thefiscaltimes--2020-08-11--What Happens to the Economy Without a Washington Lifeline?

A massive dose of government aid has been helping prop up the U.S. economy in the face of the coronavirus pandemic and the shutdowns it forced .
But with any additional federal cash infusions now caught up in stalled negotiations between the White House and congressional Democrats — and with the executive actions signed by President Trump this weekend expected to deliver limited relief at best — the U.S. economy faces significant risks , economist warn .
“ We are increasingly concerned that this best-they-can do stimulus from the White House will never make it fully to the execution stage @ @ @ @ @ @ @ sink or swim on its own , ” Chris Rupkey , chief financial economist at financial group MUFG , told Politico ’ s Ben White .
“ Washington is either unable or unwilling to provide a lifeline to those who ca n't swim like the bankrupt state and local governments and the millions of unemployed who have no jobs to return to.
” Rubeela Farooqi , chief U.S. economist at High Frequency Economics , told Politico that , without further stimulus , the recovery could get rocky : “ Expiring support is coming @ @ @ @ @ @ @ is already slowing down activity .
Without additional help , incomes and spending will surely retrench .
That in turn will have implications for business profitability and jobs.
” The White House is taking a far rosier view , with Trump and top advisers still predicting a strong V-shaped recovery .
“ There is no reason why the economy can ’ t grow at a 20 % pace in the third quarter , ” Trump said at a Monday press briefing , adding , “ It ’ s going to grow at a @ @ @ @ @ @ @ of the numbers we ’ re looking at , and probably a lot more substantial than we originally thought.
” Economist and New York Times columnist Paul Krugman argues that Senate Republicans and the Trump White House are ignoring the economic lessons of the Great Recession and its aftermath .
“ We actually have a very good road map telling us which policies are likely to be helpful and which will do great damage , ” he writes in his newsletter .
Krugman argues that , while the Federal Reserve can ’ t @ @ @ @ @ @ @ and deficit concerns should be set aside for now since “ in a depressed economy deficits aren ’ t a problem.
” Enacting austerity measures , on the other hand , is disastrous .
“ But you can probably guess the punchline , ” Krugman writes .
“ Donald Trump seems determined to take advice from people who got everything wrong during the last crisis and learned nothing from the experience .
We have a very good road map to guide us , but we ’ re being led by people dead set @ @ @ @ @ @ @ ”

A massive dose of government aid has been helping prop up the U.S. economy in the face of the coronavirus pandemic and the shutdowns it forced. But with any additional federal cash infusions now caught up in stalled negotiations between the White House and congressional Democrats — and with the executive actions signed by President Trump this weekend expected to deliver limited relief at best — the U.S. economy faces significant risks, economist warn.
“We are increasingly concerned that this best-they-can do stimulus from the White House will never make it fully to the execution stage and the economy will be left to sink or swim on its own,” Chris Rupkey, chief financial economist at financial group MUFG, told Politico’s Ben White. “Washington is either unable or unwilling to provide a lifeline to those who can't swim like the bankrupt state and local governments and the millions of unemployed who have no jobs to return to.”
Rubeela Farooqi, chief U.S. economist at High Frequency Economics, told Politico that, without further stimulus, the recovery could get rocky: “Expiring support is coming against a backdrop of virus containment that is already slowing down activity. Without additional help, incomes and spending will surely retrench. That in turn will have implications for business profitability and jobs.”
The White House is taking a far rosier view, with Trump and top advisers still predicting a strong V-shaped recovery. “There is no reason why the economy can’t grow at a 20% pace in the third quarter,” Trump said at a Monday press briefing, adding, “It’s going to grow at a very substantial pace, based on all of the numbers we’re looking at, and probably a lot more substantial than we originally thought.”
Economist and New York Times columnist Paul Krugman argues that Senate Republicans and the Trump White House are ignoring the economic lessons of the Great Recession and its aftermath. “We actually have a very good road map telling us which policies are likely to be helpful and which will do great damage,” he writes in his newsletter. Krugman argues that, while the Federal Reserve can’t save us, government spending can — and deficit concerns should be set aside for now since “in a depressed economy deficits aren’t a problem.” Enacting austerity measures, on the other hand, is disastrous.
“But you can probably guess the punchline,” Krugman writes. “Donald Trump seems determined to take advice from people who got everything wrong during the last crisis and learned nothing from the experience. We have a very good road map to guide us, but we’re being led by people dead set on driving us into a ditch.”


