More stories

  • in

    Prosecutors Struggle to Catch Up to a Tidal Wave of Pandemic Fraud

    Investigators say there was so much fraud in federal covid-relief programs that — even after two years of work and hundreds of prosecutions — they’re still just getting started.In the midst of the pandemic the government gave unemployment benefits to the incarcerated, the imaginary and the dead. It sent money to “farms” that turned out to be front yards. It paid people who were on the government’s “Do Not Pay List.” It gave loans to 342 people who said their name was “N/A.”As the virus shuttered businesses and forced people out of work, the federal government sent a flood of relief money into programs aimed at helping the newly unemployed and boosting the economy. That included $3.1 trillion that former President Donald J. Trump approved in 2020, followed by a $1.9 trillion package signed into law in 2021 by President Biden.But those dollars came with few strings and minimal oversight. The result: one of the largest frauds in American history, with billions of dollars stolen by thousands of people, including at least one amateur who boasted of his criminal activity on YouTube.Now, prosecutors are trying to catch up.There are currently 500 people working on pandemic-fraud cases across the offices of 21 inspectors general, plus investigators from the F.B.I., the Secret Service, the Postal Inspection Service and the Internal Revenue Service.The federal government has already charged 1,500 people with defrauding pandemic-aid programs, and more than 450 people have been convicted so far. But those figures are dwarfed by the mountain of tips and leads that investigators still have to chase.Agents in the Labor Department’s inspector general’s office have 39,000 investigations going. About 50 agents in a Small Business Administration office are sorting through two million potentially fraudulent loan applications.Officials already concede that the sheer number of cases means that some small-dollar thefts may never be prosecuted. Earlier this month, President Biden signed bills extending the statute of limitations for some pandemic-related fraud to 10 years from five, a move aimed at giving the government more time to pursue cases. “My message to those cheats out there is this: You can’t hide. We’re going to find you,” Mr. Biden said during the signing at the White House.Investigators say they hope the extra time will allow them to ensure that those who defrauded the government are ultimately punished, restoring a deterrent that had vanished in a flood of lies and money.President Biden signed bills extending the statute of limitations for some pandemic-related fraud to 10 years.Pete Marovich for The New York Times“There are years and years and years of work ahead of us,” said Kevin Chambers, the Department of Justice’s chief pandemic prosecutor. “I’m confident that we’ll be using every last day of those 10 years.”The federal government provided about $5 trillion in relief money in three separate legislative packages — an enormous sum that is credited with reducing poverty and saving the country from a prolonged, painful recession.But investigators say that Congress, in its haste to get money out the door quickly, designed all three packages with the same flaw: relying on the honor system.For example, an expanded unemployment benefit gave workers an extra $600 per week in federal jobless funds on top of what they received from their state. The program was funded by the federal government but administered by states, which often had loose rules around qualifying. Applicants did not need to provide proof they had lost income because of Covid-19; they simply had to swear it was true.A similar we’ll-take-your-word-for-it approach was used in two loan programs run by the Small Business Administration.Millions of Americans sought unemployment benefits during the height of the pandemic.Hiroko Masuike/The New York TimesThey were the Paycheck Protection Plan, in which the government guaranteed loans made by private lenders, and the Economic Injury Disaster Loan program, in which the government itself gave out loans and smaller advance grants that didn’t have to be repaid. In both, the government trusted businesses to self-certify that they met key requirements.Both the Labor Department and the Small Business Administration said they tried to screen those claims — and that they did reject billions of dollars’ worth of applications that didn’t make sense. But that wasn’t enough.In some cases, the programs missed schemes that were comically easy to spot: In one instance, 29 states paid unemployment benefits to the same person. In another, a Postal Service employee got $82,900 loan for a business called “U.S. Postal Services.” Another individual got 10 loans for 10 nonexistent bathroom-renovation businesses, using the email address of a burrito shop.In the Paycheck Protection Plan, private banks were supposed to help with the screening, since in theory they were dealing with customers they already knew. But that left out many small businesses, and the government allowed online lenders to enter the program. This year, University of Texas researchers found that some of those “fintech” lenders appeared less diligent about catching fraud.As the virus shuttered businesses and forced people out of work, Congress and federal agencies sent relief money into programs aimed at supporting the jobless and helping the economy stay afloat.Brittainy Newman/The New York TimesIn another case, a mother and daughter in Westchester County, N.Y., stand accused of turning fraud into a franchise — helping other people cook up fake businesses in order to get loans from the Economic Injury Disaster program.Andrea Ayers advised one client to tell the government she ran a baking business from home, although she was not a baker, prosecutors said.“You bake,” Ms. Ayers texted to the client, adding four laugh-crying emojis, according to charging documents.“Lol,” the client wrote back.The scheme was designed, prosecutors said, to take advantage of the Small Business Administration’s advance grant program, which provided applicants up to $10,000 up front while the agency decided whether to award an a larger loan. Even if the loan was rejected, in many cases the applicant could still keep the grant.Prosecutors said that Ms. Ayers’s daughter, Alicia Ayers, texted another client that the small size of the grants meant they were unlikely to be punished: “10k is not enough for jail time lol.”The government charged both Ayerses with wire fraud. They have pleaded not guilty. Their lawyers did not respond to requests for comment.In some corners of the internet, schemes to defraud were discussed in chat rooms and YouTube videos, where scammers offered to help for a cut of the proceeds. Some used the money on necessities, like mortgage bills or car payments. But many seemed to act out of opportunism and greed, splurging on a yacht, a mansion, a $38,000 Rolex or a $57,000 Pokemon trading card.Vinath Oudomsine bought a $57,000 Pokemon card after receiving a pandemic loan from the Small Business Administration for a nonexistent business.U.S. Attorney’s Office for the Southern District of GeorgiaVinath Oudomsine bought the Pokemon card in January 2021, after receiving a loan from the Small Business Administration for a nonexistent business. He pleaded guilty to defrauding the loan program in October 2021, leaving the U.S. government responsible for selling the card.Pandemic fraud became such an open secret that it ceased to be much of a secret at all. In September 2020, a California rapper named Fontrell Antonio Baines, who performs as Nuke Bizzle, posted a music video on YouTube, bragging in detail about how he’d gotten rich by submitting false unemployment claims. His song was called “EDD,” after California’s Employment Development Department, which paid the benefits.