Unemployment Numbers Spike as Renewed Stimulus Talks Stall
- Weekly unemployment claims have spiked to 853,000, their highest numbers since mid-September as job growth falters.
- Economists say that without another stimulus package, the U.S. economy will continue to slow.
- Despite earlier optimism that a $908 billion bipartisan proposal would pass, Congress has reached another impasse, with liability protections for business and funding to states and local governments being the two major sticking points.
- Democrats have accepted Republicans’ demands, agreeing to temporary liability projections. Republicans, meanwhile, have refused to support more funding for states, arguing the money amounts to “blue-state bailouts.”
- However, red states are expected to suffer even more from budget shortfalls plaguing most state and local governments, and unless more is done, there will be major long-term economic damage.
Unemployment Numbers Spike
The U.S. Department of Labor (DOL) reported Thursday that another 853,000 Americans filed new unemployment claims in the first week of December, an increase of 137,000 more claims than the week before and the largest spike since mid-September.
Another 428,000 people filed under the federal joblessness benefits program for freelancers and self-employed workers, a nearly 50% increase from the week before. The increase in claims comes as the U.S. is reporting a sharp decrease in job growth.
Last week, the DOL reported that only 245,000 new jobs were created in November, less than half of the 610,000 jobs that were added to the economy the month before.
As more states and cities continue to impose tightened restrictions on both consumers and businesses in an attempt to curb the staggering increases in COVID-19 cases, economists are worried that layoffs will surge again.
Many experts also say that the economic recovery will just continue to slow if the federal government does not provide more aid for Americans and businesses.
But despite earlier optimism over the $908 billion proposal introduced by a bipartisan group of senators last week, Congress has hit another impasse. While Democratic leadership agreed to compromise and back the framework, top Republicans have refused to do the same.
White House Proposal
In an apparent attempt to bring the two sides together, the White House put forward its own $916 billion proposal Tuesday.
Although the package, which was announced by Treasury Secretary Steven Mnuchin, sought to reach some middle ground on key issues, it also created another set of problems.
While Mnuchin’s plan included another round of one-time stimulus checks worth $600 per person, with another $600 per child, it also proposed huge cuts to unemployment benefits laid out in the bipartisan framework.
Under the initial package, Congress would approve $180 billion in new federal unemployment benefits, which would be enough to both extended existing programs set to expire in about two weeks and add a supplementary $300 a week for jobless Americans.
Despite costing more, the White House plan would slash that number to just $40 billion, and according to people familiar with the proposal, while it would extend the federal benefits, it would not give any federal additional aid to the millions of Americans who are struggling to make ends meet.
Democratic leaders immediately denounced the White House proposal. In a joint statement, House Nancy Pelosi (D-Ca.) and Senate Minority Leader Chuck Schumer (D-Ny.) called the proposed cuts to unemployment “unacceptable.”
On the other side, several key Republicans embraced the framework. House Minority Leader Kevin McCarthy (R-Ca.) said it was “a very good offer,” and even Senate Majority Leader Mitch McConnell, who has refused to reach any kind of compromise with the Democrats on the bipartisan bill, signaled openness to the idea.
However, McConnell also suggested dropping two specific provisions in the White House framework that have been arguably the biggest sticking points for the two parties: the liability protections that prevent businesses from coronavirus-related lawsuits if a customer or employee is infected on-site, and any sort of funding for state and local governments.
Republicans have repeatedly insisted that the next stimulus bill include this liability measure, and McConnells’ remarks represent the only concession he has made in months. The argument Republicans have made for the provision is that it is needed to protect small businesses from the wave of lawsuits related to the pandemic that McConnell has warned about.
Economic data shows that there have been relatively few lawsuits so far, and Democrats, have continuously rejected the idea, which Sen. Bernie Sanders (D-Vt.) called, “a get-out-of-jail-free card to companies that put the lives of their workers and customers at risk.”
Despite those objections, Democratic leadership still agreed to the more limited, temporary version of the liability protections for businesses put forward in the bipartisan proposal. In other words, the only “concession” McConnell has made is on a provision that Democrats have already agreed to compromise on. Meanwhile, he is still demanding that they let go of one of their biggest asks.
