Plan B, as in Bust

By Yuval Rosenberg

Plan B, as in Bust

Plan A went nowhere fast. Plan B isn’t looking much better. With
congressional negotiations on a coronavirus aid package at an
impasse, lawmakers scrambled Thursday to try to address the
scheduled expiration Friday of enhanced unemployment benefits for
millions of Americans and the broader devastation wrought by the
pandemic — or at least make a good show of it.

Sen. Ron Johnson (R-WI) tried to unanimously pass legislation to
continue emergency federal unemployment benefits, but at 66% of an
individual’s lost wages, or about $200 per week rather than the
$600 a week that has been in place since March. Senate Minority
Leader Chuck Schumer (D-NY) blocked the effort.

"They’ve woken up to the fact that we’re at a cliff, but it’s
too late," Schumer said of the standalone unemployment extension
Thursday, according to Politico. "It’s too late because even if we
were to pass this measure, almost every state says people would not
get their unemployment for weeks and months. All because of the
disunity, dysfunction of the Republican caucus."

Schumer in turn tried to unanimously pass the $3 trillion
package passed by the House in May. Republicans blocked it. Later,
Sen. Martha McSally (R-AZ) tried to unanimously pass a one-week
extension of the $600 benefit. Schumer blocked it, calling it
"a
stunt," and again tried to pass the Democratic bill,
which was again blocked.

Senate Majority Leader Mitch McConnell (R-KY) set up a likely
vote next week to address the expiring unemployment benefit. The
Hill’s Jordain Carney
reports: "Senate Republicans successfully brought
up a bill they will use as a vehicle for their competing
unemployment proposals, none of which appear to have the votes
needed to actually pass next week." She adds that McConnell did not
say what plan he will try to force a vote on, but other GOP
senators say they expect it will be the plan from Johnson and Sen.
Mike Braun (R-IN).

Sens. Mitt Romney (R-UT), Susan Collins (R-ME) and McSally have
a competing bill that would reportedly let states enact an 80% wage
replacement or a flat $500 weekly supplement that would scale down
by $100 a month in September and another $100 in October.

"We’ve had enough rope-a-dope. We’ve had enough empty talk. It’s
time to go on the record," McConnell said from the Senate floor,
Carney reports.

Any Senate plan would require 60 votes for passage, meaning at
least seven Democrats would need to join all Senate
Republicans.

Why it doesn’t matter: All the maneuvering amounted to
little more than political theater, with negotiations having
devolved into partisan bickering, finger-pointing and attempts to
gain leverage. "The legislative shenanigans were not meant to
actually enact policy, but rather to help further the political
blame game as Congress prepared to leave town without an
agreement," The Washington Post reports.

The bottom line: "The next meeting between Schumer/Pelosi
and Mnuchin/Meadows will be at 8p tonight," CNN’s Phil Mattingly

reports. "To this point they've managed to meet three
times, for more than three total hours, and make roughly 0 progress
toward a deal."

The official expiration tomorrow of the $600 enhanced
unemployment payments appears inevitable, though the deadline could
provide some incentive for a deal. If the benefits expire as
expected — the last checks have already gone out millions of
out-of-work Americans face a sharp, sudden drop in income. The
Washington Post’s Jeff Stein highlighted
the severity of the potential cutoff in aid: "If unemployment
benefits go away completely, more than 30 million Americans will
see an income cut of between 50 percent and 75 percent -- virtually
overnight."

Bloomberg’s Steven Dennis
writes (sarcastically, in case it needs to be said) that
all is not lost: "The Senate managed to designate July National
Blueberry Month after failing to act on virus relief/UI
benefits."

Read more, if you can stomach it, at
The Washington Post.

