McConnell Rejects Trump’s Call for Bigger Stimulus
President Trump said Thursday he’d agree to a coronavirus relief package larger than the $1.8 trillion his administration offered last week, but Senate Majority Leader Mitch McConnell quickly shot down the idea.
Asked in an interview on the Fox Business Network if he would raise his offer to Pelosi, Trump repeated a message he had tweeted earlier in the week: "I would. Absolutely, I would. I would say more. I would go higher. Go big or go home, I said it yesterday. Go big or go home.”
Trump sought to blame House Speaker Nancy Pelosi (D-CA) for the lack of an agreement. “Nancy Pelosi doesn’t want to give anything. She thinks it helps her with the election,” Trump said. “We’re not holding it up, she’s holding it up.”
Asked if he would pick up the phone to call Pelosi with a higher offer, Trump attacked the speaker. “She's got a lot of problems,” he said. “She got a lot of mental problems. And it's going to be very hard to do anything with her. She wants to wait ‘til after the election.”
Trump also expressed some frustration with Treasury Secretary Steven Mnuchin, who has been negotiating with Pelosi, saying that Mnuchin had thus far failed to convince the speaker to accept a deal. “I’ve told him. So far, he hasn’t come home with the bacon," the president said.
Pursuit of a deal continues: Mnuchin on Thursday said that Pelosi’s “all or nothing approach doesn’t make sense for the American people,” but he also indicated Thursday he was prepared to give some ground to get a deal, saying that the White House won’t let differences with Pelosi over Covid testing provisions in a relief package — one obstacle the speaker has cited repeatedly — stand in the way of reaching a deal.
“That issue is getting overblown,” Mnuchin said Thursday morning on CNBC. He added that the administration has agreed to $178 billion in health care funding and $75 billion for testing and contact tracing. “What we have been focused on is the language around testing,” he said. “When I speak to Pelosi today, I’m going to tell her that we’re not going to let the testing issue stand in the way. We’ll fundamentally agree with their testing language subject to some minor issues.”
Deep divisions between Trump and Senate Republicans: While Trump said in his interview that Republicans “are willing to do” the larger deal he called for, McConnell made clear that isn’t the case. The Republican leader has set up a vote next week on a roughly $500 billion GOP package, and he indicated Thursday that Senate Republicans would balk at a deal as big as Trump is floating. “That’s where the administration’s willing to go,” McConnell said during an appearance in Kentucky. “My members think what we laid out— a half a trillion dollars, highly targeted — is the best way to go.”
Why it matters: McConnell’s comments are a reminder that any agreement between the White House and Pelosi would only be the first step in getting another relief package passed — and that deep divisions between the White House and Senate Republicans could scuttle the chances for another bill even if Mnuchin and Pelosi can reach a hard-fought deal. Trump, meanwhile, continues to inject uncertainty into the proceedings and to provide more leverage for Pelosi as she holds out for a bigger package.
The bottom line: A pre-election deal still seems unlikely.
Unemployment Claims Jump, Raising Concerns About Stalling Recovery
As talks on a coronavirus relief package drag on, the job market is signaling that the economic recovery may be stalling as Covid cases surge in states across the country.
About 898,000 people filed for state unemployment benefits in the week ending October 10, the Labor Department announced Thursday, an increase of more than 50,000 from the week before. On an unadjusted basis, the weekly number was the highest since July.
Another 373,000 Americans applied for benefits through the Pandemic Unemployment Assistance program, the federal program that covers gig workers and the self-employed, a drop of roughly 90,000 on a week-over-week basis.
All told, nearly 1.3 million people made first-time claims for unemployment benefits, roughly the same as the week before. About 25 million people are currently receiving some kind of jobless aid (although experts say that number is almost certainly inflated to some degree by problems with the data, including double-counting and fraud).
Cause for concern: “No question this report casts doubt on the recovery,” Andrew Chamberlain, chief economist at Glassdoor, told The Washington Post. “This is a sign covid is still dealing heavy blows to the labor market. We’re nowhere near having the virus under control.”