State and Local Funding
For months, Democrats have said that they will not move forward on a bill that does not include funding for state and local governments. Republicans have refused to budge on their objections, and branding the effort as a “blue-state bailout.”
But this issue is not something that just affects Democrats or Republicans: states all over the country are struggling with severe budget crises because of the pandemic.
In fact, according to a recent report from Moody’s Analytics, six of the seven states that are expected to suffer the biggest declines in revenue over the next two years are red states led by Republican governors and won by Trump in the election.
Governors and local leaders all across the country have repeatedly begged Congress to give them additional federal aid, and while Congress did give them some money under the CARES Act passed in March, states are still under enormous financial strain.
From the get-go, much of the coronavirus-related spending has fallen on state and local leaders, and the Trump administration has continued to put the bulk of the responsibility in the hands of governors without giving them the tools to do so.
Meanwhile, there has been an increased demand for unemployment benefits and other state-funded social safety-net programs that are either wholly or partially state-funded. However, according to economists, the biggest reason states are losing money is because the economic shutdowns have also significantly decreased tax revenues.
Sales tax revenue, which is the largest source of revenue for the majority of states, has tanked because businesses are shut down and consumers are staying home. Income tax revenue has also tanked as unemployment rates have risen and people collecting those benefits have stopped paying income taxes.
Local businesses, which are also major sources of tax revenue directly and through their employees, are being forced to either fire those employees or shut down entirely. Notably, all of the stimulus proposals would include another round of Paycheck Protection Program (PPP) loans for small businesses, but experts say it likely would not be enough.
Studies have shown that PPP loans have not been effective in helping these local businesses in the long run.
“P.P.P. never really served these kinds of businesses very well. More and more of them are boarding up and closing down, and it’s a real hit to the community, a real hit to the quality of life in these communities,” Laura Tyson, an economist at the University of California, Berkeley, told The New York Times.
Multiple reports have also found that the funds were largely allocated poorly and even improperly at times.
One recent study from The Counter, an independent, food-focused news organization, found that just 1% of PPP borrowers took in a quarter of the loan money, and many of those were large companies.
In fact, the organization also reported that large fast-food franchises alone took in more than $60 billion in PPP funding through a loophole that allowed large companies to be eligible for the loans as long they employed less than 500 people at one location.
“The Counter also found multiple instances where conglomerates appeared to bypass the $10 million cap on loans through the use of subsidiaries,” the study said.
However, these small local businesses that are being thrown under the bus for the Wendy’s and Taco Bell’s of the world are not only important facets of the local economies they serve, they are also essential to the future of the American economy as a whole,
As The Times reports, “If [local businesses] fail in large numbers, it will slow the economic recovery once the pandemic is over.”
Some states have taken action to help out these small businesses, but at large, they are very limited in what they can do. In addition to being generally cash-strapped, unlike the federal government, the vast majority of states cannot deficit spend if they run out of money.
Absent a federal stimulus, the only way for states to get more money would be to raise taxes or make massive budget cuts. Both options would put significant strain on the millions of struggling Americans and have a broader, negative multiplier effect on the already faltering American economy.
See what others are saying: (The New York Times) (The Washington Post) (Forbes)
Debt Limit Bill Passes the House — Here’s What You Need to Know
The salient features of the package include changes to food stamp eligibility, an end to the pause on student loan repayments, and a controversial pipeline, among other measures.
Congress Passes Debt Deal
With the clock ticking, the House of Representatives on Wednesday passed a package to raise the debt ceiling after weeks of negotiations.
At the very top level, the deal suspends the $31.4 trillion borrowing limit until Jan. 2025 in exchange for a range of spending cuts and caps. According to the Congressional Budget Office (CBO), the bill would cut federal spending by $1.5 trillion over the next decade.
One of the most talked about parts of the legislation is the measure that would end the multi-year freeze on student loan repayments and require borrowers to resume paying again in September.
The move will have a huge impact: 45 million Americans have student loans, totaling $1.6 trillion, making this the single biggest consumer debt Americans owe after mortgages.
