Hope you’re having a good Tuesday and staying out of the way of Hurricane Ian, which is threatening the west coast of Florida with 120 mph winds. Here’s what else is happening:
Manchin Throws in the Towel
Facing a crippling lack of support on both sides of the aisle, Sen. Joe Manchin (D-WV) on Tuesday asked Senate Majority Leader Chuck Schumer (D-NY) to pull a controversial energy permitting reform plan from a funding bill that aims to prevent a government shutdown at the start of the new fiscal year on October 1.
Schumer initially included a measure in the funding bill that would speed up the process for providing federal permits for energy infrastructure projects – a provision backed by Manchin but opposed by numerous lawmakers in both parties.
Republicans in the Senate, along with a few Democrats, lined up against the bill. “I'm voting no,” Sen. Roger Marshall (R-KS) told Fox News. “I'll put the over/under that maybe 52 senators will vote yes on this, and it's going to take 60. Let's call this what it is, this is the mountaineer kickback, good for West Virginia, horrible for the rest of the country.”
The personal note in that complaint – a reference to Joe Manchin of West Virginia, home of the Mountaineers – is no coincidence. Although Republicans are generally in favor of easing permitting rules for energy projects, many GOP senators are still angry with Manchin for supporting the Inflation Reduction Act, which he helped push over the finish line this past summer.
According to reports in Politico and New York magazine, Minority Leader Mitch McConnell (R-KY) is using the funding bill to punish Manchin. “Normally, this would be easy to accomplish on the assumption that virtually all Republicans would favor eased permitting, particularly for fossil-fuel projects, and certainly enough Democrats would go along as well,” New York’s Ed Kilgore writes. But “McConnell has decided that this will be his instrument of revenge against Manchin.
Still, virtually no one expects a government shutdown on Saturday, and the slimmed-down bill is expected to pass before the Friday midnight deadline.
In addition to funding the government through December 16, the bill would provide $2 billion in relief spending in response to recent weather disasters, and $1 billion in aid for home heating costs. There’s also money for Afghan refugees settling in the U.S., and a provision that would reauthorize a user fee paid by drug companies that helps fund the Food and Drug Administration.
The bill does not include additional funds for the government response to Covid-19 and monkeypox, however, after Democrats dropped those provisions in the face of Republican opposition.
Biden’s Student Debt Forgiveness Plan Will Cost $400 Billion Over 30 Years: CBO
President Joe Biden’s plan to forgive up to $20,000 in student loan debt for millions of borrowers will cost an estimated $400 billion over 30 years, the Congressional Budget Office said Monday, with the majority of the cost coming in the first few years.
The White House plan to suspend student loan debt payments for the rest of 2022 adds another $20 billion to the plan’s cost, CBO said.
The CBO analysis does not include the cost of reducing the minimum amount borrowers are required to pay on their loans from 10% of disposable income to 5%. According to an analysis by the Committee for a Responsible Federal Budget, which opposes the Biden plan, that provision could cost an additional $120 billion.
“The president announced possibly the most expensive executive action in history without a score, and we’re now seeing just how expensive this policy is going to be,” Marc Goldwein of CRFB told The Washington Post.
Still, the CBO said its “estimates are highly uncertain,” due to the inability to know how much debt would have been repaid in the absence of the program and how much will be paid under the new rules.
“A very large share of already outstanding student debt was not going to be repaid anyway,” economist Marshall Steinbaum told The Washington Post. “So I’m curious how the CBO will account for the fact that most student debt was already uncollectable.”
Democrats defended the White House plan, and questioned the CBO’s numbers. “In contrast to President Trump and Republicans who gave giant corporations $2 trillion in tax breaks, President Biden delivered transformative middle class relief by cancelling student debt for working people who need it most — nearly 90% of relief dollars will go to those earning less than $75,000 a year,” Sens. Elizabeth Warren (MA) and Chuck Schumer (NY) said in a joint statement. “We don’t agree with all of CBO’s assumptions that underlie this analysis, but it is clear the pandemic payment pause and student debt cancellation are policies that demonstrate how government can and should invest in working people, not the wealthy and billionaire corporations.”