“I just seen 30 cards land in one day. Got straight on the phone and activate,” Mr. Baines rapped in the song, flashing cash and envelopes with preloaded debit cards from the state.“Unemployment so sweet,” Mr. Baines said.All three of those programs are now over. There is no official estimate for the amount of money that was stolen from them — or from pandemic-relief programs in general. The Justice Department has charged people with about $1 billion in fraud so far, and is investigating other cases involving $6 billion more, investigators said.But other reports have suggested the real number could be much higher. One official said the total of “improper” unemployment payments could be more than $163 billion, as first reported by The Washington Post. In the Economic Injury Disaster Loan program, a watchdog found that $58 billion had been paid to companies that shared the same addresses, phone numbers, bank accounts or other data as other applicants — a sign of potential fraud.“It’s clear there’s tens of billions in fraud,” said Michael Horowitz, the chairman of the Pandemic Response Accountability Committee, which includes 21 agency inspectors general working on fraud cases. “Would it surprise me if it exceeded $100 billion? No.”The effort to catch fraudsters began as soon as the money started flowing, and the first person was charged with benefit fraud in May 2020. But investigators were quickly deluged with tips at a scale they’d never dealt with before. The Small Business Administration’s fraud hotline — which had previously received 800 calls a year — got 148,000 in the first year of the pandemic. The Small Business Administration sent its inspector general two million loan applications to check for potential identity theft. At the Department of Labor, the inspector general’s office has 39,000 cases of suspected unemployment fraud, a 1,000 percent increase from prepandemic levels.But prosecutors face a key disadvantage: While fraud takes minutes, investigations take months and prosecutions take even longer.Mr. Baines, who detailed his jobless benefit scheme on YouTube, was arrested in September 2020, when Las Vegas police found other people’s unemployment-benefit cards in his car. Mr. Baines pleaded guilty to mail fraud last month. His attorneys declined to comment.Fontrell Antonio Baines, a rapper who performs as Nuke Bizzle, posted a video in which he bragged about getting rich by submitting false unemployment claims.Nuke Bizzle, via YouTubeHannibal Ware, the Small Business Administration inspector general, said his office has tried to focus on cases involving large thefts, career criminals or ringleaders who organized a fraud operation.“Only about 50 working field agents, right? So how do I take one of my agents off of a $20 million case to work a $10,000 case?” said Mr. Ware, who is known as Mike. “Because they will tell me, ‘Mike, the work is the same.’”That has allowed many individuals who took advantage of government programs to go unpunished. Despite ample evidence of people fraudulently obtaining $10,000 advance grants, Mr. Ware’s office has not sought charges for cases involving only a single grant, falsely obtained. It would cost more than $10,000 just to investigate each one.In all, that program awarded 3.9 million loans totaling about $389 billion, on top of $27 billion in grants that did not have to be repaid, according to the Small Business Administration. Many of the allegations of fraud in the grants program date to the first weeks of the pandemic, when the government gave out 5.8 million advance grants worth $19.7 billion in just over 100 days. In that program, fraud was easy to pull off, according to a government watchdog, which cited numerous loans given to businesses that were ineligible for funding.Mr. Ware said that he recently limited his agents to working 10 cases at a time, telling them, “You’re killing yourself. I have to protect you from you.”In some cases, lawyers for those charged with committing pandemic fraud have sought to argue that their clients should be judged less harshly for stealing because the government made it so easy.The government “was handing out money with no checks and a lot of people took advantage of that,” Ashwin J. Ram, an attorney for convicted fraudster Richard Ayvazyan, told The New York Times in November.“It’s a honey trap,” he added. “Richard Ayvazyan fell into that trap.” Mr. Ayvazyan was sentenced to 17 years in prison for participating in a ring that sought $20 million in fraudulent loans.Richard Ayvazyan was convicted in a scheme to steal $20 million in Covid-19 relief funds.Gary Coronado/Los Angeles Times, via Getty ImagesIn the case of Mr. Oudomsine, the Pokemon card purchaser, his lawyers argued in March that a judge should be lenient in deciding his sentence because the fraud had taken hardly any time at all.“It is an event without significant planning, of limited duration,” said lawyer Brian Jarrard, who was Mr. Oudomsine’s attorney at the time.That didn’t work.U.S. District Judge Dudley H. Bowen Jr. sentenced Mr. Oudomsine to three years in prison, more than prosecutors had asked for, to “demonstrate to the world that this is the consequence” of fraud, according to a transcript of the sentencing.Now, Mr. Oudomsine is appealing, with a new lawyer and a new argument. Deterrence, the new lawyer argues, is moot here because the pandemic-relief programs are over.“There’s no way to deter someone from doing it, when there’s no way they can do it any longer,” said David Rafus, Mr. Oudomsine’s new lawyer.Biden administration officials say they’re trying to prepare for the next disaster, seeking to build a system that would quickly check applications for signs of identity theft.“Criminal syndicates are going to look for weak links at moments of crisis to attack us,” said Gene Sperling, the White House coordinator for pandemic aid. He said the White House now aims to build an ongoing system that would detect identity theft quickly in applications for aid: “The right time to start building a stronger system to prevent identity theft is now, not in the middle of the next serious crisis.”In the meantime, the arrests go on.Last week, prosecutors charged a correctional officer at a federal prison in Atlanta with defrauding the Paycheck Protection Program, saying she had received two loans totaling $38,200 in 2020 and 2021. The officer, Harrescia Hopkins, has pleaded not guilty. Her attorney did not respond to a request for comment.“You can’t have a system where crime pays,” said Mr. Horowitz, of the federal Pandemic Response Accountability Committee. “It undercuts the entire system of justice. It undercuts people’s faith in these programs, in their government. You can’t have that.”Seamus Hughes contributed reporting. More

