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    What Causes Inflation and Should I Worry About It?

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    What is inflation, why is it up and whom does it hurt? A run through common questions about the ongoing price burst.Inflation has become central to the American zeitgeist in 2021 in a way that it hadn’t been for decades. Google searches are up. Supply chain issues feature into popular Instagram posts. The satire website The Onion warned in a recent headline that “higher prices may force Americans to eat reasonable portions on Thanksgiving.”Even as inflation hits its highest level since 1982 and inserts itself as a topic of popular discussion, trying to understand it can be a mind-bending task. Some people who have studied markets and the economy for years often do not know the ins and outs of how inflation is calculated. Its aftereffects on society — from who wins and who loses to whether it is good or bad news — are nuanced.Here’s a guide to help explain what inflation is, including how it is measured and what it means for your economic security and savings.What is inflation?Inflation is a loss of purchasing power over time: It means your dollar will not go as far tomorrow as it did today.Inflation is typically expressed as the annual change in prices for a basket of goods and services. In the United States, there are two main inflation gauges.One, the Consumer Price Index or C.P.I., measures the cost of things urban consumers buy out of pocket. The other, the Personal Consumption Expenditures index, or P.C.E., is released at more of a lag and measures things people consume, including things they do not pay for directly — notably health care, which insurance and government benefits help to cover. The two indexes are also built slightly differently.The Federal Reserve, America’s central bank and the institution in charge of keeping prices from increasing too rapidly, targets 2 percent annual increases in the P.C.E. index on average over time. A little bit of consumer price inflation is generally viewed as desirable, in part because it gives companies room to adjust to a changing economy — one where labor and commodities might cost more — without being forced out of business.What causes inflation?In the short term, high inflation can be the result of a hot economy — one in which people have a lot of surplus cash or are accessing a lot of credit and want to spend. If consumers are buying goods and services eagerly enough, businesses may need to raise prices because they lack adequate supply. Or companies may choose to charge more because they realize they can raise prices and improve their profits without losing customers.But inflation can — and often does — rise and fall based on developments that have little to do with economic conditions. Limited oil production can make gas expensive. Supply chain problems can keep goods in short supply, pushing up prices.The inflationary burst America has experienced this year has been driven partly by quirks and partly by demand.What to Know About Inflation in the U.S.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.Who’s to Blame for Rising Prices?: Here are the most obvious candidates — and where the evidence looks strongest.The Psychology of Inflation: Americans are flush with cash and jobs, but they also think the economy is awful.On the quirk side, the coronavirus has caused factories to shut down and has clogged shipping routes, helping to limit the supply of cars and couches and pushing prices higher. Airfares and rates for hotel rooms have rebounded after dropping in the depths of the pandemic. Gas prices have also contributed to heady gains recently.But it is also the case that consumers, who collectively built up big savings thanks to months in lockdown and repeated government stimulus checks, are spending robustly and their demand is driving part of inflation. They are continuing to buy even as costs for exercise equipment or outdoor furniture rise, and they are shouldering increases in rent and home prices. The indefatigable shopping is helping to keep price increases brisk.Where is inflation headed and should I be worried?Officials say they do not yet see evidence that rapid inflation is turning into a permanent feature of the economic landscape, even as prices rise very quickly: The C.P.I. measure rose by 6.8 percent in the year through November, the fastest pace since 1982.There are plenty of reasons to believe that the price burst will fade. Much of the increase this year owes to shortages of goods — from bicycles to cars and beds — that are likely to eventually ease as companies figure out how to produce and transport what people want to buy in a pandemic-altered economy. Many households also have built up savings, in part because of repeated stimulus payments, but they eventually could exhaust those.Plus, before the pandemic, aging demographics and high inequality in income and wealth had combined to drag inflation steadily lower for years as people preferred to save money instead of spending it, and those basic economic building blocks haven’t changed.But there are concerning signs that inflation is becoming stickier, meaning that it might last rather than fading with time. Rents have picked up sharply as home prices have risen and would-be buyers have found themselves locked out of ownership. Consumers are slowly starting to anticipate higher prices, though long-term inflation expectations have yet to jump drastically higher.In the longer term, the (sometimes contested) theory goes, high inflation can become entrenched if workers begin to expect it and can successfully negotiate wage increases to cover their climbing costs. Companies, facing higher labor bills, may manage to pass the costs onto consumers — and voilà, you have a situation where pay and prices push one another steadily upward.Is inflation bad?Whether inflation is “bad” depends on the circumstances.Most everyone agrees that super fast price increases — often called hyperinflation — spell trouble. They destabilize political systems, turn middle-class workers into paupers overnight, and make it impossible for businesses to plan. Weimar Germany, where hyperinflation helped to usher Adolf Hitler into power, is often cited as a case in point.Moderate price gains, even ones a bit above the Fed’s official goal, are a topic of more-serious debate. Slightly higher inflation can be good for people who owe money at fixed interest rates. If I sell coconuts for $1 and owe my bank $200 today, but next year I am suddenly able to charge $1.05 for my coconuts, my debt becomes easier for me to pay back: Now I only have to sell a little bit over 190 coconuts plus interest.But inflation can be tough for lenders. The bank to whom I owe my $200 is obviously not happy to get 190 coconuts worth of money instead of 200 coconuts worth. While politicians and the public rarely cry for bankers, the same is true for people with savings that bear low interest: Their holdings will not go as far. Inflation can be especially tough for people on fixed incomes, like students and many retirees.For workers taking home paychecks, whether inflation is a good or bad thing hinges on what happens with wages. If a worker’s pay goes up faster than prices increase, they can still find themselves better off in a high-inflation environment.Wages are growing quickly right now, especially for lower earners, but some measures suggest the growth is not keeping pace with inflation as it picks up steeply. Still, many households are also receiving transfers from the government — including an expanded Child Tax Credit — which could keep some families’ financial situations from deteriorating.How does inflation affect the poor?High or unpredictable inflation that isn’t outmatched by wage gains can be especially hard to shoulder for poor people, simply because they have less wiggle room.Poor households spend a bigger chunk of their budgets on necessities — food, housing and especially gas, which is often a contributor to bouts of high inflation — and less on discretionary expenditures. If rich households face high inflation and their wages do not keep up, they may have to cut back on vacations or dining out. A poor family may be forced to cut back on essentials, like food.“For lower income households, price increases eat up more of their budget,” said Laura Rosner-Warburton, a senior economist at MacroPolicy Perspectives, pointing out that some research suggests that poor people may even end up paying comparatively more for the same products. That may be partly because they lack the free cash to take advantage of temporary discounts.Around the world, poor people historically have reported greater concern around inflation, and that is also the case in the United States in the current episode.How does inflation affect the stock market?Really high inflation typically spells trouble for stocks, said Aswath Damodaran, who teaches corporate finance and valuation at New York University’s Stern School of Business. Financial assets in general have historically fared badly during inflation booms, Mr. Damodaran said, while real assets like houses have better held their value.The reason is simple.“You need to make higher returns to break even,” he explained. While it might have been attractive to invest money for a 3 percent annual payback before an inflationary burst, once inflation has taken off to 4 percent, your investment would actually be declining in terms of real-world purchasing power.Plus, inflation can be tough on the underlying business. Companies that lack pricing power — meaning that they cannot easily pass costs on to customers — suffer the worst, because they are forced to absorb input cost increases by taking a hit to their profit margin.High inflation can also spur the Federal Reserve to increase interest rates as it tries to cool off the economy and slow demand. If the central bank does so drastically, it could even plunge the economy into a recession, which would also be bad for stocks — along with everyone else.“The worse inflation is, the more severe the economic shutdown has to be to break the back of inflation,” Mr. Damodaran said. More

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    World’s Growth Cools and the Rich-Poor Divide Widens

