- 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)
Campaign Season Gets Rolling This Month With Primaries in 13 States
Several of the contests taking place this month will serve as important tests for Trump-backed candidates and how much power the former president still has over the GOP.
May Primaries Start With Key Race in Ohio
The 2022 midterm season is officially heating up this month with 13 states heading to the polls.
Voters in Indiana and Ohio will kick off the busy month on Tuesday with several highly anticipated races, including one closely watched contest for the seat being vacated by long-time Senator Rob Portman (R-Oh.)
The fight for Portman’s seat has been a heated one: candidates have spent tens of millions of dollars, held numerous debates and forums, and at one point, two of them even got into a physical confrontation.
The main reason there are so many eyes on this race is because it will prove to be a key test for former President Donald Trump and the influence he has over the party. While Portman has generally been moderate and, at times, more readily critical of Trump than many others in his party, the Republican primary campaign has basically been a fight to see who is the most in line with Trump.
According to FiveThirtyEight, all but one of the seven Republican senate candidates embraced the former president’s election fraud lies as they fought for his coveted endorsement in a state he won by eight points in both 2016 and 2020.
Trump, for his part, ultimately ended up endorsing Hillbilly Elegy author J.D. Vance in a move that surprised many, because Vance had previously been vocally opposed to the former leader and his competitors had spent months running ads noting that fact.
However, the fight for Trump’s backing appears to have been worth it. Last week, a Fox News poll found that support for Vance has surged by double-digits since Trump’s endorsement, making him the front-runner.
Still, as FiveThirtyEight reports, “other factions of the party haven’t given up the fight either — which means the primary will be a direct test of how much clout Trump has when other Republican elites dare to defy him.”
Meanwhile, there are also concerns regarding the ongoing legal battle over Ohio’s congressional map and the confusion that has caused for the state’s election calendar. For weeks, it was widely believed the state’s primaries would be pushed back after the Ohio Supreme Court ordered GOP lawmakers to redraw their map.
The map had been gerrymandered to give Republicans 12 out of the 15 congressional seats in the state even though they had only won around 55% of the popular vote. Ohio voters also previously passed a constitutional amendment in 2018 that effectively banned partisan gerrymandering.
The election, however, is still going forward anyway, even as early voting was down a whopping 40% from the last election, and the legislative races will not be on the ballot Tuesday, meaning there will have to be a second primary, which will likely drive down turnout even more.
Other Major Races This Month
There are also other notable contests scheduled for later this month. On May 17, there will be two additional races for seats vacated by Republican senators in North Carolina and Pennsylvania that will serve as important indicators of the former president’s sway over the party.
Meanwhile, in Georgia, the main Trump test focuses on two statewide races for the positions currently held by Gov. Brian Kemp (R) and Secretary of State Brad Raffensperger (R). The two infamously angered Trump after they refused to help him overturn the election, and as a result, many are watching to see if the former president’s full-fledged pressure campaign against them will work.
In Georgia and other battlegrounds voting this month, Democrats are also hoping they can make inroads — particularly in Pennsylvania. But recent polls have not painted a good picture for the party. Last week, an NPR/PBS NewsHour/Marist poll found that 47% of voters said they were more likely to vote for the Republican in their district, while just 44% said they would back Democrats.
The poll marked the first time in eight years that a Marist survey found the GOP with an advantage for congressional ballot tests.
See what others are saying: (NPR) (FiveThirtyEight) (PennLive)
New York’s Highest Court Strikes Down Democrat-Gerrymandered Map
The move represents a major blow to Democrats, who stood to gain as many as three seats in Congress if their map had been accepted.
Appeals Court Ruling
The New York State Court of Appeals struck down a congressional map drawn by the state’s Democrats Wednesday, dealing the party a major blow.
In the decision, the state’s highest court agreed with Republicans who had argued that the map was unconstitutionally gerrymandered to benefit Democrats. The justices called the map “substantively unconstitutional as drawn with impermissible partisan purpose.”
The court also condemned the Democrats for ignoring a constitutional amendment approved by voters in 2014 that aimed to limit political influence in redistricting, which included the creation of an independent entity to draw maps that the legislature would then vote on. However, the commission created to prevent partisan gerrymandering was unable to decide on a map because of its own partisan stalemate. As a result, Democrats in the legislature took it upon themselves to draw a final map.
But the version that the legislature passed and New York Gov. Kathy Hochul (D) signed into law re-drew lines so that Democrats could have gained as many as three new seats in the U.S. House of Representatives.
Such gains would be highly significant in the upcoming 2022 midterm elections, where Republicans are expected to make substantial gains and may very well take back the House. Unsurprisingly, Republicans sued, and a lower court struck down the map.
In their order, the Appeals Court justices took away the legislature’s ability to make the map and instead delegated that power to a court-appointed “neutral expert.”
