"UPDATED: The Unemployed Stare Into the Abyss. Republicans Look Away. The cruelty and ignorance of Trump and his allies are creating another gratuitous disaster."
The suspension of federal benefits would create damage almost as terrifying as the economic effects of the coronavirus.
By Paul Krugman Opinion Columnist
Aug. 6, 2020
Protesters calling for economic relief at a rally on Wednesday in New York. Angela Weiss/Agence France-Presse — Getty Images
On Friday, we’ll get an official employment report for July. But a variety of private indicators, like the monthly report from the data-processing firm ADP .. https://adpemploymentreport.com/ , already suggest that the rapid employment gains of May and June were a dead-cat bounce and that job growth has at best slowed to a crawl .. https://fred.stlouisfed.org/series/NPPTTL .
ADP’s number was at least positive — some other indicators .. https://twitter.com/ernietedeschi/status/1290971597508169729 .. suggest that employment is actually falling. But even if the small reported job gains were right, at this rate we won’t be back to precoronavirus employment until … 2027.
But things could get much worse. In fact, they probably will get much worse unless Republicans get serious about another economic relief package, and do it very soon.
I’m not sure how many people realize just how much deeper the coronavirus recession of 2020 could have been. Obviously it was terrible: Employment plunged, and real G.D.P. .. https://fred.stlouisfed.org/graph/fredgraph.png?g=tN5v .. fell by around 10 percent. Almost all of that, however, reflected the direct effects of the pandemic, which forced much of the economy into lockdown.
What didn’t happen was a major second round of job losses driven by plunging consumer demand. Millions of workers lost their regular incomes; without federal aid, they would have been forced to slash spending, causing millions more to lose their jobs. Luckily Congress stepped up to the plate with special aid to the unemployed, which sustained consumer spending and kept the nonquarantined parts of the economy afloat.
Now that aid has expired. Democrats offered a plan months ago to maintain benefits, but Republicans can’t even agree among themselves on a counteroffer. Even if an agreement is hammered out — and there’s no sign that this is imminent — it will be weeks before the money is flowing again.
The suffering among cut-off families will be immense, but there will also be broad damage to the economy as a whole. How big will this damage be? I’ve been doing the math, and it’s terrifying.
Unlike affluent Americans, the mostly low-wage workers whose benefits have just been terminated can’t blunt the impact by drawing on savings or borrowing against assets. So their spending will fall by a lot. Evidence on the initial effects of emergency aid suggests that the end of benefits will push overall consumer spending — the main driver of the economy — down by more than 4 percent .. https://twitter.com/p_ganong/status/1289213387830960128 .
Trump pledges executive orders to extend Covid relief, but offers few details
President says he will suspend payroll tax and extend unemployment through end of year amid gridlock in Congress
Donald Trump at a press briefing on Wednesday. Photograph: Rex/Shutterstock
David Smith in Washington @smithinamerica Published on Sat 8 Aug 2020 11.53 AEST
Donald Trump has promised unilateral action to provide economic relief for millions of Americans hit by the coronavirus pandemic, but he offered few specific details and admitted the move is likely to face legal challenges.
[...]
He vowed to suspend payroll tax and extend unemployment benefits until the end of the year, defer student loan payments indefinitely and forgive interest, and extend a moratorium on evictions.
Asked when the executive orders would be ready, Trump said it “could be by the end of the week. They’re being drawn by the lawyers right now.”
Trump has frequently tested the boundaries of executive power and many experts have argued that spending money on relief efforts without congressional authorisation would be inviting a battle in court.
Crooked Media, run by alumni of the Barack Obama administration, observed in its daily newsletter .. https://mailchi.mp/crooked/8-7-20 : “Trump may be able to defer payroll tax collection, but he can’t override employers’ legal obligation to withhold those taxes from worker paychecks, meaning workers would probably get no extra cash in their pockets, and if they did, they’d have to pay it all back to the government eventually.”
[...]
The impasse means a longer and perhaps permanent expiration of a $600-a-week bonus pandemic jobless federal benefit that has kept millions of people from falling into poverty.
It denies more than $100bn to help schools reopen this fall. It blocks additional funding for virus testing as cases are surging this summer. And it prevents billions of dollars reaching state and local governments considering furloughs as their revenue craters.
But negotiations broke down on Friday. Pelosi told reporters she had offered a major concession to Republicans.
“We’ll go down $1tn, you go up $1tn,” Pelosi said. The figures are approximate, but a Pelosi spokesman said the speaker is in general terms seeking a “top line” of perhaps $2.4tn since the House-passed Heroes Act is scored at $3.45tn. Republicans say their starting offer was about $1tn but have offered some concessions on jobless benefits and aid to states, among others, that have brought the White House offer higher.
Mnuchin said that renewal of a $600-a-week pandemic jobless boost and huge demands by Democrats for aid to state and local governments are the key areas where they are stuck.
Pelosi and Schumer continue to insist on a huge aid package to address a surge in cases and deaths, double-digit joblessness and the threat of poverty for millions of the newly unemployed.
At his press conference, Trump reiterated his claim that America is winning the battle against the coronavirus, even as the number of reported cases nears 5m. “It’s disappearing, it’s going to disappear,” he said.
The US is only 5% of the world’s population but has conducted 25% of all the world’s tests, he added. “We’re doing tremendous testing and we’re especially doing big testing at the nursing homes.”
That must be the only stat Trump sees in his favor. Of course he would never tell the nation the truth. For some of that see SoxFan's August 7 "Fun Facts" ..
. Fun Facts #1: with around 4% of the world's population we have more than 25% of cases
. Fun Facts #2: with around 4% of the world's population we have more than 37% of active cases
. Fun Facts #3: with around 4% of the world's population we have more than 28% of Serious and Critical cases
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