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    The International Monetary Fund says the persistence of the coronavirus and global supply chain crisis weighs on economies.As the world economy struggles to find its footing, the resurgence of the coronavirus and supply chain chokeholds threaten to hold back the global recovery’s momentum, a closely watched report warned on Tuesday.The overall growth rate will remain near 6 percent this year, a historically high level after a recession, but the expansion reflects a vast divergence in the fortunes of rich and poor countries, the International Monetary Fund said in its latest World Economic Outlook report.Worldwide poverty, hunger and unmanageable debt are all on the upswing. Employment has fallen, especially for women, reversing many of the gains they made in recent years.Uneven access to vaccines and health care is at the heart of the economic disparities. While booster shots are becoming available in some wealthier nations, a staggering 96 percent of people in low-income countries are still unvaccinated.“Recent developments have made it abundantly clear that we are all in this together and the pandemic is not over anywhere until it is over everywhere,” Gita Gopinath, the I.M.F.’s chief economist, wrote in the report.The outlook for the United States, Europe and other advanced economies has also darkened. Factories hobbled by pandemic-related restrictions and bottlenecks at key ports around the world have caused crippling supply shortages. A lack of workers in many industries is contributing to the clogs. The U.S. Labor Department reported Tuesday that a record 4.3 million workers quit their jobs in August — to take or seek new jobs, or to leave the work force.A street in São Paulo, Brazil, in July. Poverty in many nations is on the upswing.Mauricio Lima for The New York TimesIn the United States, weakening consumption and large declines in inventory caused the I.M.F. to pare back its growth projections to 6 percent from the 7 percent estimated in July. In Germany, manufacturing output has taken a hit because key commodities are hard to find. And lockdown measures over the summer have dampened growth in Japan.Fear of rising inflation — even if likely to be temporary — is growing. Prices are climbing for food, medicine and oil as well as for cars and trucks. Inflation worries could also limit governments’ ability to stimulate the economy if a slowdown worsens. As it is, the unusual infusion of public support in the United States and Europe is winding down.“Overall, risks to economic prospects have increased, and policy trade-offs have become more complex,” Ms. Gopinath said. The I.M.F. lowered its 2021 global growth forecast to 5.9 percent, down from the 6 percent projected in July. For 2022, the estimate is 4.9 percent.The key to understanding the global economy is that recoveries in different countries are out of sync, said Gregory Daco, chief U.S. economist at Oxford Economics. “Each and every economy is suffering or benefiting from its own idiosyncratic factors,” he said.For countries like China, Vietnam and South Korea, whose economies have large manufacturing sectors, “inflation hits them where it hurts the most,” Mr. Daco said, raising costs of raw materials that reverberate through the production process.The pandemic has underscored how economic success or failure in one country can ripple throughout the world. Floods in Shanxi, China’s mining region, and monsoons in India’s coal-producing states contribute to rising energy prices. A Covid outbreak in Ho Chi Minh City that shuts factories means shop owners in Hoboken won’t have shoes and sweaters to sell.South Africa has sent a train with vaccines into one of its poorest provinces to get doses to areas where health care facilities are stretched.Jerome Delay/Associated PressThe I.M.F. warned that if the coronavirus — or its variants — continued to hopscotch across the globe, it could reduce the world’s estimated output by $5.3 trillion over the next five years.The worldwide surge in energy prices threatens to impose more hardship as it hampers the recovery. This week, oil prices hit a seven-year high in the United States. With winter approaching, Europeans are worried that heating costs will soar when temperatures drop. In other spots, the shortages have cut even deeper, causing blackouts in some places that paralyzed transport, closed factories and threatened food supplies.In China, electricity is being rationed in many provinces and many companies are operating at less than half of their capacity, contributing to an already significant slowdown in growth. India’s coal reserves have dropped to dangerously low levels.And over the weekend, Lebanon’s six million residents were left without any power for more than 24 hours after fuel shortages shut down the nation’s power plants. The outage is just the latest in a series of disasters there. Its economic and financial crisis has been one of the world’s worst in 150 years.Oil producers in the Middle East and elsewhere are lately benefiting from the jump in prices. But many nations in the region and North Africa are still trying to resuscitate their pandemic-battered economies. According to newly updated reports from the World Bank, 13 of the 16 countries in that region will have lower standards of living this year than they did before the pandemic, in large part because of “underfinanced, imbalanced and ill-prepared health systems.”Other countries were so overburdened by debt even before the pandemic that governments were forced to limit spending on health care to repay foreign lenders.A power outage on Monday in Beirut. Lebanon’s economic and financial crisis has been one of the world’s worst in 150 years.Agence France-Presse — Getty ImagesIn Latin America and the Caribbean, there are fears of a second lost decade of growth like the one experienced after 2010. In South Africa, over one-third of the population is out of work.And in East Asia and the Pacific, a World Bank update warned that “Covid-19 threatens to create a combination of slow growth and increasing inequality for the first time this century.” Businesses in Indonesia, Mongolia and the Philippines lost on average 40 percent or more of their typical monthly sales. Thailand and many Pacific island economies are expected to have less output in 2023 than they did before the pandemic.Overall, though, some developing economies are doing better than last year, partly because of the increase in the prices of commodities like oil and metals that they produce. Growth projections ticked up slightly to 6.4 percent in 2021 compared with 6.3 percent estimated in July.“The recovery has been incredibly uneven,” and that’s a problem for everyone, said Carl Tannenbaum, chief economist at Northern Trust. “Developing countries are essential to global economic function.”The outlook is clouded by uncertainty. Erratic policy decisions — like Congress’s delay in lifting the debt ceiling — can further set back the recovery, the I.M.F. warned.But the biggest risk is the emergence of a more infectious and deadlier coronavirus variant.Ms. Gopinath at the I.M.F. urged vaccine manufacturers to support the expansion of vaccine production in developing countries.Earlier this year, the I.M.F. approved $650 billion worth of emergency currency reserves that have been distributed to countries around the world. In this latest report, it again called on wealthy countries to help ensure that these funds are used to benefit poor countries that have been struggling the most with the fallout of the virus.“We’re witnessing what I call tragic reversals in development across many dimensions,” said David Malpass, the president of the World Bank. “Progress in reducing extreme poverty has been set back by years — for some, by a decade.”Ben Casselman More

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    Debate Looms Over I.M.F.: Should It Do More Than Put Out Fires?

