The Shutdown Threat Just Got Real
Last week’s tentative deal to prevent a shutdown of the federal government after the fiscal year ends at midnight on September 30 fell apart late Friday, with House Speaker Nancy Pelosi (D-CA) reportedly objecting to a White House demand for more money for a farmer bailout as part of the agreement. Republicans blamed Pelosi for backing out of the agreement, while Democrats claimed they had never really made a deal in the first place.
In an attempt to move beyond the dispute, House Democrats unveiled a continuing resolution on Monday that would keep the government open through mid-December. The bill omits the issues that hung up negotiators last week — including $30 billion for a relief fund for farmers that Republicans wanted and roughly $2 billion for food aid for children that Democrats had sought — while extending current funding for most government agencies. The bill would also extend highway funding and the National Flood Insurance Program, and prevent a $50 per month increase in the cost of Medicare Part B.
“The Continuing Resolution introduced today will avert a catastrophic shutdown in the middle of the ongoing pandemic, wildfires and hurricanes, and keep government open until Dec. 11, when we plan to have bipartisan legislation to fund the government for this fiscal year,” Pelosi said in a statement Monday.
House leaders plan to vote on the bill Tuesday.
Republicans are leery: Senate Majority Leader Mitch McConnell (R-KY) was quick to criticize the bill, though without stating clearly that he would oppose it. “House Democrats’ rough draft of a government funding bill shamefully leaves out key relief and support that American farmers need. This is no time to add insult to injury and defund help for farmers and rural America,” McConnell said in a tweet.
The White House was a bit less critical, suggesting that the Trump administration could conceivably go along with the Democratic plan rather than risk a shutdown. “We do prefer additional farm aid in the CR [continuing resolution],” top White House economic adviser Larry Kudlow said. “Most of all we want a clean CR to keep the government open.”
The Senate could block a House-passed bill or vote on an amended version and pass it back to the House. It could also ultimately approve the House version and move on to other matters.
Progressives call for new tactics: The news of the death of Supreme Court Justice Ruth Bader Ginsberg late Friday added a new potential wrinkle to the negotiations, with some progressives calling for Pelosi to use the continuing resolution — and the threat of a shutdown — to gain leverage in their effort to stop or delay the nomination of a new member of the court.
David Sirota, a former speechwriter for Vermont Senator Bernie Sanders (I-VT), said Monday that Democrats should consider every possible option in their political battle over the high court, including blocking the “must-pass budget.”
Pelosi says she’s not interested: Asked by ABC News host George Stephanopoulos on Sunday if she had considered using the government funding bill as leverage in an attempt to slow the nomination of a new Supreme Court justice, Pelosi said “none of us has any interest in shutting down government. That — that has such a harmful and painful impact on so many people in our country. So I would hope that we can just proceed with that. There is some enthusiasm among some, exuberance on the left to say let's use that, but we're not going to be shutting down government.”
Pelosi did say that she is considering other ways to fight the Supreme Court battle. “Well, we have our options,” she said in response to a question about the possibility of using an impeachment proceeding to slow the Senate’s effort to confirm a new judge. “We have arrows in our quiver that I’m not about to discuss right now, but the fact is we have a big challenge in our country.
The shutdown threat can’t be dismissed entirely: Although all parties involved have said they want to avoid a shutdown of the government, the lack of agreement so close to the deadline — just over a week away — does not bode well. “With McConnell's announcement that Senate R's oppose the CR House Dems filed today, we're suddenly in ‘government shutdown looms’ territory 9 days ahead of deadline,” The Washington Post’s Erica Werner said Monday.
Debt Will Nearly Double by 2050: CBO
The national debt will increase to about twice the size of the economy over the next 30 years, the Congressional Budget Office said Monday in its latest long-term budget outlook.
Currently equal to about 98%, the debt-to-GDP ratio is projected to increase to 195% by 2050, reaching levels never seen in the nation’s history.
The CBO said that the coronavirus recession has changed the outlook significantly: “CBO now projects that debt as a percentage of GDP will be 45 percentage points higher in 2049 than the agency projected last year. Larger projected deficits in 2020 and 2021 contribute significantly to that difference. The increase in those deficits results primarily from the effects of the pandemic and actions taken to respond to it.”
The CBO also warned about the risks involved with rising debt. “High and rising federal debt makes the economy more vulnerable to rising interest rates and, depending on how that debt is financed, rising inflation,” CBO said. “The growing debt burden also raises borrowing costs, slowing the growth of the economy and national income, and it increases the risk of a fiscal crisis or a gradual decline in the value of Treasury securities.”
