Republican Party

More stories

  • 163 Shares189 Views

    in Economy

    Republican Attorneys General Press Biden Over Restrictions on State Aid in Stimulus Plan

    by

    In a letter, 21 officials asked the Treasury secretary, Janet L. Yellen, to clarify how expansively her department would interpret a portion of the law.WASHINGTON — Twenty-one Republican attorneys general pressed the Biden administration on Tuesday to clarify a provision in the $1.9 trillion economic aid package that the president signed into law last week, warning that its restrictions on state efforts to cut taxes could be “the greatest attempted invasion of state sovereignty by Congress in the history of our Republic.”The seven-page letter was signed by a host of Republican officials, including the attorneys general of Texas, Arizona, Georgia and Utah. They take issue with a restriction that lawmakers included in a $350 billion relief effort for state, local and tribal governments that prevents them from using the federal funds “to either directly or indirectly offset a reduction in the net tax revenue” as a result of tax cuts. These governments have suffered revenue hits and laid off more than a million public employees during the coronavirus pandemic.The law requires repayment to the federal government of any money that violates those conditions.In their letter, the Republican officials asked Janet L. Yellen, the Treasury secretary, to clarify how expansively her department would interpret that portion of the law. Does it simply prohibit states from using the federal dollars to offset new tax cuts, or instead prohibit them from cutting taxes for any reason, even if those cuts were in the works before the law passed? The officials said the broader restriction would be damaging and most likely unconstitutional.“This language could be read to deny states the ability to cut taxes in any manner whatsoever — even if they would have provided such tax relief with or without the prospect of Covid-19 relief funds,” the attorneys general wrote. “Absent a more sensible interpretation from your department, this provision would amount to an unprecedented and unconstitutional intrusion on the separate sovereignty of the states through federal usurpation of essentially one half of the state’s fiscal ledgers” — their ability to collect revenues.Oklahoma, for example, has already passed an income-tax cut through its House of Representatives, including an expansion of the state’s earned-income tax credit that is meant to help low-income workers, Mike Hunter, the state’s attorney general, said in a statement on Tuesday. “But,” he warned, “the federal stimulus bill might prohibit Oklahoma from providing this economic relief without losing its share of federal funding.”A White House spokesman declined on Tuesday evening to comment on the letter. A Treasury Department spokesman did not immediately return a request for comment.Republican lawmakers in Washington and around the country previously raised concerns over the provision.“We were planning on giving — reducing the sales tax on used cars, that is low-income and middle-income,” Gov. Asa Hutchinson of Arkansas said on the CBS program “Face the Nation” on Sunday. “And now we’re worried about whether that’s going to be prohibited under this bill. The language seems to indicate it is.” More