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    As the International Monetary Fund gets set for its annual meeting, economists ask if it’s time to update its mandate as the world’s financial crisis responder.Lopsided access to vaccinations, extreme economic inequality, rising food prices and staggering debt are on the agenda when the International Monetary Fund and the World Bank gather for their annual meetings in Washington next week.A pressing issue not in the official program is the controversy that has been swirling for weeks around the chief of the I.M.F., Kristalina Georgieva, threatening her leadership.An investigation last month accused Ms. Georgieva of rigging data to paint China as more business friendly in a 2018 report when she was chief executive at the World Bank. Ms. Georgieva has denied any wrongdoing.The scandal has focused on the bank’s credibility — billion-dollar decisions can be made on the basis of its information — as well as Ms. Georgieva’s culpability.But lurking behind the debate over her future are foundational questions about the shifting role of the I.M.F., which has helped guide the planet’s economic and financial system since the end of World War II.Once narrowly viewed as a financial watchdog and a first responder to countries in financial crises, the I.M.F. has more recently helped manage two of the biggest risks to the worldwide economy: the extreme inequality and climate change.Some stakeholders, though, have chafed at the scope of the fund’s ambitions, and how much it should venture onto the World Bank’s turf of long-term development and social projects. And they object to what’s perceived as a progressive tilt.“There is a modernizing streak here running through major financial institutions which is creating a kind of tension,” said Adam Tooze, a historian at Columbia University and the author of “Shutdown: How Covid Shook the World’s Economy.”Other pressures weigh on the agency as well. Washington is still home to the I.M.F.’s headquarters, and the United States is the only one of the 190 member countries with veto power, because it contributes more money than any other. But its dominance has been increasingly challenged by China — straining relations further tested by trade and other tensions — and emerging nations.The willingness of the Federal Reserve and other central banks to flush trillions of dollars into the global economy to limit downturns also means that other lenders, aside from the I.M.F., have enough surplus cash on hand to lend money to strapped nations. China has also greatly expanded its lending to foreign governments for infrastructure projects under its ambitious Belt and Road Initiative.At the same time, long-held beliefs like the single-minded focus on how much an economy grows, without regard to problems like inequality and environmental damage, are widely considered outdated. And the preferred cocktail for helping debt-ridden nations that was popular in the 1990s and early 2000s — austerity, privatization of government services and deregulation — has lost favor in many circles as punitive and often counterproductive.The debate about the role of the I.M.F. was bubbling before the appointment of Ms. Georgieva, who this month started the third year of her five-year term. But she has embraced an expanded role for the agency. A Bulgarian economist and the first from an emerging economy to head the fund, she stepped up her predecessors’ attention to the widening inequality and made climate change a priority, calling for an end to all fossil fuel subsidies, for a tax on carbon and for significant investment in green technology.She has argued that however efficient and rational the market is, governments must step in to fix built-in flaws that could lead to environmental devastation and grossly inequitable opportunity. Sustainable debt replaced austerity as the catchword.When the coronavirus pandemic brutally intensified the slate of problems — malnourishment, inadequate health care, rising poverty and an interconnected world vulnerable to environmental disaster — Ms. Georgieva urged action.Here was “a once in a lifetime opportunity,” she said, “to support a transformation in the economy,” one that is greener and fairer.The I.M.F. opposed the hard line taken by some Wall Street creditors in 2020 toward Argentina, emphasizing instead the need to protect “society’s most vulnerable” and to forgive debt that exceeds a country’s ability to repay.I.M.F. headquarters in Washington, where Republicans have bristled at Ms. Georgieva’s agenda.Daniel Slim/Agence France-Presse — Getty ImagesThis year, Ms. Georgieva managed to create a special reserve fund of $650 billion to help struggling nations finance health care, buy vaccines and pay down debt during the pandemic.That approach has not always sat well with conservatives in Washington and on Wall Street.Former President Donald J. Trump immediately objected to the new reserve funds — known as special drawing rights — when they were proposed in 2020, and congressional Republicans have continued the criticism. They argue that the funds mostly help American adversaries like China, Russia, Syria and Iran while doing little for poor nations.Ms. Georgieva’s activist climate agenda has also run afoul of Republicans in Congress, who have opposed carbon pricing and pushed to withdraw from multinational efforts like the United Nations Framework Convention on Climate Change and the Paris climate agreement.So has her advocacy for a minimum global corporate tax like the one that more than 130 nations signed on Friday.In July, Laurence D. Fink, who runs BlackRock, the world’s largest investment management company, and was at odds with the I.M.F.’s stance on Argentina, called the fund and the World Bank outdated and said they needed “to rethink their roles.”The investigation into data rigging at the World Bank focused on what is known as the Doing Business Report, which contains an influential index of business-friendly countries. WilmerHale, the law firm that conducted the inquiry, said various top officials had exerted pressure to raise the rankings of China, Saudi Arabia, the United Arab Emirates or Azerbaijan in the 2018 and 2020 editions.The law firm reported that Ms. Georgieva was “directly involved” with efforts to improve China’s rating for the 2018 edition. She said WilmerHale’s report was inaccurate and rejected its accusations. The I.M.F. executive board is reviewing the findings.The United States, which is the fund’s largest shareholder, has declined to express support for her after the allegations. Ahead of a meeting of the I.M.F. board on Friday, Ms. Georgieva maintained strong support from many of the fund’s shareholders, including France, which had lobbied hard for her to get the job in 2019. Late Friday, the I.M.F. released a statement saying the board would “request more clarifying details with a view to very soon concluding its consideration of the matter.”In Congress, Republicans and Democrats called for the Treasury Department to undertake its own investigations. A letter from three Republicans said the WilmerHale inquiry “raises serious questions about Director Georgieva’s ability to lead the International Monetary Fund.”Several people sprang to her defense, including Shanta Devarajan, an economist who helped oversee the 2018 Doing Business Report and a key witness in the investigation. He wrote on Twitter that the law firm’s conclusions did not reflect his full statements, and that the notion that Ms. Georgieva had “put her thumb on the scale to benefit one nation is beyond credulity.”“It was her job to ensure the final report was accurate and credible — and that’s what she did,” Mr. Devarajan added.In an interview, he said critics had used the investigation to discredit Ms. Georgieva. The problem, he said, is “how people may have chosen to read the findings of the report and use that to criticize Kristalina’s credibility and leadership.”Mr. Devarajan was not the only one to make the case that the controversy was functioning in some ways as a proxy for the contest over the I.M.F.’s direction. Jeffrey Sachs, director of the Center for Sustainable Development at Columbia, wrote in The Financial Times that Ms. Georgieva was receiving “McCarthyite treatment” by “anti-China forces” in Congress.Whatever role one might prefer for the I.M.F. — traditional, expanded or something else entirely — the scandal is both a distraction and a threat.Nicholas Stern, a British economist who formerly served as the chief economist and senior vice president of the World Bank, said this controversy could not come at a worse moment.“The coming few years are of vital importance to the future stability of the world economy and environment,” he wrote in a letter to the I.M.F. board in support of Ms. Georgieva. “This is as decisive a period as we have seen since the Second World War.”Alan Rappeport More

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    'Squid Game,' the Netflix Hit, Taps South Korean Fears

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    The dystopian Netflix hit taps South Korea’s worries about costly housing and scarce jobs, concerns familiar to its U.S. and international viewers.In “Squid Game,” the hit dystopian television show on Netflix, 456 people facing severe debt and financial despair play a series of deadly children’s games to win a $38 million cash prize in South Korea.Koo Yong-hyun, a 35-year-old office worker in Seoul, has never had to face down masked homicidal guards or competitors out to slit his throat, like the characters in the show do. But Mr. Koo, who binge-watched “Squid Game” in a single night, said he empathized with the characters and their struggle to survive in the country’s deeply unequal society.Mr. Koo, who got by on freelance gigs and government unemployment checks after he lost his steady job, said it is “almost impossible to live comfortably with a regular employee’s salary” in a city with runaway housing prices. Like many young people in South Korea and elsewhere, Mr. Koo sees a growing competition to grab a slice of a shrinking pie, just like the contestants in “Squid Game.”Those similarities have helped turn the nine-episode drama into an unlikely international sensation. “Squid Game” is now the top-ranked show in the United States on Netflix and is on its way to becoming one of the most-watched shows in the streaming service’s history. “There’s a very good chance it will be our biggest show ever,” Ted Sarandos, a co-chief executive at Netflix, said during a recent business conference.Culturally, the show has sparked an online embrace of its distinct visuals, especially the black masks decorated with simple squares and triangles worn by the anonymous guards, and a global curiosity for the Korean children’s games that underpin the deadly competitions. Recipes for dalgona, the sugary Korean treat at the center of one especially tense showdown, have gone viral.A shop in Seoul selling “Squid Game”-themed dalgona.Heo Ran/ReutersLike “The Hunger Games” books and movies, “Squid Game” holds its audience with its violent tone, cynical plot and — spoiler alert! — a willingness to kill off fan-favorite characters. But it has also tapped a sense familiar to people in the United States, Western Europe and other places, that prosperity in nominally rich countries has become increasingly difficult to achieve, as wealth disparities widen and home prices rise past affordable levels.“The stories and the problems of the characters are extremely personalized but also reflect the problems and realities of Korean society,” Hwang Dong-hyuk, the show’s creator, said in an email. He wrote the script in 2008 as a film, when many of these trends had become evident, but overhauled it to reflect new worries, including the impact of the coronavirus. (Minyoung Kim, the head of content for the Asia-Pacific region at Netflix, said the company was in talks with Mr. Hwang about producing a second season.)“Squid Game” is only the latest South Korean cultural export to win a global audience by tapping into the country’s deep feelings of inequality and ebbing opportunities. “Parasite,” the 2019 film that won best picture at the Oscars, paired a desperate family of grifters with the oblivious members of a rich Seoul household. “Burning,” a 2018 art-house hit, built tension by pitting a young deliveryman against a well-to-do rival for a woman’s attention.The masked guards in “Squid Game” mete out violence during the competitions.NetflixSouth Korea boomed in the postwar era, making it one of the richest countries in Asia and leading some economists to call its rise the “miracle on the Han River.” But wealth disparity has worsened as the economy has matured.“South Koreans used to have a collective community spirit,” says Yun Suk-jin, a drama critic and professor of modern literature at Chungnam National University. But the Asian financial crisis in the late 1990s undermined the nation’s positive growth story and “made everyone fight for themselves.”The country now ranks No. 11 using the Gini coefficient, one measure of income inequality, among the members of the Organization for Economic Cooperation and Development, the research group for the world’s richest nations. (The United States is ranked No. 6.)As South Korean families have tried to keep up, household debt has mounted, prompting some economists to warn that the debt could hold back the economy. Home prices have surged to the point where housing affordability has become a hot-button political topic. Prices in Seoul have soared by over 50 percent during the tenure of the country’s president, Moon Jae-in, and led to a political scandal.“Squid Game” lays bare the irony between the social pressure to succeed in South Korea and the difficulty of doing just that, said Shin Yeeun, who graduated from college in January 2020, just before the pandemic hit. Now 27, she said she had spent over a year looking for steady work.“It’s really difficult for people in their 20s to find a full-time job these days,” she said.South Korea has also suffered a sharp drop in births, generated partly by a sense among young people that raising children is too expensive.“In South Korea, all parents want to send their kids to the best schools,” Ms. Shin said. “To do that you have to live in the best neighborhoods.” That would require saving enough money to buy a house, a goal so unrealistic “that I’ve never even bothered calculating how long it will take me,” Ms. Shin said.Characters in the show receive invitations to participate in the Squid Game.Netflix“Squid Game” revolves around Seong Gi-hun, a gambling addict in his 40s who doesn’t have the means to buy his daughter a proper birthday present or pay for his aging mother’s medical expenses. One day he is offered a chance to participate in the Squid Game, a private event run for the entertainment of wealthy individuals. To claim the $38 million prize, contestants must pass through six rounds of traditional Korean children’s games. Failure means death.The 456 contestants speak directly to many of the country’s anxieties. One is a graduate from Seoul National University, the nation’s top university, who is wanted for mishandling his clients’ funds. Another is a North Korean defector who needs to take care of her brother and help her mother escape from the North. Another character is an immigrant laborer whose boss refuses to pay his wages.The characters have resonated with South Korean youth who don’t see a chance to advance in society. Known locally as the “dirt spoon” generation, many are obsessed with ways to get rich quickly, like with cryptocurrencies and the lottery. South Korea has one of the largest markets for virtual currency in the world.Like the prize money in the show, cryptocurrencies give “people the chance to change their lives in a second,” said Mr. Koo, the office worker. Mr. Koo, whose previous employer went out of business during the pandemic, said the difficulty of earning money is one reason South Koreans are so obsessed with making a quick buck.“I wonder how many people would participate if ‘Squid Game’ was held in real life,” he said.Seong Gi-hun, the show’s protagonist, entering an arena for one of the games.Netflix More

