Bickering Over Price
Republicans want to spend about $1 trillion with strong internal divisions.
The Democrats are united behind Pelosi. They propose $3 trillion.
A video courtesy of The Street has key details.
Clock Just Ran Out on $600 in Weekly Unemployment Benefits
As noted on Sunday the Clock Just Ran Out on $600 in Weekly Unemployment Benefits.
Calendar Quirk
The last full week in July ends Saturday July 25 for most state UI programs. And that is when the benefits expire, not July 31.
Rubio proposes taking up the lapse in insurance “by the first week in August.”
That would be too late.
Republicans Propose a Means Test Instead of $600 Weekly Benefits
On Sunday, I commented Republicans Propose a Means Test Instead of $600 Weekly Benefits
Republican Proposal Details
- Eliminate the $600 weekly benefit and replace that with a means test to rejigger benefits so that they replace roughly 70% of a worker’s former wages.
- Another round of direct $1,200 payments to would be sent to the same group of Americans as the last round—$1,200 to individuals with adjusted gross incomes below $75,000 and married couples making less than $150,000. Payments would be gradually reduced for incomes above those levels before they are phased out entirely.
- $100 billion in aid to schools and universities and additional money for coronavirus testing.
- State and local governments would get no additional aid, but more freedom on how to spend previous money.
- The Republican bill would make it harder to successfully sue businesses, schools and health-care providers in coronavirus-related cases.
- Estimated total cost of about $1 trillion
More Details On Point 1
- The GOP proposes to cut the enhanced unemployment benefit from $600 to $200 per week through September. That is in addition to what recipients get from states unemployment insurance.
- The GOP also proposes to set the maximum assistance at 70% of a worker’s previous wages, with a cap of $500 per week.
These are huge cutbacks that Pelosi is unlikely to agree with quickly if at all.
Senate Majority Leader Mitch McConnell (R., Ky.) has said he expects to take at least a few weeks.
If so, that is three weeks of missed $600 checks. In addition the benefits stopped flowing completely in states with minimal weeks of unemployment insurance.
Advantage Democrats
Because of Republican delays, Democrats can hold out for more and blame Republicans for all of it.
Under this scenario, they would agree to a deal after a couple of weeks, then blame Trump and the Republican Senators for the difference
Philosophically Speaking
Philosophically, people should not make more being unemployed than employed.
Politically speaking, the Republicans just stepped on a landmine.
Weeks or Longer Delay
Via MarketWatch “The Republican proposal on unemployment benefits, simply put, is unworkable. It will delay benefits for weeks if not months as we slide into a greater degree of recession,” said Chuck Schumer, Democratic Senate Minority Leader.
Democrats Favored to Win the Senate
Please note that the Democrats are Now Favored to Win the Senate.
This update will not help the Republican cause.
Trump Will Lose to Biden
For analysis of why Trump will lose to Biden, please see Only 13 Percent of Voters are Still Undecided
Republican bickering can easily turn things into a Democrat tidal wave.
Mish
I would be surprised if we don’t hear more people calling for a national guaranteed income. This relates back to my previous post about the wealth gap in this country. There is something inherently wrong when CEOs make $31M per year and pay starting salaries of $37,000 per year for an entry level bank teller in California. That is not much better than minimum wage. The CEOs company also benefited from the recent US tax cuts to the tune of $3.8 billion in 2019.
Interestingly and/or ironically, that was a concept that Andrew Yang was pushing as a candidate. I think it is almost inevitable due to the reasons you suggest – plus automation of jobs.
The wage ratio / wealth gap starting going crazy in the late 70s / early 80s … Reaganomics was the beginning of the blast-off to the stratosphere.
The outlook for this country is not promising if the gap between the “haves” and the “have nots” gets larger and larger. The “have nots” are beginning to catch on to the fact that the bailouts are primarily for the rich. This will undoubtedly spur social unrest if the gap continues to grow.
The inequality grows.
At the end of the day (or civil unrest will grow) either the rich get poorer … or the poor get richer.
With the debt situation looming over everything (basically the rich own debt … and the poor owe debt) … it will only be rectified by some sort of jubilee (inflating it away under current conditions impossible …. EVERY solution now fueled by more debt).
Maybe I’m an optimist, but I think “they” will opt to make the rich poorer or else risk losing everything.
Or, we go straight to totalitarianism.
This is a lot of money, and I am concerned it will not solve the problem and save the economy until virus problems go, likely another YEAR, especially given how the US has repeatedly flubbed responding intelligently and with a plan.
But if they are going to pass this package, the money should flow bottom up, efficiently lubricating the economy where unemployment is about to wreak havoc. That is the Democrats’ approach much more than the Republicans.