  • in

    Trump Officials Gave Pandemic Loan to Trucking Company Despite Objections

    WASHINGTON — Democratic lawmakers on Wednesday released a report alleging that top Trump administration officials had awarded a $700 million pandemic relief loan to a struggling trucking company in 2020 over the objections of career officials at the Defense Department.The report, released by the Democratic staff of the House Select Subcommittee on the Coronavirus Crisis, describes the role of corporate lobbyists during the early months of the pandemic in helping to secure government funds as trillions of dollars of relief money were being pumped into the economy. It also suggests that senior officials such as Steven Mnuchin, the former Treasury secretary, and Mark T. Esper, the former defense secretary, intervened to ensure that the trucking company, Yellow Corporation, received special treatment despite concerns about its eligibility to receive relief funds.“Today’s select subcommittee staff report reveals yet another example of the Trump administration disregarding their obligation to be responsible stewards of taxpayer dollars,” Representative James E. Clyburn of South Carolina, the Democratic chairman of the subcommittee, said in a statement. “Political appointees risked hundreds of millions of dollars in public funds against the recommendations of career D.O.D. officials and in clear disregard of provisions of the CARES Act intended to protect national security and American taxpayers.”The $2.2 trillion pandemic relief package that Congress passed in 2020 included a $17 billion pot of money set up by Congress and controlled by the Treasury Department to assist companies that were considered critical to national security. In July 2020, the Treasury Department announced it was giving a $700 million loan to the trucking company YRC Worldwide, which has since changed its name to Yellow.Lobbyists for Yellow had been in close touch with White House officials throughout the loan process and had discussed how the company employs Teamsters as its drivers, according to the report.Mark Meadows, the White House chief of staff, was a “key actor” coordinating with Yellow’s lobbyists, according to correspondences that the committee obtained. The report also noted that the White House’s political operation was “almost giddy” in its effort to assist with the application.The loan raised immediate questions from watchdog groups because of the company’s close ties to the Trump administration and because it had faced years of financial and legal turmoil. The firm had lost more than $100 million in 2019 and was being sued by the Justice Department over claims that it had defrauded the federal government for a seven-year period. It recently agreed to pay $6.85 million to resolve allegations “that they knowingly presented false claims to the U.S. Department of Defense by systematically overcharging for freight carrier services and making false statements to hide their misconduct.”To qualify for a national security loan, a company needed certification by the Defense Department.According to the report, defense officials had recommended against certification because of the accusations that the company had overcharged the government. They also noted that the work that the company had been doing for the federal government — which included shipping meal kits, protective equipment and other supplies to military bases — could be replaced by other trucking firms.But the day after a defense official notified a Treasury official that the company would not be certified, one of Mr. Mnuchin’s aides set up a telephone call between him and Mr. Esper.The report indicated that Mr. Esper was not initially familiar with the status of Yellow’s certification. Before the call, aides prepared a summary of the analysis and recommendations of the department’s career officials that concluded that the certification should be rejected. Before those reached Mr. Esper, Ellen M. Lord, the department’s under secretary for acquisition and sustainment who was appointed by Mr. Trump, intervened and requested a new set of talking points that argued that the company should receive the financial support “to both support force readiness and national economic security.” Ms. Lord could not immediately be reached for comment.After the call with Mr. Mnuchin, Mr. Esper certified that the company was critical to national security, and a week later the approval of the loan was announced.Mr. Mnuchin then sent an email to Mr. Meadows that included news reports praising the loan. He highlighted positive comments from James P. Hoffa, the longtime president of the Teamsters union, who according to documents in the report made a direct plea to President Donald J. Trump about the loan.Mr. Esper and Mr. Mnuchin declined to comment. A former Treasury official familiar with the process said the loan saved 25,000 union jobs during an economic crisis and prevented disruption to the national supply chain that the Defense Department, businesses and consumers had depended on. The former official said that because of the terms of the loan, taxpayers were profiting from the agreement.A spokesman for Mr. Esper said that the company met the criteria to be eligible for the loan and emphasized that the report made clear that senior staff at the Defense Department recommended that he certify it. The Treasury Department made the final decision to issue the loan, the spokesman added.The Trump InvestigationsCard 1 of 6Numerous inquiries. More

  • in

    Rapid Inflation, Lower Employment: How the U.S. Pandemic Response Measures Up

    The United States spent more on its policy response than other advanced economies. Now economists are revisiting how that worked.The United States spent more aggressively to protect its economy from the pandemic than many global peers, a strategy that has helped to foment more rapid inflation — but also a faster economic rebound and brisk job gains.Now, though, America is grappling with what many economists see as an unsustainable worker shortage that threatens to keep inflation high and may necessitate a firm response by the Federal Reserve. Yet U.S. employment has not recovered as fully as in Europe and some other advanced economies. That reality is prodding some economists to ask: Was America’s spending spree worth it?As the Fed raises interest rates and economists increasingly warn that it may take at least a mild recession to bring inflation to heel, risks are mounting that America’s ambitious spending will end up with a checkered legacy. Rapid growth and a strong labor market rebound have been big wins, and economists across the ideological spectrum agree that some amount of spending was necessary to avoid a repeat of the painfully slow recovery that followed the previous recession. But the benefits of that faster recovery could be diminished as rising prices eat away at paychecks — and even more so if high inflation prods central bank policymakers set policy in a way that pushes up unemployment down the road.“I’m worried that we traded a temporary growth gain for permanently higher inflation,” said Jason Furman, an economist at Harvard University and a former economic official in the Obama administration. His concern, he said, is that “inflation could stay higher, or the Fed could control it by lowering output in the future.”The Biden administration has repeatedly argued that, to the extent the United States is seeing more inflation, the policy response to the pandemic also created a stronger economy.“We got a lot more growth, we got less child poverty, we got better household balance sheets, we have the strongest labor market by some metrics I’ve ever seen,” Jared Bernstein, an economic adviser to President Biden, said in an interview. “Were all of those accomplishments accompanied by heat on the price side? Yes, but some degree of that heat showed up in every advanced economy, and we wouldn’t trade that back for the historic recovery we helped to generate.”Inflation has picked up around the world, but price increases have been quicker in America than in many other wealthy nations.Consumer prices were up 9.8 percent in March from a year earlier, according to a measure of inflation that strips out owner-occupied housing to make it comparable across countries. That was faster than in Germany, where prices rose 7.6 percent in the same period; the United Kingdom, where they rose 7 percent; and other European countries. Other measures similarly show U.S. inflation outpacing that of its global peers.The Rise of InflationInflation has risen worldwide in the past year, but the increase has been fastest in the United States.

    .dw-chart-subhed {
    line-height: 1;
    margin-bottom: 6px;
    font-family: nyt-franklin;
    color: #121212;
    font-size: 15px;
    font-weight: 700;
    }

    Change in consumer prices from a year earlier
    Note: Euro area and U.K. data are Harmonised Index of Consumer Prices. U.S. data is the Consumer Price Index excluding owners’ equivalent rent.Sources: U.S. Bureau of Labor Statistics, O.E.C.D., EurostatBy The New York TimesThe comparatively large jump in prices in America owes at least partly to the nation’s ambitious spending. Research from the Federal Reserve Bank of San Francisco attributed about half of the nation’s 2021 annual price increase to the government’s spending response. The researchers estimated the number, which is imprecise, by measuring America’s inflation outcome compared with what happened in countries that spent less.“The size of the package was very large compared to any other country,” said Òscar Jordà, a co-author on the study.Understand Inflation in the U.S.Inflation 101: What is inflation, why is it up and whom does it hurt? Our guide explains it all.Your Questions, Answered: Times readers sent us their questions about rising prices. Top experts and economists weighed in.Interest Rates: As it seeks to curb inflation, the Federal Reserve announced that it was raising interest rates for the first time since 2018.How Americans Feel: We asked 2,200 people where they’ve noticed inflation. Many mentioned basic necessities, like food and gas.Supply Chain’s Role: A key factor in rising inflation is the continuing turmoil in the global supply chain. Here’s how the crisis unfolded.The Trump and then Biden administrations spent about $5 trillion on pandemic relief in 2020 and 2021 — far more as a share of the nation’s economy than what other advanced economies spent, based on a database compiled by the International Monetary Fund. Much of that money went directly to households in the form of stimulus checks, expanded unemployment insurance and tax credits for parents.Payments to households helped to fuel rapid consumer demand and quick economic growth — progress that has continued into 2022. A global economic outlook released by the International Monetary Fund last week showed that America’s economy is expected to expand by 3.7 percent this year, faster than the roughly 2 percent trend that prevailed before the pandemic and the 3.3 percent average expected across advanced economies this year.That comes on the heels of even more rapid 2021 growth. And as the U.S. economy has expanded so quickly, unemployment has plummeted. After spiking to 14.7 percent in early 2020, joblessness is now roughly back to the 50-year lows that prevailed prior the pandemic.That’s a victory that politicians have celebrated. “Our economy roared back faster than most predicted,” Mr. Biden said in his State of the Union address last month. A major report from the White House on April 14 noted that the United States has experienced a faster recovery than other advanced economies, as measured by gross domestic product, consumer spending and other indicators.The Rebound in SpendingConsumer spending has recovered more quickly in the United States, even after accounting for faster inflation.