Still, CBO Director Phillip Swagel said in a statement that a crisis is not immediately at hand. “There is no set tipping point at which a fiscal crisis becomes likely or imminent, nor is there an identifiable point at which interest costs as a percentage of GDP become unsustainable,” Swagel said. “But as the debt grows, the risks become greater.”
CDC Removes New Guidance on How Coronavirus Spreads
The Centers for Disease Control and Prevention is making some confusing — and potentially controversial — changes to its guidance on how the coronavirus spreads.
What’s happening: The agency on Friday quietly updated its website to say that the novel coronavirus can spread "through respiratory droplets or small particles, such as those in aerosols, produced when an infected person coughs, sneezes, sings, talks or breathes." Where the agency had previously warned that the virus spreads mainly via larger droplets when people are in close contact, the revised page reportedly said that aerosols — smaller particles that can linger in the air for longer — were “thought to be the main way the virus spreads."
On Monday morning, the CDC removed that updated language, saying a draft version of proposed changes had been posted in error. "It was a failure of process at CDC,” Jay Butler, the agency’s deputy director for infectious disease, told The Washington Post. The agency reportedly is still working on updated guidance to be posted as soon as Monday. It wants to convey that aerosol transmission is possible, but not the primary method by which the virus spreads, a source told The Wall Street Journal.
Why it matters, part 1: Friday’s revisions represented a significant shift. Some experts suggested the new language “should drive a major rethink of public policy — particularly at a time when students in many areas are returning to indoor classrooms,” the Post reports. The Journal’s Caitlin McCabe adds: “Acknowledging aerosol transmission of the coronavirus would carry significant implications for how businesses and schools proceed with re-openings. To reduce the risk of aerosol transmission, property owners and building managers would need to implement precautions such as better ventilation and proper social distancing, according to scientists and researchers studying Covid-19.”
Why it matters, part 2: As the Trump administration seeks to push schools and businesses to reopen, such reversals instantly raise concerns, warranted or not, about the politicization of pandemic response.
“That type of whiplash, especially without an explanation directly from the CDC, creates confusion and unfortunately it leads to lack of trust in the CDC overall,” Dr. Leanna Wen, a visiting professor of health policy and management at the George Washington University and former Baltimore health commissioner, told CNN. “The fact that they retracted this, even though this is common scientific knowledge at this point, one has to wonder what’s behind it. Was there political pressure, political interference that’s driving this rather than science?”
This isn’t the first time health officials have walked back their guidance regarding the coronavirus. The CDC just last week reversed controversial guidance that said that people who were exposed to someone with the virus don’t need to get tested if they don’t have symptoms of infection. And President Trump last week disputed his CDC chief’s public comments on the importance of face masks and the timing of a vaccine.
The CDC about-face also comes after Health and Human Services Secretary Alex Azar reportedly issued a memo barring health agencies, including the Food and Drug Administration, from signing any new rules "regarding the nation’s foods, medicines, medical devices and other products” — a move that outside experts warned could add to the public perception of political interference in decisions that should be based in science and medicine.
The bottom line: Even if the CDC’s changed guidance was simply a failure of process and not political, it’s another stumble that highlights the dangerous erosion of trust in public health officials under the Trump administration — and it threatens to further erode that trust. Remember, the CDC has long been viewed as one of the world’s leading public health organizations. But its mistakes have been piling up. “This cannot happen again,” the CDC’s Butler told the Post.
How RBG’s Death Puts the ACA at Greater Risk
The death of Justice Ruth Bader Ginsburg puts the Affordable Care Act at greater risk as the Supreme Court prepares to hear a challenge to the law just after November’s elections.
“Ginsburg’s death is the nightmare scenario for the Affordable Care Act,” Nicholas Bagley, a University of Michigan law professor who supports the Obama health law, told The Washington Post. “If the suit had a trivial chance of success yesterday, it has a new lease on life.”
Axios’s Sam Baker breaks down how the outlook for the law has changed:
“Conventional wisdom had held that Chief Justice John Roberts would likely join with the court’s liberals to save the ACA once again. But if President Trump is able to fill Ginsburg’s former seat, Roberts’ vote alone wouldn’t be enough to do the trick, and the law — or big sections of it — is more likely to be struck down. … In the absence of a new justice, the court could easily deadlock 4-4. That would leave in place the 5th Circuit Court of Appeals’ ruling, which said the individual mandate is unconstitutional but didn’t decide how much of the rest of the law to strike down along with it.”