thefiscaltimes--2020-08-10--Time-Traveling Tax Breaks, Thanks to Coronavirus

The coronavirus relief package signed into law in March gave money-losing companies the right to carry losses backward for up to five years , a move intended to help cash-strapped firms struggling amid the coronavirus shutdown get larger refunds from the IRS .
The rule change enables companies to get refunds now on taxes they paid at a 35 % rate , before the 2017 tax cuts reduced it to 21 % .
This creates an opportunity for “ rate arbitrage , ” says Richard Rubin of The Wall Street Journal , in which companies load up on deductions today @ @ @ @ @ @ @ and claim refunds based on taxes paid in prior years , when the tax rate was higher .
Here ’ s how Rubin describes the process : “ For corporations with past profits , current losses and little risk of insolvency , the math is compelling .
A $ 1 million deduction taken in 2020 is worth up to $ 350,000 in federal tax savings .
The same $ 1 million deduction taken in 2021 is worth at most $ 210,000.
” Nearly two dozen publicly traded firms have already reported benefits from @ @ @ @ @ @ @ billion , and that number is expected to grow .
“ We ’ re going to see some of the biggest firms in the U.S. economy benefit , ” Rebecca Lester , a Stanford University accounting professor , told Rubin .
One example Rubin discusses is FedEx , which has recorded a tax benefit worth $ 71 billion from the refund rule change and is seeking permission to add another $ 130 million .
It ’ s not clear how much the company needs the cash , though .
At the end of @ @ @ @ @ @ @ 4.9 billion in cash and equivalents .
The arbitrage opportunity is not without critics , who question the need to give tax breaks to companies sitting on billions in cash .
“ The appetite for corporate tax breaks is truly insatiable , ” Rep. Lloyd Doggett ( D-TX ) , told Rubin .
“ Now , it ’ s like time travel .
”

The coronavirus relief package signed into law in March gave money-losing companies the right to carry losses backward for up to five years, a move intended to help cash-strapped firms struggling amid the coronavirus shutdown get larger refunds from the IRS.
The rule change enables companies to get refunds now on taxes they paid at a 35% rate, before the 2017 tax cuts reduced it to 21%. This creates an opportunity for “rate arbitrage,” says Richard Rubin of The Wall Street Journal, in which companies load up on deductions today while pushing income into future years, and claim refunds based on taxes paid in prior years, when the tax rate was higher.
Here’s how Rubin describes the process: “For corporations with past profits, current losses and little risk of insolvency, the math is compelling. A $1 million deduction taken in 2020 is worth up to $350,000 in federal tax savings. The same $1 million deduction taken in 2021 is worth at most $210,000.”
Nearly two dozen publicly traded firms have already reported benefits from the rule totaling more than $2 billion, and that number is expected to grow. “We’re going to see some of the biggest firms in the U.S. economy benefit,” Rebecca Lester, a Stanford University accounting professor, told Rubin.
One example Rubin discusses is FedEx, which has recorded a tax benefit worth $71 billion from the refund rule change and is seeking permission to add another $130 million. It’s not clear how much the company needs the cash, though. At the end of May, the company reported holding $4.9 billion in cash and equivalents.
The arbitrage opportunity is not without critics, who question the need to give tax breaks to companies sitting on billions in cash. “The appetite for corporate tax breaks is truly insatiable,” Rep. Lloyd Doggett (D-TX), told Rubin. “Now, it’s like time travel.”


