Jobless Claims Top 40 Million, but There’s a Silver Lining

Jobless Claims Top 40 Million, but There’s a Silver Lining

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Plus: House votes to relax PPP rules
Thursday, May 28, 2020

House Approves Paycheck Protection Program Fixes

The House on Thursday overwhelmingly approved bipartisan changes to give small businesses more time and flexibility in using emergency loans obtained through the Paycheck Protection Program meant to aid companies and workers during the pandemic.

The details: The $670 billion program provides businesses with fewer than 500 employees with low-interest loans up of to $10 million that can be forgiven if companies meet certain requirements — but business owners said the criteria for forgiveness were problematic, making the program less effective and appealing. In response, the Paycheck Protection Program Flexibility Act passed on Thursday would:

  • Extend the window small businesses have to spend their funds and still qualify for loan forgiveness from eight weeks to 24 weeks;
  • Reduce the percentage of forgivable loan funds required to be spent on payroll from 75% to 60%, giving business owners the ability to use more of the money they receive on overhead expenses including rent and utilities;
  • Allow payroll tax deferrals to PPP loan recipients;
  • Extend the application deadline from June 30 to December 31;
  • Allow more time to rehire workers;
  • Extend the repayment time for non-forgiven loans from two years to five years for future borrowers.

The bill, introduced by Republican Rep. Chip Roy of Texas and Democratic Rep. Dean Phillips of Minnesota, passed 417-1. Republican Rep. Thomas Massie of Kentucky cast the only “no” vote.

What’s next: The legislation now goes to the Senate, which is expected to take up the issue when it returns next week.

Senators said last week that they had made progress on their own set of PPP changes, including some changes not in the House bill. The Senate would reportedly have allowed 16 weeks, rather than 24, for spending the loan money and would have kept the 75% payroll requirement. Sen. Marco Rubio (R-FL), one of the architects of the program, has some concerns about the House version, according to The New York Times.

The new proxy voting process used by the House to pass the bill also creates some uncertainty since Republicans have filed a lawsuit arguing that legislation passed in such a manner is invalid.

The sponsors of the bill want the Senate to act quickly and avoid making this bill part of a larger coronavirus relief package that is likely still weeks away.

“I would be both surprised and disappointed if the Senate didn’t pass this immediately and get it to the president,” Phillips said, according to the Star Tribune. And Roy told CNN ahead of Wednesday’s vote: "I hope that Congress doesn't mess this up en route to some grand bargain.”

Jobless Claims Top 40 Million, but There’s a Silver Lining

More than 2.1 million people filed for unemployment benefits last week, the Department of Labor announced Thursday, bringing the total coronavirus-related jobless claims to more than 40 million over the last 10 weeks — a staggering toll without precedent in American history.

The initial claims numbers continued to decline on a week-over-week basis, though, as the pace of layoffs slows. And for the first time since the crisis began, continuing jobless claims — from those already on the jobless rolls — moved lower, falling to 21.1 million for the week ended May 16 (the continuing claims data is delayed by a week). That suggests that nearly 4 million people have left the unemployment system.

“The data still point to a pretty significant loss of jobs but at least the numbers are moving in the right direction,” Aneta Markowska, chief financial economist at Jefferies Group, told Bloomberg News. “Even though initial claims are still very elevated, the fact that continuing claims are declining means businesses are actually bringing a lot of workers back in and that is more than offsetting the new filings.”

Still, the unemployment rate is at levels not seen since the Great Depression, and economists expect the pain to linger for months, if not years. While employers appear to be bringing some employees back as parts of the economy reopen, the competition for jobs — especially safe ones that can be done remotely – is fierce.

“Those who aspire to return to the workforce, seeking new positions amid a battered economy, are likely to find their options limited and less than ideal,” The Washington Post’s Tony Romm said Thursday. “Already, some economists said they had noticed a growing reluctance on the part of workers to apply for positions where face-to-face interaction is required -- and working at home might be difficult or impossible.”

White House Won't Update Economic Projections

The White House typically releases a mid-year review in July or August, updating its projections on a variety of economic factors including unemployment, inflation, GDP growth and the size of the deficit. But for the first time in decades, that review will not be released this summer, according to The Washington Post.