  • 138 Shares179 Views

    in Economy

    How the U.S. Got It (Mostly) Right in the Economy’s Rescue

    by

    #masthead-section-label, #masthead-bar-one { display: none }Biden’s Stimulus PlanBiden’s AddressWhat to Know About the BillAnalysis: Economic RescueBenefits for Middle ClassShoppers at a mall in Los Angeles. Consumer spending is nearly back to its prepandemic level.Credit…Mark Abramson for The New York TimesAnalysisHow the U.S. Got It (Mostly) Right in the Economy’s RescueThough the recession has been painful, policymakers cushioned the pandemic’s blow and opened the way to recovery.Shoppers at a mall in Los Angeles. Consumer spending is nearly back to its prepandemic level.Credit…Mark Abramson for The New York TimesSupported byContinue reading the main storyMarch 15, 2021Updated 2:31 p.m. ETWhen the coronavirus pandemic ripped a hole in the economy a year ago, many feared that the United States would repeat the experience of the last recession, when a timid and short-lived government response, in the view of many experts, led to years of high unemployment and anemic wage growth.Instead, the federal government responded with remarkable force and speed. Within weeks after the virus hit American shores, Congress had launched a multitrillion-dollar barrage of programs to expand unemployment benefits, rescue small businesses and send checks to most American households. And this time, unlike a decade ago, Washington is keeping the aid flowing even as the crisis begins to ease: On Thursday, President Biden signed a $1.9 trillion aid bill that will pump still more cash into households, businesses, and state and local governments.The Federal Reserve, too, acted swiftly, deploying emergency tools developed in the financial crisis a decade earlier. Those efforts helped safeguard the financial system — and the central bank has pledged to remain vigilant.The result is an economy far stronger than most forecasters expected last spring, even as the pandemic proved much worse than feared. The unemployment rate has fallen to 6.2 percent, from nearly 15 percent in April. Consumer spending is nearly back to its prepandemic level. Households are sitting on trillions of dollars in savings that could fuel an epic rebound as the health crisis eases.Yet not everyone made it into the lifeboats unscathed, if at all. Millions of laid-off workers waited weeks or months to begin receiving help, often with lasting financial consequences. Aid to hundreds of thousands of small businesses dried up long before they could welcome back customers; many will never reopen. Long lines at food banks and desperate pleas for help on social media reflected the number of people who slipped through the cracks.“The damage that has been done has occurred in a disparate fashion,” said Michelle Holder, a John Jay College economist who has studied the pandemic’s impact. “It’s occurred among low-income families. It’s occurred among Black and brown families. It’s certainly occurred among families that did not have a lot of resources to fall back on.”For many white-collar workers, Dr. Holder said, the pandemic recession may one day look like a mere “bump in the road.” But not for those hit hardest.“It wasn’t just a bump in the road if you were a low-wage worker, if you were a low-income family,” she said. “Their ability to recover is just not the same as ours.”Jesus Quinonez lost his job as a manager at a warehouse in the San Diego area early in the pandemic. He quickly found another job — with a company that shut down before he could begin work. He hasn’t worked since.It took Mr. Quinonez, 62, three months to fight his way through California’s overwhelmed unemployment insurance system and begin receiving benefits. Less than two months later, a $600-a-week unemployment supplement from the federal government expired, leaving Mr. Quinonez, his wife and his four children trying to subsist on a few hundred dollars a week in regular unemployment benefits.By January, Mr. Quinonez was four months behind on rent on the one-bedroom trailer he shares with his family. He had raided his 401(k) account, leaving no savings a few years before his intended retirement. Government nutrition assistance kept his family fed, but it didn’t help with the car payment, or pay for toilet paper.“I started falling behind on my bills, plain and simple,” he said.A closed storefront in Newark. Not everyone made it into the lifeboats unscathed.Credit…Bryan Anselm for The New York TimesFor hundreds of thousands of small businesses, government aid dried up long before they could welcome back customers. Many will never reopen.Credit…Bryan Anselm for The New York TimesBut in December, Congress passed a $900 billion aid package, which included a second round of direct checks to households and revived the expanded unemployment programs. By January, Mr. Quinonez was able to pay off at least part of his debt, enough to hold on to the trailer and his car. The next round of aid should carry Mr. Quinonez until he can work again.“As soon as they lift the restrictions and more people get vaccinated, I see things coming back good,” he said. “I expect to get a job, and I expect to continue working until I retire.”Whether Mr. Quinonez’s story — and millions more like it — should count as a success or failure for public policy is partly a matter of perspective. Mr. Quinonez himself is unimpressed: He worked and paid taxes for decades, then found himself subject to a decrepit state computer system and a divided Congress.“Now that we need them, there’s no freaking help,” he said.Research from Eliza Forsythe, an economist at the University of Illinois, found that from June until Feb. 17, only 41 percent of unemployed workers had access to benefits. Some of the rest were unaware of their eligibility or couldn’t navigate the thicket of rules in their states. Others simply weren’t eligible. Asian workers, Black workers and those with less education were disproportionately represented among the nonrecipients.The gaps and delays in the system had consequences.“The impact of that is folks’ having to move out of their apartments because they have this money that’s supposed to be coming but they just haven’t received it,” said Rebecca Dixon, executive director of the National Employment Law Project, a worker advocacy group. Others kept their homes because of eviction bans, but had their utilities shut off, Ms. Dixon added, or turned to food banks to avoid going hungry — measures of food insecurity surged in the pandemic.Still, the federal government did far more for unemployed workers than in any previous recession. Congress expanded the safety net to cover millions of workers — freelancers, part-time workers, the self-employed — who are left out in normal times. At the peak last summer, the state and federal unemployment systems were paying $5 billion a day in benefits — money that helped workers avoid evictions and hunger and that flowed through the economy, preventing an even worse outcome.The record of other federal responses is similarly mixed. The Paycheck Protection Program helped hundreds of thousands of small businesses but was plagued by administrative hiccups and, at least according to some estimates, saved relatively few jobs. Direct checks to households similarly helped keep families afloat, but sent billions of dollars to households that were already financially stable, while failing to reach some of those who needed the help the most — in some cases because they had not filed tax returns or did not have bank accounts.Beyond the successes and failures of specific programs, any evaluation of the broader economy needs to start with a question: Compared with what?Relative to a world without Covid-19, the economy remains deeply troubled. The United States had 9.5 million fewer jobs in February than a year earlier, a hole deeper than in the worst of the last recession. Gross domestic product fell 3.5 percent in 2020, making it among the worst years on record.Relative to the rosy predictions early in the pandemic — when economists hoped a brief shutdown would let the country beat the virus, then get quickly back to work — the downturn has been long and damaging. But those hopes were dashed not by a failure of economic policy but by the virus itself, and the failure to contain it.