Momentum for Covid-Relief Bill Fizzles

 

Congress Buys More Time for Covid-Relief Deal, but Talks Are Going ‘Nowhere’

The House voted 343 to 67 Wednesday to approve a one-week measure that would keep the government funded until December 18, providing Congress with a bit more time to hash out a full-year funding bill and perhaps finalize an elusive Covid-relief package.

The Senate is expected to vote on the spending bill as soon ass Thursday.

The path toward a coronavirus package remains far less certain, clouded by competing proposals and continuing disagreement over key provisions.

Treasury Secretary Steven Mnuchin jumped back into the negotiations late Tuesday, with a $916 billion proposal that is slightly larger than the $908 billion one currently under discussion by a bipartisan group of centrist lawmakers.

Mnuchin said the proposal has the support of Republican leaders including Senate Majority Leader Mitch McConnell (R-KY), who had previously offered a smaller package worth about $500 billion.

Democratic leaders said unified GOP support for a larger proposal was a sign of progress but were quick to criticize the details — especially the absence of any money for supplemental federal unemployment benefits, which in the centrist package are provided at $300 per week for four months. Instead, the White House proposes to send one-time payments of up to $600 to most Americans, at a cost of $164 billion, while spending $140 billion less on unemployment aid relative to the bipartisan proposal.

House Speaker Nancy Pelosi (D-CA) and Senate Democratic Leader Chuck Schumer (D-NY) said in a joint statement that they were concerned that White House involvement could undermine negotiations.

“While it is progress that Leader McConnell has signed off on a $916 billion offer that is based off of the bipartisan framework, the President’s proposal must not be allowed to obstruct the bipartisan Congressional talks that are underway,” they said. “Members of the House and Senate have been engaged in good-faith negotiations and continue to make progress. The bipartisan talks are the best hope for a bipartisan solution.”

The Democratic leaders also made clear that they rejected the White House proposal to spend less on unemployment aid: “The President’s proposal starts by cutting the unemployment insurance proposal being discussed by bipartisan Members of the House and Senate from $180 billion to $40 billion. That is unacceptable.”

Major issues still unresolved: Mnuchin’s proposal includes provisions on issues that have stymied negotiators so far — liability protections for businesses, schools and hospitals that Republicans says are essential and funds for state and local governments that Democrats insist are needed to avoid layoffs and help pay for vaccinations. But there’s no sign that either side is willing to give way on their demands, or their opposition to the other side’s requirements.

More details on the bipartisan $908 billion plan: The release Wednesday of more details from the $908 billion centrist proposal did little to change the picture. Under that still-developing plan, state and local governments would receive $160 billion, and businesses would receive liability protections. A document outlining the details refers to agreements in principle on the issues, but only insofar as they allow “good faith negotiations” to continue, according to The Hill.

McConnell’s offer on Tuesday to drop both issues from the negotiations — no liability shield and no state and local money — was quickly rejected and seen by at least one lawmaker as a sign that the Senate leader isn’t really interested in reaching an agreement. “Mitch doesn’t want a deal,” Sen. Joe Manchin (D-WV) told reporters. “You have to have both.”

McConnell blamed Democrats for the lack of progress. “At every turn they’ve delayed, deflected, moved the goalpost and made the huge number of places where Congress agrees into a hostage ... for the few places where we do not agree,” he said on the Senate floor.

The bottom line: Taking stock of where negotiations stood Wednesday afternoon, Politico’s Playbook team said talks were going “nowhere.” Just nine days before Congress is scheduled to leave town, “there’s no bill, no sense of who is in charge, no breakthroughs on any long-held policy disputes,” they said.

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Quote of the Day

“We essentially are going to make a choice over the next two weeks over whether we want to have a double-dip recession or not.”

– Joe Brusuelas, chief economist at audit and tax firm RSM, as quoted by The Hill.

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CBO Report Lists 83 Options for Reducing the Deficit

The federal budget deficit in October and November, the first two months of fiscal year 2021, totaled $430 billion, an increase of $87 billion, or 25%, over the same period last year, the Congressional Budget Office estimated on Tuesday. Spending rose by 9% while revenues fell by 3%. Individual income tax and payroll tax receipts dropped by 4% while corporate income taxes decreased 13%.

Deficits have risen dramatically under President Trump, climbing from $585 billion in fiscal year 2016 to nearly $1 trillion in 2019. Emergency coronavirus relief in fiscal year 2020 lifted a deficit that was already projected to top $1 trillion to a record $3.13 trillion.

While deficit reduction has become less of a priority as the nation grapples with the pandemic and its economic toll, CBO on Wednesday issued the latest edition of a periodic report laying out dozens of options — 83 in all this time — for reducing the deficit over the coming decade.

Some of the options would save relatively little, such as limiting enrollment in the Department of Agriculture’s conservation programs, which is projected to save between $3 billion and $8 billion over the decade. Others would save or raise hundreds of billions of dollars:

  • Reducing funding for international affairs programs ($117 billion)
  • Setting caps on federal spending for Medicaid ($353 billion to $959 billion)
  • Cutting the Defense Department’s budget ($317 billion to $607 billion)
  • Increasing the payroll tax cap for Social Security ($647 billion to $1.024 trillion)
  • Eliminating itemized deductions ($1.718 trillion)
  • Imposing a 5% Value-Added Tax ($1.82 trillion to $2.83 trillion)


Most of the options in the report would save $10 billion or more over 10 years.

In a statement accompanying the report, CBO Direct Phillip Swagel warns that lawmakers will need to make significant policy changes to put the federal budget on a sustainable long-term path. “Beyond the coming decade, the fiscal outlook is daunting,” he says.

CBO notes that the options “are intended to reflect a range of possibilities rather than to rank priorities or present a comprehensive list” and it says that the inclusion or exclusion of an idea does not represent an endorsement or rejection. CBO’s website includes a search tool that allows users to choose options based on potential savings or budget category.

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Bezos and Musk, World’s Richest Men, Qualify for Anti-Poverty Tax Break: Report

David Kocieniewski of Bloomberg News reports that the world’s two richest men, Amazon founder Jeff Bezos and Tesla founder Elon Musk, are eligible for a tax break intended to help poor communities. That’s because the sites of their privately owned space companies, Blue Origin and SpaceX, were designated as Qualified Opportunity Zones as part of a much-criticized program that was part of the 2017 tax cuts:

“The billionaires’ qualification for the federal benefit, which hasn’t been previously reported, enables them to avoid capital gains taxes on money they steer into opportunity zone operations. Those investments can then grow tax-free, and if the billionaires keep their investments in place for a decade, any appreciation can be shielded from federal capital gains taxes forever.”

Another billionaire, Richard Branson, also stands to benefit from the program, Kocieniewski says. Brett Theodos, a community development expert who has studied the opportunity zone program for the Urban Institute, tells Bloomberg: “It would be a gross misuse of scarce resources to be subsidizing billionaires to go out into space when there are people struggling with real problems here on earth.”

Read the full story at Bloomberg News.

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A terrible year just got even worse: The Campbell Soup company warned that it’s facing "supply constraints" in its cookie division, meaning holiday-season shortages of Pepperidge Farm cookies.

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