A Deal to Avoid a Shutdown in October

By Michael Rainey

A Tentative Deal to Avoid a Shutdown in
October

Congressional negotiators on Friday reached an agreement "in
principle" on a short-term spending deal that would avert a
government shutdown on October 1, when the next fiscal year begins.
Assuming the agreement holds, the House is expected to vote on the
bill next week, followed by the Senate.

Missing a self-imposed noon deadline, the deal was held up by a
White House demand for $30 billion to replenish a Depression-era
fund that has been used to provide aid for farmers hurt financially
by President Trump’s trade policies. Trump took to Twitter to press
his case Friday, charging that "Pelosi wants to take 30 Billion
Dollars away from our great Farmers. Can’t let that happen!"

Initially resisting the White House request – a Democratic aide
said it was "an abuse of taxpayer dollars to give this
administration more money so the president can grab headlines with
announcements at campaign rallies" – House Speaker Nancy Pelosi
(D-CA) reportedly backed down late in the day. In exchange,
Democrats will get one of their funding requests, about $2 billion
for nutrition assistance for children affected by the coronavirus
pandemic.

Democrats reportedly will not get some of their other demands,
however, including $3.6 billion for election security and an
extension of the December 31 deadline for the Census Bureau to turn
over the data from the latest national count to Congress.

The deal would extend current funding levels until December 11,
well short of the February 26 end date Democrats had been seeking,
potentially setting up another contentious standoff in a lame-duck
Congress and during a possible presidential transition.

Pandemic Legislation to Boost GDP 4.7% This
Year: CBO

The four major laws passed by Congress to address the
coronavirus pandemic will boost real domestic gross product by 4.7%
in 2020 and 3.1% in 2021, the
Congressional Budget Office said Friday. The "wide
array of conventional and unconventional fiscal policies" in the
laws will also add $2.3 trillion to the deficit in the current
fiscal year and $0.6 trillion in the following fiscal year,
according to CBO estimates.

"By providing financial support to households, businesses, and
state and local governments, the legislation will offset part of
the deterioration in economic conditions brought about by the
pandemic," CBO said. "From fiscal year 2020 through 2023, for every
dollar that it adds to the deficit, the legislation is projected to
increase GDP by about 59 cents."

In the long run, CBO expects the increased debt to weigh on
growth, in part by driving up borrowing costs.

Massive Corporate Tax Holiday Could Cause
Headaches Next Year

Worried about getting stuck with unpaid tax bills in 2021,
private employers have largely passed on President Trump’s
voluntary program that allows companies to defer the Social
Security portion of employee payroll taxes until the end of the
year. But an earlier rule change that allows companies to defer the
employer portion of both Social Security and Medicare taxes has
proven more popular. Some analysts, though, are starting to worry
about what happens when those taxes come due over the next two
years.

The collective bill will be substantial. According to the Joint
Committee on Taxation, unpaid payroll taxes could total $211
billion this year.

"While this may be good for a short-term cash flow, it may
backfire," tax attorney Cameron Hess
told Bloomberg. The program could leave employers
"under an even more serious financial crisis, with obligations
owing to the U.S. Treasury."

For the most part, analysts say the liquidity provided by the
tax deferral – United Parcel Service saved $370 in the second
quarter, for example, while Lowe’s saved $251 million – was worth
it, coming as it did in the middle of the worst of the pandemic
shutdowns, even though there may be some pain down the line.

"Things would be drastically different if we hadn’t had the
flood of liquidity in the system from the CARES Act," Mark Mazur of
the Tax Policy Center said. "On balance, it has been more positive
than negative. But there are going to be unintended consequences
that we haven’t even anticipated."

Judge Orders Halt to Changes at US Postal
Service

Chief Judge Stanley A. Bastian of the U.S. District Court for
the Eastern District of Washington on Thursday night granted a
request to block operational changes at the U.S. Postal
Service.

Democratic officials from 14 states sought the injunction, and
the decision in their favor stated that President Trump and
Postmaster General Louis DeJoy are intentionally interfering with
the postal system for political gain.

"The states have demonstrated that the defendants are involved
in a politically motivated attack on the efficiency of the Postal
Service," Bastian said. "They have also demonstrated that this
attack on the Postal Service is likely to irreparably harm the
states’ ability to administer the 2020 general election."

The ruling, which you can
read here, includes a stinging indictment of the
Trump administration’s efforts, which the judge said amount to
"voter disenfranchisement":

"Although not necessarily apparent on the surface, at the
heart of DeJoy’s and the Postal Service’s actions is voter
disenfranchisement. This is evident in President Trump’s highly
partisan words and tweets, the actual impact of the changes on
primary elections that resulted in uncounted ballots, and recent
attempts and lawsuits by the Republican National Committee and
President Trump’s campaign to stop the States’ efforts to bypass
the Postal Service by utilizing ballot drop boxes, as well as the
timing of the changes. It is easy to conclude that the recent
Postal Services’ changes is an intentional effort on the part the
current Administration to disrupt and challenge the legitimacy of
upcoming local, state, and federal elections, especially given that
72% of the decommissioned high speed mail sorting machines that
were decommissioned were located in counties where Hillary Clinton
receive the most votes in 2016."

Donald Lee Moak, a member of the USPS Board of Governors, denied
the accusation. "Any suggestion that there is a politically
motivated attack on the efficiency of the Postal Service is
completely and utterly without merit," Moak said, according to

The Washington Post.

Number of the Day: 247%Private insurers and employers paid
hospitals 247% of what Medicare would have paid for the same
services in 2018, according to a new report from RAND. The study
found considerable variation in prices, though, with little or no
relation between cost and quality. Researchers said the report
would help provide a greater degree of transparency around pricing,
which is often lacking in the complex and murky world of American
health care. Although health care consumers and providers may argue
about whether private prices are too high or Medicare reimbursement
rates are too low, the researchers said the results indicate that
"there are large potential savings at stake" when it comes to
negotiating deals for the provision of health care services.

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