“If you want to think back on what we got wrong, really the fundamental errors were about the spread of the virus,” said Karen Dynan, a Harvard economist and Treasury Department official during the Obama administration. But relative to the outcome that forecasters feared in the worst moments last spring, the rebound has been remarkably strong. In May, economists at Goldman Sachs predicted that the unemployment rate would be 12 percent at the end of 2020 and wouldn’t fall below 6 percent until 2024. The same team now expects the rate to fall to 4 percent by the end of this year. Other forecasters have similarly upgraded their projections..css-yoay6m{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;}@media (min-width:740px){.css-yoay6m{font-size:1.25rem;line-height:1.4375rem;}}.css-1dg6kl4{margin-top:5px;margin-bottom:15px;}.css-k59gj9{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-flex-direction:column;-ms-flex-direction:column;flex-direction:column;width:100%;}.css-1e2usoh{font-family:inherit;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;border-top:1px solid #ccc;padding:10px 0px 10px 0px;background-color:#fff;}.css-1jz6h6z{font-family:inherit;font-weight:bold;font-size:1rem;line-height:1.5rem;text-align:left;}.css-1t412wb{box-sizing:border-box;margin:8px 15px 0px 15px;cursor:pointer;}.css-hhzar2{-webkit-transition:-webkit-transform ease 0.5s;-webkit-transition:transform ease 0.5s;transition:transform ease 0.5s;}.css-t54hv4{-webkit-transform:rotate(180deg);-ms-transform:rotate(180deg);transform:rotate(180deg);}.css-1r2j9qz{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-e1ipqs{font-size:1rem;line-height:1.5rem;padding:0px 30px 0px 0px;}.css-e1ipqs a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;}.css-e1ipqs a:hover{-webkit-text-decoration:none;text-decoration:none;}.css-1o76pdf{visibility:show;height:100%;padding-bottom:20px;}.css-1sw9s96{visibility:hidden;height:0px;}#masthead-bar-one{display:none;}#masthead-bar-one{display:none;}.css-1cz6wm{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;font-family:’nyt-franklin’,arial,helvetica,sans-serif;text-align:left;}@media (min-width:740px){.css-1cz6wm{padding:20px;width:100%;}}.css-1cz6wm:focus{outline:1px solid #e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-1cz6wm{border:none;padding:20px 0 0;border-top:1px solid #121212;}Frequently Asked Questions About the New Stimulus PackageThe stimulus payments would be $1,400 for most recipients. Those who are eligible would also receive an identical payment for each of their children. To qualify for the full $1,400, a single person would need an adjusted gross income of $75,000 or below. For heads of household, adjusted gross income would need to be $112,500 or below, and for married couples filing jointly that number would need to be $150,000 or below. To be eligible for a payment, a person must have a Social Security number. Read more. Buying insurance through the government program known as COBRA would temporarily become a lot cheaper. COBRA, for the Consolidated Omnibus Budget Reconciliation Act, generally lets someone who loses a job buy coverage via the former employer. But it’s expensive: Under normal circumstances, a person may have to pay at least 102 percent of the cost of the premium. Under the relief bill, the government would pay the entire COBRA premium from April 1 through Sept. 30. A person who qualified for new, employer-based health insurance someplace else before Sept. 30 would lose eligibility for the no-cost coverage. And someone who left a job voluntarily would not be eligible, either. Read moreThis credit, which helps working families offset the cost of care for children under 13 and other dependents, would be significantly expanded for a single year. More people would be eligible, and many recipients would get a bigger break. The bill would also make the credit fully refundable, which means you could collect the money as a refund even if your tax bill was zero. “That will be helpful to people at the lower end” of the income scale, said Mark Luscombe, principal federal tax analyst at Wolters Kluwer Tax & Accounting. Read more.There would be a big one for people who already have debt. You wouldn’t have to pay income taxes on forgiven debt if you qualify for loan forgiveness or cancellation — for example, if you’ve been in an income-driven repayment plan for the requisite number of years, if your school defrauded you or if Congress or the president wipes away $10,000 of debt for large numbers of people. This would be the case for debt forgiven between Jan. 1, 2021, and the end of 2025. Read more.The bill would provide billions of dollars in rental and utility assistance to people who are struggling and in danger of being evicted from their homes. About $27 billion would go toward emergency rental assistance. The vast majority of it would replenish the so-called Coronavirus Relief Fund, created by the CARES Act and distributed through state, local and tribal governments, according to the National Low Income Housing Coalition. That’s on top of the $25 billion in assistance provided by the relief package passed in December. To receive financial assistance — which could be used for rent, utilities and other housing expenses — households would have to meet several conditions. Household income could not exceed 80 percent of the area median income, at least one household member must be at risk of homelessness or housing instability, and individuals would have to qualify for unemployment benefits or have experienced financial hardship (directly or indirectly) because of the pandemic. Assistance could be provided for up to 18 months, according to the National Low Income Housing Coalition. Lower-income families that have been unemployed for three months or more would be given priority for assistance. Read more.The recovery proved so strong in part because businesses were able to adapt better — and Americans, for better or worse, were willing to take more risks — than many people expected, allowing a faster rebound in activity over the summer. But the biggest factor was that Congress responded more quickly and forcefully than in any past crisis — a particularly remarkable outcome given that both the White House and Senate were controlled by Republicans, a party traditionally skeptical of programs like unemployment insurance.Millions of laid-off workers waited weeks or months to begin receiving help, a lag that often left financial consequences.Credit…Bryan Woolston/ReutersLong lines at food banks provided a hint of the number of people who slipped through the cracks.Credit…Tamir Kalifa for The New York Times“The dominant narrative about Washington and about legislating and public policy is one of dysfunction, one of not being able to rise to meet challenges, one of not being able to get it together to address glaring problems, and I think it’s a well-earned narrative,” said Michael R. Strain, an economist at the American Enterprise Institute. “But when I look back over the last year, that is just not what I see.”Congress didn’t prevent a recession. But its intervention, along with aggressive action from the Federal Reserve, may have prevented something much worse.“We could have experienced another Great Depression-like event that took years and years to recover from, and we didn’t,” Dr. Strain said.Washington’s moment of unity didn’t last. Democrats pushed for another multitrillion-dollar dose of aid. Republicans, convinced that the economy would rebound largely on its own once the pandemic eased, wanted a much smaller package. The stalemate lasted months, allowing aid to households and businesses to lapse. Economists are still debating the long-term impact of that delay, but there is little doubt it resulted in thousands of business failures.“We had this grand success that policymakers acted so quickly in passing two significant pieces of legislation early in the pandemic, and then they flailed through the whole fall in just the most frustrating of ways,” said Wendy Edelberg, director of the Hamilton Project, an economic-policy arm of the Brookings Institution. “That was just such an unforced error and created confusion and needless panic.”But unlike in 2009, when Republican opposition prevented any significant economic aid after President Barack Obama’s first few months in office, Congress did eventually provide more help. The $900 billion in aid passed in late December prevented millions of people from losing unemployment benefits, and helped sustain the recovery at a moment when it looked like it was faltering.The $1.9 trillion plan that Democrats pushed through Congress this month could help the United States achieve something it failed to do after the last recession: ensure a robust recovery.If that happens, it could fundamentally shift the narrative around the pandemic recession. The damage was deeply unequal, and the economic response, though it helped many families weather the storm, didn’t come close to overcoming that inequity. But a recovery that restores jobs quickly could help workers like Mr. Quinonez get back on track.“It’s just a bad year, and you just close the page and move on and try to make the best of the new days and new years,” he said. “Things are going to get better.”AdvertisementContinue reading the main story More