The legal fights over the law likely wouldn’t end there, meaning that if Trump is able to seat another conservative justice on the court, that justice may still have a chance to rule on the Affordable Care Act down the line.
Justice Dept. Labels Three Cities as 'Anarchy' Jurisdictions and Targets for Funding Cuts
The Justice Department said Monday that New York City, Seattle and Portland, Oregon, would be designated as jurisdictions “that have permitted violence and destruction of property,” opening up the possibility that federal funding for those cities would be cut under a memorandum signed by President Trump early this month. The memo said the government should review the use of federal funds by jurisdictions “that permit anarchy, violence, and destruction.” It specifically mentioned Portland, Seattle, and New York as well as Washington, DC.
“We cannot allow federal tax dollars to be wasted when the safety of the citizenry hangs in the balance,” Attonery General William Barr said in a statement. “It is my hope that the cities identified by the Department of Justice today will reverse course and become serious about performing the basic function of government and start protecting their own citizens.”
The Justice Department announcement criticized the Democratic leaders of those three cities for rejecting federal law enforcement involvement in response to social justice protests and said the cities “have refused to undertake reasonable measures to counteract criminal activities.” Local leaders have said that President Trump was inflaming tensions by pressing for a stronger law enforcement crackdown on protests and sending armed federal agents to Portland.
The Justice Department said other cities may be added to the list based on a number of criteria, including whether they disempower or defund police departments or “any other related factors the Attorney General deems appropriate.”
What’s next: The White House budget office is supposed to issue guidance about cutting funding to the three cities, even though it’s not clear that Trump has the power to cut federal funding. “The Trump administration was unsuccessful in a similar funding-cut move against New York and other cities over their immigration policies. A federal appeals court ruled that the move violated the separation of powers spelled out in the Constitution,” The Washington Post reports. Legal challenges could follow here, too. Whatever the ultimate outcome, the administration has for now reinforced Trump’s “law and order” campaign messaging.
- House, Senate on Collision Course Over Government Funding as Shutdown Looms in Nine Days – Washington Post
- U.S. Stimulus Prospects Darken With Partisan Strains Over Court – Bloomberg
- Democrats, the Party of Government, Are Torn Over Coronavirus Relief – Roll Call
- Pelosi: Trump Wants to "Crush" ACA With Ginsburg Replacement – Axios
- Key GOP Senators Introduce Bill to Give Airlines $28 Billion More in Payroll Aid – Washington Post
- In ‘Power Grab,’ Health Secretary Azar Asserts Authority Over F.D.A. – New York Times
- Government Watchdog Finds Supply Shortages Are Harming US Coronavirus Response – The Hill
- Top U.S. Health Officials Tiptoe Around Trump’s Vaccine Timeline – New York Times
- Signs of an ‘October Vaccine Surprise’ Alarm Career Scientists – Kaiser Health News
- World Health Organization Unveils Plan for Distributing Coronavirus Vaccine, Urges Cooperation – Washington Post
- For Insulin and Other Medications, Rising Costs Aren’t Slowing Down – Washington Post
- Threats and Invective Hurled at Health Director Who Sought to Postpone Trump’s Tulsa Rally, Emails Show – Washington Post
- Fed President: Near-Zero Interest Rates May Be Needed for Three Years – The Hill
- New Jersey, California Dodge Worst of Tax Crisis in ‘Weird Recession’ – Bloomberg
- ‘We Are Stuck, With Little to No Options’: 6 Months After the Cares Act Passed, Many Americans Are Still Struggling – CNBC
- Even Republicans Don’t Buy Trump’s Spin on the Pandemic – Paul Waldman, Washington Post
- If Trump Replaces Ginsburg, the ACA Really Is at Risk – Sam Baker, Axios
- How Ruth Bader Ginsburg’s Death Could Jeopardize the Affordable Care Act – Amy Goldstein, Washington Post
- We Get It, Mr. President: You’re Mad at New York City – Philip Bump, Washington Post
- How Much Covid Relief Do States Need? – Karl W. Smith, Bloomberg
- Did the $600 Unemployment Supplement Discourage Work? – Nicolas Petrosky-Nadeau and Robert G. Valletta, Federal Reserve Bank of San Francisco Economic Letter
- What the Fall and Winter of the Pandemic Will Look Like – Jeneen Interlandi, New York Times
- Biden’s Capital Gains Tax Hike Could Spark a Big Sell-off in Stocks. Here’s What That Means for the Market – Robert Frank, CNBC
- The Economic Case for Biden – Edmund S. Phelps, Project Syndicate
The Libertarian Ideas That Wrecked the Fed – Bruce Bartlett, New Republic