While the judges did say there was enough time to finish the map before the primary elections in June, they also added that the Congressional contests would likely need to be moved to August. Races for governor and other statewide officials, however, would stay the same.
The Appeals Court ruling is unique in that it targets Democrats, but it also comes as part of the broader trend of state courts cracking down on gerrymandering — though most other instances have stemmed from GOP-drawn maps.
In just the first four months of 2022, state courts in Ohio, North Carolina, Kansas, and Maryland have all struck down redistricting plans crafted by lawmakers.
Unlike the New York ruling, some of those other courts have implied that they will still allow those maps to be used in the 2022 elections. Such a decision would very likely disadvantage Democrats even more.
See what others are saying: (The New York Times) (NPR) (The Washington Post)
McCarthy Warned Far-Right Lawmakers Could Incite Violence After Jan. 6 in New Audio of Leaked Call
The conversations represent a marked difference from the public efforts of McCarthy and other Republican leaders to downplay their members‘ actions.
Four days after the Jan. 6 insurrection, House Minority Leader Kevin McCarthy (R-Ca.) expressed concern about far-right Republicans inciting violence and openly voiced support for censoring them on Twitter, according to audio published by The New York Times on Tuesday.
The recordings, which come from a call among party leaders and aides on Jan. 10, are by far the clearest evidence top Republicans acknowledged that their members played a role in stoking violence before the insurrection and threatened to do so after.
They also emphasize the vast difference between what top Republicans, especially McCarthy, said behind closed doors, and how they downplayed and ignored the actions of their members in public.
One of the most notable elements of these recordings is that McCarthy and the others explicitly identified several individuals by name. They focused mainly on Reps. Matt Gaetz (R-Fl.) and Mo Brooks (R-Al.) as the primary offenders.
In the audio, McCarthy can be heard flagging Gaetz right off the bat.
“Tension is too high. The country is too crazy,” he added. “I do not want to look back and think we caused something or we missed something and someone got hurt. I don’t want to play politics with any of that.”
Specifically, McCarthy and the others talked about how Gaetz had gone on TV to attack multiple Republicans for being unsupportive of former President Donald Trump after Jan. 6. They particularly expressed concern over his targeting of Rep. Liz Cheney (R-Wy.), who was a member of the leadership team and had already been facing threats.
Others on the call also noted that Brooks had spoken at the rally before the insurrection, where he made incendiary remarks that many have viewed as direct calls to violence. McCarthy said the public comments from his members “have to stop,” adding he would call Gaetz and have others do the same to tell him that this “is serious shit” and “to cut this out.”
Rep. Steve Scalise (R-La.), the second-ranking House Republican, asserted at one point that Gaetz’s actions were “potentially illegal.”
“Well, he’s putting people in jeopardy, and he doesn’t need to be doing this,” McCarthy responded. “We saw what people would do in the Capitol, you know, and these people came prepared with rope, with everything else.”
Republicans on the call also mentioned incendiary remarks from other members, including Reps. Louie Gohmert (R-Tx.), Barry Moore (R-Al.), and Lauren Boebert (R-Co.). Cheney pointed to Boebert as a security risk, noting she had tweeted out incredibly sensitive information about the movements of top leaders like House Speaker Nancy Pelosi (D-Ca.) during the attack on the Capitol.
“Our members have got to start paying attention to what they say, too, and you can’t put up with that shit,” McCarthy added later. “Can’t they take their Twitter accounts away, too?”
McCarthy in Hot Water
The newly published recordings also come just days after The Times reported that McCarthy had told members on a call after the insurrection that he would urge Trump to resign.
McCarthy initially called the reporting “totally false and wrong,” but shortly after his denial, The Times received permission from their source to publish audio where he can be heard saying precisely that.
McCarthy, for his part, has tried to spin the situation, claiming that his remarks were still true because he never actually followed through on the plan to call Trump.
Still, the situation prompted widespread backlash from the far-right faction of the Republican party.
Multiple people expressed hesitancy about their support for McCarthy as Speaker of the House if Republicans take control of the chamber in the midterm elections. Some said they could not trust him.
Speaking on his show Tuesday, Foxs News host Tucker Carlson called McCarthy “a puppet of the Democratic Party.”
Gaetz also responded with ire, tweeting out a statement in which he referred to the call as “sniveling” and said of McCarthy and Scalise: “This is the behavior of weak men, not leaders.”
Other members mentioned in the call, however, appeared to brush it off. In a statement to Axios, Moore claimed that the story was engineered by “RINOS” (Republicans in Name Only), and that “Republicans will be more united than ever after taking back the House this November.”
It currently remains unclear whether these revelations with pose any long-term threat to McCarthy, but if Trump is any indication of the far-right party line, the House leader may be in the clear.
After The Times published the audio of McCarthy saying Trump should resign, the former president told The Wall Street Journal that the relationship between the two men was untroubled.
“I think it’s all a big compliment, frankly,” he added. “They realized they were wrong and supported me.”