Millionaires Say: Tax Us More to Pay for Pandemic

Millionaires Say: Tax Us More to Pay for Pandemic

Printer-friendly version
Plus, Trump is open to more aid for schools, Kudlow says
Monday, July 13, 2020

Trump Open to Providing Money to Help Schools Reopen, Kudlow Says

President Trump threatened last week to cut off funding to schools that don’t reopen in the fall and Education Secretary Betsy DeVos told Fox News yesterday that public schools that don't reopen should not get federal money. But top White House economic adviser Larry Kudlow said Monday that the president is willing to consider providing more money to help return students to classrooms.

"The president has said that he’s open to suggestions about additional funding if it appears that would be necessary in certain states and localities, so he will look at that," Kudlow told reporters outside the White House, according to Reuters. Kudlow made similar comments to Fox Business.

Trump and his administration have been pushing to have students and teachers return to classrooms, even as the coronavirus surges across many states and new national case counts reach record highs. "We have to open the schools. We have to get ‘em open," the president said Monday.

Pelosi, school officials and education advocates push back:
State and local officials along with teachers unions and school administrators have responded to the administration’s pressure by emphasizing that schools will need more money and resources if they are to reopen safely.

"Let's show that we put children first, and their education, by putting the resources there. Because without the resources, we shouldn't even be thinking about sending them back to school," House Speaker Nancy Pelosi said Monday an interview with MSNBC's Craig Melvin.

How much would it cost?
The cost of safely reopening schools has been the subject of some debate, but the Council of Chief State School Officers, a nonprofit representing public education officials, last month estimated it to be between $158.1 billion and $244.6 billion.

"[A]dministrators say they are already struggling to cover the head-spinning logistical and financial challenges of retrofitting buildings, adding staff members and protective gear, and providing students with the academic and emotional support that many will need after a traumatic disruption to their lives," Dana Goldstein reported in The New York Times last week. "The federal relief package passed in March dedicated $13.5 billion to K-12 education — less than 1 percent of the total stimulus. But education groups estimate that schools will need many times that, and with many local and state budgets already depleted by the economic impact of the coronavirus, it is unclear where it will come from."

House Democrats passed a bill in May that would provide $58 billion in aid local school districts. Another Democratic proposal would provide $175 billion to state educational agencies and school districts. But those plans haven’t gotten Republican support.

Millionaires: Tax Us More to Pay for Pandemic

Dozens of wealthy individuals calling themselves Millionaires for Humanity are asking the Trump administration and other Western governments to raise taxes on the rich in order to fund recovery efforts during the coronavirus crisis.

"As Covid-19 strikes the world, millionaires like us have a critical role to play in healing our world," the group said in an open letter Monday. "We are not driving the ambulances that will bring the ill to hospitals. We are not restocking grocery store shelves or delivering food door to door. But we do have money, lots of it. Money that is desperately needed now and will continue to be needed in the years ahead, as our world recovers from this crisis."

The group, which is dominated by Americans but includes citizens of the U.K., Germany, New Zealand, Canada and the Netherlands, said it was asking "our governments to raise taxes on people like us. Immediately. Substantially. Permanently."

The letter’s signatories include Walt Disney Co. heir Abigail Disney, Ben & Jerry’s co-founder Jerry Greenfield and former BlackRock managing director Morris Pearl. According to The Guardian, the letter was organized by several liberal groups including the Patriotic Millionaires, Oxfam and the Club of Rome.

Some additional quotes from the letter:

  • "The problems caused by, and revealed by, Covid-19 can’t be solved with charity, no matter how generous. Government leaders must take the responsibility for raising the funds we need and spending them fairly. We can ensure we adequately fund our health systems, schools, and security through a permanent tax increase on the wealthiest people on the planet, people like us."

  • "Unlike tens of millions of people around the world, we do not have to worry about losing our jobs, our homes, or our ability to support our families. We are not fighting on the frontlines of this emergency and we are much less likely to be its victims. So please. Tax us. Tax us. Tax us. It is the right choice. It is the only choice. Humanity is more important than our money."