  • 138 Shares149 Views

    in Economy

    A Last-Minute Add to Stimulus Bill Could Restrict State Tax Cuts

    by

    #masthead-section-label, #masthead-bar-one { display: none }Personal TaxesNew Pandemic ChangesHelp for Working FamiliesEstate Tax PlanningSmall-Business TipsWorking RemotelyAdvertisementContinue reading the main storySupported byContinue reading the main storyA Last-Minute Add to Stimulus Bill Could Restrict State Tax CutsRepublicans say Congress is infringing on state sovereignty by trying to limit the ability of local governments to control their finances.President Biden signing the $1.9 trillion economic relief plan into law on Thursday at the White House. The restriction is intended to ensure that states use federal funds to keep their local economies humming.Credit…Doug Mills/The New York TimesMarch 12, 2021Updated 7:02 p.m. ETWASHINGTON — A last-minute change in the $1.9 trillion economic relief package that President Biden signed into law this week includes a provision that could temporarily prevent states that receive government aid from turning around and cutting taxes.The restriction, which was added by Senate Democrats, is intended to ensure that states use federal funds to keep their local economies humming and avoid drastic budget cuts and not simply use the money to subsidize tax cuts. But the provision is causing alarm among some local officials, primarily Republicans, who see the move as federal overreach and fear conditions attached to the money will impede upon their ability to manage their budgets as they see fit.Officials are scrambling to understand what strings are attached to the $220 billion that is expected to be parceled out among states, territories and tribes and are already pressing the Treasury Department for guidance about the restrictions they will face if they take federal money.Under the new law, $25 billion will be divided equally among states, while $169 billion will be allocated based on a state’s unemployment rate. States can use the money for pandemic-related costs, offsetting lost revenues to provide essential government services, and for water, sewer and broadband infrastructure projects.But they are prohibited from depositing the money into pension funds — a key worry of Republicans in Congress — and cannot use funds to cut taxes by “legislation, regulation or administration” through 2024.Democrats slipped the new language into the legislation last week after several senators from the party’s moderate wing expressed concern that some states would seize on the opportunity to use emergency relief money to subsidize tax cuts. They worked with Senator Chuck Schumer, the majority leader, on language for the amendment, according to a Democratic Senate aide.Senator Joe Manchin III, Democrat of West Virginia, explained why he pushed for the language in a briefing this week, arguing that states should not be cutting taxes at a time when they need more money to combat the virus. He urged states to postpone their plans to cut taxes.“How in the world would you cut your revenue during a pandemic and still need dollars?” Mr. Manchin said.Senator Ron Wyden, Democrat of Oregon, said the funds were meant “to keep teachers and firefighters on the job and prevent the gutting of state and local services that we saw during the Great Recession.”“It’s important that there are guardrails to prevent these funds from being used to cut taxes for those at the top,” he added.But some Republican-led states are pointing to the apparent prohibition as a violation of their sovereignty and calling for that part of the law to be repealed. They see the requirement that states refrain from cutting taxes as an unusual intervention by the federal government in state tax policy.“It is an intrusion into what would traditionally be a state prerogative of how we balance our budget,” said Ben Watkins, the director of the Florida Division of Bond Finance. “If they want to give us this money to deal with Covid, then they should just give it to us with no strings attached.”Funding for state and local governments was one of the most contentious issues during stimulus talks, with Republicans saying Democrat-led states were being rewarded for mismanaging their finances and labeling the aid as a “blue-state bailout.”Those concerns were amplified in the latest legislation, which allocates money to a state based on a formula that considers its unemployment rate rather than its population. Conservative-leaning states, many of which had less onerous coronavirus restrictions and did not shut down as much business activity, claim they are essentially being penalized for prioritizing their economies during the pandemic.But early analyses of the bill show that both conservative-leaning and liberal-leaning states will receive big chunks of cash. California, Florida, New York and Texas will each get more than $10 billion in aid, according to a Tax Foundation tally.Still, the tax language has angered Republicans — none of whom voted for the rescue package — and on Thursday, Senator Mike Braun, Republican of Indiana, introduced legislation to reverse it.“Democrats are trying to ban states from cutting taxes with a sneaky amendment to the $1.9 trillion so-called Covid relief package,” Mr. Braun said. “Not only did this blue-state bailout bill penalize states for reopening by calculating state funds based on unemployment, now they are trying to use it as a back door to ban states from cutting taxes.”The restrictions have created a conundrum for states because, while many cities are facing budget crunches, state finances have turned out to be relatively healthy.A New York Times analysis this month found that, on balance, state revenues were generally flat or down slightly last year compared with 2019 as expanded unemployment benefits allowed consumer spending and tax revenues to keep flowing.“Idaho would potentially subsidize poorly managed states simply because we are using our record budget surplus to pursue historic tax relief for our citizens,” Gov. Brad Little of Idaho said this week. “We achieved our record budget surplus after years of responsible, conservative governing and quick action during the pandemic, and our surplus should be returned to Idahoans as I proposed.”Gov. Jim Justice, a Republican of West Virginia, criticized Mr. Manchin in an interview this week with CNN..css-yoay6m{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;}@media (min-width:740px){.css-yoay6m{font-size:1.25rem;line-height:1.4375rem;}}.css-1dg6kl4{margin-top:5px;margin-bottom:15px;}.css-k59gj9{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-flex-direction:column;-ms-flex-direction:column;flex-direction:column;width:100%;}.css-1e2usoh{font-family:inherit;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;border-top:1px solid #ccc;padding:10px 0px 10px 0px;background-color:#fff;}.css-1jz6h6z{font-family:inherit;font-weight:bold;font-size:1rem;line-height:1.5rem;text-align:left;}.css-1t412wb{box-sizing:border-box;margin:8px 15px 0px 15px;cursor:pointer;}.css-hhzar2{-webkit-transition:-webkit-transform ease 0.5s;-webkit-transition:transform ease 0.5s;transition:transform ease 0.5s;}.css-t54hv4{-webkit-transform:rotate(180deg);-ms-transform:rotate(180deg);transform:rotate(180deg);}.css-1r2j9qz{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-e1ipqs{font-size:1rem;line-height:1.5rem;padding:0px 30px 0px 0px;}.css-e1ipqs a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;}.css-e1ipqs a:hover{-webkit-text-decoration:none;text-decoration:none;}.css-1o76pdf{visibility:show;height:100%;padding-bottom:20px;}.css-1sw9s96{visibility:hidden;height:0px;}#masthead-bar-one{display:none;}#masthead-bar-one{display:none;}.css-1cz6wm{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;font-family:’nyt-franklin’,arial,helvetica,sans-serif;text-align:left;}@media (min-width:740px){.css-1cz6wm{padding:20px;width:100%;}}.css-1cz6wm:focus{outline:1px solid #e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-1cz6wm{border:none;padding:20px 0 0;border-top:1px solid #121212;}How Has the Pandemic Changed Your Taxes?Nope. The so-called economic impact payments are not treated as income. In fact, they’re technically an advance on a tax credit, known as the Recovery Rebate Credit. The payments could indirectly affect what you pay in state income taxes in a handful of states, where federal tax is deductible against state taxable income, as our colleague Ann Carrns wrote. Read more. Mostly.  Unemployment insurance is generally subject to federal as well as state income tax, though there are exceptions (Nine states don’t impose their own income taxes, and another six exempt unemployment payments from taxation, according to the Tax Foundation). But you won’t owe so-called payroll taxes, which pay for Social Security and Medicare. The new relief bill will make the first $10,200 of benefits tax-free if your income is less than $150,000. This applies to 2020 only. (If you’ve already filed your taxes, watch for I.R.S. guidance.) Unlike paychecks from an employer, taxes for unemployment aren’t automatically withheld. Recipients must opt in — and even when they do, federal taxes are withheld only at a flat rate of 10 percent of benefits. While the new tax break will provide a cushion, some people could still owe the I.R.S. or certain states money. Read more. Probably not, unless you’re self-employed, an independent contractor or a gig worker. The tax law overhaul of late 2019 eliminated the home office deduction for employees from 2018 through 2025. “Employees who receive a paycheck or a W-2 exclusively from an employer are not eligible for the deduction, even if they are currently working from home,” the I.R.S. said. Read more. Self-employed people can take paid caregiving leave if their child’s school is closed or their usual child care provider is unavailable because of the outbreak. This works similarly to the smaller sick leave credit — 67 percent of average daily earnings (for either 2020 or 2019), up to $200 a day. But the caregiving leave can be taken for 50 days. Read more. Yes. This year, you can deduct up to $300 for charitable contributions, even if you use the standard deduction. Previously, only people who itemized could claim these deductions. Donations must be made in cash (for these purposes, this includes check, credit card or debit card), and can’t include securities, household items or other property. For 2021, the deduction limit will double to $600 for joint filers. Rules for itemizers became more generous as well. The limit on charitable donations has been suspended, so individuals can contribute up to 100 percent of their adjusted gross income, up from 60 percent. But these donations must be made to public charities in cash; the old rules apply to contributions made to donor-advised funds, for example. Both provisions are available through 2021. Read more. “He’s hurting his own people in the state of West Virginia,” Mr. Justice said. “I do not condone it.”The provision is also raising questions about what actually constitutes a tax cut and whether the law could prevent states from other types of tax relief. The language of the legislation appears to offer states little wiggle room.Jared Walczak, the vice president for state projects at the Tax Foundation’s Center for State Tax Policy, said that the fine print in the law raised many complicated questions for states that, in some cases, would be awarded money for things that they either do not need or that they already had plans to pay for out of their budgets. It is not clear, for example, if a state could use aid money for an expense related to the coronavirus that it was already planning to pay for and then offer tax credits with the additional surplus.“If the federal government intends to forbid any sort of revenue negative tax policy, no matter what its size, because a state received some funding, that would be a radical federal entanglement in state fiscal policy that may go beyond what was intended,” Mr. Walczak said.Such questions will largely hinge on how Treasury Secretary Janet L. Yellen interprets the legislation and what guidance the Treasury Department gives to states.A department official noted that the law says that states and territories that receive the aid cannot use the funds to offset a reduction in net tax revenue as a result of tax cuts because the money is intended to be used to support the public health response and avoid layoffs and cuts to public services. More guidance on the matter is coming, the official said.The lack of clarity also raises the risk that states use the money for projects or programs that do not actually qualify under the law and then are forced to repay the federal government. States are required to submit regular reports to the Treasury Department accounting for how the funds are being spent and to show any other changes that they have made to their tax codes. The department will also be setting up a system of monitoring how the funds are being used.Emily Swenson Brock, the director of the Federal Liaison Center at the Government Finance Officers Association, said that the eligible uses of the federal aid appeared to be relatively limited for the states and that some might actually find it challenging to deploy the money in a useful way.“It’s complicated here for the states,” Ms. Brock said, adding that her organization had asked the Treasury Department for an explanation. “Congress is reaching in and telling these states how they can and can’t use that money.”Before they receive federal funds, states will have to submit a certification promising to use the money according to the law. They could also decline funding or, if they are set on tax cuts, they could offset them with other sources of revenue that do not include the federal funds.For many states, the federal money is welcome even if they do not necessarily need it for public health purposes.Melissa Hortman, the speaker of the Minnesota House of Representatives, said that she was hopeful that the federal government gives states the flexibility to use the money to make up for lost revenue from the virus. She suggested that the state should look to make new investments in education and transportation. Minnesota is expected to have a budget surplus for the next two years and will receive more than $2 billion in aid.“It’s not too much money,” said Ms. Hortman, a Democrat. “Our country has just lived through a once-in-a-hundred-year pandemic.”AdvertisementContinue reading the main story More