Requiring people to repay their loans at a time when the economy is struggling and inflation continues to soar will put a dent in income for many folks. Joseph Brusuelas, the chief economist for consulting firm RSM US, told The Washington Post that households could see a $40 billion reduction in disposable income as a direct result of the policy.
Notably, the deal does not scrap President Joe Biden’s sweeping student loan forgiveness, as Republicans had proposed in an earlier draft. That matter is still playing out before the Supreme Court.
Changes to SNAP and TANF Benefits
Another major component that could hurt millions of Americans already struggling with high prices are the proposed cuts to food stamps — officially known as the Supplemental Nutrition Assistance Program (SNAP.)
Specifically, the bill would expand the work requirements for SNAP eligibility. Under current eligibility rules, adults up to age 49 are required to either work or participate in a training program for a minimum of 80 hours a month with exceptions for people who are pregnant, live with children, or have certain disabilities.
The debt ceiling deal would raise the age of people who have to meet those work requirements to 54. That alone could risk hundreds of thousands of Americans losing their essential food assistance, according to the Center on Budget and Policy Priorities (CBPP).
Ty Jones Cox, vice president of food assistance at CBPP, explained to The Post that many older adults work part-time or seasonal jobs and thus may not reach the 80-hour-a-month requirement.
Despite the fact that the cuts to food stamps were one of the biggest Republican sticking points and one they have widely touted, the debt deal does include some major expansions to SNAP eligibility.
In addition to expanding work requirements, it also creates new exceptions for those requirements that will be extended to veterans, homeless Americans, and people 18 to 24 who were previously in foster care.
In a tweet, Housing and Urban Development Secretary Marcia Fudge said the move represents the first time ever that people experiencing homelessness will not have to meet work requirements to qualify for SNAP.
As a result, the CBO estimates that the number of SNAP recipients would actually grow by 78,000 on average and increase spending by $2.1 billion.
In a similar vein, another part of the deal that could impact many Americans is a measure that would implement changes to the Temporary Assistance for Needy Families (TANF), which is a program that provides temporary cash for families in need.
The legislation would overhaul a framework for state TANF programs that would effectively require states to expand work requirements. The actual effect will vary by state, but the CBO estimated that the move would slightly reduce the amount of money the federal government gives to states for the program.
An additional provision in this bill that has been getting a lot of attention — and a lot of backlash — would fast-track the building of a natural gas pipeline in West Virginia.
Completion of the 303-mile Mountain Valley Pipeline (MVP) — which would cut through federal forests and hundreds of dozens of waterways and wetlands — has been stalled by numerous court fights and environmental regulations.
Construction has gone millions of dollars over budget and violated many clean water laws. According to the environmental group Appalachian Voices, MVP has made more than 500 violations in two states.
The debt deal would speed up permitting for the project, make it basically impossible for environmental groups to bring legal challenges for government approvals, and shift jurisdiction away from regional courts that have continuously ruled against MVP.
The pipeline has been championed by Sen. Joe Manchin (D-W.V.), who has raked in three times more money from pipeline companies than any other member of Congress, according to Open Secrets.
Manchin’s vote will be essential to passing the debt deal in the narrowly divided Senate, and Biden promised him he would expedite the pipeline in exchange for his vote on the sweeping climate spending bill last year that the senator had single-handedly held up.
Other Notable Measures — and What Was Left Out
MVP is not the only provision in the legislation that has angered environmentalists. The deal would also streamline environmental permitting for huge energy projects, including ones on fossil fuels.
There are a number of other notable measures included in the package, including proposals to cut $20 billion in funding for the Internal Revenue Service (IRS) and claw back around $27 billion in COVID relief funds.
The bill would also mandate that significant expenditures be offset with pay-as-you-go spending reductions, as well as cap non-defense discretionary spending — a broad category that includes funding for education, national parks, and scientific research.
Also worth noting are the issues that were left out of the deal. Specifically, the package does not touch military spending or entitlements Republicans had floated cutting like Social Security and Medicare.
That is significant because those areas make up the country’s largest expenses by far — totaling nearly 80% of last year’s budget alone and costing $4.9 trillion.