    .dw-chart-subhed {
    line-height: 1;
    margin-bottom: 6px;
    font-family: nyt-franklin;
    color: #121212;
    font-size: 15px;
    font-weight: 700;
    }

    Change in per capita household spending since fourth quarter of 2019
    Notes: Quarterly data, adjusted for inflationSource: O.E.C.D.By The New York TimesBut increasingly, at least when it comes to the job market, America’s achievement looks less unique.Unemployment in the United States jumped much higher at the outset of the pandemic in part because America’s policies did less to discourage layoffs than those in Europe. While many European governments paid companies to keep workers on their payrolls, the U.S. focused more on providing money directly to those who lost their jobs.Joblessness fell fast in the United States, too, but that was also true elsewhere. Many European countries, Canada and Australia are now back to or below their prepandemic unemployment rates, data reported by the Organization for Economic Co-operation and Development showed.And when it comes to the share of people who are actually working, the United States is lagging some of its global peers. The nation’s employment rate is hovering around 71.4 percent, still down slightly from nearly 71.8 percent before the pandemic began.By comparison, the eurozone countries, Canada and Australia have a higher employment rates than before the pandemic, and Japan’s employment rate has fully recovered.The Rebound in JobsEmployment rates fell further in the U.S. than in many peer countries, and have not yet returned to their prepandemic level.

    .dw-chart-subhed {
    line-height: 1;
    margin-bottom: 6px;
    font-family: nyt-franklin;
    color: #121212;
    font-size: 15px;
    font-weight: 700;
    }

    Change in employment rate since fourth quarter of 2019
    Note: Quarterly data, ages 15 to 64Source: O.E.C.D.By The New York TimesEurope’s more complete employment recovery may partly reflect its different regulations and different approach to supporting workers during the pandemic, said Nick Bennenbroek, international economist at Wells Fargo. European aid programs effectively paid companies to keep people on the payroll even when they couldn’t go to work, while the United States supported workers directly through the unemployment insurance system.That relatively subtle difference had a major consequence: Because fewer Europeans were separated from employers, many flowed right back into their old jobs as the economy reopened. Meanwhile, pandemic layoffs touched off an era of soul-searching and job shuffling in the United States.“You didn’t have as much motivation to reconsider your assessment of your work-life situation,” Mr. Bennenbroek said. “What we initially saw in the U.S. was much more disruptive.”Inflation F.A.Q.Card 1 of 6What is inflation? More