  • 113 Shares149 Views

    in Economy

    Biden Plans Messaging Blitz to Sell Economic Aid Plan

    by

    #masthead-section-label, #masthead-bar-one { display: none }Biden’s Stimulus PlanWhat to Know About the BillSenate PassageWhat the Senate Changed$15 Minimum WageChild Tax CreditAdvertisementContinue reading the main storySupported byContinue reading the main storyBiden Plans Messaging Blitz to Sell Economic Aid PlanDrawing on a lesson from early in the Obama administration, the White House wants to tell voters how the legislation will help them and keep Republicans from defining it on their terms.President Biden, joined by Vice President Kamala Harris, answered questions from reporters on Saturday after the Senate vote to approve a $1.9 trillion relief package.Credit…Stefani Reynolds for The New York TimesJim Tankersley and March 10, 2021Updated 7:23 p.m. ETWASHINGTON — President Biden is planning an aggressive campaign to tell voters about the benefits for them in the $1.9 trillion economic relief package that won final congressional approval on Wednesday, an attempt to ensure that he and his fellow Democrats get full political credit for the first big victory of his administration.The effort will start with Mr. Biden’s scheduled prime-time address to the nation on Thursday and include travel by the president and Vice President Kamala Harris across multiple states, events with a wide range of cabinet members emphasizing themes of the legislation and endorsements from Republican mayors, administration officials said on Wednesday.The White House’s decision to get out and sell the package after its passage reflects a lesson from the early months of the Obama administration. In 2009, fighting to help the economy recover from a crippling financial crisis, President Barack Obama never succeeded in building durable popular support for a similar stimulus bill and allowed Republicans to define it on their terms, fueling a partisan backlash and the rise of the Tea Party movement.Mr. Biden starts with the advantage that the legislation, which he is set to sign on Friday, is widely popular in national polling. And it will deliver a series of tangible benefits to low- and middle-income Americans, including direct payments of $1,400 per individual, just as the economy’s halting recovery from the pandemic recession is poised to accelerate.Speaking briefly to reporters on Wednesday, the president called the legislation “a historic, historic victory for the American people.”After his address from the Oval Office on Thursday night, Mr. Biden will headline a public relations effort over several weeks that aides say will involve his entire cabinet and White House communications officials, and support from like-minded business and policy organizations and political supporters at all levels around the country. The White House announced on Wednesday that Mr. Biden would visit the Philadelphia suburbs next week.Unlike President Donald J. Trump, who loved to serve at times as a singular pitchman for the economic policies under his administration, Mr. Biden will lead an all-hands effort.It is a striking contrast to the strategy pursued by the Obama administration, when Mr. Biden was vice president. Mr. Obama’s first major legislative victory was a nearly $800 billion stimulus bill that passed with the backing of a majority of voters, but it lost support over time.Mr. Biden was still trying to sell voters on the benefits of that plan in 2016, near the end of his time as vice president. He told congressional Democrats this month that the administration had “paid a price” for failing to better market the bill early on.Mr. Obama struggled in part because the economy was still contracting when his plan passed, and its rollout was overshadowed by an arduously slow recovery from recession. “President Obama gave speech after speech” to sell his stimulus plan, Dan Pfeiffer, who was a White House communications director under Mr. Obama, wrote this week. “He visited factory after factory that had reopened because of the Recovery Act. But it was nearly impossible to break through the avalanche of bad news.”The circumstances appear to be different this year. Democrats are buoyed by polls that show Mr. Biden’s relief package winning as much as three-quarters support from voters nationwide, including large swaths of Republicans, even after a month of attacks from congressional Republicans who voted in unison against its passage in both the House and the Senate.More than 7 in 10 Americans backed Mr. Biden’s aid package as of last month, according to polling from the online research firm SurveyMonkey for The New York Times. That includes support from three-quarters of independent voters, 2 in 5 Republicans and nearly all Democrats. A poll released on Tuesday by the Pew Research Center found similar support.Jen Psaki, the White House press secretary, said Mr. Biden’s main message would echo his campaign theme: “Help is on the way.”Credit…Doug Mills/The New York TimesThe Biden team also appears to have economic circumstances working in its favor. Job growth accelerated in February, Mr. Biden’s first full month in office. Forecasters expect economic growth to speed up even more in the months to come because of the increasingly widespread deployment of Covid-19 vaccines across the country, which should allow consumers to start spending more on activities like traveling or dining out, which many have cut back on over the past year because of the pandemic.Forecasters expect the relief package to further fuel growth, in part by shuttling money to low- and middle-income Americans who disproportionately lost jobs and incomes in the crisis. The O.E.C.D. predicted this week that the Biden plan would help the United States economy grow at a 6.5 percent rate this year, which would be its fastest annual clip since the early 1980s.The timing of the bill could bolster Mr. Biden’s attempts to claim credit for that rebound, even though forecasters were projecting a return to growth — albeit a smaller one than they now predict — before he took office. Mr. Trump did something similar in 2017: Growth had slowed in early 2016, but it had begun to improve in the second half of that year, before Mr. Trump won the White House. Yet he persistently claimed he had engineered the greatest economy in American history.Still, Biden administration officials are mindful that political opposition could easily fester and grow if they do not clearly explain the contents — and direct benefits — of a bill that will be the second-largest economic aid package in American history, trailing only the initial bill that lawmakers approved under Mr. Trump last year as the worsening pandemic pushed the nation into recession. .css-yoay6m{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;}@media (min-width:740px){.css-yoay6m{font-size:1.25rem;line-height:1.4375rem;}}.css-1dg6kl4{margin-top:5px;margin-bottom:15px;}.css-k59gj9{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-flex-direction:column;-ms-flex-direction:column;flex-direction:column;width:100%;}.css-1e2usoh{font-family:inherit;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;border-top:1px solid #ccc;padding:10px 0px 10px 0px;background-color:#fff;}.css-1jz6h6z{font-family:inherit;font-weight:bold;font-size:1rem;line-height:1.5rem;text-align:left;}.css-1t412wb{box-sizing:border-box;margin:8px 15px 0px 15px;cursor:pointer;}.css-hhzar2{-webkit-transition:-webkit-transform ease 0.5s;-webkit-transition:transform ease 0.5s;transition:transform ease 0.5s;}.css-t54hv4{-webkit-transform:rotate(180deg);-ms-transform:rotate(180deg);transform:rotate(180deg);}.css-1r2j9qz{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-e1ipqs{font-size:1rem;line-height:1.5rem;padding:0px 30px 0px 0px;}.css-e1ipqs a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;}.css-e1ipqs a:hover{-webkit-text-decoration:none;text-decoration:none;}.css-1o76pdf{visibility:show;height:100%;padding-bottom:20px;}.css-1sw9s96{visibility:hidden;height:0px;}#masthead-bar-one{display:none;}#masthead-bar-one{display:none;}.css-1cz6wm{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;font-family:’nyt-franklin’,arial,helvetica,sans-serif;text-align:left;}@media (min-width:740px){.css-1cz6wm{padding:20px;width:100%;}}.css-1cz6wm:focus{outline:1px solid #e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-1cz6wm{border:none;padding:20px 0 0;border-top:1px solid #121212;}Frequently Asked Questions About the New Stimulus PackageThe stimulus payments would be $1,400 for most recipients. Those who are eligible would also receive an identical payment for each of their children. To qualify for the full $1,400, a single person would need an adjusted gross income of $75,000 or below. For heads of household, adjusted gross income would need to be $112,500 or below, and for married couples filing jointly that number would need to be $150,000 or below. To be eligible for a payment, a person must have a Social Security number. Read more. Buying insurance through the government program known as COBRA would temporarily become a lot cheaper. COBRA, for the Consolidated Omnibus Budget Reconciliation Act, generally lets someone who loses a job buy coverage via the former employer. But it’s expensive: Under normal circumstances, a person may have to pay at least 102 percent of the cost of the premium. Under the relief bill, the government would pay the entire COBRA premium from April 1 through Sept. 30. A person who qualified for new, employer-based health insurance someplace else before Sept. 30 would lose eligibility for the no-cost coverage. And someone who left a job voluntarily would not be eligible, either. Read moreThis credit, which helps working families offset the cost of care for children under 13 and other dependents, would be significantly expanded for a single year. More people would be eligible, and many recipients would get a bigger break. The bill would also make the credit fully refundable, which means you could collect the money as a refund even if your tax bill was zero. “That will be helpful to people at the lower end” of the income scale, said Mark Luscombe, principal federal tax analyst at Wolters Kluwer Tax & Accounting. Read more.There would be a big one for people who already have debt. You wouldn’t have to pay income taxes on forgiven debt if you qualify for loan forgiveness or cancellation — for example, if you’ve been in an income-driven repayment plan for the requisite number of years, if your school defrauded you or if Congress or the president wipes away $10,000 of debt for large numbers of people. This would be the case for debt forgiven between Jan. 1, 2021, and the end of 2025. Read more.The bill would provide billions of dollars in rental and utility assistance to people who are struggling and in danger of being evicted from their homes. About $27 billion would go toward emergency rental assistance. The vast majority of it would replenish the so-called Coronavirus Relief Fund, created by the CARES Act and distributed through state, local and tribal governments, according to the National Low Income Housing Coalition. That’s on top of the $25 billion in assistance provided by the relief package passed in December. To receive financial assistance — which could be used for rent, utilities and other housing expenses — households would have to meet several conditions. Household income could not exceed 80 percent of the area median income, at least one household member must be at risk of homelessness or housing instability, and individuals would have to qualify for unemployment benefits or have experienced financial hardship (directly or indirectly) because of the pandemic. Assistance could be provided for up to 18 months, according to the National Low Income Housing Coalition. Lower-income families that have been unemployed for three months or more would be given priority for assistance. Read more.Republicans continued to attack the bill on the House floor on Wednesday, casting it as overly expensive, ineffectively targeted and bloated with longstanding liberal priorities unrelated to the pandemic.“Because Democrats chose to prioritize their political ambitions instead of the working class,” Representative Jason Smith of Missouri, the top Republican on the Budget Committee, said in a news release, “they just passed the wrong plan, at the wrong time, for all the wrong reasons.”Senator Sherrod Brown of Ohio, one of the few Democrats in the chamber to represent a state Mr. Biden lost to Mr. Trump in 2020, called the Republican attacks “lies” and said they showed why Democrats needed to remind voters of the benefits to people and businesses included in the bill.“You’ve got to sell it, because they’re going to lie about everything,” Mr. Brown said. “The sale is an easy sell, but you need to continue to remind” voters about the contents of the package, he said.With that in mind, Mr. Biden is scheduled to follow his speech on Thursday with travel to states led by both Democratic and Republican governors in the coming weeks to begin the sales pitch. Among the options being considered, if they can be done safely during the pandemic, are town-hall-style events that allow the president to directly take questions from people.The main message, according to Jen Psaki, the White House press secretary, will be an echo of one of Mr. Biden’s chief campaign promises: “Help is on the way.”The president’s political and communications advisers have identified 10 themes that they want to tackle, one by one, in the days and weeks ahead. They include food insecurity, child poverty, bolstering rural health care, school reopening, help for veterans and help for small businesses.“We’ll be emphasizing a number of components that are in the package and really having a conversation,” Ms. Psaki said. “This is important to the president personally, having a conversation directly with people about how they can benefit, addressing questions they have, even taking their feedback on implementation.”AdvertisementContinue reading the main story More

