chief of Staff Kash Patel.
After Trump issued his demand, Bannon’s lawyer announced that he would not obey the subpoena until the panel reached an agreement with Trump or a court ruled on the executive privilege matter.
Many legal experts have questioned whether Bannon, who left the White House in 2017, can claim executive privilege for something that happened when he was not working for the executive.
Panel Intensifies Compliance Efforts
The Thursday decision from the committee is significant because it will likely set up a legal battle and test how much authority the committee can and will exercise in requiring compliance.
It also sets an important precedent for those who have been subpoenaed. While Bannon is the first former official to openly defy the committee, there have been reports that others plan to do the same.
The panel previously said Patel and Meadows were “engaging” with investigators, but on Thursday, several outlets reported that the two — who were supposed to appear before the body on Thursday and Friday respectively — are now expected to be given an extension or continuance.
Sources told reporters that Scavino, who was also asked to testify Friday, has had his deposition postponed because service of his subpoena was delayed.
As far as what happens next for Bannon, the committee will vote to adopt the contempt report next week. Once that is complete, the matter will go before the House for a full vote.
Assuming the Democratic-held House approves the contempt charge, it will then get referred to the U.S. Attorney for the District of Columbia to bring the matter before a grand jury.
See what others are saying: (CNN) (The Washington Post) (Bloomberg)
Senate Votes To Extend Debt Ceiling Until December
The move adds another deadline to Dec. 3, which is also when the federal government is set to shut down unless Congress approves new spending.
Debt Ceiling Raised Temporarily
The Senate voted on Thursday to extend the debt ceiling until December, temporarily averting a fiscal catastrophe.
The move, which followed weeks of stalemate due to Republican objections, came after Senate Minority Leader Mitch McConnell (R-Ky.) partially backed down from his blockade and offered a short-term proposal.
After much whipping of votes, 11 Republicans joined Democrats to break the legislative filibuster and move to final approval of the measure. The bill ultimately passed in a vote of 50-48 without any Republican support.
The legislation will now head to the House, where Majority Leader Steny Hoyer (D-Md.) said members would be called back from their current recess for a vote on Tuesday.
The White House said President Joe Biden would sign the measure, but urged Congress to pass a longer extension.
“We cannot allow partisan politics to hold our economy hostage, and we can’t allow the routine process of paying our bills to turn into a confidence-shaking political showdown every two years or every two months,’’ White House Press Secretary Jen Psaki said in a statement.
Under the current bill, the nation’s borrowing limit will be increased by $480 billion, which the Treasury Department said will cover federal borrowing until around Dec. 3.
The agency had previously warned that it would run out of money by Oct. 18 if Congress failed to act. Such a move would have a chilling impact on the economy, forcing the U.S. to default on its debts and potentially plunging the country into a recession.
Major Hurdles Remain
While the legislation extending the ceiling will certainly offer temporary relief, it sets up another perilous deadline for the first Friday in December, when government funding is also set to expire if Congress does not approve another spending bill.
Regardless of the new deadline, many of the same hurdles lawmakers faced the first time around remain.
Democrats are still struggling to hammer out the final details of Biden’s $3.5 trillion spending agenda, which Republicans have strongly opposed.
Notably, Democratic leaders previously said they could pass the bill through budget reconciliation, which would allow them to approve the measure with 50 votes and no Republican support.
Such a move would require all 50 Senators, but intraparty disputes remain over objections brought by Joe Manchin (D-W.V.) and Kyrsten Sinema (D-Az.), who have been stalling the process for months.
Although disagreements over reconciliation are ongoing among Democrats, McConnell has insisted the party use the obscure procedural process to raise the debt limit. Democrats, however, have balked at the idea, arguing that tying the debt ceiling to reconciliation would set a dangerous precedent.
Despite Republican efforts to connect the limit to Biden’s economic agenda, raising the ceiling is not the same as adopting new spending. Rather, the limit is increased to pay off spending that has already been authorized by previous sessions of Congress and past administrations.
In fact, much of the current debt stems from policies passed by Republicans during the Trump administration, including the 2017 tax overhaul.
As a result, while Democrats have signaled they may make concessions to Manchin and Sinema, they strongly believe that Republicans must join them to increase the debt ceiling to fund projects their party supported.
It is currently unclear when or how the ongoing stalemate will be resolved, or how either party will overcome their fervent objections.
See what others are saying: (The New York Times) (NPR) (The Washington Post)
California Makes Universal Voting by Mail Permanent
California is now the eighth state to make universal mail-in ballots permanent after it temporarily adopted the policy for elections held amid the COVID-19 pandemic.
CA Approves Universal Voting by Mail
California Gov. Gavin Newsom (D) signed a bill Monday requiring every registered voter in the state to be mailed a ballot at least 29 days before an election, whether they request it or not.
Assembly Bill 37 makes permanent a practice that was temporarily adopted for elections during the COVID-19 pandemic. The law, which officially takes effect in January, also extends the time mail ballots have to arrive at elections offices from three days to seven days after an election. Voters can still choose to cast their vote in person if they prefer.
Supporters of the policy have cheered the move, arguing that proactively sending ballots to registered voters increases turnout.
“Data shows that sending everyone a ballot in the mail provides voters access. And when voters get ballots in the mail, they vote,” the bill’s author, Assemblyman Marc Berman (D-Palo Alto), said during a Senate committee hearing in July.
Meanwhile opponents — mostly Republicans — have long cast doubts about the safety of mail-in voting, despite a lack of evidence to support their claims that it leads to widespread voter fraud. That strategy, however, has also faced notable pushback from some that a lot of Republicans who say it can actually hurt GOP turnout.
Others May Follow
The new legislation probably isn’t too surprising for California, where over 50% of votes cast in general elections have been through mail ballots since 2012, according to The Sacramento Bee. Now, many believe California will be followed by similar legislation from Democrats across the country as more Republican leaders move forward with elections bills that significantly limit voting access.
Newsome signed 10 other measures Monday changing election and campaign procedures, including a bill that would require anyone advocating for or against a candidate to stand farther away from a polling place. Another bill increases penalties for candidates who use campaign funds for personal expenses while a third measure increases reporting requirements for limited liability corporations that engage in campaign activity.
“As states across our country continue to enact undemocratic voter suppression laws, California is increasing voter access, expanding voting options and bolstering elections integrity and transparency,” Newsom said in a statement.
“Last year we took unprecedented steps to ensure all voters had the opportunity to cast a ballot during the pandemic and today we are making those measures permanent after record-breaking participation in the 2020 presidential election.”
The news regarding California came just in time for National Voter Registration day today, giving Americans another reminder to make sure they’re registered in their states. For more information on how to register, visit Vote.gov or any of the other resources linked below.