GOP Senators Propose $1,000 Stimulus Checks
for Adults and Children

Four Republican senators on Thursday introduced a competing idea
for the next round of coronavirus direct payments, The Hill’s Naomi
Jagoda
reports:

"Under the bill from GOP Sens. Bill Cassidy (La.), Steve
Daines (Mont.), Mitt Romney (Utah), and Marco Rubio (Fla.), both
adults and children would receive stimulus payments of
$1,000.
"The payments that Congress provided for in legislation
enacted in March, known as the CARES Act, were $1,200 per adult and
$500 per child. …
"Under House Democrats' proposal, called the Heroes Act,
families would receive payments of $1,200 per non-dependent adult
and $1,200 per dependent for up to three dependents. The HEALS Act
would provide payments of $1,200 per adult and $500 per
dependent."

Under every proposal, eligibility for the full payments
would be limited to individuals making up to $75,000 and married
couples with incomes of up to $150,000, with payments phasing out
above those levels.

An Unprecedented Collapse for the U.S. Economy

The U.S. economy shrank in the second quarter at the fastest
pace on record by some measures, with gross domestic product
falling by 9.5% on a quarterly basis as businesses closed and
millions of Americans stayed home in response to the coronavirus
pandemic.

On an annualized basis — the rate for the full year, assuming
the quarterly results were repeated in each quarter — the economy
shrank at a rate of 32.9%, the fastest since 1946, according to

Deutsche Bank.

"The collapse was unprecedented in its speed and
breathtaking in its severity," The New York Times
said Thursday. "The only possible comparisons in
modern American history came during the Great Depression and the
demobilization after World War II, both of which occurred before
the advent of modern economic statistics."

Although the numbers are shocking, they were not
unexpected; economists polled by Dow Jones had expected to see a
decline of 34.7%.

Mark Zandi, chief economist at Moody’s Analytics, said the
report "highlights how deep and dark the hole is that the economy
cratered into in Q2. It’s a very deep and dark hole and we’re
coming out of it, but it’s going to take a long time to get
out."

The White House put a relatively positive spin on the
report Thursday, with President Trump’s Council of Economic
Advisers saluting Americans’ resiliency and the strength of the
economy heading into the crisis. "The magnitude of this contraction
reflects the gravity of the economic sacrifice Americans made to
slow the spread of COVID-19 and prevent greater tragic loss of life
and health," the council said in a
statement. "The country mitigated pressures on
hospital capacity and allowed medical professionals the time to
learn how to more effectively treat this disease. The Trump
Administration will continue to support America as we build a
bridge to the other side of this crisis."

But that bridge is looking harder to cross as the size of
the crisis — and the lack of recent progress (see new unemployment
figures, below) — has come into sharper focus. "A couple of weeks
ago there was a lot more optimism that we would see a strong
V-shaped recovery," Edward Moya, an analyst at currency trading
firm OANDA, told
Politico. Now, however, "there is a lot of bad
news about how some areas are handling the virus. And every day we
don’t have a new stimulus agreement in place is hurting the
economy."

Jobless Claims Edge Higher Again

Initial jobless claims rose for the second week in a row, with
1.43 million workers filing for state unemployment benefits.
Another 830,000 people applied to the Pandemic Unemployment
Assistance program, which provides benefits for self-employed and
gig workers, bringing the weekly total to well over 2 million. It
was the 19th week straight that unemployment claims have exceeded 1
million, a level that hadn’t previously been reached.

The data confirm many economists’ fears that the recovery
is losing steam and may be reversing course. "What's more worrying
is that months after the virus arrived, we still have more people
losing their jobs each week than at any point during the Great
Recession,"
said Justin Wolfers of the University of Michigan.
"The short-term virus-related economic suppression is turning into
a more enduring recession."

Quote of the Day

"Over his entire career, I can’t recall a single forecast
that he made that was accurate. You know, there’s the old joke
about the economist that predicted seven out of the last four
recessions. Kudlow makes that guy look good."

– An unnamed banker who used to work with
White House economic adviser Larry Kudlow at investment bank Bear
Stearns, in a blistering
Vanity Fair profile of Kudlow by William D.
Cohan.

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