  • 113 Shares119 Views

    in Economy

    To Juice the Economy, Biden Bets on the Poor

    by

    #masthead-section-label, #masthead-bar-one { display: none }The Jobs CrisisCurrent Unemployment RateWhen the Checks Run OutThe Economy in 9 ChartsThe First 6 MonthsAdvertisementContinue reading the main storySupported byContinue reading the main storynews analysisTo Juice the Economy, Biden Bets on the PoorMr. Biden’s bottom-up $1.9 trillion aid package is a sharp reversal from the tax cut bill that was President Donald J. Trump’s first big legislative victory.Volunteers distributing food on Monday in Warren, Mich. President Biden’s economic relief plan overwhelmingly helps low earners and the middle class and is more focused on people than on businesses.Credit…Elaine Cromie for The New York TimesPublished More

  • 163 Shares169 Views

    in Economy

    Republicans Pitch Biden on Smaller Aid Plan as Democrats Prepare to Act Alone

    by

    #masthead-section-label, #masthead-bar-one { display: none }The Coronavirus OutbreakliveLatest UpdatesMaps and CasesSee Your Local RiskVaccine InformationWuhan, One Year LaterAdvertisementContinue reading the main storySupported byContinue reading the main storyRepublicans Pitch Biden on Smaller Aid Plan as Democrats Prepare to Act AloneThe president met at the White House with Republican senators seeking a much smaller stimulus plan, but congressional Democrats pressed forward to force through his $1.9 trillion measure, if necessary.President Biden and Vice President Kamala Harris met with Republican senators on Monday about a stimulus plan.Credit…Doug Mills/The New York TimesLuke Broadwater and Feb. 1, 2021Updated 7:43 p.m. ETWASHINGTON — A coalition of 10 Republican senators took a stimulus counterproposal to the White House on Monday evening, urging President Biden to scale back his ambitions for a sweeping $1.9 trillion pandemic aid package in favor of a plan less than one-third the size that they argued could garner the bipartisan consensus the new president has said he is seeking.Their outline, which came as Democrats prepared to push forward on Mr. Biden’s plan with or without Republican backing, amounted to a test of whether the president would opt to pursue a scaled-back measure that could fulfill his pledge to foster broad compromise, or use his majority in Congress to reach for a more robust relief effort enacted over stiff Republican opposition.Mr. Biden appeared eager to signal an openness to negotiating, telling Senator Susan Collins, Republican of Maine and the leader of the group, that he was “anxious” to hear what the senators had to say as they chatted in the Oval Office before the meeting began, and spending two hours behind closed doors in what both sides described as a cordial and productive session.“I wouldn’t say that we came together on a package tonight,” Ms. Collins told reporters as she left. But she called the discussion “excellent” and said Mr. Biden and the senators had agreed to continue their talks. And she said Republicans appreciated that Mr. Biden had devoted his first Oval Office meeting as president to “a frank and very useful discussion” with them.“All of us are concerned about struggling families, teetering small businesses, an overwhelmed health care system, getting vaccines out and into people’s arms, and strengthening our economy and addressing the public health crisis that we face,” Ms. Collins said.Even so, Mr. Biden’s advisers have made clear that the president has little enthusiasm for significantly cutting back on the rescue measure he has proposed. And there was scant evidence, for now, that any Democrats were seriously considering embracing a proposal as limited as the one the Republicans have laid out.“The risk is not that it is too big, this package,” Jen Psaki, the White House press secretary, said before the meeting. “The risk is that it is too small. That remains his view.”Republicans outlined the plan as the Congressional Budget Office projected that the American economy would return to its pre-pandemic size by the middle of this year, even if Congress did not approve any more federal aid for the recovery, but that it would be years before everyone thrown off the job by the pandemic would be able to return to work.The rosier-than-expected projections were likely to inject even more debate into the discussions over the stimulus measure, emboldening Republicans who have pushed Mr. Biden to scale back his plan. But they also indicated that there was little risk that another substantial package of federal aid could “overheat” the economy, and reflected the prolonged difficulties of shaking off the virus and returning to full levels of economic activity.The Republicans’ $618 billion proposal would include many of the same elements as Mr. Biden’s plan, with $160 billion for vaccine distribution and development, coronavirus testing and the production of personal protective equipment; $20 billion to help schools reopen; more relief for small businesses; and additional aid to individuals. But it differs in ways large and small, omitting a federal minimum wage increase or direct aid to states and cities.It would slash the direct payments to Americans, providing $1,000 instead of $1,400 and limiting them to the lowest income earners, excluding individuals who earned more than $50,000. It would also pare back federal jobless aid, which is set to lapse in March, setting weekly payments at $300 through June instead of $400 through September.On Capitol Hill, top Democrats said they were worried a smaller package would not adequately meet the needs of struggling Americans.“This proposal is an insult to the millions of workers and families struggling to survive this crisis,” Senator Ron Wyden, Democrat of Oregon and the incoming Finance Committee chairman, said of the Republican plan. “A bill that sets up yet another cliff for jobless workers in a few short months is a nonstarter.”Hours before Mr. Biden sat down with the Republicans, Democratic leaders began laying the groundwork to move forward on their own, if necessary, with the president’s $1.9 trillion plan through a process known as budget reconciliation, which would allow it to bypass any Republican filibuster with a mere majority vote.Speaker Nancy Pelosi and Senator Chuck Schumer of New York, the majority leader, filed a joint budget resolution to begin the process, with plans for votes in the Senate by week’s end.The Coronavirus Outbreak More

