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Unemployment Numbers Spike as Renewed Stimulus Talks Stall

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2 months ago

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  • 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)

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House To Send Impeachment Article Monday, Starting Impeachment Trial Process

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2 days ago

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January 22, 2021

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  • Senate Majority Leader Chuck Schumer said the House will send the impeachment article against former President Donald Trump to the Senate on Monday, triggering the start of the impeachment trial process.
  • The news comes one day after Senate Minority Leader Mitch McConnell requested that the trial be delayed until mid-February so that Trump’s legal team could have two weeks to prepare.
  • The senators could still come to their own agreement to delay the start of oral arguments and give Trump’s team more time to file pretrial briefs. 
  • Some Democrats have signaled support for this move because it would give them extra time to confirm President Joe Biden’s nominations before the trial starts.

Pelosi To Send Impeachment Article

Senate Majority Leader Chuck Schumer (D-NY) said Wednesday that House Speaker Nancy Pelosi (D-Ca.) will send the impeachment article against former President Donald Trump to the Senate on Monday.

The move will officially trigger the start of the impeachment trial process. The announcement comes one day after Minority Leader Mitch McConnell (R-Ky.) requested that the trial be delayed until mid-February so that Trump’s legal team could have two weeks to prepare.

Despite Pelosi’s decision, the senators still could come to their own agreement to start the ceremonial proceedings but delay the start of oral arguments and give Trump’s team more time to file pretrial briefs.

In fact, Democrats, who have been pushing for a schedule that would allow them to still confirm President Joe Biden’s nominees before the trial proceedings start each day, have signaled that they might not oppose a delay because it would give them extra time for confirmations.

During his announcement this morning, Schumer indicated that the details were still being hashed out.

“I’ve been speaking to the Republican leader about the timing and duration of the trial,” he said. “But make no mistake a trial will be held in the United States Senate and there will be a vote on whether to convict the president.” 

McConnell, for his part, responded by reiterating that his party will continue to press for Trump’s team to be given enough time.

“This impeachment began with an unprecedentedly fast and minimal process over in the House,” he said. “Senate Republicans strongly believe we need a full and fair process where the former president can mount a defense.”

While the leaders may not have worked out the particulars yet, according to reports, both parties have already agreed that this trial will be shorter than Trump’s first impeachment, which lasted three weeks.

Implications for Power-Sharing Deal

The new impeachment trial deadline could also speed up the currently stalled negotiations between Schumer and McConnell regarding how power will be shared in a Senate with equal numbers of Republicans and Democrats.

Democrats effectively control the Senate because Vice President Kamala Harris will be the deciding vote, but she cannot always be there to resolve every dispute.

As a result, McConnell and Schumer have been working to come up with a power-sharing deal for day to day operations, similar to one that was struck in 2001 the last time the Senate was split 50-50. However, those negotiations have hit a roadblock: the legislative filibuster.

The filibuster is the long-standing Senate rule that requires a supermajority of at least 60 senators to vote to end debate on a given piece of legislation before moving to a full floor vote. Technically, all 50 Democrats and Vice President Harris could agree to change the rule to just require a simple majority to legislation advance, or what’s known as the “nuclear option.”

That move, in effect, would allow them to get through controversial legislation without any bipartisan support, as long as every Democrat stays within party lines. Many more progressive Democrats have pushed for this move, arguing that the filibuster stands in the way of many of their and Biden’s top priorities.

Given this possibility, McConnell has demanded that Democrats agree to protect the filibuster and promise not to pursue the nuclear option as part of the power-sharing deal. 

But top Democrats have rejected that demand, with many arguing that having the threat of filibuster is necessary to get Republicans to compromise.

In other words: if Republicans fear that Democrats will “go nuclear,” they will be more likely to agree to certain bills and measures to avoid that.

See what others are saying: (The New York Times) (Politico) (The Wall Street Journal)

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Biden Signs 17 Executive Order During His First Day in Office. Here’s What You Need to Know

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3 days ago

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January 21, 2021

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  • In the first hours of his presidency, Joe Biden signed 17 executive orders and proclamations, many of which focused on rolling back Trump administration policies regarding immigration, the environment, and protections for minority groups.
  • Biden also implemented several measures to tackle the coronavirus, including requiring masks to be worn on federal property and by federal employees. He is also expected to announce a new national strategy aimed at restructuring the federal response to the pandemic.
  • On Thursday, Biden will also invoke the Defense Production Act, which would speed up the development and distribution of vaccine-related equipment.

Biden Rolls Back Trump Policies

President Joe Biden signed 17 executive actions and proclamations Wednesday afternoon. Many of his first acts in office are focused on rolling back several policies implemented by former President Donald Trump that Biden’s aides said have caused the “greatest damage” to the country.

“I thought there’s no time to wait, get to work immediately,” Biden told reporters present during the signed of several of the orders. 

Here is a breakdown of some of the key measures Biden implemented.

Immigration

Biden immediately ended all construction on the border wall by overhauling the national emergency declaration Trump had enacted to divert billions in federal funds to his central campaign promise.

The new president also expanded protections under the Deferred Action for Childhood Arrivals program (DACA) and overturned a Trump policy that made immigration enforcement more strict and

In similar actions, he also ended the travel ban on multiple Muslim-majority countries and revoked a Trump administration order that would have excluded non-citizens from the 2020 Census count.

