Congress Boosts Ukraine Aid to $40 Billion as Dems Delink Covid Money
Congressional Democrats are reportedly moving to hold a House vote as soon as Tuesday on a nearly $40 billion aid package for Ukraine that would delink assistance to the war-torn nation from $10 billion in additional Covid pandemic funding.
The aid package would add $3.4 billion in military aid and $3.4 billion in humanitarian aid to an earlier Biden administration request for $33 billion in assistance to Ukraine, bringing the total to $39.8 billion, according to multiple reports.
The plan represents a shift in strategy after Senate Democrats had considered combining the Ukraine and Covid aid packages in an effort to pass the pandemic funding that has been stalled for weeks. Republicans had signaled that they would not support that combined legislation due to an ongoing dispute over border policy. GOP lawmakers have demanded that the Covid bill be accompanied by a vote on an amendment preventing the Biden administration from ending a pandemic immigration policy known as Title 42, which allows for the quick expulsion of migrants at the southern border.
The decision to move ahead without the Covid funding comes at the behest of President Joe Biden, who informed congressional leaders that he wants the two aid packages to move separately to avoid delaying the aid to Ukraine. "We cannot afford delay in this vital war effort. Hence, I am prepared to accept that these two measures move separately, so that the Ukrainian aid bill can get to my desk right away," Biden said in a statement. "However let me be clear: as vital as it is to help Ukraine combat Russian aggression, it is equally vital to help Americans combat COVID. Without timely COVID funding, more Americans will die needlessly."
Pentagon spokesman John Kirby told reporters Monday that the administration had nearly exhausted the drawdown authority used by Biden to send weapons to Ukraine, with only about $100 million left, or only enough to last until about the third week of May.
Republicans reportedly have yet to agree to the new plan, though aid to Ukraine has broad bipartisan support in Congress. Senate Republicans reportedly have pushed for a larger, $8 billion increase in military aid.
Senate Majority Leader Mitch McConnell (R-KY) has advocated for decoupling the two funding packages. "I’m focused on getting it done without extraneous matters on it," he told Punchbowl News on Monday of aid to Ukraine. "And getting it done quickly. We need to do it without this Covid issue and Title 42. And I believe the president’s agreed with that."
Biden signs lend-lease act: The president on Monday signed into law the Ukraine Democracy Defense Lend-Lease Act of 2022, a separate bill from the aid funding that will help speed the process of sending U.S. weapons and supplies to Ukraine. The legislation had passed the House by a 417-10 margin and cleared the Senate unanimously.
The bottom line: The outlook for Covid funding remains clouded, but with Ukraine aid money quickly running out, the new assistance package became urgent. "Democrats’ decision to decouple the pandemic aid is a painful one for some in the party who have worried about how else they can force Republicans to support a Covid aid plan that’s languished for months in Congress," Politico’s Sarah Ferris and Burgess Everett write. "But other Democrats have been publicly and privately warning their leadership not to delay the U.S. aid to Ukraine as the brutal Russian assault intensifies."
Tax Revenues Surge, With Meme Stocks Providing a Boost
Tax collections in the current fiscal year are running at a record high so far — about 43% higher than during the same period in 2019, the last full year before the onset of the Covid-19 pandemic — and the Congressional Budget Office now estimates that the IRS will record a $308 billion surplus in the month of April.
The surge in tax revenues is shrinking the federal budget deficit, producing a shortfall of $360 billion in the first seven months of the fiscal year, far smaller than the $1.9 trillion deficit recorded in 2021, the CBO said in its latest monthly budget review. Compared to the previous year, estimated revenues are $843 billion (or 39%) higher while estimated outlays are $729 billion (or 18%) lower.
"April surpluses are the norm – but these are pretty large," wrote Marc Goldwein of the Committee for a Responsible Federal Budget, referring to the typical rise in tax revenues around April 15.
The CBO said its estimate for April revenues of $864 billion is nearly twice the revenue recorded in the same month last year. While some timing issues were at play and the year-over-year comparison is exaggerated somewhat due to the delay of tax day last year, the increase was also driven by significantly higher individual and corporate tax payments, which soared along with the strong economic recovery. And as Bloomberg’s Laura Davison reports, stock trading by individuals produced capital gains tax payments at three times the level recorded in 2019.
"A big chunk of it has come from short-term capital gains," Lou Crandall, chief economist at the research firm Wrightson ICAP, told Bloomberg. "Meme stocks were very, very good to the IRS."