  • in

    Covid Stimulus Money Brings Clashes Within Cities and Counties

    Last June, a meeting of the Dutchess County Legislature in New York’s Hudson Valley quickly turned heated over how to spend some of the county’s $57 million in federal pandemic relief aid.For more than two hours, residents and Democratic lawmakers implored the Republican majority to address longstanding problems that the pandemic had exacerbated. They cited opioid abuse, poverty and food insecurity. Some pointed to decrepit sewer systems and inadequate high-speed internet. Democrats offered up amendments directing funds to addiction recovery and mental health services.In the end, the Legislature rebuffed their appeals. It voted 15 to 10 to devote $12.5 million to renovate a minor-league baseball stadium that’s home to the Hudson Valley Renegades, a Yankees affiliate.“Who created this plan? Some legislators?” asked Carole Pickering, a resident of Hyde Park. “These funds were intended to rescue our citizens to the extent possible, not to upgrade a baseball field.”“I think we should be a little bit ashamed,” Brennan Kearney, a Democrat in the Legislature, told her fellow lawmakers.Cities and counties across the United States have found themselves in the surprisingly uncomfortable position of deciding how best to spend a windfall of federal relief funds intended to help keep them afloat amid deadly waves of Covid-19 infections.The pandemic, which is showing signs of waning as it enters its third year, prompted the largest infusion of federal money into the U.S. economy since the New Deal. President Biden and former President Donald J. Trump got Congress to approve roughly $5 trillion to help support families, shop owners, unemployed workers, schools and businesses.Where $5 Trillion in Pandemic Stimulus Money WentIt is the largest government relief effort in recorded history, and two years after Covid-19 crisis began, money is still flowing to communities. Here’s where it went and how it was spent.A large portion of the aid went to state, local and tribal governments, many of which had projected revenue losses of as much as 20 percent at the pandemic’s onset. The largest chunk came from Mr. Biden’s $1.9 trillion recovery bill, the American Rescue Plan, which earmarked $350 billion. That money is just beginning to flow to communities, which have until 2026 to spend it.“We’ve sent you a whole hell of a lot of money,” Mr. Biden said during a meeting with the nation’s governors in January.In many cases, the money has become an unusually public and contentious marker of what matters most to a place — and who gets to make those decisions. The debates are sometimes partisan, but not always divided by ideology. They pit colleagues against each other, neighbors against neighbors, people who want infrastructure improvements against those who want to help people experiencing homelessness.“It’s both breathtaking in its magnitude but it still requires some hard and strategic choices,” said Brad Whitehead, who is a nonresident senior fellow at Brookings Metro, a metropolitan policy project, and advises cities on how to use their funds. “One of the difficulties for elected leaders is everyone has a claim and a thought for how these dollars should be used.”Poughkeepsie, N.Y., part of Dutchess County. At a meeting last summer, county residents implored leaders to use pandemic aid to address longstanding problems.Amir Hamja for The New York TimesA person who is homeless in Poughkeepsie. Homelessness and poverty were among the issues that residents said deserved funding.Amir Hamja for The New York TimesLocal governments were given broad discretion over how to use the money. In addition to addressing immediate health needs, they were allowed to make up for pandemic-related revenue losses from empty transit systems, tourist attractions and other areas that suffered financially.That money is often equivalent to a third or nearly half of a city’s annual budget. St. Louis, for instance, will receive $498 million, more than 40 percent of its 2021 budget of $1.1 billion. Cleveland, with a city budget of $1.8 billion, will get $511 million.But the relief comes with strings: Governments are prohibited from using the funds to subsidize tax cuts or to make up for pension shortfalls. And because the aid is essentially a one-time installment, it wouldn’t necessarily help cover salaries for new teachers or other recurring costs.Several states have sued the Biden administration over the tax cut restriction, claiming it violates state sovereignty. Some governments have refused to take the money over concerns that it would give the federal government power to control local decision-making.In Saginaw, Mich., the mayor formed a 15-person advisory group to recommend ways to spend the city’s $52 million allotment. Harrisburg, Pa., which received $49 million, has held public events seeking input from residents. Massillon, Ohio, identified the biggest source of public complaints — flooding and sanitation issues — and proposed using its $16 million share to address those areas.“We listened to the people, and we’re trying to make improvements for them,” said Kathy Catazaro-Perry, Massillon’s mayor. “Our city is old. We have a lot of areas that did not have storm drains, and so for us, this is going to be huge because we’re going to be able to rectify some of those older neighborhoods.”But many have found their communities mired in clashes over who has the power to spend the money.Poughkeepsie residents picked up free meals at the Family Partnership Center in February. The food was distributed through the Lunch Box, a program that provides hot meals in Dutchess County five days a week.Amir Hamja for The New York TimesIn New York’s Onondaga County, which includes Syracuse, legislators from both parties have been trying to claw back spending authority from the county executive, Ryan McMahon, a Republican.When the first half of the county’s $89 million stimulus share arrived last spring, Mr. McMahon placed it into an account that he controlled and began committing funds to projects, including a $1 million restaurant voucher program, $5 million in incentives for filmmakers to produce in the area and $25 million for a multisport complex featuring 10 synthetic turf fields.Lawmakers, who questioned why they were not being asked to vote on the spending, were told by the county attorney’s office that they had ceded that authority in December 2020 when they approved an emergency resolution that gave the county executive authority “to address budget issues specifically related to Covid-19 global pandemic.”Legislators argued that they had never intended for that control to extend beyond the immediate pandemic response.James Rowley, who was elected chair of the Onondaga County Legislature in January, hired a lawyer and spent $11,000 preparing a lawsuit to challenge Mr. McMahon.“We have the power of the purse,” Mr. Rowley, a Republican, said in an interview. “I didn’t want to set a precedent that gave the county executive power to spend county money.”Mr. McMahon did not respond to a request for comment. On Feb. 22, he sent a letter to the Legislature proposing that it regain control of the stimulus funds that had not yet been allocated.“I recognize your concern,” he wrote, noting that “our cooperative actions should comport with county charter principles of separation of powers.” An abandoned property in Poughkeepsie. One county legislator called the investment in the baseball stadium “a betrayal of our community.”Boarded-up buildings in Poughkeepsie. Local governments were given broad discretion in how the pandemic aid could be spent.The rush of money from the federal government is in part an attempt to avoid the mistakes of the last recession, when state and local governments cut spending and fired workers, prolonging America’s economic recovery. But analysts say it will take years to fully assess whether all the spending this time was successful. Critics argue that the overall $5 trillion effort has added to a ballooning federal deficit and helped propel rapid inflation. And many states report increasing revenue, and even surpluses, as the economy strengthens.The money has led to ideological fights over the role of the federal government.In January, dozens of residents crowded into a City Council meeting in Coeur d’Alene, Idaho, where they demanded that the mayor and other officials turn down the city’s $8.6 million share of stimulus funds, saying it was a ruse by Washington to take control of the town.Residents booed and called the Council members “fascists.” Several referred to the money as a Trojan horse, lamenting that taking it would allow the federal government to impose restrictions on Idaho, including establishing vaccine checkpoints. Amid cries of “Recall!” one woman shouted repeatedly that “you have given up our sovereignty.”“Nobody wants this money,” Mark Salazar, a resident, said to applause. “I don’t want to be under the chains of the federal government. Nobody does.”The council eventually voted 5 to 1 to accept the funds, saying they would go toward expanding a police station and other areas.Dutchess County residents were similarly agitated, if less rowdy, at their June 14 meeting about the stadium. Guidance on using the funds issued by the Treasury Department specifically cited stadiums as “generally not reasonably proportional to addressing the negative economic impacts of the pandemic.”So why, those in attendance asked, was this happening?Marc Molinaro, the county executive, defended the spending, saying Dutchess County had identified $33 million in lost revenue as a result of the pandemic and that, according to the Biden administration’s guidance, stimulus funds could indeed go toward investing in things like the stadium.“It’s basically any structure, facility, thing you own as a government, you can invest these dollars in with broad latitude,” Mr. Molinaro said.In a recent interview, Mr. Molinaro said that because the funds were one-time money, the county needed to be careful not to create expenses that could not be paid for once the federal funds ran out.He added that investing in the stadium would produce an ongoing revenue stream for Dutchess County — money that he said would allow the government to pay for the types of programs that Democrats wanted.The investment, he said, “allows us to create 25 years of revenue that we can invest in the expansion of mental health services, homelessness and substance abuse.”That explanation has not mollified everyone.“I was just devastated that we spent the money that way,” Ms. Kearney, the Democratic legislator, said in an interview. “It was such a betrayal of our community. So grossly inappropriate and grossly tone deaf to the needs of the people in Dutchess who have suffered.” More

  • in

    Where $5 Trillion in Pandemic Stimulus Money Went

    At the outset of the pandemic, governments used the funds largely to cover virus-related costs.

    As the months dragged on, they found themselves covering unexpected shortfalls created by the pandemic, including lost revenue from parking garages and museums where attendance dropped off. They also funded longstanding priorities like upgrading sewer systems and other infrastructure projects.

    K-12 schools used early funds to transition to remote learning, and they received $122 billion from the American Rescue Plan that was intended to help them pay salaries, facilitate vaccinations and upgrade buildings and ventilation systems to reduce the virus’s spread. At least 20 percent must be spent on helping students recover academically from the pandemic.

    While not all of the state and local aid has been spent, the scope of the funding has been expansive:

    Utah set aside $100 million for “water conservation” as it faces historic drought conditions.

    Texas has designated $100 million to “maintain” the Bob Bullock Texas State History Museum in Austin.

    The San Antonio Independent School District in Texas plans to spend $9.4 million on increasing staff compensation, giving all permanent full-time employees a 2 percent pay raise and lifting minimum wages to $16 an hour, from $15.