The Senate bill also includes a lot unrelated to helping the economy – significant military purchases, increases in business tax deductions for entertainment, provision to prevent a competitor building a hotel across from the Washington Trump, etc.
There will be civil unrest, but I do not think you understand the ramifications….
The birthpains of a gauranteed income for all Americans. It was inevitable. The virus just sped up the process. Like it or not, socialism is here to stay. Lest there be civil unrest.
I sure hope not. I don’t think the US is capable of generating enough wealth to support guaranteed income on a wide scale. That means lots of debt and money creation to make up the difference. Which will lead to higher prices and when prices for necessities rise beyond the guaranteed income levels, people will riot and demand even more. And thus starts the death spiral for the USD.
“US is capable of generating enough wealth to support guaranteed income on a wide scale”
Depends on how you do it. If you simply divide 30% of last years actually collected tax receipts by the adult population and hand each adult that sized check, you’ll be fine. Then do 10-15% ditto for health care.
And then kill every other form of handouts, pensions and “social programs.” And while you’re at it, bring all troops, and 80% of all other foreign service workers, home, and promptly lay off 80% of them. You’ve got your 40-45% covered quite nicely.
Don’t you mean “Let there be civil unrest?” That will be the result, of course, and it’s intentional.
The American people need to toughen up and stop expecting the government to be their mommy. We have become a nation of weak, complainers, and beggars with out hands out expecting something for nothing. There was a time when Americans were ashamed to accept charity, today they think it is their birthright.
We cannot be a great country when our people are pathetic beggars…..
I think the Dems should cave and give Trump and Republicans whatever they want. The economy will only get worse with Republican “solutions”.
I don’t see any semblance of sanity from either side and really nothing but economically destructive ideas. Given what looks to be coming, I’m just glad I didn’t sell all of the gold and silver I purchased back in 2009.
All you have to do is look at the Democratic cities devolving into Mogadishu as people flee, to see the results of liberalism. Socialism is the road to failure and misery.
Law of all types of budget negotiations – Republicans always cave.
That’s how you implement socialism, while suckering the well meaning but gullible into believing there is some “party” out there which is not in the socialist camp. Which there, of course, is not. The “two party system” being nothing more than an obfuscation for a “one party” one.
Well, the GOP proposal also includes a billion or so for a new FBI headquarters right where it is so competition does not adversely affect the Trump hotel. Likewise it restores Pentagon funding that Trump used for his pet border wall project.
Keep backing the establishment, and you’ll end up like the rest of them – exposed, at best. https://www.armstrongeconomics.com/world-news/press/youtube-is-engaged-in-sedition-to-overthrow-the-government/
BTW – you’ll also wrong about Trump – https://www.amazon.com/Blitz-Trump-Will-Smash-Left/dp/1630061387
The Democrats want a huge bailout for their public unions. The bay area rapid transit (BART) admitted their ridership is off 90% from their budget. Given the collapse in tourism, personal/business expenditure its my guess every city in California is in serious trouble. They do not want to share in the consequences served up by their psychotic oligarch Gavin Newsome.
The only democrat tidal way is of socialism. I doubt the average conservative democrat will by into turning the US into Cuba 2. As in 2016, trumps odds are being underestimated both here and in the media circus.
More faux news. The Republicans are just as socialist with their central banking interventions by the Fed for bailouts to Wall Street, Trump donors and others select people. Trump has made things worse when it comes to intervention not better.
When you are ready to talk about reality versus your fake news, then come back. Otherwise shut it.
They are now throwing $TRILLIONS around like it’s confetti.
Gold will go ballistic and the US can kiss Global Reserve Currency status goodbye.
I would take swiss francs and singaporean dollars.
Not enough of those for global trade.
Need a major currency to step forward.
Yes it is just as a hedge. Singapore and Switzerland won’t destroy their currencies and they have manageable populations and productive working populations. This is the future IMO. Slow productive growth is fine. The problem is the world has too many people to keep productive in a time when machines and automation are replacing humans increasingly faster. This will only get worse with AI/ML on the way in a big way. A lot of people are about to be automated out of existence faster thanks to Covid.
“Under this scenario, they would agree to a deal after a couple of weeks, then blame Trump and the Republican Senators for the difference”
…
I bet Democrat strategists are salivating. Do just this … won’t be enough to kick economic can past November … ensuring Blue Wave this Fall … next year(s) epic deficit(s) as US becomes entrenched in Nanny State-itis.
Yes Tony. Trump and Republicans have done a bang up job of not increasing deficits even before Covid. Bravo !
Socialist spain is looking at -20% gdp Q2… and they can’t even print properly. Probably want to sell the country to someone or something.