More Covid shutdowns: “Confirmed coronavirus cases have been rising again nationwide in the past month, likely causing more Americans to hold back from eating out, shopping and engaging in other commerce,” the Associated Press’s Christopher Rugaber reported.
Evidence of a stall: “I think we’ve seen the labor market recovery stall out,” Sarah House, senior economist at Wells Fargo, told Bloomberg, adding that she thinks “we’ve seen a heightened risk of the labor market really backsliding.”
8 Million More in Poverty Since May: Report
About 8 million people have slipped into poverty since May, according to a new report from researchers at the Center on Poverty & Social Policy at Columbia University.
The increase in poverty reverses the dynamics seen in the early days of the coronavirus pandemic, when the $2 trillion Cares Act passed helped lift millions of people out of poverty. The massive federal support provided by the legislation — including $1,200 stimulus checks and $600 per week in extra unemployment benefits, among other things — has now largely dried up, leaving more people in poverty than before the pandemic began.
“The Cares Act was unusually successful, but now it’s gone, and a lot more people are poor,” Zachary Parolin, an author of the Columbia report, told The New York Times.
Using a different definition of poverty, a separate report from researchers from the University of Chicago and Notre Dame University found that poverty has grown by 6 million in the last three months, the Times said.
Biden Tax Plan Would Raise $2.4 Trillion Over a Decade: TPC
Updating its analysis of Joe Biden’s tax proposals, the Tax Policy Center said Thursday that the former vice president’s plans would generate about $2.4 trillion over 10 years, about $1.6 billion less than previously estimated.
The new analysis reduces the revenue bump from Biden’s tax proposal from the $4 trillion projected in its March analysis, due in part to changing economic conditions amid the coronavirus recession and in part to new proposals from the candidate, among other factors.
Echoing the conclusions reached by the more conservative American Enterprise Institute earlier this week, the TPC analysis finds that the tax increases Biden has proposed would fall overwhelmingly on businesses and the wealthy.
“The burden of nearly all those tax increases would fall on high income households,” TPC’s Howard Gleckman said. “In 2022, on average, all but the highest-income 20 percent would get a tax cut under Biden’s plan, while the top 1 percent -- those making about $790,000 or more -- would see substantial reductions in their after-tax incomes.”
Read more at Bloomberg, CNBC or Politico.
Tax Rates Crush Some Low-Wage Workers: Fed Study
Low-wage workers face shockingly high marginal tax rates once the loss of government benefits as they earn more are taken into account, according to researchers at the Federal Reserve Bank of Atlanta.
“Our findings are striking,” the researchers say. “One in four low-wage workers face marginal net tax rates above 70 percent, effectively locking them into poverty.”
That means that some low-wage workers will keep only $30 for every extra $100 they earn, due to tax payments and the loss of benefits such as Medicaid, food stamps and housing vouchers. In some cases, the tax rate is even higher, such as when a few hundred dollars in extra income results in the loss of thousands of dollars’ worth of housing aid.
“This is a perverse incentive that says you shouldn’t try to make yourself better,” Atlanta Fed President Raphael Bostic told the Bloomberg. “They are not dumb. It’s on us to actually change those incentives so that people understand what the potential is and move forward towards opportunity.”
As part of an effort to reduce intergenerational poverty, the Atlanta Fed is working on tools that allow low-wage workers to earn more while minimizing the loss of support payments.
“These are crazy hurdles some people are facing,” Atlanta Fed Research Director David Altigsaid said. “This is a significant impediment to our capacity to move people into better and higher-paying jobs.”
Number of the Day: 21 Million
More than 21 million people could lose their health insurance coverage if the Affordable Care Act is overturned by the Supreme Court, according to a new study updating prior results by researchers at the Urban Institute. “Invalidating the ACA would be devastating to millions, especially people who gained access to affordable health coverage in the past decade,” said Avenel Joseph, vice president for policy at the Robert Wood Johnson Foundation, which funded the study. “Nearly overnight, America’s health care system could become more expensive and less accessible, and perpetuate health and financial insecurity. Unfortunately, those who have the least stand to lose the most.”
The Supreme Court is set to hear arguments in the challenge to the Obama health law on November 10.