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    Biden's Presidential Agenda Rests on $3.5 Trillion Spending Bill

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    A plan for the economy, education, immigration, climate and more binds disparate Democratic lawmakers, but the proposal risks sinking under its own weight.WASHINGTON — No president has ever packed as much of his agenda, domestic and foreign, into a single piece of legislation as President Biden has with the $3.5 trillion spending plan that Democrats are trying to wrangle through Congress over the next six weeks.The bill combines major initiatives on the economy, education, social welfare, climate change and foreign policy, funded in large part by an extensive rewrite of the tax code, which aims to bring in trillions from corporations and the rich. That stacking of priorities has raised the stakes for a president resting his ambitions on a bill that could fail over the smallest of intraparty disputes.If successful, Mr. Biden’s far-reaching attempt could result in a presidency-defining victory that delivers on a decades-long campaign by Democrats to expand the federal government to combat social problems and spread the gains of a growing economy to workers, striking a fatal blow to the government-limiting philosophy of President Ronald Reagan that has largely defined American politics since the 1980s.But as Democrats are increasingly seeing, the sheer weight of Mr. Biden’s progressive push could cause it to collapse, leaving the party empty-handed, with the president’s top priorities going unfulfilled. Some progressives fear a watered-down version of the bill could fail to deliver on the party’s promises and undermine its case for a more activist government. Some moderates worry that spending too much could cost Democrats, particularly those in more conservative districts, their seats in the 2022 midterm elections, erasing the party’s control of Congress.The legislation, which Democrats are trying to pass along party lines and without Republican support, contains the bulk of Mr. Biden’s vision to overhaul the rules of the economy in hopes of reducing inequality and building a more vibrant middle class. But its provisions go beyond economics.Democrats hope the package will create a pathway to citizenship for as many as eight million undocumented immigrants, make it easier for workers to form unions, and lower prescription drug costs for seniors. They want to guarantee prekindergarten and community college for every American, bolster the nation’s strategic competitiveness with China and stake an aggressive leadership role in global efforts to fight climate change and corporate tax evasion.The plan includes a large tax cut for the poor and middle class, efforts to reduce the cost of child care and expand access to home health care for older and disabled Americans and create the first federally guaranteed paid leave for American workers.Democrats hope the package will create a pathway to citizenship for immigrants brought to the United States as children.Carlo Allegri/ReutersIt is almost as if President Franklin D. Roosevelt had stuffed his entire New Deal into one piece of legislation, or if President Lyndon B. Johnson had done the same with his Great Society, instead of pushing through individual components over several years.“The president is on the cusp of achieving a major expansion in public education, one of the largest expansions of the social safety net, the largest investment in climate change mitigation” and overhauls in labor law and drug pricing, said Patrick Gaspard, a former Obama administration official who is now the president of the liberal Center for American Progress in Washington..css-1xzcza9{list-style-type:disc;padding-inline-start:1em;}.css-3btd0c{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-3btd0c{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-3btd0c strong{font-weight:600;}.css-3btd0c em{font-style:italic;}.css-1kpebx{margin:0 auto;font-family:nyt-franklin,helvetica,arial,sans-serif;font-weight:700;font-size:1.125rem;line-height:1.3125rem;color:#121212;}#NYT_BELOW_MAIN_CONTENT_REGION .css-1kpebx{font-family:nyt-cheltenham,georgia,’times new roman’,times,serif;font-weight:700;font-size:1.375rem;line-height:1.625rem;}@media (min-width:740px){#NYT_BELOW_MAIN_CONTENT_REGION .css-1kpebx{font-size:1.6875rem;line-height:1.875rem;}}@media (min-width:740px){.css-1kpebx{font-size:1.25rem;line-height:1.4375rem;}}.css-1gtxqqv{margin-bottom:0;}.css-19zsuqr{display:block;margin-bottom:0.9375rem;}.css-12vbvwq{background-color:white;border:1px solid #e2e2e2;width:calc(100% – 40px);max-width:600px;margin:1.5rem auto 1.9rem;padding:15px;box-sizing:border-box;}@media (min-width:740px){.css-12vbvwq{padding:20px;width:100%;}}.css-12vbvwq:focus{outline:1px solid #e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-12vbvwq{border:none;padding:10px 0 0;border-top:2px solid #121212;}.css-12vbvwq[data-truncated] .css-rdoyk0{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-12vbvwq[data-truncated] .css-eb027h{max-height:300px;overflow:hidden;-webkit-transition:none;transition:none;}.css-12vbvwq[data-truncated] .css-5gimkt:after{content:’See more’;}.css-12vbvwq[data-truncated] .css-6mllg9{opacity:1;}.css-qjk116{margin:0 auto;overflow:hidden;}.css-qjk116 strong{font-weight:700;}.css-qjk116 em{font-style:italic;}.css-qjk116 a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;text-underline-offset:1px;-webkit-text-decoration-thickness:1px;text-decoration-thickness:1px;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:visited{color:#326891;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:hover{-webkit-text-decoration:none;text-decoration:none;}“Each one of these things is significant in its individual constituent parts,” he said, “but taken as a whole, it, I think, speaks to the remarkable opportunity that we have — these once-in-a-generation opportunities to set a course that creates growth for all, including and especially those who have been most vulnerable in this economy.”If the effort succeeds, Mr. Biden will have accomplished much of what he campaigned on in one fell swoop. Observers say he will carry a strengthened hand into global summits in October and November that are meant to galvanize the world around transitioning from planet-warming fossil fuels and ending the use of offshore havens that companies have long used to avoid taxation.White House officials say that the breadth of programs in the package form a unified vision for the United States’ domestic economy and its place in the world, and that the planks serve as a sort of coalition glue — a something-for-everyone approach that makes it difficult to jettison pieces of the plan in negotiations, even if they prove contentious.But the sheer scope of its contents has opened divisions among Democrats on multiple fronts, when Mr. Biden cannot afford to lose a single vote in the Senate and no more than three votes in the House.Centrists and progressives have clashed over the size of the spending in the legislation and the scale and details of the tax increases that Mr. Biden wants to use to help offset its cost. They are divided over prescription drug pricing, the generosity of tax credits for the poor, the aggressiveness of key measures to speed the transition to a lower-emission energy sector and much more.Even items that are not top priorities for Mr. Biden have opened rifts. On Friday, one of the party’s most outspoken progressives, Representative Alexandria Ocasio-Cortez of New York, took aim at a crucial priority of several top Democrats, including Senator Chuck Schumer, saying she would resist attempts to fully repeal a cap on deductions for state and local property taxes that would aid high earners in high-tax areas.If Mr. Biden’s party cannot find consensus on those issues and the bill dies, the president will have little immediate recourse to advance almost any of those priorities. Outside of a hard-fought victory on a bipartisan infrastructure package — which has passed the Senate but not yet cleared the House — Mr. Biden has found almost no reception from Republicans for his proposals. His economic, education and climate agendas, and perhaps even additional efforts to rebuild domestic supply chains and counter China, could be blocked by Republicans under current Senate rules for most legislation.Democrats hope to stake an aggressive American leadership role in global efforts to fight climate change.Kathleen Flynn/ReutersRepublicans say the breadth of the bill shows that Democrats are trying to drastically shift national policy without full debate on individual proposals.Representative Kevin Brady of Texas, the top Republican on the Ways and Means Committee, complained repeatedly this week that Republicans and conservatives “believe that our government is wasting so much to kill so many American jobs.”Mr. Biden’s plan would “hook a whole new generation of the poor on government dependency,” he said.Biden administration officials say the bill’s contents are neither secret nor socialist. They say the plan tracks with the proposals Mr. Biden laid out in the 2020 campaign, in his first budget request and in an address to a joint session of Congress.