  • 163 Shares199 Views

    in Economy

    Effort to Include $15 Minimum Wage in Relief Bill Poses Test for Democrats

    by

    #masthead-section-label, #masthead-bar-one { display: none }The New WashingtonLatest UpdatesExpanding Health CoverageBiden’s CabinetPandemic ResponseAdvertisementContinue reading the main storySupported byContinue reading the main storyEffort to Include $15 Minimum Wage in Relief Bill Poses Test for DemocratsThe measure will test their willingness and ability to use procedural maneuvers to shepherd big policy goals past entrenched Republican opposition in an evenly divided Senate.Senator Bernie Sanders is mounting an aggressive push for the minimum wage as he prepares to take control of the Senate Budget Committee.Credit…Pool photo by Graeme JenningsJan. 31, 2021, 7:04 p.m. ETWASHINGTON — As Senator Bernie Sanders, the Vermont independent, prepares to take control of the Senate Budget Committee, he is mounting an aggressive campaign ahead of what will be one of his first tests as chairman: securing the support needed to increase the federal minimum wage to $15 an hour by 2025 in a pandemic relief package.Whether he succeeds will not only affect the jobs and wages of millions of American workers, but also help define the limits of Democrats’ willingness and ability to use procedural maneuvers to shepherd major policy proposals past entrenched Republican opposition in an evenly divided Senate.President Biden and top Democratic leaders have repeatedly said their first choice is to pass Mr. Biden’s sweeping $1.9 trillion stimulus proposal with bipartisan support. But Republicans are already balking at the scope of the proposal, and raising the minimum wage to $15 is a particularly contentious part of the bill, a progressive priority that draws intense opposition from many Republicans.So Democrats are barreling toward using a fast-track process known as budget reconciliation to avoid the 60-vote threshold typically needed to overcome a filibuster and approve legislation. That would allow them to pass the measure with no Republican support and Vice President Kamala Harris casting the tiebreaking vote. Both chambers are expected to vote on a budget resolution — a measure that will formally direct committees in the House and the Senate to begin drafting the relief package, kicking off the reconciliation process — in the coming days.Mr. Sanders argued in an interview that Democrats clinched control of the White House and the Senate in part by promising sweeping policy changes and additional pandemic relief, and that not supporting the full legislation would betray their voters and undermine faith in the party’s governing.“If that is the case, if that is what we do, we will surely be a minority in two years,” Mr. Sanders said. “We have to keep the promises that we made.”But Republicans have said that failing to compromise would jeopardize future bipartisan negotiations for a president who has repeatedly called for unity, with a group of 10 Republican senators moving to unveil their own $600 billion proposal as early as Monday in an effort to negotiate with the administration.And the minimum wage poses a particularly polarizing test: Including it in the package would be an aggressive use of reconciliation, one some lawmakers fear will not be allowed by the Senate parliamentarian. That could force Democrats into even more contentious tactics if they want the minimum wage to pass, setting up a battle between a priority championed by liberals like Mr. Sanders and the further fraying of Senate norms.“Minimum wage is probably the most controversial of those proposals,” Mr. Sanders acknowledged. “I’m sure every Democratic senator will have some problem with some aspect of reconciliation, I do, others do — I am absolutely confident that people will support our new president and do everything we can to help the working families of this country.”Other lawmakers, including some Republicans, have argued that the pandemic relief package should be scaled down, with items like the minimum wage provision left for another legislative battle later in the year. Most House Republicans voted against a stand-alone minimum wage bill in 2019, pointing to a Congressional Budget Office report that estimated the provision would put an estimated 1.3 million Americans out of work. Senate Republicans, in control of the chamber, did not take it up.“That’s an agenda item for the administration, so be it,” Senator Lisa Murkowski, Republican of Alaska, told reporters. “Should it be included as part of a Covid relief package? I think it takes the focus off the priority, which is what is the immediate need today.”“Hey,” she added, “you get the keys to the car now. And so let’s get some legislation done, but you don’t need to think that you need to get it all in one package.”Senator Lindsey Graham, Republican of South Carolina, bluntly told reporters in January that “we’re not going to do a $15 minimum wage in it” and that Mr. Biden was better off reaching out to Capitol Hill and negotiating a compromise.Mr. Sanders and Democrats have argued that with jobless benefits set to begin expiring in mid-March, there is little time to win over their Republican counterparts, who embarked on similar reconciliation efforts in 2017 to repeal portions of the Affordable Care Act and pass a sweeping tax overhaul.But to secure the first increase in the federal minimum wage since 2009, even under reconciliation Mr. Sanders and liberal Democrats can afford to lose little, if any, support from the rest of the caucus.Several lawmakers, including Representative John Yarmuth of Kentucky, the chairman of the House Budget Committee, have voiced skepticism that the minimum wage provision can prevail through the rules of the reconciliation process, which imposes strict parameters to prevent the process from being abused. Under the so-called Byrd Rule, Democrats cannot include any measure that affects the Social Security program, increases the deficit after a certain period of time set in the budget resolution or does not change revenues or spending.The decision on whether the provision can be included in the reconciliation package lies with the Senate parliamentarian. Ms. Harris could ultimately overrule the parliamentarian — something that has not been done since 1975 — and Mr. Sanders declined to say whether a rejection of the minimum wage provision would prompt Democrats to do so.“Our first task is to get the ruling of the parliamentarian,” he said. “That’s what I would like to see and that’s what we are focused on right now.”Some Democrats, including Mr. Yarmuth, have signed on instead to stand-alone legislation for the minimum wage increase as another avenue for approval, but one that would require Republican support. Cedric Richmond, a top White House adviser, argued that “the minimum wage has been expanded or increased during times of crisis before” but declined to say whether it should be part of the coronavirus package or a stand-alone bill.Mr. Sanders pointed to two new studies, shown to The New York Times ahead of their publication, that argue that the minimum wage would have a direct impact on the federal budget, opening a door to using reconciliation. In a new paper, Michael Reich, a professor of economics and labor economist at the University of California, Berkeley, estimated that approval of the minimum wage would have a positive effect of $65.4 billion per year largely because of increases to payroll and income tax revenue.“It seems to me that it has pretty substantial budgetary impacts,” Mr. Reich, who has long studied the effects of minimum wage, said of the provision in an interview, adding that he had been conservative in his estimate.Another report, produced by three economists at the Economic Policy Institute, a liberal think tank and a longtime advocate for increasing the minimum wage, found that there would be “significant and direct effects” on the federal budget by increasing payroll tax revenue by $7 billion to $13.9 billion and reducing expenditures on public assistance programs by $13.4 billion to $31 billion.“This is a sizable chunk of money, no matter how you look at it,” said David Cooper, who wrote the report with Ben Zipperer and Josh Bivens. They determined that increased revenue would prevent many workers and their families from qualifying for assistance programs, reducing expenses.But it remains uncertain whether that evidence will be enough to clear the parameters of the Byrd Rule, given that those effects could be ruled “merely incidental.” The Congressional Budget Office, one of the arbiters of the budget effects, found during the last Congress that there would be minimal impact based on the wages of some federal employees.But Mr. Sanders, pressed on whether Democrats had the votes in an evenly divided Senate to move forward with the minimum wage provision, declared that there were “50 votes to pass reconciliation, including minimum wage, yes.”“In totality, what Democrats are saying,” he said, is “we’ve got to support the president, we’ve got to address the crises facing working families and we’re going to pass reconciliation.”Jim Tankersley More