thefiscaltimes--2020-08-07--1.8 Million Jobs Added in July, but Recovery Slows

The U.S. economy added 1.8 million jobs in July , the Labor Department said Friday , and the unemployment rate dropped to 10.2 % , down from 11.1 % the month before .
The jobs number beat consensus estimates of 1.5 million new jobs , and the unemployment rate fell nearly half a percentage point more than expected .
Showing job growth for the third straight month , the July report confirms that the recovery continues to rumble along .
“ Overall this is a favorable report and indicates that the economic recovery which began in May has continued at @ @ @ @ @ @ @ Feroli of J.P. Morgan said in a note to clients .
Still , while the July jobs number was positive , it was far smaller than the 2.7 million new jobs seen in May and 4.8 million recorded in June .
The latest jobs report essentially provides a snapshot of conditions in mid-July , or about three weeks ago , and more recent data suggests that the surge of the coronavirus in some states , combined with the expiration of federal aid programs including the $ 600-per-week boost to unemployment benefits , have @ @ @ @ @ @ @ The beginning of a stall ?
Some economists are worried that the slowdown in hiring will persist and possibly turn negative , threatening a double-dip recession .
Economist Ernie Tedeschi of Evercore ISI said that “ after several months of extraordinary monetary & fiscal support , we 've recovered ~40 % of the jobs lost since Feb. ” But we “ still have a ways to go , and while July was a good report it was slower than May & June .
And much of that fiscal support is already exhausted.
” @ @ @ @ @ @ @ degree of uncertainty among the experts .
J.P. Morgan ’ s Feroli said that growth does appear to have slowed in recent weeks , but he does not expect to see a reversal , as some fear , writing that “ it seems reasonable to expect continued positive job growth in August and beyond , albeit at a more moderate pace than seen over the past three months.
” A plea for fiscal support : Joseph Brusuelas , chief economist at the consulting firm RSM , said Friday that in his view , @ @ @ @ @ @ @ worst labor market since the Great Depression.
” Separately , he told Politico that it is `` absolutely critical to the economy '' for Congress to make a deal for a new round of fiscal stimulus .
“ If the talks fail , the political sector is creating the conditions for at best a double dip recession or much longer downturn than would occur otherwise , ” he said .
Mark Zandi of Moody ’ s Analytics struck the same note .
“ It is critical that lawmakers agree to another substantial fiscal @ @ @ @ @ @ @ its August recess for the fragile economy to avoid backsliding into recession , ” he told Politico .
A long way to go : Whatever the prospects may be for growth over the next few months , the economy still has 12.9 million fewer jobs than it did in February ( see the chart below ) .
And if the pre-pandemic job growth trend is factored in — absent Covid-19 , the economy was on course to continue adding jobs — the number of missing jobs comes to more than 13 million .
@ @ @ @ @ @ @ , some experts say , is gaining control over the coronavirus .
“ The economy is unlikely to go anywhere fast until the pandemic is over ; that is , there is an effective vaccine that is widely distributed and adopted , ” Zandi said .