    Alabama approved $400 million to help fund 4,000-bed prisons.

    Summerville, S.C., allocated more than $1.3 million for premium pay for essential workers.

    What was the impact?

    The aim of the money was to prevent the kind of painful budget cuts that state and local governments were forced to make in the wake of the Great Recession, when revenues plunged and costs soared, a recipe that prolonged America’s sluggish recovery and hampered some local economies for years.

    Economists largely agree that the money helped local governments shoulder significant pandemic-related costs, and many governments avoided deep budget cuts. Many states have even reported surpluses.

    But federal rules prevented local governments from using CARES Act funds to fill budget shortfalls, and state and local governments wound up slashing hundreds of thousands of public sector jobs anyway. Several states have sued the Biden administration over restrictions it imposed on the use of funds.

    What hasn’t been spent?

    A significant portion has yet to be spent, in part because more than $100 billion remains to be distributed by the Treasury Department. Only 19 states, plus Washington, D.C., received their entire allotments of American Rescue Plan funds in 2021. A second batch will be distributed this year.

    Governments have until 2026 tospend the funds, and disagreements over where the money should go and who has authority to spend it have slowed planning in some communities.

    School districts have until January 2025 to spend the money allocated to them. But even with several years left, schools have voiced concerns about meeting that deadline as many districts struggle with labor shortages and supply-chain delays. More

  • in

    Modern Monetary Theory Got a Pandemic Tryout. Inflation Is Now Testing It.

    The sun was sinking low over Long Island Sound as Stephanie Kelton, wearing the bright red suit jacket she had donned to give a virtual guest lecture to university students in London that morning, perched before a pillow fort she had constructed atop the heavy wooden desk in her home office.The setup was meant to keep out noise as she recorded the podcast she co-hosts, a MarketWatch production called the “Best New Ideas in Money.” The room was hushed except for Ms. Kelton, who bantered energetically with the producers she was hearing through noise-blocking headphones, sang a Terri Gibbs song and made occasional edits to the script. At one point, she muttered, “That sounds like Stephanie.”What Stephanie Kelton sounds like, circa early 2022, is the star architect of a movement that is on something of a victory lap. A victory lap with an asterisk.Ms. Kelton, 52, is the most familiar public face of Modern Monetary Theory, which posits that if a government controls its own currency and needs money — to make sure its citizens have food and places to live when, say, a global pandemic pushes many out of work — it can just print it, as long as its economy has the ability to churn out the needed goods and services.In the M.M.T. view of the world, “How will you pay for it?” is a vapid policy question. Real-world resources and political priorities determine how much lawmakers can and should spend.It is an idea that was forged, and put to something of a test, during a low-inflation era.When Ms. Kelton’s book, “The Deficit Myth,” was published in June 2020 and shot onto best seller lists, inflation had been weak for decades and had dropped below 1 percent as consumers retrenched in the pandemic. The government had begun to spend rapidly to try to prop up flailing households.When Ms. Kelton appeared on a Bloomberg podcast episode, “How M.M.T. Won the Fiscal Policy Debate,” in early 2021, inflation had bounced back to around 2 percent.But by a chilly January afternoon, as ducks flew over the frosty estuary outside Ms. Kelton’s house near Stony Brook University, where she teaches, inflation had rocketed up to 7 percent. The government’s debt pile has exploded to $30 trillion, up from about $10 trillion at the start of the 2008 downturn and $5 trillion in the mid-1990s.The good news: The government has had no trouble selling bonds to fund its spending, contrary to the direst projections of deficit scolds.The bad news: Some economists blame big spending in the pandemic for today’s rapid price increases. The government will release fresh Consumer Price Index data this week, and it is expected to show inflation running at its fastest pace since 1982.And that may be why Ms. Kelton, and the movement she has come to represent, now seem anxious to control the narrative. The pandemic spending wasn’t entirely consistent with M.M.T principles, they say — it wasn’t assessed carefully for its inflationary effects as it was being drawn up, because it was crisis policy. But the situation has underlined how hard it is to know just where the economy’s constraints lay, and how difficult it is to fix things once you run into them.Last summer, Ms. Kelton called inflation a temporary sign of “growing pains.” By the fall, she painted it as a good problem to solve, compared with a continued weak economy. As it lingers, she has argued that diagnosing what is causing it is key.“Can we blame ‘MMT’ for the run-up in inflation?” she tweeted rhetorically last month, just hours before her podcast recording.Understand Inflation in the U.S.Inflation 101: What is inflation, why is it up and whom does it hurt? Our guide explains it all.Your Questions, Answered: We asked readers to send questions about inflation. Top experts and economists weighed in.What’s to Blame: Did the stimulus cause prices to rise? Or did pandemic lockdowns and shortages lead to inflation? A debate is heating up in Washington.Supply Chain’s Role: A key factor in rising inflation is the continuing turmoil in the global supply chain. Here’s how the crisis unfolded.“Of course not.”Emon Hassan for The New York TimesThe economy is the limitTo understand how M.M.T. fits in with other dominant ways of thinking, it’s helpful to take a trip to the beach.In economics, there’s a school of thought sometimes called “freshwater.” It’s the set of ideas that became popular at inland universities in the 1970s, when they began to embrace rational markets and limited government intervention to fight recessions. There’s also “saltwater” thinking, an updated version of Keynesianism that argues that the government occasionally needs to jump-start the economy. It has traditionally been championed in the Ivy League and other top-ranked schools on the coasts.You might call the school of thought Ms. Kelton is popularizing, from a bay that feeds into the East River, brackish economics.M.M.T. theorists argue that society should feel capable of spending to achieve its goals to the extent that there are resources available to fulfill them. Deficit spending need not be constrained to recessions, even theoretically. Want to build a road? No problem, so long as you have asphalt and construction workers. Want to feed children free lunches? Also not a problem, so long as you have the food and the cafeteria workers.What became Modern Monetary Theory began to percolate among a small group of academics when Ms. Kelton, a former military brat and one-time furniture saleswoman, was a graduate student.She had a gap period between graduating with a bachelor’s degree from California State University, Sacramento and attending Cambridge University on a Rotary scholarship, and her college economics professor recommended that she spend the time studying with L. Randall Wray, an early pioneer in the set of ideas.They hit it off. She remained in Mr. Wray’s circle, and he — and Warren Mosler, a hedge fund manager who had written a book on what we get wrong about money — convinced her that the way America understood cash, revenues and budgeting was all backward.Ms. Kelton earned her doctorate at The New School, long a booster of out-of-mainstream economic thinking, and went on to teach at the University of Missouri-Kansas City. She, Mr. Wray, who was there at the time, and their colleagues mentored doctoral students and began to write academic papers on the new way of thinking.But academic missives reached only a small circle of readers. After the 2008 financial crisis punched a hole in the economy that would take more than a decade to fill, Ms. Kelton and her colleagues, invigorated with a new urgency, began a blog called “New Economic Perspectives.” It was a bare bones white, red and black layout, using a standard WordPress template, that served as a place for M.M.T. writers to make their case (and, in its early days, featured a #Occupy[YourCityHere] tab).The theory picked up some fervent followers but limited popular acceptance, charitably, and outright derision, uncharitably. Mainstream economists panned it as overly simplistic. Many were confused about what it was arguing.“I have heard pretty extreme claims attributed to that framework and I don’t know whether that’s fair or not,” Jerome H. Powell, the Fed chair, said in 2019. “The idea that deficits don’t matter for countries that can borrow in their own currency is just wrong.”Ms. Kelton kept the faith. She and her colleagues held conferences, including one in 2018 at The New School where she gave a lecture on “mainstreaming M.M.T.”Rohan Grey organized the conference and a media reception afterward at an Irish pub (“‘Shades of Green,’ monetary pun intended,” he said). It was attended by organizers, academics, “lay people” and lots of journalists. At the happy hour — which lasted until 1 a.m. — Ms. Kelton was mobbed when she walked in the door. “She was already on her way to super celebrity status at that point,” said Mr. Grey, an assistant professor at Willamette Law.When she gave presentations on her ideas, Ms. Kelton would occasionally display a quote often attributed to Mahatma Gandhi: “First they ignore you, then they laugh at you, then they fight you. Then you win.”And her star was rising more broadly. She advised Bernie Sanders’ presidential campaigns in 2016 and 2020, getting to know the Vermont senator. He never fully publicly embraced M.M.T., but he nevertheless advanced policies — like Medicare for All — that reflected its ideals.She amassed a following of tens of thousands, later growing to 140,000, on Twitter. Her first handle, @deficitowl, prompted ardent fans to gift her wise bird figurines, some of which are still on display in her home office. She cultivated a small coterie of prominent journalists who were interested in the idea, most notably Joe Weisenthal at Bloomberg. She signed a book deal. She was regularly talking to Democratic lawmakers, sometimes in groups.Her idea percolated through Washington’s media and liberal policy circles. Mainstream economic predictions that huge debt loads would come back to haunt nations like Japan had not played out, the anemic rebound from 2008 had scarred society and called the size of the crisis response into question. Ms. Kelton and her colleagues were ensuring that their theory on benign deficits was an ever-present feature of the blossoming debate.Then the pandemic hit, and suddenly the theoretical question of just how much the government could spend before it ran into limits faced a real-world experiment.The $1.9 Trillion FloorWithout thinking about paying for it, Donald J. Trump’s government quickly passed a $2.3 trillion relief package in late March 2020. In December, it followed that up with another $900 billion. President Biden took office in early 2021, and promptly added $1.9 trillion more.Inflation F.A.Q.Card 1 of 6What is inflation? More