Much of Biden’s domestic agenda was largely spared from the sweeping cuts and caps Republicans initially wanted. As a result, many experts have noted that the debt deal ultimately is not expected to bring down the U.S. deficit.
Deutsche Bank analysts estimated that the annual deficit reduction will only be “a few tenths of a percentage point.”
A Mixed Bag for McCarthy
Beyond having sweeping implications for America, this debt ceiling deal also has high political stakes — especially for House Speaker Kevin McCarthy (R-Ca.).
The package was arguably the biggest test of his career as speaker, and while he did ultimately achieve his goal of passing a bill that cut spending and proved he could pass bipartisan legislation, it came at a cost.
The final version of this debt bill was significantly whittled down from the first one House Republicans passed as their starting point for negotiations, and he was only able to get it through the chamber with significant help from Democrats.
The entire deal nearly fell apart before it got to the House floor because far-right Republicans moved to block the measure from consideration in a major snub to McCarthy, forcing Democrats to swoop in.
Once the bill was finally put to a vote, it passed with more support from Democrats than Republicans. Democrats voted 165 in favor and 46 against, while 149 Republicans backed the measure and 71 opposed it.
That is still a solid 2-to-1 ratio of Republican support for McCarthy, but numerous members of the far-right wing of his party have threatened to oust him as speaker over the debt deal, including some who have specifically said they would do so if the bill passed with more support from Democrats than Republicans.
The debt deal now moves to the Senate, where both Democratic and Republican leadership have pushed for their members to fast-track the bill so it can get to Biden’s desk by Monday — the deadline to suspend the debt ceiling.
A couple of Senators on both sides are threatening to slow down the bill with amendments. While Republicans are calling for more spending cuts, Democrats want to remove the provision expediting the MVP pipeline.
However, because any amendments require a 60-vote threshold, these proposals are mostly symbolic. Especially because any changes would force the bill back to the House — and there is not enough time.
See what others are saying: (The Washington Post) (The New York Times) (Axios)
Texas State Senate Sets Date for AG Ken Paxton’s Impeachment Trial
The House impeached Paxton on 20 articles, including bribery, abuse of public trust, and dereliction of duty.
The Texas State Senate on Monday adopted a resolution outlining how the impeachment trial of Attorney General Ken Paxton (R) will play out in the upper chamber.
The proceedings, which will be over seen by the Lieutenant Governor, will start no later than Aug. 28. The move comes after the House voted to impeach Paxton on Saturday 121 to 23, with a majority of Republicans voting in favor. The historic vote marks just the third time a public official has been impeached in Texas’ nearly 200-year history. The most recent impeachment was nearly five decades ago.
The decision follows a tumultuous week for Texas Republicans and further highlights the growing rifts within the party.
The divisions first came to a head last Tuesday when Paxton called for Speaker of the House Dade Phelan (R) to step down after he presided over the floor while seemingly intoxicated. Mere hours later, the Republican-led General Investigating Committee announced that it had been investigating Paxton for months.
On Thursday, the committee unanimously recommended that Paxton be impeached and removed from office, prompting a full floor vote over the weekend.
Articles of Impeachment
In total, 20 articles of impeachment were brought against Paxton, including bribery, abuse of public trust, dereliction of duty, and more.
While there is a wide range of allegations, many first surfaced in Oct. 2020, when seven of Paxton’s top aides published a letter they had sent to the Attorney General’s director of human resources.
The letter accused Paxton of committing several crimes and asked the FBI to launch an investigation, which it did.
The staffers claimed that Paxton had abused his office to benefit Nate Paul, an Austin real estate developer and friend of Paxton’s who donated $25,000 to his 2018 campaign. Many of the impeachment articles concern Paxton’s alleged efforts to try and protect Paul from an FBI investigation he was facing in 2020.
Specifically, Paxton is accused of attempting to interfere in foreclosure lawsuits and issuing legal opinions that benefitted Paul, improperly obtaining undisclosed information to give him, and violating agency policies by appointing an outside attorney to investigate baseless claims and issue subpoenas to help the developer and his businesses.