“There is a through line to everything that we are advancing,” Brian Deese, who heads the White House National Economic Council, said in an interview, “from investments in education, to winning the clean energy economy of the future to restoring fairness in the tax code, that connects to how we make ourselves globally competitive in this next quarter of the 21st century.”.css-1xzcza9{list-style-type:disc;padding-inline-start:1em;}.css-3btd0c{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-3btd0c{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-3btd0c strong{font-weight:600;}.css-3btd0c em{font-style:italic;}.css-w739ur{margin:0 auto 5px;font-family:nyt-franklin,helvetica,arial,sans-serif;font-weight:700;font-size:1.125rem;line-height:1.3125rem;color:#121212;}#NYT_BELOW_MAIN_CONTENT_REGION .css-w739ur{font-family:nyt-cheltenham,georgia,’times new roman’,times,serif;font-weight:700;font-size:1.375rem;line-height:1.625rem;}@media (min-width:740px){#NYT_BELOW_MAIN_CONTENT_REGION .css-w739ur{font-size:1.6875rem;line-height:1.875rem;}}@media (min-width:740px){.css-w739ur{font-size:1.25rem;line-height:1.4375rem;}}.css-9s9ecg{margin-bottom:15px;}.css-16ed7iq{width:100%;display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-align-items:center;-webkit-box-align:center;-ms-flex-align:center;align-items:center;-webkit-box-pack:center;-webkit-justify-content:center;-ms-flex-pack:center;justify-content:center;padding:10px 0;background-color:white;}.css-pmm6ed{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-align-items:center;-webkit-box-align:center;-ms-flex-align:center;align-items:center;}.css-pmm6ed > :not(:first-child){margin-left:5px;}.css-5gimkt{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:0.8125rem;font-weight:700;-webkit-letter-spacing:0.03em;-moz-letter-spacing:0.03em;-ms-letter-spacing:0.03em;letter-spacing:0.03em;text-transform:uppercase;color:#333;}.css-5gimkt:after{content:’Collapse’;}.css-rdoyk0{-webkit-transition:all 0.5s ease;transition:all 0.5s ease;-webkit-transform:rotate(180deg);-ms-transform:rotate(180deg);transform:rotate(180deg);}.css-eb027h{max-height:5000px;-webkit-transition:max-height 0.5s ease;transition:max-height 0.5s ease;}.css-6mllg9{-webkit-transition:all 0.5s ease;transition:all 0.5s ease;position:relative;opacity:0;}.css-6mllg9:before{content:”;background-image:linear-gradient(180deg,transparent,#ffffff);background-image:-webkit-linear-gradient(270deg,rgba(255,255,255,0),#ffffff);height:80px;width:100%;position:absolute;bottom:0px;pointer-events:none;}.css-uf1ume{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-box-pack:justify;-webkit-justify-content:space-between;-ms-flex-pack:justify;justify-content:space-between;}.css-wxi1cx{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-flex-direction:column;-ms-flex-direction:column;flex-direction:column;-webkit-align-self:flex-end;-ms-flex-item-align:end;align-self:flex-end;}.css-12vbvwq{background-color:white;border:1px solid #e2e2e2;width:calc(100% – 40px);max-width:600px;margin:1.5rem auto 1.9rem;padding:15px;box-sizing:border-box;}@media (min-width:740px){.css-12vbvwq{padding:20px;width:100%;}}.css-12vbvwq:focus{outline:1px solid #e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-12vbvwq{border:none;padding:10px 0 0;border-top:2px solid #121212;}.css-12vbvwq[data-truncated] .css-rdoyk0{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-12vbvwq[data-truncated] .css-eb027h{max-height:300px;overflow:hidden;-webkit-transition:none;transition:none;}.css-12vbvwq[data-truncated] .css-5gimkt:after{content:’See more’;}.css-12vbvwq[data-truncated] .css-6mllg9{opacity:1;}.css-qjk116{margin:0 auto;overflow:hidden;}.css-qjk116 strong{font-weight:700;}.css-qjk116 em{font-style:italic;}.css-qjk116 a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;text-underline-offset:1px;-webkit-text-decoration-thickness:1px;text-decoration-thickness:1px;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:visited{color:#326891;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:hover{-webkit-text-decoration:none;text-decoration:none;}Ted Kaufman, a longtime aide to Mr. Biden who helped lead his presidential transition team, said the core of the bill went back much further: to a set of newsprint brochures that campaign volunteers delivered across Delaware in 1972, when Mr. Biden won an upset victory for a Senate seat.“He ran because he wanted to do all these things,” Mr. Kaufman said, both during his 1972 race and during his presidential campaign last year. But tackling so many things at once has exposed divisions among congressional Democrats, including this week, when Mr. Biden’s attempt to reduce prescription drug costs failed a House committee vote after three Democrats joined Republicans in disapproval.Party leaders are trying to balance the demands of liberals who already see a $3.5 trillion bill as insufficient for the nation’s problems and moderates, like Senators Kyrsten Sinema of Arizona and Joe Manchin III of West Virginia, who have balked at its overall cost and some of its tax and spending provisions.Many polls show the bill’s pieces largely fare well with voters, including independents and some Republicans. Margie Omero, a principal at the Democratic polling firm GBAO, which has polled on the bill for progressive groups, said the ambition of the package was a selling point that Democrats should press as a contrast with Republicans in midterm elections.“People feel like the country is going through a lot of crises, and that we need to take action,” she said.As they scuffle over the bill’s final cost and levels of taxation, Democrats have tried to find savings without discarding entire programs — by reducing spending on home health care, for example, instead of dropping it or another provision entirely.Progressive groups say that is a reason for lawmakers to not further reduce the size of the effort, worrying that scaled-back programs could undermine the case for broad government intervention to solve problems.The bill calls for expanding access to child care.Kathleen Flynn/Reuters“If the bill passes as is right now and we get a major sea change in the progressivity of the tax code, we build a serious infrastructure for, like, universal child care in this country, and we really, really sort of start to make progress toward a green economy, this is going to be a historic piece of legislation,” said Lindsay Owens, the executive director of the Groundwork Collaborative, which has pushed the administration to focus on shared prosperity that advances racial equity.If the bill is whittled down, she said, Mr. Biden risks “a situation in which we didn’t spend enough money on any piece to do it well.”“You don’t want half a child care system and a little bit of a greening of the economy in two sectors,” she added. “You really don’t want to do a lot of things poorly.”Administration officials insist that even if the bill fails entirely, other efforts by Mr. Biden — including executive actions and bipartisan measures now awaiting House approval after clearing the Senate — have reasserted the United States’ leadership on climate, competitiveness and confronting China. In some areas, though, Mr. Biden has little other recourse, like opening the pathway to citizenship for immigrants brought to the country as children.For now, the president continues to publicly set high expectations for a bill that aides say he sees as fundamental to demonstrating that democratic governments can deliver clear and tangible benefits for their people.“This is our moment to prove to the American people that their government works for them, not just for the big corporations and those at the very top,” Mr. Biden said on Thursday. He added, “This is an opportunity to be the nation we know we can be.” More