Will it last? Experts aren’t sure whether the surge in revenues is a one-time event or reflective of a deeper, structural shift, though recent losses in the stock market are a reminder that trading profits can be fleeting. In any case, the smaller budget deficit has led the U.S. Treasury to cut back its debt issuance plans, at least in the short run.
"Wouldn't be surprised if we ended up with less than a $1 trillion deficit for the year," CRFB’s Goldwein said, while also noting that the level is "still massive," even if below the trillion-dollar mark.
In the longer run, inflationary pressures may cause the deficit to increase once again, as benefit payments in Social Security and health care programs rise and higher interest rates increase the cost of payments on the national debt.
Still, the surge in revenues could help Democrats as they lobby for their spending plans on Capitol Hill. On the other hand, inflation could drive the cost of the bills higher, negating the surge in tax revenues.
"We’re going to have some political maneuvering around the scoring of this bill," Bill Hoagland of the Bipartisan Policy Center told Bloomberg.
Number of the Day: $30
The Biden administration announced Monday that 20 service providers have agreed to provide broadband internet to low-income households at a cost of no more than $30 per month. Combined with the $14 billion Affordable Connectivity Program — which was created through the $1 trillion infrastructure package signed into law last year and provides subsidies to qualifying households — the reduced-price offering means that millions of Americans will now be able to take advantage of high-speed internet at no cost. The White House said the effort will cover 48 million households in the U.S., or roughly 40% of the country.
Senate Democrats Look to Revive Child Care Plan
Senate Democrats led by Patty Murray (WA) and Tim Kaine (VA) are revamping a plan to provide hundreds of billions of dollars for child care, hoping they can still win the backing of Sen. Joe Manchin (WV) for including the idea as part of a budget reconciliation package, Politico reports.
"The White House in October proposed investing another $400 billion in the [child care] sector as part of Democrats’ multibillion reconciliation package, Build Back Better, which would have been enough to establish universal Pre-K; a new program capping eligible families’ child care costs; and more," Politico’s Eleanor Mueller writes. "Now, Murray and Kaine are proposing to spend about half as much — between $150 and $200 billion — as part of a future bill. More than $100 billion would go toward funneling $72 billion to the existing Child Care and Development Block Grant program for more robust child care subsidies; $18 billion to a new grant program that would help states expand access to pre-K; and $12 billion to the Head Start program to raise wages for teachers — all over six years."
- Congress Plans Nearly $40 Billion More for Ukraine, COVID Aid to Wait – Reuters
- Hill Leaders Strike Deal on Nearly $40B in Ukraine Aid – Politico
- Democrats Weigh $40 Billion for Ukraine, Topping Biden’s Ask – Bloomberg
- Biden Signs Ukraine Lend-Lease Act Into Law, Expediting Military Aid – Washington Post
- Biden Running Out of Money Source for Ukraine – The Hill
- Low-Wage Earners to Get High-Speed Internet for $30 in Biden Program – Washington Post
- DOJ Announces $40 Million to Fund Community Policing – The Hill
- Despite Popularity, Taxes on the Wealthy Struggle to Find a Foothold in Congress – The Hill
- Senate Eyes Quick Passage of Security for Supreme Court Family Members – The Hill
- After 1 Million Deaths, Covid Leaves Millions More Forever Changed – Washington Post
- The Lucky Few to Never Get Coronavirus Could Teach Us More About It – Washington Post
Views and Analysis
- We Pay to Keep the Old Out of Poverty. Why Won’t We Do the Same for the Young? – Bryce Covert, New York Times
- The 2017 Tax Reform Delivered as Promised – Tyler Goodspeed and Kevin Hassett, Wall Street Journal
- Economic Stimulus Works – Ryan Cooper, The American Prospect
- Fed's Kashkari Reveals an Uncomfortable Truth – Lisa Abramowicz, Bloomberg
- What Is America’s Energy Plan? – William S. Becker, The Hill
- Americans Now See Both Political Parties as Equally Extreme – Philip Bump, Washington Post
- One Million Died. It Didn’t Have to Happen — and It Must Not Again – Washington Post Editorial Board
- We Have Early Warnings for Hurricanes. We Need One for Pandemics – Washington Post Editorial Board
- ‘If Economists Are So Smart, Why Ain’t They Rich?’ – Peter Coy, New York Times