The U.S. economy added 1.8 million jobs in July, the Labor Department said Friday, and the unemployment rate dropped to 10.2%, down from 11.1% the month before. The jobs number beat consensus estimates of 1.5 million new jobs, and the unemployment rate fell nearly half a percentage point more than expected.
Showing job growth for the third straight month, the July report confirms that the recovery continues to rumble along. “Overall this is a favorable report and indicates that the economic recovery which began in May has continued at least through July,” economist Michael Feroli of J.P. Morgan said in a note to clients.
Still, while the July jobs number was positive, it was far smaller than the 2.7 million new jobs seen in May and 4.8 million recorded in June. The latest jobs report essentially provides a snapshot of conditions in mid-July, or about three weeks ago, and more recent data suggests that the surge of the coronavirus in some states, combined with the expiration of federal aid programs including the $600-per-week boost to unemployment benefits, have taken a toll on economic growth.
The beginning of a stall? Some economists are worried that the slowdown in hiring will persist and possibly turn negative, threatening a double-dip recession. Economist Ernie Tedeschi of Evercore ISI said that “after several months of extraordinary monetary & fiscal support, we've recovered ~40% of the jobs lost since Feb.” But we “still have a ways to go, and while July was a good report it was slower than May & June. And much of that fiscal support is already exhausted.”
Even so, there is a high degree of uncertainty among the experts. J.P. Morgan’s Feroli said that growth does appear to have slowed in recent weeks, but he does not expect to see a reversal, as some fear, writing that “it seems reasonable to expect continued positive job growth in August and beyond, albeit at a more moderate pace than seen over the past three months.”
A plea for fiscal support: Joseph Brusuelas, chief economist at the consulting firm RSM, said Friday that in his view, the U.S. is “clearly in the worst labor market since the Great Depression.” Separately, he told Politico that it is "absolutely critical to the economy" for Congress to make a deal for a new round of fiscal stimulus. “If the talks fail, the political sector is creating the conditions for at best a double dip recession or much longer downturn than would occur otherwise,” he said.
Mark Zandi of Moody’s Analytics struck the same note. “It is critical that lawmakers agree to another substantial fiscal rescue package before Congress goes away on its August recess for the fragile economy to avoid backsliding into recession,” he told Politico.
A long way to go: Whatever the prospects may be for growth over the next few months, the economy still has 12.9 million fewer jobs than it did in February (see the chart below). And if the pre-pandemic job growth trend is factored in — absent Covid-19, the economy was on course to continue adding jobs — the number of missing jobs comes to more than 13 million.
The key factor in recovering those jobs, some experts say, is gaining control over the coronavirus. “The economy is unlikely to go anywhere fast until the pandemic is over; that is, there is an effective vaccine that is widely distributed and adopted,” Zandi said.


thefiscaltimes--2020-08-11--Trump's Payroll Tax Deferral Creates Headaches for Employers

President Trump pitched his plan to suspend payroll tax collections through the end of the year as a win for workers and a boost for the economy .
Employers see it differently .
“ [ F ] or companies large and small , the presidential intervention poses difficult legal and logistical questions that only add to the uncertainty that executives and workers are contending with during the pandemic , ” Alan Rappeport and Gillian Friedman write at The New York Times .
The basics : Trump ’ s plan calls for a deferral of the 6.2 % employee share of @ @ @ @ @ @ @ the end of the year for workers earning up to $ 104,000 a year .
But the president doesn ’ t have the power to change tax laws , meaning that his move would still leave workers on the hook for those deferred payroll taxes starting next year .
Trump has promised to “ terminate ” the payroll taxes , but there ’ s no guarantee Congress will forgive those deferred payments .
“ Since employees must still pay those taxes next year , this order is really an offer of a zero @ @ @ @ @ @ @ in tax liability , ” J.P. Morgan economist Michael Feroli said in a research note Monday .
“ If every worker utilized this offer , it would free up about $ 30-40 billion in liquidity per month for the household sector.
” What employers are worried about : Business are worried that they ’ ll be on the hook for employees ’ deferred tax payments .
“ That is a particular risk in cases where employees change jobs and employers can ’ t withhold more taxes from later paychecks to catch up on @ @ @ @ @ @ @ Journal ’ s Richard Rubin reports .
In some cases , employers could owe income and payroll taxes on the payroll tax payments they have to cover , compounding the cost .
Marianna Dyson , a lawyer at Covington & Burling LLP in Washington who specializes in payroll taxes , tells Rubin : “ Liability is going to stick to the employer like flies to flypaper.
” The bottom line : Employers are generally awaiting further guidance from the Treasury Department and IRS before deciding what to do .
“ Payroll experts said @ @ @ @ @ @ @ anything until they had assurances from Congress that they and their employees wouldn ’ t have to make good on the deferred taxes next year , ” the Times reports .
Right now , it looks like any economic stimulus generated by Trump ’ s unilateral move may be extremely limited .

