| | | Pelosi and Dems Look to ‘Go Big’ With $1.5 Trillion Infrastructure Bill
House Democrats on Thursday unveiled a $1.5 trillion infrastructure bill, arguing that the need to rebuild crumbling roads and bridges, expand broadband access in rural areas and invest in clean energy has been made more urgent by the coronavirus pandemic and its economic fallout.
“It's job-creating in its essence, but it's also commerce-promoting. So it grows the economy of our country,” House Speaker Nancy Pelosi said, according to The Hill.
The bill, called the Moving Forward Act, reportedly would provide nearly $500 billion in highway and transportation funds over 10 years as well as $100 billion for low-income schools, $100 billion for affordable housing, $100 billion for broadband, $70 billion for the electric grid, $65 billion for water projects, $30 billion for hospitals and $25 billion for the Postal Service.
Pelosi said she would push to pass the bill before Congress leaves town for its July 4 recess, and she noted that President Trump has spoken of the need for new infrastructure investment.
“The president, we understand, really wants an infrastructure bill,” she said. “He talks about it quite a bit, so now let’s get down to what that means.”
Pelosi reportedly added that low interest rates mean that “there's never been a better time for us to go big.”
The White House has reportedly discussed a $1 trillion infrastructure stimulus package, but congressional Republicans have expressed concern about federal spending and the additional cost of any new stimulus package.
Democrats urged Trump to enter into negotiations on how to pay for an infrastructure bill. House Ways and Means Chairman Richard Neal reportedly said that Democrats have proposed a combination of government-subsidized bonds, Private Activity Bonds and "some borrowing" to cover the cost of the legislation.
“It’s time to have the conversation, it’s time to negotiate,” Neal said, according to Bloomberg News. “We think on the revenue side we are open to some solutions and negotiations.”
Republicans have also objected to the green measures included in Democrats’ previously released highway bill, which would represent the largest part of the infrastructure package.
“Republicans have been a bit critical at points during the mark up and saying this is Green New Deal 2.0. This is the application of the principles of the Green New Deal. And this proves that we can both deal with climate change, fossil fuel pollution and actually create millions of new high-paying American jobs. That is the promise of this legislation,” Transportation and Infrastructure Committee Chairman Peter DeFazio (D-OR.) said, according to The Hill.
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| Conservative Groups Call for Tax Day to Be Delayed Until 2021
A coalition of more than 20 conservative and free-market groups wrote to Treasury Secretary Steven Mnuchin on Thursday asking that he defer the July 15 tax deadline into next year, saying that the payments due next month “are a fiscal cliff endangering our economic recovery.”
The 22 groups include Americans for Tax Reform, FreedomWorks, the National Taxpayers Union Foundation and Tea Party Nation. They say that the tax payments due next month could total $1 trillion or more. “This would represent an enormous financial burden at a time when many individuals and businesses are struggling to make ends meet due to the impacts of the COVID-19 crisis and the recent civil unrest,” the groups say. “The case is clear that delaying payment deadlines – including estimated taxes and excise taxes – must be an immediate priority.”
Why it matters: At Politico’s Morning Tax, Bernie Becker summed it up smartly. “Let’s not act like conservative groups angling to let people keep their tax dollars is wildly out of character,” he wrote. “But it is a presidential election year, and President Donald Trump has promised the economy will come roaring back before November — so it’s probably fair to wonder how much of a political debate this will become in the coming weeks."
Becker notes that the National Treasury Employees Union has also called for the July 15 deadline to be pushed back for the safety of IRS employees. But the American Institute of CPAs, for now at least, says the deadline should stay, in part because the group doesn’t expect states to offer another delay.
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| Bailout Oversight Board Sounds a Warning
The government watchdog responsible for monitoring $2.4 trillion in coronavirus-related bailout funds warned Wednesday that the size and speed of the various rescue programs present significant challenges for proper oversight.
In its first report, the Pandemic Response Accountability Committee reviewed the main issues facing the Offices of Inspector General at the 37 federal agencies receiving emergency funds. “Key areas of concern include both the need for accurate information concerning pandemic-related spending and the significant amount of money federal agencies may lose as the result of improper payments,” the report said.
One specific program cited in the report is the $150 billion fund intended to help state and local governments. The report said that some aid had been distributed already “without agreements or terms and conditions establishing requirements for the use of funds and reporting on such uses.”
The report also said the $660 billion Paycheck Protection Program run by the Small Business Administration lacks proper controls, leading to “increased vulnerability to fraud and unnecessary losses when SBA and its lending partners expedite loan transactions to provide quick relief.”
The report comes amid complaints about a lack of transparency in the stimulus and relief programs. Michael E. Horowitz, the acting chair of the oversight committee, told Congress that the Treasury Department was resisting efforts to disclose information on companies and individuals who have received federal funds.
Treasury Secretary Steven Mnuchin said last week that he would not divulge the names of loan recipients in the Paycheck Protection Program, though he later said that he would work with Congress on the issue.
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| Coronavirus Layoffs Keep Coming as Jobless Claims Top 45 Million
About 1.5 million people filed for state unemployment benefits last week, the Department of Labor announced Thursday, bringing the 13-week total for first-time claims to more than 45 million. Another 760,000 filed new claims for Pandemic Unemployment Assistance, a temporary program for workers such as independent contractors who ordinarily do not qualify for unemployment payments.