In exchange, Paul allegedly helped Paxton by hiring a woman the Attorney General was having an affair with and paying for expensive renovations to Paxton’s home. According to the articles, that swap amounted to bribery.
Beyond Paxton’s relationship with Paul, many impeachment articles also concern how the top lawyer handled the 2020 letter.
In particular, Paxton is accused of violating Texas’ whistleblower law by firing four of the staffers who reported him in retaliation, misusing public funds to launch a sham investigation into the whistleblowers, and making false official statements in his response to the allegations.
The Attorney General also allegedly tried to conceal his wrongdoing by entering into a $3.3 million settlement with the fired staffers. The settlement is especially notable as House leaders have explicitly said they launched their probe into Paxton because he had asked the state legislature to approve taxpayer money to pay for that settlement.
Additionally, the impeachment articles outline several charges relating to a securities fraud case that Paxton was indicted for in 2015 but has not been charged in. The charges there include lying to state investigators and obstructing justice.
Paxton, for his part, has denied the allegations. On Saturday, the Attorney General issued a statement seeking to politicize the matter, claiming his impeachment was “illegal” and a “politically motivated scam.”
See what others are saying: (The Washington Post) (The Associated Press) (The New York Times)
Trump Lawyer Notes Indicate Former President May Have Obstructed Justice in Mar-a-Lago Documents Probe
The notes add to a series of recent reports that seem to paint a picture of possible obstruction.
Corcoran’s Notes on Mar-a-Lago
Prosecutors have 50 pages of notes from Donald Trump’s lawyer Evan Corcoran that show the former president was explicitly told he could not keep any more classified documents after he was subpoenaed for their return, according to a new report by The Guardian.
The notes, which were disclosed by three people familiar with the matter, present new evidence that indicates Trump obstructed justice in the investigation into classified documents he improperly kept at his Mar-a-Lago estate.
In June, Corcoran found around 40 classified documents in a storage room at Mar-a-Lago while complying with the initial subpoena. The attorney told the Justice Department that no additional documents were on the property.
In August, however, the FBI raided Mar-a-Lago and discovered about 100 more.
The Guardian’s report is significant because it adds a piece to the puzzle prosecutors are trying to put together: whether Trump obstructed justice when he failed to comply with the subpoena by refusing to return all the documents he had or even trying to hide them intentionally.
As the outlet noted, prosecutors have been “fixated” on Trump’s valet, Walt Nauta, since he told them that the former president directed him to move boxes out of the storage room before and after the subpoena. His actions were also captured on surveillance footage.
The sources familiar with Corcoran’s notes said the pages revealed that both Trump and the Nauta “had unusually detailed knowledge of the botched subpoena response, including where Corcoran intended to search and not search for classified documents at Mar-a-Lago, as well as when Corcoran was actually doing his search.”
At one point, Corcoran allegedly noted how he had told the Nauta about the subpoena prior to his search for the documents because the lawyer needed him to unlock the storage room, showing how closely involved the valet was from the get-go.
Corcoran further stated that Nauta had even offered to help go through the boxes, but the attorney declined. Beyond that, the report also asserted that the notes “suggested to prosecutors that there were times when the storage room might have been left unattended while the search for classified documents was ongoing.”
Adding to the Evidence
If real, Corcoran’s notes are very damning, especially considering other recent reports concerning Trump’s possible efforts to obstruct the documents probe.
A few weeks ago, The New York Times reported that Corcoran had testified before a grand jury that multiple Trump employees told him the Mar-a-Lago storage room was the only place the documents were kept.
“Although Mr. Corcoran testified that Mr. Trump did not personally convey that false information, his testimony hardly absolved the former president,” the outlet reported, referencing people with knowledge of the matter.
“Mr. Corcoran also recounted to the grand jury how Mr. Trump did not tell his lawyers of any other locations where the documents were stored, which may have effectively misled the legal team.”
Additionally, the only reason that Corcoran handed over these notes was that he was under court order to do so. Corcoran had refused to turn the materials over, citing attorney-client privilege.
A federal judge rejected that claim on the grounds that there was reason to believe a lawyer’s advice or services were used to further a crime — meaning prosecutors believed they had enough evidence to prove Trump may have acted criminally.