President Trump pitched his plan to suspend payroll tax collections through the end of the year as a win for workers and a boost for the economy. Employers see it differently. “[F]or companies large and small, the presidential intervention poses difficult legal and logistical questions that only add to the uncertainty that executives and workers are contending with during the pandemic,” Alan Rappeport and Gillian Friedman write at The New York Times.
The basics: Trump’s plan calls for a deferral of the 6.2% employee share of Social Security taxes from September 1 through the end of the year for workers earning up to $104,000 a year. But the president doesn’t have the power to change tax laws, meaning that his move would still leave workers on the hook for those deferred payroll taxes starting next year. Trump has promised to “terminate” the payroll taxes, but there’s no guarantee Congress will forgive those deferred payments.
“Since employees must still pay those taxes next year, this order is really an offer of a zero interest loan rather than an actual reduction in tax liability,” J.P. Morgan economist Michael Feroli said in a research note Monday. “If every worker utilized this offer, it would free up about $30-40 billion in liquidity per month for the household sector.”
What employers are worried about: Business are worried that they’ll be on the hook for employees’ deferred tax payments. “That is a particular risk in cases where employees change jobs and employers can’t withhold more taxes from later paychecks to catch up on missed payments,” The Wall Street Journal’s Richard Rubin reports. In some cases, employers could owe income and payroll taxes on the payroll tax payments they have to cover, compounding the cost. Marianna Dyson, a lawyer at Covington & Burling LLP in Washington who specializes in payroll taxes, tells Rubin: “Liability is going to stick to the employer like flies to flypaper.”
The bottom line: Employers are generally awaiting further guidance from the Treasury Department and IRS before deciding what to do. “Payroll experts said many businesses would be hesitant to do anything until they had assurances from Congress that they and their employees wouldn’t have to make good on the deferred taxes next year,” the Times reports. Right now, it looks like any economic stimulus generated by Trump’s unilateral move may be extremely limited.


thefiscaltimes--2020-08-11--Trump Teases Another Tax Cut

Trump Teases Another Tax Cut

President Trump said Monday he ’ s looking “ very seriously ” at some new tax cuts .
“ We ’ re looking at also considering a capital gains tax cut , which would create a lot more jobs , ” Trump told reporters at a White House briefing Monday .
“ So we ’ re looking very seriously at a capital gains tax cut and also at an income tax cut for middle-income families .
We ’ re looking at expanding the tax cuts that we ’ ve already done , but specifically for middle-income families , and you @ @ @ @ @ @ @ the upcoming few weeks , and I think it ’ ll be very exciting.
” Trump has repeatedly teased middle-class tax cuts .
Last September he said he would announce a “ very substantial tax cut for middle income folks ” in the next year .
The capital gains tax cut is an idea that has been pushed by some of his advisers but that Trump rejected last September , when a spokesperson said the president did not feel enough of the benefits would go to the middle class .
Trump himself said @ @ @ @ @ @ @ perceived as somewhat elitist . ''
Trump can ’ t just cut the 20 % long-term capital gains tax rate on his own .
Congress would have to do that .
But some Trump advisers have pressed the president to enact an executive order allowing gains to be indexed to inflation , a change that could dramatically lower taxes due on sold assets that had been held for extended periods .
In such cases , no taxes would be paid on appreciation in value tied to inflation .
Fox Business provides an example @ @ @ @ @ @ @ individual purchased an asset for $ 100 in 2000 and sold that item 18 years later for $ 200 , the nominal capital gain would be $ 100 , according to the Tax Foundation .
But inflation over that same time period would have increased the price level by 49 % .
Under an indexing proposal , the original selling price would increase to $ 149 — meaning the individual would only pay a tax on $ 51 , instead of the full $ 100.
” The benefits of such a change would @ @ @ @ @ @ @ the top 1 % receiving 86 % of the tax cut , according to 2018 estimates by the Penn Wharton Budget Model cited by Bloomberg News .
The model projected at the time that indexing gains to inflation would reduce tax revenue by $ 102 billion over a decade .
The Tax Foundation similarly found in 2018 that inflation indexing would reduce federal revenue by $ 178 billion over a decade , or by $ 148 billion once economic feedback effects were factored into the calculations .
But the Tax Foundation analysis said @ @ @ @ @ @ @ be limited , with after-tax incomes rising by 0.2 % on average for all taxpayers and the largest increase going to the top 1 % , who would see an increase of 0.83 % .

