Trump Threatens ‘Radical Left’ Universities

Trump Threatens ‘Radical Left’ Universities

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Plus, June's soaring deficit
Friday, July 10, 2020

Trump Threatens Tax-Exempt Status and Funding for ‘Radical Left’ Universities

President Trump on Friday continued to put pressure on American schools, charging that "too many" universities are about "radical left indoctrination" rather than education. As a result, the president said, he was instructing the Treasury Department to "re-examine" the tax-exempt status and funding of universities. Most colleges and universities are exempt from taxes as 501(c)(3) organizations.

In a pair of tweets sent while on his way to events in Florida, Trump said: "Too many Universities and School Systems are about Radical Left Indoctrination, not Education. Therefore, I am telling the Treasury Department to re-examine their Tax-Exempt Status... and/or Funding, which will be taken away if this Propaganda or Act Against Public Policy continues. Our children must be Educated, not Indoctrinated!"

Earlier in the week, Trump had threatened to cut federal funding from schools if they don't reopen this fall.

What Trump is doing:
"This is an old issue for conservatives that the president is now tapping into as part of his broader culture war conversation he's been stoking in recent days and weeks," Peter Baker of The New York Times said.

What Trump could do:
"It would fall to the IRS, a bureau of the Treasury Department, to conduct the review that Trump described. However, federal law prohibits the IRS from targeting groups for regulatory scrutiny ‘based on their ideological beliefs,’" The Hill’s Morgan Chalfant reports.

Bloomberg’s Jordan Fabian further explains: "Trump’s power to drastically alter universities’ tax exemption is limited, but he could make policy changes that could hurt their bottom lines. For example, the Treasury Department could make changes through regulations, such as the Unrelated Business Income Tax, which pertains to profits earned through a part of the school that is not substantially related to the non-profit or educational part of the university."

Universities also rely on federal research grants and they’ll need emergency coronavirus response funds, which the administration reportedly may be able to curtail, but broader changes would require congressional action, which is highly unlikely.

Quote of the Day: Pelosi Calls $1 Trillion for Covid Relief an 'Interesting Starting Point'

"So, a trillion dollars is okay, that is an interesting starting point, but it doesn't come anywhere near. … And let me say another thing about trillions. The Fed is spending trillions of dollars to shore up the stock market. That may be a good thing to do. We think we should spend trillions of dollars to shore up America's workers, and there is a path that is a good investment, that is stimulus, that keeps people from losing their jobs and helps people get jobs by being a stimulus and having consumer confidence, spending, injecting demand into the economy, job creating. "

– House Speaker Nancy Pelosi, at a press conference Thursday, on Trump administration and GOP calls to limit the cost of the next coronavirus relief bill to $1 trillion.

June Deficit Soars to $863 Billion, Nearly Matching 2019 Total: CBO

The federal budget deficit in June totaled $863 billion, the Congressional Budget Office estimated this week. That’s up from $8 billion in the same month last year and nearly matches the fiscal gap for all of fiscal year 2019, which was $984 billion.

The surging deficit is the result of the coronavirus pandemic, as federal spending more than tripled compared to June 2019 and tax revenues plunged 28%.

Outlays by the Small Business Administration (SBA) rose from $80 million to $511 billion because of the Paycheck Protection Program created to help small companies weather the pandemic and maintain payrolls. SBA spending accounted for almost half of the government’s $1.1 trillion in total outlays.

Spending on unemployment insurance jumped from $2 billion in June 2019 to $116 billion last month, with more than half of the increase stemming from the $600 increase in weekly benefits authorized by Congress in March. Those enhanced payments are set to expire this month.

Tax revenues fell as a result of declines in wages and diminished economic activity as well as the administration’s decision to delay the deadline for quarterly estimated taxes from June 15 to July 15, the CBO said.

For the first nine months of the fiscal year, the deficit totaled $2.7 trillion, CBO estimated, compared with $747 billion over the same period last year.

Total outlays have risen by 49%, while receipts have fallen by 13%. Revenues for the first six months of the year were 6% higher than the same period last year, but receipts over the last three months plunged by 40% compared to 2019, in large part as the result of the tax filing deadline being pushed back from April 15. CBO expects that much of the deferred revenue will be collected later this year or in future years.

From April through June, the deficit was an estimated $2.0 trillion, compared with $56 billion for the same period last year.

Drug Giants Partner in Fund to Create New Antibiotics

Twenty of the largest drugmakers on Thursday announced they would create a new $1 billion fund to provide short-term backing to biotech startups developing antibiotics to treat drug-resistant infections. The fund, created in partnership with the World Health Organization with funding from companies including Johnson & Johnson, Merck and Roche AG, will invest in roughly two dozen companies that have identified promising drugs, with the aim of bringing two to four antibiotics to market within a decade.

Chart of the Day: The Growth of Medicare Advantage

Total enrollment in Medicare Advantage, the Medicare program that offers health plans from private insurers, has grown by more than 30% since 2017 — and has nearly doubled over the last decade, according to government data cited in a report released Thursday by the Better Medicare Alliance, a non-profit advocacy group that says its mission is to support Medicare Advantage. Enrollment in Medicare Advantage is projected to increase to nearly 51% of total Medicare enrollment by 2030, the report says.

Have a good weekend and stay safe! Send your tips and feedback to Follow us on Twitter: @yuvalrosenberg, @mdrainey and @TheFiscalTimes. And please tell your friends they can sign up here for their own copy of this newsletter.

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