Deficit Hits Record $864 Billion in June

What a difference a year makes.

In June 2019, the federal deficit totaled $8 billion. According to the Treasury Department Monday, the monthly deficit in June 2020 came in at $864 billion — the largest monthly shortfall on record and $1 billion more than the Congressional Budget Office projected last week.

A surge in spending for coronavirus relief drove much of the increase, with outlays rising by 223% to $1.1 trillion. At $511 billion, the Paycheck Protection Program, which provides small businesses with forgivable loans, accounted for nearly half of the spending increase.
Federal receipts were down 28% to $241 billion on a year-over-year basis, driven by job losses and the delay in tax filing deadlines.

The June numbers bring the year-to-date deficit to $2.7 trillion, nearly twice the previous full-year record of $1.4 trillion in 2009. Analysts expect the deficit to total roughly $3.8 trillion for the 2020 fiscal year, which ends on September 30.

"June’s deficit figures highlights just how much havoc the coronavirus pandemic has wreaked on U.S. budgeting," said Jeff Stein of The Washington Post. "In prior years, the federal deficit was considered large when it approached or eclipsed $1 trillion for an entire year."

Quote of the Day

"COVID-19 is now inversely related to the markets. The worse that COVID-19 gets, the better the markets do because the Fed will bring in stimulus. That is what has been driving markets."

Andrew Brenner, head of international fixed income at NatAlliance, a boutique investment firm

Fiscal Flashes

10.1 Million Will Lose Employer Insurance Due to COVID, 3.5 Million Will Stay Uninsured: More than 10 million Americans will lose their employer-provided health insurance this year as a result of pandemic-related job loss, researchers at the Urban Institute estimate in a new report. Of those, an estimated 3.3 million people are projected to regain coverage through a family member’s work, 2.8 million are expected to enroll in Medicaid and 600,000 are forecast to sign up for new Obamacare or other individual market plans. The researchers estimate that 3.5 million people will wind up uninsured. (Urban Institute)

IRS canceling checks sent to dead people:
Hurrying to get relief out as quickly as possible and uncertain about the rules governing eligibility, the IRS sent coronavirus relief checks to nearly 1.1 million dead people. It was just a small fraction of the roughly 160 million checks sent out, but the news was an embarrassment for the agency, which has taken steps to avoid sending checks to dead people in the future. As part of its review process, the IRS is now canceling uncashed checks sent to dead people, the agency said on its website. (Politico)

Small business loan data is a mess:
The Paycheck Protection Program last week released details on loans worth more than $521 billion, but according to an analysis by Bloomberg News, the data is loaded with errors. An example: "Although the maximum PPP loan for a one-person enterprise is $20,833, more than 75,000 loans listing one job retained have higher amounts -- including 154 showing $1 million or more." Taken together, the many errors raise questions about the effectiveness of the small business aid program.

"We are spending, as American taxpayers, upwards of half a trillion dollars to purportedly help small businesses stay afloat," Kyle Herrig, president of government-watchdog group Accountable.US told Bloomberg. "We should know where the money went, how many jobs were saved, and right now with the data, we don’t have that ability to say with any certainty." (Bloomberg)

State and local governments fight over coronavirus funds:
As Congress prepares to consider the next round of coronavirus relief, state and local governments are wrestling over the dwindling funds remaining from the $150 billion lawmakers provided in March, leading to accusations that the money is being misspent.

"The funds were supposed to help local governments purchase personal protective equipment, pay first responders and cover other public-health costs related to the pandemic," Tony Romm and Erica Werner report. "But restrictions in how the aid can be used, and confusion around how it is supposed to be doled out, mean that many have struggled to take full advantage of the so-called Coronavirus Relief Fund four months after Democrats and Republicans authorized it."

States have earmarked about $18 billion, or some 16% of the federal funds provided, for their smallest cities and counties, the Washington Post found. That’s far less than some lawmakers expected and the Treasury Department recommended in guidance issued earlier this year. (Washington Post)

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.

Views and Analysis