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Unemployment Numbers Spike as Renewed Stimulus Talks Stall

Published

11 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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Jan. 6 Rally Organizers Say They Met With Members of Congress and White House Officials Ahead of Insurrection

Published

3 days ago

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October 25, 2021

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Two sources told Rolling Stone that they participated in “dozens” of meetings with “multiple members of Congress” and top White House aides to plan the rallies that proceeded the Jan. 6 insurrection.

Rolling Stone Report

Members of Congress and White House Staffers under former President Donald Trump allegedly helped plan the Jan. 6 protests that took place outside the U.S. Capitol ahead of the insurrection, according to two sources who spoke to Rolling Stone.

According to a report the outlet published Sunday, the two people, identified only as “a rally organizer” and “a planner,” have both “begun communicating with congressional investigators.”

The two told Rolling Stone that they participated in “dozens” of planning briefings ahead of the protests and said that “multiple members of Congress were intimately involved in planning both Trump’s efforts to overturn his election loss and the Jan. 6 events that turned violent.”

“I remember Marjorie Taylor Greene specifically,” the person identified as a rally organizer said. “I remember talking to probably close to a dozen other members at one point or another or their staffs.”

The two also told Rolling Stone that a number of other Congress members were either personally involved in the conversations or had staffers join, including Representatives Paul Gosar (R-Az.), Lauren Boebert (R-Co.), Mo Brooks (R-Al.), Madison Cawthorn (R-N.C.), Andy Biggs (R-Az.), and Louie Gohmert (R-Tx.).

The outlet added that it “separately obtained documentary evidence that both sources were in contact with Gosar and Boebert on Jan. 6,” though it did not go into further detail. 

A spokesperson for Greene has denied involvement with planning the protests, but so far, no other members have responded to the report. 

Previous Allegations Against Congressmembers Named

This is not the first time allegations have surfaced concerning the involvement of some of the aforementioned congress members regarding rallies that took place ahead of the riot.

As Rolling Stone noted, Gosar, Greene, and Boebert were all listed as speakers at the “Wild Protest” at the Capitol on Jan. 6, which was arranged by “Stop the Steal” organizer Ali Alexander.

Additionally, Alexander said during a now-deleted live stream in January that he personally planned the rally with the help of Gosar, Biggs, and Brooks.

Biggs and Brooks previously denied any involvement in planning the event, though Brooks did speak at a pro-Trump protest on Jan. 6.

Gosar, for his part, has remained quiet for months but tagged Alexander in numerous tweets involving Stop the Steal events leading up to Jan. 6, including one post that appears to be taken at a rally at the Capitol hours before the insurrection.

Notably, the organizer and the planner also told Rolling Stone that Gosar “dangled the possibility of a ‘blanket pardon’ in an unrelated ongoing investigation to encourage them to plan the protests.”

Alleged White House Involvement

Beyond members of Congress, the outlet reported that the sources “also claim they interacted with members of Trump’s team, including former White House Chief of Staff Mark Meadows, who they describe as having had an opportunity to prevent the violence.”

Both reportedly described Meadows “as someone who played a major role in the conversations surrounding the protests.”

The two additionally said Katrina Pierson, who worked for the Trump campaign in both 2016 and 2020, was a key liaison between the organizers of the demonstrations and the White House.

“Katrina was like our go-to girl,” the organizer told the outlet. “She was like our primary advocate.”

According to Rolling Stone, the sources have so far only had informal talks with the House committee investigating the insurrection but are expecting to testify publicly. Both reportedly said they would share “new details about the members’ specific roles” in planning the rallies with congressional investigators.

See what others are saying: (Rolling Stone) (Business Insider) (Forbes)

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Jan. 6 Committee Prepares Criminal Charges Against Steve Bannon for Ignoring Subpoena

Published

2 weeks ago

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October 14, 2021

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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)

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Senate Votes To Extend Debt Ceiling Until December

Published

3 weeks ago

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October 8, 2021

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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)

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