  • in

    Democrats Blast Corporate Profits as Inflation Surges

    Politicians are placing more blame on greedy companies as prices stay high. But booming consumer demand is enabling firms to charge more.Inflation remains rapid as the economy enters 2022, and Democrats have begun pointing to a new culprit for the high and lasting price increases: Greedy corporations.Senator Sherrod Brown of Ohio, Senator Elizabeth Warren of Massachusetts, and the White House spokeswoman, Jen Psaki, have been among those pointing to excessive profits in certain industries as one thing jacking up costs for consumers. They don’t blame overall inflation on price-gouging businesses — but the implication is that higher prices are partly the product of corporate opportunism.The explanation for inflation is the latest in a string Democrats have offered since price gains shot up to uncomfortably high levels last year. It is partly grounded in economic reality, partly in political necessity: Rising prices are burdening and unsettling consumers, making them a liability for a party with a tenuous hold on Congressional control headed into 2022 midterm elections.Prices are increasing at the fastest pace since 1982, and while inflation is broadly expected to fade in the year ahead, the speed and extent of that moderation is uncertain. Even if price gains slow down, they could remain a headache for the Biden administration if they continue to rise more rapidly than was normal before the pandemic — which is what economists increasingly expect. They had hovered around or below 2 percent for years, but Federal Reserve officials think they will reach an average of 2.6 percent by the end of this year.The administration has limited power over prices: It is making tweaks around the edges to help to tamp them down, but keeping a lid on inflation is mostly the job of the Fed, which has signaled it expects to begin raising interest rates this year to help control it.Still, as consumers feel the pinch of higher prices for food, gas and household goods, it’s creating a political messaging problem for Democrats. Lawmakers and the White House had initially argued that fast inflation was a sign that airfares and hotel rates were bouncing back and would fade quickly, but supply chain snarls and booming consumer demand for goods kept them elevated throughout 2021. More recently, price pressures have begun to broaden to service categories, like rent, in which increases tend to be long-lasting — and as wages climb swiftly, it raises the possibility that companies will keep lifting prices to cover their costs.As inflation proves stubbornly sticky, administration officials and prominent lawmakers have refined their message to focus more blame on corporations, especially those in concentrated industries with a handful of powerful firms, like meat processing or gas.Many companies — from car dealerships to beauty stores and beef sellers — are raking in bigger profits as they successfully raise their prices or discount less while still managing to sell as much or more. But economists have pointed out that in many cases, blaming big firms for worsening inflation is overly simplistic. Industries have been relatively concentrated for years, but businesses now have the wherewithal to charge more because consumers are spending strongly. That owes partly to government stimulus checks and other benefits that have put more money in shoppers’ pockets.“It’s what you would fully expect when demand goes up,” said Jason Furman, a Harvard economist and a former chairman of the White House Council of Economic Advisers during the Obama administration.The laws of supply and demand have not stopped many on the political left from calling companies out.What to Know About Inflation in the U.S.Inflation, Explained: What is inflation, why is it up and whom does it hurt? We answered some common questions.The Fed’s Pivot: Jerome Powell’s abrupt change of course moved the central bank into inflation-fighting mode.Fastest Inflation in Decades: The Consumer Price Index rose 6.8 percent in November from a year earlier, its sharpest increase since 1982.Why Washington Is Worried: Policymakers are acknowledging that price increases have been proving more persistent than expected.The Psychology of Inflation: Americans are flush with cash and jobs, but they also think the economy is awful.“Profits at the biggest U.S. companies shot above $3 trillion this year, and the margins keep growing,” Mr. Brown, chairman of the Senate Banking Committee, said during a recent hearing. “Mega corporations would rather pass higher costs on to consumers than cut into their profits.”Ms. Warren has pointed to robust corporate profits as a sign that companies are partly to blame for rising costs.“Corporations are exploiting the pandemic to gouge consumers with higher prices on everyday essentials, from milk to gasoline,” she posted on Twitter on Nov. 26. “American families shouldn’t be bankrolling corporate America’s record-high profits.”And White House economic advisers have pointed to what they have called price gouging behavior in a few specific, concentrated industries. Mr. Biden has publicly encouraged an examination of oil company pricing, and the administration has announced measures to try to combat price fixing in meat processing, pointing out that four large companies control 85 percent of the beef market.“When too few companies control such a large portion of the market, our food supply chains are susceptible to shocks,” the administration said in a Jan. 3 release, repeating an argument administration officials have increasingly highlighted. “Mega corporations would rather pass higher costs on to consumers than cut into their profits,” Senator Sherrod Brown has said.Tom Brenner for The New York Times“I would say there are some areas where we have seen corporations benefit, profit from the pandemic,” Ms. Psaki said at a news conference in December.It is the case that big company profits are surging across many industries, a sign that companies are either selling more goods and services or are managing to eke more profit out of each unit that they are selling thanks to higher prices or better productivity. Based on corporate earnings calls and a spate of data, it’s likely a combination of those factors.Using data reported by Standard & Poor’s, the market analyst Edward Yardeni estimates that 2021 was a year of robust profit margins — the amount companies earn after subtracting their costs. After contracting sharply early in the pandemic, margins jumped to a record-high 13.7 percent in the second quarter before ticking down to 13.6 percent in the third.He thinks that owes partly to efficiency improvements, and partly to the fact that some firms have raised prices by more than their costs have climbed, something that they had previously struggled to do without losing customers.“It kind of became culturally acceptable to raise prices,” Mr. Yardeni said. “Consumers could understand that many corporations are under pressure to pass on their costs.”Inflation F.A.Q.Card 1 of 6What is inflation? More