President Trump said Monday he’s looking “very seriously” at some new tax cuts.
“We’re looking at also considering a capital gains tax cut, which would create a lot more jobs,” Trump told reporters at a White House briefing Monday. “So we’re looking very seriously at a capital gains tax cut and also at an income tax cut for middle-income families. We’re looking at expanding the tax cuts that we’ve already done, but specifically for middle-income families, and you’ll be hearing about that in the upcoming few weeks, and I think it’ll be very exciting.”
Trump has repeatedly teased middle-class tax cuts. Last September he said he would announce a “very substantial tax cut for middle income folks” in the next year.
The capital gains tax cut is an idea that has been pushed by some of his advisers but that Trump rejected last September, when a spokesperson said the president did not feel enough of the benefits would go to the middle class. Trump himself said a capital gains tax cut is "perceived as somewhat elitist."
Trump can’t just cut the 20% long-term capital gains tax rate on his own. Congress would have to do that. But some Trump advisers have pressed the president to enact an executive order allowing gains to be indexed to inflation, a change that could dramatically lower taxes due on sold assets that had been held for extended periods. In such cases, no taxes would be paid on appreciation in value tied to inflation.
Fox Business provides an example:
“For instance, if an individual purchased an asset for $100 in 2000 and sold that item 18 years later for $200, the nominal capital gain would be $100, according to the Tax Foundation. But inflation over that same time period would have increased the price level by 49%. Under an indexing proposal, the original selling price would increase to $149 — meaning the individual would only pay a tax on $51, instead of the full $100.”
The benefits of such a change would mostly flow to high-income households, with the top 1% receiving 86% of the tax cut, according to 2018 estimates by the Penn Wharton Budget Model cited by Bloomberg News. The model projected at the time that indexing gains to inflation would reduce tax revenue by $102 billion over a decade.
The Tax Foundation similarly found in 2018 that inflation indexing would reduce federal revenue by $178 billion over a decade, or by $148 billion once economic feedback effects were factored into the calculations. But the Tax Foundation analysis said the economic benefits of a cut would be limited, with after-tax incomes rising by 0.2% on average for all taxpayers and the largest increase going to the top 1%, who would see an increase of 0.83%.


thefiscaltimes--2020-08-11--Governors Push Back Against Trump Unemployment Plan

The nation ’ s governors are expressing concerns about the costs to states imposed by President Trump ’ s effort to provide extra unemployment benefits for the millions of workers who have lost their jobs due to the coronavirus pandemic – and whose $ 600 per week in enhanced unemployed payments expired at the end of July .
Trump signed a memorandum Saturday that attempts to allow states to use disaster-relief funds to pay enhanced unemployment benefits of up to $ 400 per week , with federal funds providing $ 300 and states covering the remaining $ 100 .
But @ @ @ @ @ @ @ revenues plunging due to the crisis and social safety net costs soaring , they don ’ t have the money to participate in the plan as proposed .
“ We appreciate the White House ’ s proposals to provide additional solutions to address economic challenges , ” a statement released Monday by the National Governors Association said .
“ [ H ] owever , we are concerned about the significant administrative burdens and costs this latest action would place on the states.
” As an alternative , the NGA – led by Govs @ @ @ @ @ @ @ Asa Hutchinson ( R-AR ) – said that Congress and the Trump administration should negotiate a relief package that does not impose “ new administrative and fiscal burdens on states , ” while noting that the governors ’ group has previously requested $ 500 billion from the federal government in unrestricted state aid .
Questions about the Trump plan : Treasury Secretary Steven Mnuchin said over the weekend that the plan would be easy to implement and that states could get it up and running immediately .
On Monday , he said that @ @ @ @ @ @ @ to make operational .
But some governors doubt the plan will ever get off the ground .
“ It ’ s not workable in its current form , ” Kentucky Gov .
Andy Beshear ( D ) said Monday .
Some states are waiting for further guidance from the Trump administration on how to proceed , even as officials say they have doubts about the proposal .
“ The program appears woefully insufficient relative to the scale of the crisis , unworkable in its proposed form , and a bad deal for workers @ @ @ @ @ @ @ said a spokesperson for Washington Gov .
Jay Inslee ( D ) .
Money is an issue : Aside from the important legal and logistical questions about Trump ’ s memorandum , most state officials are worried about how they could pay for the new benefits , which would operate outside of the existing unemployment system .
California Gov .
Gavin Newsom ( D ) said the plan would cost his state about $ 700 million a week , which it could not afford .
Gov .
Cuomo said the additional cost – @ @ @ @ @ @ @ through the end of the year for his state – was like “ handing a drowning man an anchor.
” The White House has hinted at workarounds on the cost issue .
President Trump said Sunday that states could apply to have the federal government cover the full $ 400 weekly cost , although that may violate federal regulations .
The Labor Department said Monday that states could include their normal unemployment benefit payments as part of the $ 100 contribution or use leftover Coronavirus Relief Funds to cover the cost .
But @ @ @ @ @ @ @ have already been obligated .
A short-term fix : The Trump unemployment plan revolves around redistributing about $ 44 billion in unspent funds at the Federal Emergency Management Agency .
Critics have noted that if all states participate , the money would last a little more than a month – and asking if all of the legal and fiscal wrangling makes this the right path to take .
“ It ’ s going to take a long time to set up , and it ’ s not going to last a long time @ @ @ @ @ @ @ the left-leaning Economic Policy Institute told The Washington Post .