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    In Social Policy Bill, Businesses See a Lot to Like. They Oppose It.

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    Resistance to tax increases outweighs the appeal of a $3.5 trillion measure containing child care credits and other items that corporations embrace.WASHINGTON — The far-reaching social policy bill under construction in Congress has much that corporate America has long sought from Washington.Federal funding for family leave would ease the burden of businesses that currently pay for it while helping those that cannot afford it compete for workers. Child care tax credits would get women back in the work force. Income supports for young families could ease upward pressure on wages.But the bill also contains plenty for corporate America to dislike — particularly the tax increases that would pay for it — and in the cold calculus of corporate lobbying, industries are working hard to bring the whole enterprise down.“It’s not fair to say we like all the spending but don’t want to pay for it. There is some investment that is more valuable than others,” said Neil Bradley, the executive vice president and chief policy officer for the U.S. Chamber of Commerce. But, he added, “ultimately we’re making the case that taken as a whole, this is economically devastating for the country and in particular members’ districts and states.”Businesses have long seen a role for the government in creating and sustaining the kind of trained, healthy work force that can keep them competitive in a global economy.Access to affordable child care and early childhood education would help parents who stopped working during the coronavirus pandemic return to the labor force. Expanded higher education aid and worker retraining could create a more flexible labor pool, programs that business groups have supported for years. Federally financed family and medical leave would help small businesses that cannot afford it compete for talent with larger businesses providing the benefit.“What’s holding back growth? Labor force participation, which hasn’t recovered; nonaffordability of child care, which is going to take the biggest leap forward that we’ve ever had; paid leave for illness and family leave,” said Representative Donald S. Beyer Jr., a Virginia Democrat who owned and ran car dealerships before his political career. “On the business side, I think it will make for a better workplace, an easier one with less tension.”Yet the Chamber of Commerce, the Business Roundtable, the National Federation of Independent Business and the National Association of Manufacturers are implacably opposed. Many have made it clear: Taxes trump policy.“We’re hearing somewhere between $1.8 and $3.5 trillion on job creators in America. That would take us back to where we were before the 2017 tax reforms,” Jay Timmons, the chief executive of the manufacturers’ association, said on CNBC. “We will oppose the bill with any of those factors in there.”That 2017 tax law, signed by President Donald J. Trump, is at the heart of the opposition. The net tax cuts were supposed to cost the Treasury Department about $1.5 trillion over 10 years, but the total tax cutting, more than $5 trillion over a decade, was far larger than the tax increases now being contemplated — though it was partly offset by other tax increases, mainly on individuals.The major business groups are divided on precisely how to respond to the emerging social policy bill, but they are united in their defense of the Trump-era tax cuts. For instance, the Retail Industry Leaders Association, in a letter to congressional leaders on Thursday, embraced a proposal by President Biden to create a corporate minimum tax, declaring, “For too long, some of the largest corporations have paid minimal or no taxes.”But retailers pleaded with lawmakers to hit other companies first before even contemplating an increase in the corporate income tax rate, which the 2017 tax cut lowered to 21 percent from 35 percent. Mr. Biden has proposed raising it to 28 percent.The social policy bill under construction in Congress has much that corporate America has long sought from Washington.Stefani Reynolds for The New York Times“This is, in many ways, just a small response to the 2017 Tax Cuts and Jobs Act bill that passed under Trump, which led to some $2 trillion in lost revenue that could have gone to the public investments that we are all calling for and everyone agrees are needed,” said Didier Trinh, the director of policy at the Main Street Alliance, a liberal small-business group that is dwarfed by the groups opposing the measure. “The corporate tax rate at 28 percent would only be halfway to the pre-Trump tax rate.”Beyond the corporate tax rate, Democrats are considering taxing business repurchasing of stocks, raising taxes on overseas profits, limiting tax write-offs for foreign investment, tightening access to a special low tax rate for partnerships and other companies that do not pay corporate income taxes, and dozens of other measures.Jeffrey Hollender, a co-founder and former chief executive of Seventh Generation, which makes “green” household and personal care products, said Congress’s progress toward what would be the most significant expansion of the social safety net since the 1960s was testing the business community’s stated commitments to social change. He said he was not surprised that the calls for change were not standing up to the reality of paying for it.“People say they’re for this new stakeholder economy, that they’re committed to sustainability,” said Mr. Hollender, now the chief executive of the liberal American Sustainable Business Council. “But at the same time, there is a system of incentives designed to maximize profits, and when those profits are threatened, businesses don’t like it.”More mainline business groups recoiled at the accusation. Mr. Bradley, of the Chamber of Commerce, agreed that parts of the Democratic vision mirrored the business lobby’s longstanding wishes. Accessible child care is a high priority, he said, and addressing climate change with investments in clean energy is overdue.“The administration was right to raise I.R.S. enforcement to close the tax gap,” he added. “We want a pro-growth tax code, but we want people to comply with that tax code.”But he said the way Democrats were addressing those issues — by hastily lumping them into one voluminous $3.5 trillion measure to be passed through a fast-track process known as reconciliation — guaranteed opposition.For instance, business groups had been working with lawmakers from both parties to try to create a paid family and medical leave program that would be paid for with a payroll tax, shared among businesses, workers and the government. To satisfy Mr. Biden’s pledge not to raise any taxes on people with incomes below $400,000, the payroll tax has disappeared, replaced by a variety of tax increases on rich people and corporations that are no longer connected to the program they are to finance.“Paid family leave, outside a reconciliation context, would require intense negotiations and trade-offs, but it wouldn’t be outside the realm of possibility that we could find a proposal that we could support,” Mr. Bradley said. “Inside reconciliation, it’s only getting worse.”The Business Roundtable, which represents the chief executives of the nation’s largest corporations, expressed a similar desire. “There is strong bipartisan support for some of these policies, and we encourage Congress to take them up through that deliberative process, not via reconciliation,” the group said in a statement.To many Democrats, that sounds like an excuse, “a tactic to avoid having to pay,” Mr. Hollender said. For many of the programs under consideration, like paid family leave, recently championed by Ivanka Trump, former President Donald J. Trump’s older daughter, bipartisan negotiations have dragged on fruitlessly for decades. Now that legislative efforts are moving forward in earnest, supporters are dropping away.Heather Boushey, a member of the White House Council of Economic Advisers, defended the broad-based approach of addressing social policy needs and paying for them with tax policies generally devised to address income inequality, not narrowly tailored as direct offsets to specific programs.“This is a pro-growth agenda, based on the notion that when the middle class does well everyone does well,” she said, “and one history will show is the right way to go.” More

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    800,000 New Yorkers Just Lost Federal Unemployment Benefits