While new jobless claims continue to decline, falling for the 11th straight week, the numbers remain startlingly high relative to previous recessions, and some economists have expressed concerns that the labor market is not healing as rapidly as they had hoped.
“It’s not clear why claims are still so high,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics, in a note to clients. “[I]s it the initial shock still working its way up through businesses away from the consumer-facing jobs lost in the first wave, or is it businesses which thought they could survive now throwing in the towel, or both? Either way, these are disappointing numbers and serve to emphasize that a full recovery is going to take a long time.”
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| | Digging Into the Unemployment Numbers
With the labor market in a state of unprecedented turmoil, the data is coming in so quickly that it can be difficult to see the clear trendlines. Heidi Shierholz of the Economic Policy Institute attempted to straighten out some of the crooked lines in a blog post Thursday.
In particular, Shierholz argued that delays in filing, processing and reporting jobless claims — along with the two-tiered system of state and federal benefit payments — make it hard to get a handle on how many people are currently receiving unemployment benefits. While the Labor Department reported Thursday that the number of people receiving benefits has plateaued at 20.5 million, there are millions more in limbo as they wait for their applications to be processed.
By Shierholz’s calculations (see the chart below for a summary), about 34.5 million people are either receiving benefits — including 9.3 million in the Pandemic Unemployment Assistance program — or are in process within the system. That means that “more than one in five workers are either on unemployment benefits or are waiting to get on,” Shierholz said.
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| | Poll of the Day: Americans Fear Drug Companies Will Use Covid to Raise Prices
Nearly 90% of Americans are concerned that drug companies will use the Covid-19 pandemic to raise prices, according to a new poll by Gallup and West Health, a non-profit organization focused on health care costs. More than half (55%) of adults surveyed said they are very concerned that the pharmaceutical industry will leverage the pandemic to raise prices. Another 33% said they are somewhat concerned.
Nearly nine in 10 Americans also said they support allowing the government to negotiate prices directly with the manufacturer of any approved Covid-19 treatment.
The poll also found that 79% of Americans report being very or somewhat concerned about their health insurance premiums going up and 84% are very or somewhat concerned about the general cost of care rising.
More than half give low marks to U.S. coronavirus response: Asked to rate the national response to the pandemic relative to U.S. spending on health care, more than half of Americans called the response poor (34%) or fair (23%). About one in 10 (9%) rated the response as excellent and another 14% described it as very good.
The pollsters surveyed 1,016 American adults in interviews conducted May 11-22.
Why it matters: There has been speculation that the coronavirus pandemic and the race for a vaccine or treatment may present an opportunity for the pharmaceutical industry to burnish its dismal reputation. A Harris poll from mid-May found that 40% of Americans have a more positive view of the industry than they did before the pandemic hit.
But as Beth Snyder Bulik wrote this week at Fierce Pharma, pricing remains a potential landmine for drugmakers looking to reset their reputations. "If a vaccine or treatment exists, but Americans can’t afford to get it, especially the most vulnerable or at risk populations—for example, lower income, minority, or living in more densely populated areas—it will likely be a major issue," Harris Poll Managing Director Rob Jekielek told Fierce Pharma.
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| Opportunity Zones Mostly Help Real Estate Developers: Report
The 2017 Republican tax package created an Opportunity Zone program that provides tax breaks for real estate developers in specially designated, low-income neighborhoods. President Trump has touted the program as a key part of his effort to combat racial inequality, but a new study from the Urban Institute says the program is falling well short of its goals.
“The incentives were intended to foster equitable development outcomes — such as by creating quality jobs, affordable housing, community-oriented amenities like grocery stores, and improved quality of life for low-income people,” the report says. “Our evidence suggests they need to be redesigned so government dollars are allocated effectively and help project sponsors achieve those outcomes.”
The main problem, the researchers found, is that low-income neighborhoods provide relatively modest returns on investment. Wealthy investors prefer the higher returns they can get on projects in neighborhoods closer to developed areas. “Luxury housing in appreciating neighborhoods therefore may receive much larger public support than, say, affordable housing projects,” the report says.
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| | | | - Continued Layoffs Signal an ‘Economic Scarring’ – Ben Casselman and Tiffany Hsu, New York Times
- Coronavirus Is Killing Our Economy Because It Was Already Sick – Eric Levitz, New York
- Why Is There a Deadline on PPP Applications? – David Dayen, American Prospect
- State Taxes Shouldn’t Be Another Pandemic Worry – Sen. John Thune (R-SD), Wall Street Journal
- Why I’m Introducing a Bill to Help Protect Inspectors General – Sen. Chuck Grassley (R-IA), Washington Post
- The Fed Is Addicted to Propping Up the Markets, Even Without a Need – Steven Pearlstein, Washington Post
- The Destruction of Coronavirus Bailout Oversight Foretells Another Disaster – Michael Hiltzik, Los Angeles Times
- How to Avoid a ‘Rich Man’s Recovery’ – Tim Wu, New York Times
- Will the Pandemic Reshape Child Care for Good? – Sarah Jones, New York
- The Dead End of Small Government – Brink Lindsey, Niskanen Center
- Designing the Main Street Lending Program: Challenges and Options – William B. English J. Nellie Liang, Hutchins Center for Fiscal and Monetary Policy
- Drug Makers Have Even Less Reason to Fear Price Reform Now – Riley Griffin and Emma Court, Bloomberg Law
- A Rebuke on Drug Prices – Wall Street Journal Editorial Board
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