  • in

    The Path Ahead for Biden: Overcome Manchin’s Inflation Fears

    A key Democrat’s decision to pull support from the president’s sprawling climate and social agenda is rooted in the scope of the bill.WASHINGTON — Senator Joe Manchin III, the West Virginia Democrat, effectively killed President Biden’s signature domestic policy bill in its current form on Sunday, saying he was convinced the spending and tax cuts in the $2.2 trillion legislation will exacerbate already hot inflation.Economic evidence strongly suggests Mr. Manchin is wrong. A host of economists and independent analyses have concluded that the bill is not economic stimulus, and that it will not pump enough money into consumer pocketbooks next year to raise prices more than a modest amount.The reason has to do with the pace at which the bill spends money and how much it raises through tax increases that are intended to pay for that spending. The legislation spends funds over a decade, allowing the taxes it raises on wealthy Americans and businesses, which will siphon money out of the economy, to help counteract the boost from spending and tax cuts.The bill also does not provide the type of direct stimulus included in the $1.9 trillion pandemic aid package Mr. Biden signed in March — and which Mr. Manchin supported. Some of its provisions would give money directly to people, like a continued expanded child tax credit, but others would fund programs that would take time to ramp up, like universal prekindergarten.Economists say the net result is likely to be at most a tenth of a percentage point or two increase in the inflation rate. That would be a relatively small effect at a time when supply chain crunches, surging global oil demand and a pandemic shift among consumers away from travel and dining out and toward durable goods have combined to raise the annual inflation rate to 6.8 percent, its fastest pace in nearly 40 years.For months, Mr. Manchin has warned the president and congressional leaders that he was uncomfortable with the breadth of what had become a $2.2 trillion bill to fight climate change, continue monthly checks to parents, establish universal prekindergarten and invest in a wide range of spending and tax cuts targeting child care, affordable housing, home health care and more. He has cited both the risks of inflation and his fear that the package could further balloon the federal budget deficit, saying several programs that are now estimated to end in a few years would likely be made permanent.Over the past week, he has insisted that the bill shrink to fit the framework of less than $2 trillion that Mr. Biden announced this fall, and that — crucially — the legislation not use budget gimmicks to artificially lower the bill’s effect on the budget deficit.In a statement on Sunday, Mr. Manchin said Democrats “continue to camouflage the real cost of the intent behind this bill.”White House officials have tried to promote the idea that the bill would reduce price pressures right away — an outcome economists have not entirely bought into. But the general economic consensus finds little evidence to suggest the bill risks exacerbating rising food, gasoline and other prices.Today’s inflationary surge stems from a confluence of factors, many of them related to the pandemic. The coronavirus has caused factories to shutter and clogged ports, disrupting the supply of goods that Americans stuck at home have wanted to buy, like electronics, televisions and home furnishings.That high demand has been fueled in part by consumers who are flush with cash after months of lockdown and repeated government payments, including stimulus checks. Research from the Federal Reserve has shown that inflation is most likely getting a temporary increase from the coronavirus relief package in March, which included $1,400 direct checks to families and generous unemployment benefits. But Mr. Biden’s social policy bill would do relatively little to spur increased consumer spending next year and not enough to offset the loss of government stimulus to the economy as pandemic aid expires.White House aides have tried to make that case to Mr. Manchin — and the public — in recent weeks, pointing to a series of analyses that have dismissed inflationary fears pegged to the bill. That includes analysis from a pair of Democratic economists who warned about rising inflation earlier this year — Harvard’s Lawrence H. Summers and Jason Furman — and from the nonpartisan Penn Wharton Budget Model at the University of Pennsylvania. All of those analyses conclude that the bill would add little or nothing to inflation in the coming year.The disconnect between economic reality and Mr. Manchin’s stated concerns has exasperated the White House, which is struggling with voter discontent toward Mr. Biden over rising prices, as well as an unyielding pandemic.In a scathing statement about Mr. Manchin on Sunday, the White House press secretary, Jen Psaki, noted that the Penn Wharton analysis found Mr. Biden’s bill “will have virtually no impact on inflation in the short term, and in the long run, the policies it includes will ease inflationary pressures.”White House officials, who along with party leaders have spent weeks trying to bring Mr. Manchin to a place of comfort with Mr. Biden’s bill, registered a sense of betrayal after the senator’s declaration.Ms. Psaki said Mr. Manchin had last week personally submitted to the president an outline for a bill “that was the same size and scope as the president’s framework, and covered many of the same priorities.” He had also promised to continue discussions toward an agreement, she said.Republicans celebrated Mr. Manchin’s statement as evidence that the bill, which Democrats were attempting to pass along party lines, was full of inflationary policies that even the president’s own party could not get behind.Biden’s ​​Social Policy and Climate Bill at a GlanceCard 1 of 7The centerpiece of Biden’s domestic agenda. More