Administration officials say the coronavirus crisis has produced so much volatility in the economy that it’s too difficult to model the trends. Others point out that the decision will help the White House avoid providing what would likely be an unflattering picture of an economy wracked by the coronavirus. “It gets them off the hook for having to say what the economic outlook looks like,” former CBO director Douglas Holtz-Eakin said.

Bill Hoagland, senior vice president of the Bipartisan Policy Center and a former Republican staff director for the Senate Budget Committee, also expressed doubts about the administration’s decision. “There is no logistical reason they couldn’t do it,” he said. “It seems more likely they do not want to bring attention to the high level of unemployment they’d have to project for this year, and into next year.”

The lack of economic projections could make it harder for federal agencies to develop their budget requests for next year. “The agencies need good information on the economic outlook to plan,” said Claudia Sahm, who served on the White House Council on Economic Advisers during the Obama administration. “Without these forecasts, they cannot ask for the right amount in appropriations.”

Fed survey provides a look at the damage: A new Federal Reserve survey reveals some of the brutal economic conditions the Trump White House may be seeking to avoid bringing to light. Economic activity fell “sharply” in most districts in the six weeks up to May 18, the survey says, with severe reductions in travel and tourism, automotive sales, manufacturing and construction. The outlook among business owners is “highly uncertain” and many say they are “pessimistic about the potential pace of recovery.”

The survey is a “bracing reminder that as some Americans take advantage of easing restrictions to resume working and spending — and the stock market continues to rally — the economic wound remains open,” the Post’s Tory Newmyer said Thursday.

White House Pushes to End Surprise Medical Bills

The White House is pushing Congress to take action on a plan to end “surprise” medical bills, possibly by including it as part of the next coronavirus relief package, Politico’s Susannah Luthi and Rachel Roubein report.

Congress punted on a legislative fix to the problem last year, as lawmakers — buffeted by intense lobbying on the issue — couldn’t agree on competing proposals to prevent health care providers from hitting patients with unexpected bills for emergency room visits or out-of-network care. The main point of contention was how to determine compensation for health care providers and resolve billing disputes.

Trump administration officials are now floating a plan that would simply ban surprise bills but avoid specifying out how doctors and hospitals would get paid by insurers, Luthi and Roubein report, citing administration sources, Capitol Hill aides and industry lobbyists familiar with discussions. Billing disputes would reportedly have to be worked out case by case.

Cost concerns could still kill the White House plan: “The prospect of the White House plan raising health care costs could yet douse enthusiasm on Capitol Hill,” Luthi and Roubein write. “Though congressional scorekeepers haven't issued a formal estimate, a congressional aide said the Congressional Budget Office has advised through informal guidance that the plan would raise premiums by driving up provider rates.” A spokesperson for Sen. Patty Murray (D-WA), the ranking member on the Senate Committee on Health, Education, Labor and Pensions, told Politico that she is concerned that the White House proposal would increase patients’ costs. Doctors, insurers and employers all still have concerns.

The bottom line: There’s probably no easy way to steer clear of obstacles to a deal. “In the end, the issue is the same as it’s been for over a year,” Politico’s Adam Cancryn and Dan Diamond say. “All sides support an elimination of surprise bills. But if the patient isn't paying for those sometimes-hefty treatment expenses, some other part of the health sector will need to — and nobody wants to be the one stuck with the bill.”

Chart of the Day: Who’s Sending Surprise Medical Bills

A new report from the Health Care Cost Institute breaks down who is most responsible for sending out-of-network medical bills. It finds that most providers in six specialty areas who bill out of network do so less than 10% of the time — but some providers always or almost always bill out of network.

“In every specialty, more than half of the sample's providers never billed out of network. And even among providers who did bill out of network, the plurality to vast majority — depending on the specialty — tended to bill out of network infrequently (less than 10 percent of the time),” the report says. “There were, however, some providers who almost exclusively billed out of network (more than 90 percent of the time), most notably in the pathology specialty.”

The English Premier League is set to resume play starting June 17. Yay, sports!

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