  • 125 Shares139 Views

    in Economy

    Ghosts of 2009 Drive Democrats’ Push for Robust Crisis Response

    by

    #masthead-section-label, #masthead-bar-one { display: none }The New WashingtonLatest UpdatesExpanding Health CoverageBiden’s CabinetPandemic ResponseAdvertisementContinue reading the main storySupported byContinue reading the main storyNews AnalysisGhosts of 2009 Drive Democrats’ Push for Robust Crisis ResponseIn their quest for Republican backing, Democrats say they missed opportunities in 2009 for a stronger response to the Great Recession. They are determined not to repeat the mistake.Senator Chuck Schumer of New York, the new majority leader, at the Capitol on Wednesday. “We should have learned the lesson of 2008 and 2009, when Congress was too timid and constrained in its response to the financial crisis,” he said last week.Credit…Oliver Contreras for The New York TimesJan. 31, 2021Updated 5:27 p.m. ETWASHINGTON — Ten Republican senators asked President Biden on Sunday to drastically scale back his $1.9 trillion pandemic aid bill, offering a $600 billion alternative that they said could pass quickly with bipartisan support.But their proposal met a tepid reception from Democrats, who are preparing this week to move forward with their own sweeping package — even if it means eventually cutting Republicans out of the process. Haunted by what they see as their miscalculations in 2009, the last time they controlled the government and faced an economic crisis, the White House and top Democrats are determined to move quickly this time on their stimulus plan, and reluctant to pare it back or make significant changes that would dilute it with no certainty of bringing Republicans on board.“The dangers of undershooting our response are far greater than overshooting,” said Senator Chuck Schumer, Democrat of New York and the new majority leader. “We should have learned the lesson of 2008 and 2009, when Congress was too timid and constrained in its response to the financial crisis.”Their strategy can be traced to 12 years ago, when Barack Obama became president, Democrats controlled both houses of Congress, and they tackled both an economic rescue package and a sweeping health care overhaul.In retrospect, in the quest to win Republican backing for both, Democrats say, they settled for too small an economic stimulus and extended talks on the health care measure for too long. That view was driving the party’s unenthusiastic response on Sunday to the new offer from the Senate Republicans who asked for a meeting with Mr. Biden to lay out a substantially smaller stimulus proposal. In a letter, the 10 senators — notably enough to defeat a filibuster — said their priorities aligned with Mr. Biden’s on crucial areas such as vaccine distribution.But members of the group made clear in interviews on Sunday that their plan amounted to less than a third of Mr. Biden’s proposal. Democrats said they would review it, but would insist on a comprehensive legislative response.While talks with Republicans are expected to continue, Democrats are set this week to put in motion a budget process known as reconciliation that is not subject to a filibuster, allowing them to push through pandemic legislation on their own if no bipartisan agreement emerges.That possibility has Republicans squawking that Democrats are abandoning their bipartisan pledge without giving it a chance and warning that the effort will poison their ability to reach bipartisan deals. The objection ignores the fact that when they controlled Congress, Republicans rolled over Democrats in January 2017 and began their own reconciliation process even before Donald J. Trump was sworn in as president, paving the way for the enactment of a $1.5 trillion tax package that was muscled through without a single Democratic vote.“We’re giving an opportunity to come together on important and timely legislation, so why wouldn’t you do that rather than trying to move it through with reconciliation and having a fully partisan product?” asked Senator Lisa Murkowski, Republican of Alaska and one of the signers of the new letter.While they have yet to roll out their plan, members of the group said it would omit Democrats’ proposal for a federal minimum wage increase and scale back direct stimulus payments to individuals, excluding Americans earning more than $50,000 a year or families with a combined income exceeding $100,000.“Let’s focus on those who are struggling,” Senator Rob Portman, Republican of Ohio, said on the CNN program “State of the Union” on Sunday.But to Democrats, the scars from 2009 cut deep. First, they believe they were too accommodating to Republicans, who called for restraint in providing stimulus for the economy. Then Democrats saw themselves as sandbagged by Republicans who engaged in prolonged negotiations over health care before pulling the plug entirely, opposing legislation that they had helped draft and inflaming a partisan fight that cost Democrats dearly in the 2010 midterm elections.This time, Democrats say the new aid must be robust and delivered quickly. They do not intend to allow Republicans to dictate the timing nor the reach of the legislation.“I’m not going to let Republican senators stall for the sole purpose of stalling,” Senator Ron Wyden, Democrat of Oregon and the incoming chairman of the Senate Finance Committee, said on a conference call hosted by the advocacy group Invest in America. He added that his view grew out of his own experience serving as a junior member of the panel during the Great Recession.Mr. Biden would no doubt prefer to push his proposal through with bipartisan support to show he is able to bridge the differences between the two parties. But the White House has been adamant that it will not chop up his plan to try to secure Republican backing and that while the scope could be adjusted, the changes will not be too substantial.“We have learned from past crises that the risk is not doing too much,” Mr. Biden, who was vice president in 2009, said on Friday at the White House, striking the same theme as Mr. Schumer. “The risk is not doing enough.”Like Mr. Biden this year, Mr. Obama entered the White House in 2009 optimistic he could cooperate with Republicans, and there had been promising signs in 2008. In the face of a dire economic emergency, congressional Republicans, Democrats and George W. Bush’s administration had worked closely to approve the $700 billion Wall Street bailout. Republicans also seemed dispirited by steep election losses in November, suggesting some might be open to cooperation.But to an extent that was not immediately apparent, top Republicans in the House and Senate quickly decided that their best path to reclaiming power was to remain united against Mr. Obama’s agenda, a stance Republicans later acknowledged.As a result, the administration and Democratic leaders had to make multiple concessions to ensure the votes of three Republicans and a few moderate Democrats needed to provide the bare minimum of 60 votes to overcome deep Republican opposition to the stimulus package. That meant holding the amount to $787 billion, less than what some economists at the time said was needed, and potentially slowing the recovery.President Obama speaking about health care in 2009. Democrats say they settled for too small an economic stimulus to gain needed Republican support while also extending talks on health care for too long.Credit…Stephen Crowley/The New York TimesThen came the health care law. Democrats were determined to both expand access to affordable health insurance and to work with Republicans in doing so. They were also concerned then about repeating past mistakes, particularly the Clinton health care effort in 1994, whose spectacular collapse was attributed partly to a failure to involve Republicans from the start.While many Republicans were considered out of reach in 2009, a group of three senators influential on health care policy — Charles E. Grassley of Iowa, Mike Enzi of Wyoming and Olympia Snowe of Maine — engaged in lengthy negotiations with three Democratic counterparts, in a group that came to be known as the Gang of Six.To bring them along, Democrats proposed a market-based approach rather than the kind of government-run, single-payer program sought by many liberals. They even eschewed a limited public option to mollify Republicans and some moderate Democrats. Still, the talks dragged, and Republicans began pulling back amid a rash of raucous protests at congressional town hall events across the country.Frustrated and believing Democrats were being strung along, Mr. Obama in September 2009 summoned Mr. Grassley to the White House along with Senator Max Baucus, Democrat of Montana, who was leading the Gang of Six.Mr. Obama recounted the scene in his new memoir, writing that he had pressed Mr. Grassley on whether, “if Max took every one of your latest suggestions, could you support the bill?” Mr. Grassley was hesitant. “Are there any changes — any at all — that would get us your vote?” Mr. Obama asked, drawing what he described as an awkward silence from the Republican senator.“I guess not, Mr. President,” Mr. Grassley eventually responded.As they plunge forward this year, Democrats say they do not want to find themselves in a similar position, working with Republicans only to come up short with an insufficient response that does not draw bipartisan support.Some Democrats still hold out hope of reaching bipartisan agreement on at least some elements of the administration’s coronavirus response and say the party must make a legitimate attempt to come together with Republicans.“We ought to try to do what we can do in a bipartisan way,” Senator Joe Manchin III of West Virginia, a leading Democrat in the bipartisan talks, told reporters. He said it would then be appropriate for Mr. Schumer to use “other means to move things along” if progress could not be made.Emily Cochrane More