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    Many pandemic-era federal programs expired on Sunday, leaving jobless New Yorkers with more modest state unemployment benefits, or no aid at all.From the beginning of the coronavirus pandemic, New York City has been pummeled economically unlike any other large American city, as a sustained recovery has failed to take root and hundreds of thousands of workers have yet to find full-time jobs.On Sunday, the city, like other communities nationwide, was hit with another blow: The package of pandemic-related federal unemployment benefits, which has kept families afloat for 17 months, expired.In short order, roughly $463 million in weekly unemployment assistance for New York City residents is ending, threatening to upend the city’s fledgling economic rebound and slashing the only source of income for some to pay rent and buy groceries in a city rife with inequality. About 10 percent of the city’s population, or about 800,000 people, will have federal aid eliminated, though many will continue receiving state benefits.The benefits were the sole income for the many self-employed workers and contract employees whose jobs are central to the city’s economy and vibrancy — taxi drivers, artists and hairdressers, among many others — and who do not qualify for regular unemployment benefits. “To just cut people off, it’s ridiculous and it’s unethical and it’s evil,” said Travis Curry, 34, a freelance photographer who will lose all his assistance, about $482 a week. “If we can’t buy food or go to local businesses because we don’t have money to live in New York, how will New York come back?”Federal officials say that more Americans are ready to return to work, and Republican lawmakers and small business owners have blamed the benefits for discouraging people from working at a time when there are a record number of job openings.In recent weeks, President Biden has said that states like New York with high unemployment rates could turn to leftover federal pandemic aid to extend benefits after his administration decided not to ask Congress to authorize an extension. In New York, Gov. Kathy Hochul, a Democrat who last week signed a new moratorium on evictions after the Supreme Court ended federal protections, said the state could not afford to extend the benefits on its own and would need the federal government to provide additional money. A spokesman for Mayor Bill de Blasio did not respond to requests for comment.Gov. Kathy Hochul said the state could not afford to keep financing unemployment assistance without additional federal aid.Stephanie Keith for The New York TimesThe expiring of unemployment benefits ends a period of extraordinary federal intervention to prop up the economy over the past year and a half as the virus has ravaged the country, claiming the lives of 649,000 people and leaving millions of laid-off workers struggling to secure new jobs. .css-1xzcza9{list-style-type:disc;padding-inline-start:1em;}.css-3btd0c{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-3btd0c{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-3btd0c strong{font-weight:600;}.css-3btd0c em{font-style:italic;}.css-1kpebx{margin:0 auto;font-family:nyt-franklin,helvetica,arial,sans-serif;font-weight:700;font-size:1.125rem;line-height:1.3125rem;color:#121212;}#NYT_BELOW_MAIN_CONTENT_REGION .css-1kpebx{font-family:nyt-cheltenham,georgia,’times new roman’,times,serif;font-weight:700;font-size:1.375rem;line-height:1.625rem;}@media (min-width:740px){#NYT_BELOW_MAIN_CONTENT_REGION .css-1kpebx{font-size:1.6875rem;line-height:1.875rem;}}@media (min-width:740px){.css-1kpebx{font-size:1.25rem;line-height:1.4375rem;}}.css-1gtxqqv{margin-bottom:0;}.css-19zsuqr{display:block;margin-bottom:0.9375rem;}.css-12vbvwq{background-color:white;border:1px solid #e2e2e2;width:calc(100% – 40px);max-width:600px;margin:1.5rem auto 1.9rem;padding:15px;box-sizing:border-box;}@media (min-width:740px){.css-12vbvwq{padding:20px;width:100%;}}.css-12vbvwq:focus{outline:1px solid #e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-12vbvwq{border:none;padding:10px 0 0;border-top:2px solid #121212;}.css-12vbvwq[data-truncated] .css-rdoyk0{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-12vbvwq[data-truncated] .css-eb027h{max-height:300px;overflow:hidden;-webkit-transition:none;transition:none;}.css-12vbvwq[data-truncated] .css-5gimkt:after{content:’See more’;}.css-12vbvwq[data-truncated] .css-6mllg9{opacity:1;}.css-qjk116{margin:0 auto;overflow:hidden;}.css-qjk116 strong{font-weight:700;}.css-qjk116 em{font-style:italic;}.css-qjk116 a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;text-underline-offset:1px;-webkit-text-decoration-thickness:1px;text-decoration-thickness:1px;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:visited{color:#326891;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:hover{-webkit-text-decoration:none;text-decoration:none;}The federal programs supplemented standard and far more modest state unemployment benefits. New York City was the first major city in the United States to be hit hard by the pandemic, decimating industries almost overnight that underpinned the city’s economy, from tourism to hospitality to office buildings. Economists have projected that New York City may not fully regain all its pandemic job losses until 2024.The federal assistance provided new streams of financial aid beyond regular unemployment payments, which are distributed by states. Jobless Americans received a $600 per week supplement, which was later reduced under Mr. Biden to $300 per week. Unemployment benefits were also offered to contract workers and the self-employed, who under normal circumstances do not qualify for assistance. Payments were extended beyond the 26 weeks offered by most states.The end of the $300 federal supplement means those who still qualify for regular benefits through New York State will lose about half of their weekly assistance.Since the jobless programs rolled out in April 2020, New York City residents have collected about $53.5 billion in unemployment aid, primarily among lower-paid workers in the service, hospitality and arts industries, according to a recent report by the economist James Parrott of the New School’s Center for New York City Affairs. The recipients also tended to be people of color, who have borne the brunt of the pandemic’s economic and health toll. That includes Ericka Tircio, who lost her job cleaning a 40-story office building in Manhattan’s Financial District in March 2020 and contracted the disease around the same time. She has collected assistance since then, but it will be reduced by about $300 per week. Ms. Tircio, an immigrant from Ecuador who has a 6-year-old son, said her company told her recently that she might be asked to return to work in the coming months.“I’m praying to God that they call me back,” Ms. Tircio, who speaks Spanish, said through a translator. “There are moments when I’ve waited so long that I feel myself falling into a depression.”Ms. Tircio is a member of 32BJ SEIU, a local chapter of the Service Employees International Union, whose president, Kyle Bragg, said thousands of its members had been laid off during the pandemic.“Workers should not be left behind to fend for themselves during the worst crisis in a century,” Mr. Bragg said.In recent months, about half the states elected to end their pandemic-related benefits long before the expiration this weekend, a deadline set by the federal government when a vigorous recovery appeared to be on the horizon. In states led by Republican governors, elected officials said that the assistance stymied economic growth and resulted in labor shortages; however, the job growth in those states has not been substantially different than in states that kept the programs.In New York, business leaders have advocated for the state to end the pandemic unemployment benefits, arguing that they hurt small businesses struggling to hire workers. Thomas Grech, president of the Queens Chamber of Commerce, said several job fairs he hosted over the summer were poorly attended.“People were disincentivized to go to work,” Mr. Grech said. “They’re making more money sitting at home. It’s a classic case of good intentions gone bad.”Mr. Grech said that raising wages as a way to lure workers, as some labor economists and advocates have recommended, was unrealistic for some restaurants “unless you want to spend $30 or $40 for a burger.”Elected officials in New York have argued that unemployment benefits helped pump money directly into the economy.“People who receive emergency unemployment assistance are going to turn around and spend that money, and that money is helpful to other people who are also struggling to get things back to normal,” said State Senator Brian Kavanagh, a Democrat who represents Lower Manhattan.The expiration of the benefits was supposed to coincide with a grand reopening of sorts for New York, as many companies announced during an early summer dip in virus cases that workers would be called back to the office in September. But the Delta variant has fueled a resurgence of the virus, postponing any hope that Manhattan’s office buildings would soon refill. Months of moderate job gains stalled over the summer and the city’s unemployment rate, 10.2 percent, increased slightly in July and is nearly double the national average.Bill Wilkins, who oversees economic development for the Local Development Corporation of East New York in Brooklyn, said unemployment and other benefits helped sustain his neighborhood, which has long suffered from high joblessness. But as the pandemic recedes from its peak, he said it was also “incumbent for individuals to be more self-reliant.”The pandemic exposed the significant skills gap in New York City, he said, resulting in large numbers of unemployed workers who do not qualify for job openings that require a college degree, such as high-paying jobs in the tech sector.“If you want a job right now, you have a job,” Mr. Wilkins said, referring to lower-paying openings at many mom-and-pop shops. “The problem is, is that job a sustainable wage? You want the higher-paying jobs, but you have to have the requisite skills that demand that type of salary.”Alex Weisman, an actor, registered for unemployment benefits for the first time after the pandemic shut down Broadway, where he had been in the ensemble for “Harry Potter and the Cursed Child.” The checks, which ranged from about $800 to $1,100 a week, allowed him to keep paying rent for his apartment in the Hamilton Heights neighborhood of Manhattan.When the pandemic shut down Broadway, including “Harry Potter and the Cursed Child,” it left Alex Weisman, an actor in the show’s ensemble, jobless and reliant on supplemental federal unemployment assistance.Erin Schaff/The New York TimesMr. Weisman, 34, submits audition videos every week, hoping for steady work. Earlier this year, he booked a television job for five weeks, which allowed him to briefly go off unemployment benefits.As his benefits run out, he is considering connecting with a temp agency to find work. The last time he had a job outside acting was as a barista in 2013.“I’m going to have to get an entry-level position somewhere,” Mr. Weisman said. “Because I succeeded in the thing that I trained in and wanted to do, I have absolutely nothing to offer any other industry. It’s scary.”Mohammad Kashem, who worked for nearly two decades as a taxi driver, had similar difficulties switching industries. Before the pandemic, a bank had seized his taxi medallion after he struggled to repay his loans amid a sharp drop in yellow cab ridership. Mr. Kashem, an immigrant from Bangladesh who lives in Brooklyn, worked as a postal carrier during the pandemic but quit after one month, saying he was unaccustomed to delivering mail through rain and snow. His family has been relying on $700 a week in unemployment benefits. He and his wife could not maintain jobs during the pandemic because of health issues, he said, noting that they both contracted the coronavirus and have high blood pressure and diabetes.When the unemployment benefits expire, his wife may try finding a job as a babysitter. Mr. Kashem, 50, has been wracked with anxiety about how he will pay for rent and school supplies for his three children.“I was driving taxi many, many years,” Mr. Kashem said. “I’m not used to another job.” More

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    Democrats and Lobbyists to Battle Over Tax Increases for Biden’s Social Policy Bill

