Schumer’s Trillion-Dollar Gamble

Schumer’s Trillion-Dollar Gamble

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Plus, Covid recession was the shortest on record
Monday, July 19, 2021

Chuck Schumer’s Trillion-Dollar Gamble

President Joe Biden’s economic agenda may be hanging in the balance this week as Senate Majority Leader Chuck Schumer (D-NY) looks to force a test vote on a bipartisan infrastructure bill that is still being negotiated.

Schumer is gambling, looking to advance both the infrastructure bill and a $3.5 trillion budget resolution that Democrats will try to pass without Republican votes and get it all done ahead of a scheduled August recess. “The hardball move,” Punchbowl News reports, “is meant to test whether Republicans who say they want bipartisanship mean it — but also to strong-arm his own ideologically diverse caucus into line on the massive, Democrats-only reconciliation bill.”

Senate Republicans are warning that if Schumer presses ahead with his deadline, the vote will fail. Sen. Susan Collins (R-ME), a member of the bipartisan group negotiating the legislation, said there is “no way” they can finish pulling crafting the bill by Wednesday.

A $100 billion hole: Negotiators are still scrambling to finalize the bipartisan infrastructure bill, trying to fill a $100 billion hole in the plan’s financing now that a proposal to beef up IRS collection of unpaid taxes has been pulled from the package.

They are reportedly considering reversing a Trump-era policy that seeks to eliminate rebates drug companies give to pharmacy benefit managers in Medicare Part D. The rule has yet to be implemented, but the Congressional Budget Office estimated in 2019 that it would increase federal Medicare spending by $177 billion over a decade, meaning that reversing or delaying it could be a source of savings. Including the provision in the infrastructure deal means that Democrats wouldn’t be able to use it in their bill, though.

The bipartisan negotiators reportedly also still have differences across nearly every category in the bill, ranging from roads and transit to water and power.

Senate Republicans are insisting that they won’t vote to begin debate on the “Bipartisan Infrastructure Framework” if the text isn’t ready, arguing that Schumer is unnecessarily rushing them. “We need to see the bill before voting to go to it. I think that’s pretty easily understood,” Minority Leader Mitch McConnell (R-KY) told reporters Monday. Republicans will also be looking for an official estimate of the fiscal impact of the legislation from the Congressional Budget Office.

Democrats, meanwhile, worry that the GOP is trying to drag out the process and make it harder to pass the separate $3.5 trillion spending package. And they point out that Republicans have in the past supported opening debate on legislation that was still not final, including the Endless Frontier Act just last month. Republicans say the infrastructure package is far more substantial than that bill, which was aimed at improving competitiveness with China.

Biden on Monday called for lawmakers to unite behind the infrastructure framework. “We shook hands on it,” he said, pushing back against fears that additional government spending would worsen inflation by arguing that his economic agenda would help to lower prices and create jobs.

“If we make a prudent, multi-year investments in better roads, bridges, transit systems, and high-speed Internet, and a modern, resilient electric grid, here’s what will happen: It breaks up the bottlenecks in our economy,” Biden said. “Goods get to consumers more rapidly and less expensively. Small businesses create and innovate much more seamlessly. If we increase the availability of quality, affordable childcare, eldercare, paid leave, more people will enter the workforce. These steps will enhance our productivity — raising wages without raising prices.”

Why it matters: A failed vote this week wouldn’t necessarily signal doom for the infrastructure package, but it could throw off Democrats’ timeline for the infrastructure legislation — and risks alienating Republicans in the bipartisan group.

What’s next: Schumer was expected to file cloture Monday evening on the infrastructure bill, setting up the Wednesday vote. The bipartisan group, which continued talks over the weekend, was also expected to meet again Monday night.

The Covid Recession Officially Lasted Just 2 Months, the Shortest on Record

The recession caused by the Covid-19 pandemic ended in April 2020, the National Bureau of Economic Research’s Business Cycle Dating Committee said Monday.

Officially running from March 2020 to April 2020, the two-month Covid recession is the shortest on record. The economy reached a peak in February 2020, NBER said, with the recession beginning the following month as Covid drove shutdowns all over the country. After hitting its lowest point with respect to job losses and output in April, the economy began to recover, which the NBER says marked the end of this atypical recession.

“The recent downturn had different characteristics and dynamics than prior recessions,” the NBER said in a statement, noting that most recessions last at least a few months. “Nonetheless, the committee concluded that the unprecedented magnitude of the decline in employment and production, and its broad reach across the entire economy, warranted the designation of this episode as a recession, even though the downturn was briefer than earlier contractions.”

That doesn’t mean that all was well from the end of the recession forward, of course. Instead, the ruling about the end of the recession simply reflects the not necessarily obvious way economists measure these things.

“If someone falls down a ten-foot hole, an economist would say the person is in recession,” Forbes’ Bill Conerly writes. “When the unlucky person gets up and takes one step upward, the economist says the person is out of recession. Everyone else sees the person is nine feet down a ten-foot hole.”

Biden touts economy: President Biden talked up the state of the economy Monday in remarks at the White House. “Our economy’s come a long way over the last six months. We can’t slow down now," he said.

“Folks, it turns out capitalism is alive and very well,” Biden added. “We’re making serious progress to ensure that it works the way it’s supposed to work, for the good of the American people. For all those predictions of gloom and doom six months in, here’s where we stand. Record growth, record job creation, workers getting hard-earned breaks.”

Speaking as stocks were sliding on Wall Street, Biden also addressed growing concerns about inflation. “My administration understands that if we were to ever experience unchecked inflation over the long-term, that would pose a real challenge to our economy,” he said. “So while we’re confident, that isn’t what we’re seeing today. We’re going to remain vigilant about any response that is needed.”

Biden and Infrastructure Plans Win Positive Reviews in New Poll

A poll released Monday suggests that most Americans are generally in agreement with President Biden’s upbeat assessment of how things are going in the U.S.

More than half of Americans, 52%, say they feel “hopeful” about the next year, with another 15% saying they are “excited,” according to a CBS News/You Gov survey. Not everyone is on board though, with 40% saying they are “scared” and 23% saying they are “angry.” (Respondents could choose more than one answer.)

One major concern is Covid-19. While most say the effort to combat the virus is going well, 62% of respondents report that they are concerned about the delta variant that is rapidly spreading in the U.S. Those who are fully vaccinated are more concerned (72%) than those who are not (48%). Overall, Biden wins strong support for how the country is dealing with Covid, with 64% saying that the fight against the virus is going well, up from 35% in January.

With respect to the economy, opinions are close to evenly split, with 45% of respondents saying economic conditions are good and 47% saying they are bad. The partisan differences are pronounced, with 68% of Democrats responding positively on the economy, but only 24% of Republicans doing so.

On personal finances, 60% say their own financial situation is good, and 33% say it’s bad. Income levels matter, though, with more people earning over $50,000 reporting good conditions than those earning less.

The expanded child tax credit — a Biden initiative that provides payments of as much as $300 per child to millions of families starting this month — receives positive reviews, with a slim majority (51%) of parents with children under the age of 18 saying it will help their families. About 31% of such parents say it will not help their families, while 18% say they’re not sure.

Biden’s infrastructure proposal receives stronger support, with 59% of respondents saying they approve, versus 41% saying they do not. Spending on traditional infrastructure is particularly popular, with 87% approving more federal spending on building and repairing roads and bridges. Other less traditional elements of the president’s infrastructure plan appear to be popular as well, with 73% of respondents expressing support for spending more to expand rural broadband, and 71% saying they support more spending on child and elder care.

The survey of 2,238 U.S. adult residents was conducted from July 14 to July 17.

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