Overall, the CBO expects about a quarter of existing student loan debt to be forgiven under the Bid plan, affecting roughly 40 million people. “As of June 30, 2022, 43 million borrowers held $1.6 trillion in federal student loans," CBO's Phillip L. Swagel wrote to Sens. Richard Burr (R-NC) and Rep. Virginia Foxx (R-NC), who requested the analysis. "About $430 billion of that debt will be canceled.”
Number of the Day: $557 Billion
Gun violence occurs at much higher levels in the U.S. than elsewhere, and researchers at Harvard Medical School estimate that the shocking level of mayhem is costing the country upwards of $557 billion a year. The costs fall in significant part on employers, who face lost productivity and higher insurance bills.
“Employers and their health insurers sustain a substantial financial burden from firearm injuries and have a financial incentive to prevent them,” Zirui Song of Harvard Medical School said in a statement. “However, US businesses have by and large not engaged publicly on the subject of firearms, despite spending large sums on other efforts to promote employee health.”
Quotes of the Day: Very Different Takes on the UK Fiscal Plan
“It makes me very sorry to say, but I think the UK is behaving a bit like an emerging market turning itself into a submerging market. Between Brexit, how far the Bank of England got behind the curve and now these fiscal policies, I think Britain will be remembered for having pursued the worst macroeconomic policies of any major country in a long time.”
— Former Treasury Secretary Larry Summers, speaking to Bloomberg Television about Prime Minister Liz Truss’s plan to borrow extensively to offset the cost of soaring energy prices while slashing taxes for high-income households and corporations as part of a bid to boost economic growth – a plan that, when announced last Friday, crashed stock markets in the UK and briefly sent the British pound to its lowest level against the U.S. dollar in history.
“I’m very supportive of what they’re doing. This is exactly what we should be doing in the US … I’m surprised the market has not reacted [with] positivity but I think that’s going to reverse course.”
— Former Trump economic advisor Stephen Moore, taking a decidedly unpopular position on the issue, but one that stays true to the Republican luminary's approach to tax policy over the last 40 years. Moore has "been saying the same things about tax cuts since 1980," CNBC’s Ron Insana said. “The market has a much different view of a tax cut that helps only the top 5% of the British population at a time when different policies are called for. The broken clock of supply-side economics.”
- Senate to Move Ahead on Short-Term Spending Bill After Manchin-Backed Provision Is Removed – Washington Post
- Manchin Relents, Asks Schumer to Drop Permitting Language – Roll Call
- McConnell Works to Box Out Manchin – Politico
- McConnell Seeks Revenge on Manchin for Inflation Reduction Act – New York
- Millions of Americans Will Save on Medicare Fees Next Year – Associated Press
- White House Hunger Strategy Widens Free School Meals, Food Stamps – Roll Call
- Biden’s Hunger and Nutrition Goals Confront November Realities – Politico
- Freedom Caucus Poised to Pull Its Hardest McCarthy Punch – Politico
- Biogen Agrees to Pay $900 Million to Settle Lawsuit Over Kickbacks – New York Times
- Funds to Aid Jackson’s Water System Held Up as Governor Rose – Associated Press
Views and Analysis
- How Policy Got Done in 2022 – David Dayen, American Prospect
- Why Progressive Groups Struggled With the Biden Agenda – David Dayen, American Prospect
- The Fed Is Underplaying the Pain of Inflation Fighting – Bill Dudley, Bloomberg
- Is the Fed’s Cure for Inflation Worse than the Disease? – Benjamin Hart, New York
- Lowly T-Bills Are Suddenly Sexy. Yes, Treasury Bills! – Alexis Leondis, Bloomberg
- Truss’s Economic Plan Isn’t the Disaster Everyone Says It Is – Tyler Cowen, Bloomberg
- Why Zombie Reaganomics Still Rules the G.O.P. – Paul Krugman, New York Times
- How The House Is About To Make Social Security’s Finances Worse – C. Eugene Steuerle, Tax Policy
- If You Really Love Democracy, You Can’t Love the U.S. Senate – Ed Kilgore, New York