Pelosi Pushes Back on Trump’s Call for New Tax Cuts

Pelosi Pushes Back on Trump’s Call for New Tax Cuts

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Plus, the failure of our health care system
Thursday, May 7, 2020

Pelosi Pushes Back on Trump's Tax Cut Demands, Calls for Massive Aid Bill

House Speaker Nancy Pelosi on Thursday laid out the broad outlines of the next round of coronavirus stimulus being written by House Democrats and dismissed President Trump’s calls for payroll and capital gains tax cuts, saying those cuts won’t help those hurt most by the coronavirus pandemic and that the president shouldn’t insist on them now.

“If you want to compare the need for us to change the capital gains tax, which, once again, once again, ignores the fact that there are people in our country that are hungry and that there is some equivalent to that, I respectfully disagree. There are certain things are urgent,” Pelosi said in an interview with Bloomberg Television. “Having a discussion of tax policy? Save that for another day and do it in a bipartisan way. But don’t draw any lines in the sand. We’re not. He shouldn’t.”

At her weekly press conference, the speaker called for more aid to state and local governments, more virus testing and “putting money in people’s pockets,” potentially in the form of direct payments, expanded unemployment insurance and tax credits.

Pelosi said those elements were all in previous coronavirus relief legislation. “So this is not plowing any new territory. It is digging deeper with more money,” she said in her Bloomberg interview.

Pelosi also called for “a significant increase” in Supplemental Nutrition Assistance Program benefits, commonly known as food stamps, and help for the United States Postal Service. And she said she supports the use of “automatic stabilizers” that could extend unemployment benefits without requiring Congress to act repeatedly.

A ‘Rooseveltian’ response: Pelosi said Thursday that the package being prepared by House Democrats “will be big.” Though she did not provide specific figures, it reportedly could match or exceed the $2.2 trillion cost of the initial CARES Act. She said concerns about the rapidly rising national debt, which topped $25 trillion this week, should not prevent lawmakers from providing food assistance to people in need — and that it was far better to add to the debt for that than for the tax cuts passed by Republicans in 2017. "Yes, I'm concerned about the national debt," she said, "but I think it would be penny foolish to say, 'I'm sorry, we can't do SNAP to give you food because there's a national debt.'"

Pelosi also reiterated that Federal Reserve Chair Jerome Powell had encouraged lawmakers to “think big” because interest rates are low.

Along those lines, Senate Minority Leader Chuck Schumer told MSNBC that the coming package would be “Rooseveltian” in its scope and size. He compared calls by GOP leaders including Mitch McConnell and Kevin McCarthy for lawmakers to pause before passing any additional legislation to President Herbert Hoover’s response to the 1929 stock market crash and the start of the Great Depression.

“The people like McConnell and McCarthy and even Trump who say, ‘Let’s wait and do nothing,’ well, they remind me of the old Herbert Hoovers. We had the Great Depression — Hoover said let’s just wait it out. It got worse and worse,” Schumer said.

What’s next: Pelosi told reporters that the House would probably return next week and could vote on its latest coronavirus legislation then. It’s not clear yet whether Democrats will look to pass their legislation without Republican support, unlike previous rounds of coronavirus relief.

McCarthy on Thursday called for hearings to evaluate previous coronavirus legislation before lawmakers take up any new bill, and some moderate Democrats reportedly have also raised concerns about moving ahead without bipartisan consensus or further negotiations.

Coronavirus-Related Jobless Claims Top 33 Million

Nearly 3.2 million people applied for unemployment benefits last week, the Labor Department announced Thursday, bringing the seven-week total since the coronavirus crisis hit to more than 33 million.

The report shows that job losses continue to slow, but the numbers are staggering by any measure. “That’s one in five jobs likely gone in seven weeks,” Nick Bunker of Indeed Hiring Lab told MarketWatch. “The outlook for the labor market remains frightening. Not only does the pace of layoffs remain at unprecedented levels, but hiring intentions remain depressed.”

The April jobs report, due Friday morning, is expected to show job losses of about 21 million and an unemployment rate in the neighborhood of 16%. “Both numbers would be highs on records back to the late 1930s and 40s,” The Wall Street Journal said Thursday. “The previous peak unemployment rate was 10.8% in 1982. The largest monthly jobs loss, 1.96 million, occurred at the end of World War II.”