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    Congressional committees this week begin drafting tax increases on the wealthy and corporations to pay for a $3.5 trillion social policy bill, but the targets are putting up a fight.WASHINGTON — Congressional Democrats always knew their battle plan for raising taxes on corporations, large inheritances and the superwealthy would not survive initial contact with the enemy.They just didn’t realize that enemy would be North Dakota-nice Heidi Heitkamp.The Democratic former senator has emerged as the smiling face of a well-financed effort to defeat a proposed tax increase that is crucial to funding the $3.5 trillion social spending bill at the heart of President Biden’s agenda. Her effort is indicative of the difficult slog ahead as the business lobby mobilizes to chip away at Democrats’ tax-raising ambitions, which some lawmakers say will have to be scaled back to maintain party unity, an assessment the White House has disputed.On Thursday, the House Ways and Means Committee is set to begin formally drafting its voluminous piece of the 10-year measure to combat climate change and reweave the nation’s social safety net, with paid family and medical leave, expanded public education, new Medicare benefits and more. The committee’s purview includes much of that social policy, but also the tax increases needed to pay for it.Democrats had hoped that the tax side would be more than notations on an accounting ledger. They regard it as an opportunity to fundamentally change policies to address growing income inequality, reduce incentives for corporations to move jobs and profits overseas, and slow the amassing of huge fortunes that pass through generations untaxed.But corporate interests, led by the U.S. Chamber of Commerce, the Business Roundtable and Americans for Tax Reform, have mobilized a multifaceted lobbying and advertising blitz to stop the tax increases — or at least mitigate them.“They’re lobbying to try to escape their obligation to pay the taxes they owe, leaving working families to pay a larger share of the burden,” Mr. Biden said at the White House on Friday. “Somebody has got to pay.”The $3.5 trillion social spending bill would help fund expanded public education.Clara Mokri for The New York TimesMembers of the Senate Finance Committee will meet this week to go over more than two dozen tax proposals. Some of them are well on their way toward inclusion in the measure, which under a complex budget process known as reconciliation would be able to pass Congress without a single Republican vote.Lobbyists expect the top individual income tax rate to return to 39.6 percent from the 37 percent rate that President Donald J. Trump’s tax cuts created in 2017. The corporate income tax rate will also rise from the 21 percent in the Trump tax cuts, though not to the 35 percent rate of the Obama years. Lawmakers say a 25 percent rate is more likely.Many Democrats are determined to tax the wealth of America’s fabulously rich, much of which goes untaxed for decades before being passed along to heirs. Currently, for instance, when large estates are passed on at death, heirs are allowed to value the stocks, real estate and other assets at the price they would fetch at the time of the original owner’s death. They pay taxes only on the gain in value from that point once the assets are sold. If the assets are not sold, they are not taxed at all..css-1xzcza9{list-style-type:disc;padding-inline-start:1em;}.css-3btd0c{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-3btd0c{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-3btd0c strong{font-weight:600;}.css-3btd0c em{font-style:italic;}.css-1kpebx{margin:0 auto;font-family:nyt-franklin,helvetica,arial,sans-serif;font-weight:700;font-size:1.125rem;line-height:1.3125rem;color:#121212;}#NYT_BELOW_MAIN_CONTENT_REGION .css-1kpebx{font-family:nyt-cheltenham,georgia,’times new roman’,times,serif;font-weight:700;font-size:1.375rem;line-height:1.625rem;}@media (min-width:740px){#NYT_BELOW_MAIN_CONTENT_REGION .css-1kpebx{font-size:1.6875rem;line-height:1.875rem;}}@media (min-width:740px){.css-1kpebx{font-size:1.25rem;line-height:1.4375rem;}}.css-1gtxqqv{margin-bottom:0;}.css-19zsuqr{display:block;margin-bottom:0.9375rem;}.css-12vbvwq{background-color:white;border:1px solid #e2e2e2;width:calc(100% – 40px);max-width:600px;margin:1.5rem auto 1.9rem;padding:15px;box-sizing:border-box;}@media (min-width:740px){.css-12vbvwq{padding:20px;width:100%;}}.css-12vbvwq:focus{outline:1px solid #e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-12vbvwq{border:none;padding:10px 0 0;border-top:2px solid #121212;}.css-12vbvwq[data-truncated] .css-rdoyk0{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-12vbvwq[data-truncated] .css-eb027h{max-height:300px;overflow:hidden;-webkit-transition:none;transition:none;}.css-12vbvwq[data-truncated] .css-5gimkt:after{content:’See more’;}.css-12vbvwq[data-truncated] .css-6mllg9{opacity:1;}.css-qjk116{margin:0 auto;overflow:hidden;}.css-qjk116 strong{font-weight:700;}.css-qjk116 em{font-style:italic;}.css-qjk116 a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;text-underline-offset:1px;-webkit-text-decoration-thickness:1px;text-decoration-thickness:1px;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:visited{color:#326891;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:hover{-webkit-text-decoration:none;text-decoration:none;}Mr. Biden wants to have heirs to large fortunes pay taxes when the original owner dies. Those taxes would be levied on inherited assets based on the gain in value from when those assets were initially purchased.Ms. Heitkamp, who said she was recruited to the opposition campaign by the Democratic former senator-turned-superlobbyist John Breaux, is adamant that taxation upon death, regardless of wealth, is deadly politics. Ms. Heitkamp said she was finding a receptive audience among potential swing voters in rural areas, especially owners of family farms, even though Democrats say such voters would never be affected by the changes under consideration. Lobbyists already expect this piece of the estate tax changes to wash out in the lobbying deluge.“This is very consistent with my concern about revitalizing the Democratic Party in rural America,” Ms. Heitkamp said. “You may want to do this,” she said she had counseled her former colleagues, “but understand there will be risk, and risk is the entire agenda.”Even more significantly, the Finance Committee is looking at taxing the accumulated wealth of billionaires, regardless of whether it is sold. Extremely wealthy Americans like the Amazon founder Jeff Bezos would have a decade to pay a one-time tax on the value of assets like stocks that have been accruing value for years. They would then pay taxes each year on the annual gain in value of their stocks, bonds and other assets, much like many Americans pay property taxes on the annually assessed value of their homes.Another key component is the international tax code. The Biden administration has called for doubling the tax that companies pay on foreign earnings to 21 percent, so the United States complies with an international tax deal that the administration is brokering, which would usher in a global corporate minimum tax of at least 15 percent.The Organization for Economic Cooperation and Development announced in July that more than 130 countries had agreed to the new framework, which aims to eliminate tax havens and end a race to the bottom on corporate tax rates. Officials have been rushing to confirm the details before the Group of 20 leaders meet in Rome in October.Extremely wealthy Americans like the Amazon founder Jeff Bezos would have a decade to pay a one-time tax on the value of assets such as stocks that have been accruing value for years.Mandel Ngan/Agence France-Presse — Getty ImagesBut countries such as France are concerned that the United States will not be able to live up to its end of the bargain if Congress cannot raise the minimum tax.The moment of truth is approaching. Representative Lloyd Doggett of Texas, a senior Democrat on the Ways and Means Committee, and 40 other members of his party on Tuesday backed the White House. Yet some Democratic lawmakers have expressed concern that U.S. companies would still be at a competitive disadvantage if other countries enacted minimum tax rates as low as 15 percent and the United States had a higher rate.Treasury Secretary Janet L. Yellen addressed those concerns in a Twitter post on Friday.“As Congress begins to finalize their legislation, I urge them to remember the historic opportunity that we have to end the race to the bottom and finally have a foreign policy and a tax code that works for the middle class,” she wrote.Republicans are already on the attack. After the disappointing monthly jobs report on Friday, Representative Kevin Brady of Texas, the ranking Republican on the Ways and Means Committee, said the slowing economy would “only get worse if the Democrats’ trillions in tax hikes and welfare spending is rammed through Congress in September.”Senator Ron Wyden of Oregon, the chairman of the Finance Committee, said he understood that business groups and Republicans would howl that the tax increases would kill jobs, stifle the economy and hurt ordinary, struggling Americans.“The big lobbies are going to attack you under any circumstance,” he said, “and half the time they’re just making it up.”But he insisted that the politics had changed. Americans who struggled during the coronavirus pandemic can see how rich others have become. New revelations from a trove of tax records leaked to ProPublica showed that household names like Mr. Bezos and Elon Musk paid virtually no federal taxes.Other lawmakers are not so sure, especially in the House, where midterm campaigns loom and a razor-thin Democratic majority is clearly at risk. Among the most vulnerable members are those from conservative-leaning districts where tax increases are particularly unpopular.“No one wants to throw the House away,” said Representative Donald S. Beyer Jr., Democrat of Virginia, a member of the Ways and Means Committee. “We’re all mindful of our frontline candidates.”Estate and capital gains tax changes proposed by the president and embraced by Mr. Wyden are aimed at the superrich, but the campaign against them frames the issue around family farms and small businesses. Ms. Heitkamp rebuffed Mr. Wyden’s assurance that he could structure the changes to affect only the very wealthy and the gain in value of their assets without taxation.“People don’t believe that, because they believe that rich people always have the lane to get into Congress,” she said. “I get that you’re trying to deal with a huge disparity in wealth in this country, and I get that you are concerned about that for the future of America. I share the concern. Taxing unrealized capital gains is not the path forward.”Some lawmakers and tax lobbyists are already circulating a document handicapping which measures are likely to survive — and which are not. A corporate tax rate increase at home and abroad is likely to pass, though it may not be as high as some Democrats would like. So is a higher top income tax rate on individuals. Capital gains tax rates are expected to rise somewhat, though not to the ordinary income tax rate of 39.6 percent for the very rich, as Mr. Biden has proposed.A measure to increase tax law enforcement, which fell out of a separate bipartisan infrastructure bill, is likely to reappear in the reconciliation bill.But lobbyists expect the proposal to make heirs pay immediate taxes on inheritances based on asset purchase prices to fall out of the plan.They also see a straight, 15 percent minimum tax on overseas income as imperiled. Even some measures that looked like slam dunks may still be rejected because of the back-room lobbying campaign that has just begun.“They’re lobbying to try to escape their obligation to pay the taxes they owe, leaving working families to pay a larger share of the burden,” Mr. Biden said of corporate interests on Friday at the White House.Stefani Reynolds for The New York TimesThat includes closing the so-called carried interest loophole, which allows richly compensated private equity and hedge fund managers to claim the fees they charge clients as investment income, subject to low capital gains tax rates, not income tax rates. Every president since Barack Obama has denounced the provision and demanded its closure, only to lose to influential lobbyists.The U.S. Chamber of Commerce on Tuesday started a campaign to stop the loophole from being closed, saying doing so “would reduce investment, lead to widespread job losses and decrease tax revenues.” Mr. Wyden called the assertions “insulting to the intelligence of every American.”Administration officials insisted that taxing the rich and corporations would help sell the bill.“Should we let millions of children grow up in poverty in order to protect offshore tax loopholes?” Kate Bedingfield, the White House communications director, wrote to House Democrats in a memo on Tuesday. “Should we let middle-class families bear crushing costs for child care and elder care rather than asking the very richest among us to pay their fair share? Those are the questions before us.” More