The Environment

One of the most significant actions Biden took was signing a letter to rejoin the Paris Climate Agreement. It will take 30 days for the return to go into effect.

The president also issued a sweeping order that reversed a number of the Trump administration’s environmental policies, including revoking the permit for the Keystone XL pipeline, re-establishing a working group to look into the social costs of greenhouse gasses, and temporarily banning oil and natural gas leases in the Arctic National Wildlife Refuge.

Justice for Minority Groups

In one far-reaching order, Biden directed all federal agencies to review equity in their programs and policies. They are required to issue a report within 200 days that, among other things, details how each will remove barriers to opportunities and ensure all Americans have equal access to federal resources.

Biden also ended Trump’s policy that limited federal agencies, contractors, and other organizations from holding diversity and inclusion training. The same order also disbanded the 1776 Commission created by Trump to study his claims that the education system was too liberal in its teaching of American history.

In a separate order, the president issued changes that will broaden federal protections against sex discrimination to include LGBTQ+ Americans, reversing a previous action by Trump.

Government Accountability

As part of a broad measure aimed at general accountability in the executive branch, Biden issued an order that will establish ethics rules for all people in his administration. The same order will also require all executive branch appointees to sign an ethics pledge. 

Separately, the president additionally froze all new regulations Trump had put in place during his last few weeks in office until they can be further evaluated.

Economy and Coronavirus

Chief among Biden’s first acts in office were his plans for the coronavirus pandemic and the damage it has caused to the American people.

In terms of financial relief, Biden extended the ban on evictions and foreclosures and paused student loan payments until September.

As for direct actions concerning the pandemic, the president imposed a mask mandate for all federal employees and anyone on federal property. He also signed an extensive order aimed at restructuring the federal response to the pandemic.

Biden is expected to enact more policies in regards to the coronavirus in the coming days, including taking more executive actions to ramp up testing and vaccine distribution, safely reopening schools and businesses, and provide more money to states to help carry out those efforts, among other things.

To achieve these goals, he will also invoke the Defense Production Act, which will compel American companies to manufacture supplies for the pandemic response such as PPE and other items needed for vaccines.

See what others are saying: (The New York Times) (ABC News) (The Washington Post)

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U.S. To Join WHO-led Vaccine Distribution Plan as Biden Implements a Flurry of COVID-19 Executive Orders

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3 days ago

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January 21, 2021

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  • Dr. Anthony Fauci indicated Thursday that President Joe Biden will join COVAX, a World Health Organization-led COVID-19 vaccine distribution plan.
  • Fauci’s announcement comes one day after Biden signed an executive order reversing former President Donald Trump’s plan to remove the United States from the WHO. 
  • Among other orders, Biden plans to implement a mask mandate for airports, planes, trains, and other forms of interstate travel. He has already ordered masks to be worn on all federal property. 
  • Biden is also expected to invoke the Defense Production Act on Thursday, which would speed up the development and distribution of vaccine-related equipment.

U.S. To Join COVAX

Just one day after President Joe Biden signed an order to keep the United States in the World Health Organization, Dr. Anthony Fauci said the country will join its global COVID-19 vaccine distribution plan.

That plan, COVAX, is a collaborative effort between 92 countries to ensure that COVID vaccines aren’t only distributed in wealthy countries.

The idea behind the plan is that establishing a global herd immunity will be much more effective at curbing the spread of the virus than just establishing herd immunity in countries that can afford to buy large quantities of the vaccine, especially when international travel picks back up. 

The plan is not without its shortcomings. Earlier this week, the WHO stated that some countries participating in COVAX have been disregarding the plan and buying large quantities of vaccines for themselves.

Nonetheless, in a video conference call Thursday morning with the WHO’s executive board, Fauci — now chief medical advisor to the president — said the Biden administration believes it can inoculate every American while also helping people in other countries.

Biden’s plan to join COVAX is a stark contrast from the Trump administration, which refused to participate in the program. 

Fauci said Biden will issue the directive to join COVAX later Thursday. 

Additionally, Fauci noted that the U.S. once again “intends to fulfill its financial obligations” to the WHO. 

In his attempt to leave the organization, Trump cut off payments from the U.S.; however, his administration never got the chance to fully cut ties with the organization because the U.S. wasn’t scheduled to officially leave until July of this year. 

Biden Signs Mask Mandate, Other Orders To Come

Among other COVID-related executive orders signed Wednesday, Biden implemented a national mask mandate for people on federal property. 

Sometime Thursday, Biden is also expected to sign another order requiring masks to be worn in airports, as well as on airplanes, trains, and other interstate transit systems.

Also on Thursday, Biden is also expected to sign an order that will establish a COVID-19 testing board. Once implemented, the board will be responsible for increasing testing rates, addressing supply shortfalls, and determining the rules and regulations for international travelers coming into the U.S. It will also have the power to distribute resources to minority communities that have been disproportionately affected by the virus.

On top of that, Biden plans to sign an order that will direct the Federal Emergency Management Agency to reimburse states and Native American tribes for their emergency response efforts. Notably, those reimbursements include costs related to reopening schools.

Finally, Biden is expected to invoke the Defense Production Act on Thursday. Such a move would speed up the production of masks and other equipment needed to help administer vaccines.  

See what others are saying: (Business Insider) (Reuters) (CNBC)

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