Op-Ed of the Day: Our For-Profit Healthcare System Failed

Elisabeth Rosenthal, the editor in chief of Kaiser Health News, writes at The New York Times that our health care system failed in its response to the pandemic — and that failure was, in many cases, the result of the decentralized, for-profit nature of the system, which, for example, gives hospitals no incentive to stockpile ventilators:

“[T]he saddest part is that most of the failings and vulnerabilities that the pandemic has revealed were predictable — a direct outgrowth of the kind of market-based system that Americans generally rely on for health care.

“Our system requires every player — from insurers to hospitals to the pharmaceutical industry to doctors — be financially self-sustaining, to have a profitable business model. As such it excels at expensive specialty care. But there’s no return on investment in being primed and positioned for the possibility of a once-in-a-lifetime pandemic.

“Combine that with an administration unwilling to intervene to force businesses to act en masse to resolve a public health crisis like this, and you get what we got: a messy, uncoordinated under-response, defined by shortages and finger-pointing.”

Rosenthal details a number of ways the system failed, from ventilators to testing to hospitals, but she says that those various failures don’t necessarily mean we need a government-run system — just that we need one that “responds more to illness and less to profits.”

Read the full piece at The New York Times.

Tweet of the Day

From Larry Levitt, executive vice president for health policy at the Kaiser Family Foundation:

Quote of the Day

“Printing money is the most expedient, least well-understood, and most common big way of restructuring debts. It’s like playing Monopoly in a way where the banker can make more money and redistribute it to everyone when too many of the players are going broke and getting angry.”

— Hedge fund manager Ray Dalio, from a new appendix to his book, “The Big Cycle of Money, Credit, Debt, and Economic Activity.” According to Bloomberg’s Nathan Crooks, Dalio says that “money printing, when compared to the other tools that policy makers can use like austerity, debt defaults and higher taxes, feels ‘good rather than bad’ to most people.”

Fiscal Flashes

Small Business Loan Program Pulls Back: Overwhelmed by demand for aid, the Economic Injury Disaster Loan program, run by the Small Business Administration with a huge injection of new funding, has stopped accepting most applications and reduced its maximum loan amount from $2 million to $150,000. “Congress gave the disaster loan program more than $50 billion in new funding in recent relief bills to offer quick-turnaround loans to businesses slammed by the coronavirus pandemic,” says The Washington Post. “But by many accounts, it is failing spectacularly.” (Washington Post)

Two-Year Treasury at Record Low: The yield on the two-year Treasury fell to 0.129% Thursday, surpassing the previous record low of 0.157% seen in September 2011. The rate drop suggests that traders think the Fed could drop rates into negative territory in the coming months. The two-year note was above 1% as recently as February. (Wall Street Journal)

CVS Says Americans Are Ignoring Non-Coronavirus Health Needs: No surprise here, but executives at CVS Health, which owns insurance giant Aetna, said Wednesday that the company’s data suggests Americans are putting off routine health treatment amid the coronavirus pandemic. Aetna saw a roughly 30% drop in use of health-care services in April, and patients got fewer new prescriptions. Aetna’s commercial contracts also declined as businesses shut down, laid off workers or cut health coverage. The concern is that the decline in treatment could result in a future surge of health problems and higher costs, especially for patients with untreated chronic conditions such as diabetes and heart disease. (Wall Street Journal)

Navy’s New Frigates Could Cost $1.4 Billion Each: The U.S. Navy reduced its order for the Littoral Combat Ship — derided as the “Little Crappy Ship” by critics for its light armor and lack of survivability — but now there are questions about the price tag of the frigate designed to replace the LCS. Current estimates put the cost at about $940 million each for 18 ships, but the Congressional Research Service says that based on contracts for similar ships currently being built, the cost is more likely to be $1.47 billion per unit — 56% higher than the Navy’s projection. Bryan Clark, a naval analyst at the Hudson Institute, says there is a “significant risk” that the Navy is underestimating the true cost of the new frigates. (Bloomberg)

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