The nation’s governors are expressing concerns about the costs to states imposed by President Trump’s effort to provide extra unemployment benefits for the millions of workers who have lost their jobs due to the coronavirus pandemic – and whose $600 per week in enhanced unemployed payments expired at the end of July.
Trump signed a memorandum Saturday that attempts to allow states to use disaster-relief funds to pay enhanced unemployment benefits of up to $400 per week, with federal funds providing $300 and states covering the remaining $100. But many state officials say that with tax revenues plunging due to the crisis and social safety net costs soaring, they don’t have the money to participate in the plan as proposed.
“We appreciate the White House’s proposals to provide additional solutions to address economic challenges,” a statement released Monday by the National Governors Association said. “[H]owever, we are concerned about the significant administrative burdens and costs this latest action would place on the states.”
As an alternative, the NGA – led by Govs. Andrew Cuomo (D-NY) and Asa Hutchinson (R-AR) – said that Congress and the Trump administration should negotiate a relief package that does not impose “new administrative and fiscal burdens on states,” while noting that the governors’ group has previously requested $500 billion from the federal government in unrestricted state aid.
Questions about the Trump plan: Treasury Secretary Steven Mnuchin said over the weekend that the plan would be easy to implement and that states could get it up and running immediately. On Monday, he said that it might take one or two weeks to make operational. But some governors doubt the plan will ever get off the ground. “It’s not workable in its current form,” Kentucky Gov. Andy Beshear (D) said Monday.
Some states are waiting for further guidance from the Trump administration on how to proceed, even as officials say they have doubts about the proposal. “The program appears woefully insufficient relative to the scale of the crisis, unworkable in its proposed form, and a bad deal for workers, employers, and states,” said a spokesperson for Washington Gov. Jay Inslee (D).
Money is an issue: Aside from the important legal and logistical questions about Trump’s memorandum, most state officials are worried about how they could pay for the new benefits, which would operate outside of the existing unemployment system.
California Gov. Gavin Newsom (D) said the plan would cost his state about $700 million a week, which it could not afford. Gov. Cuomo said the additional cost – which he pegged at $4 billion through the end of the year for his state – was like “handing a drowning man an anchor.”
The White House has hinted at workarounds on the cost issue. President Trump said Sunday that states could apply to have the federal government cover the full $400 weekly cost, although that may violate federal regulations. The Labor Department said Monday that states could include their normal unemployment benefit payments as part of the $100 contribution or use leftover Coronavirus Relief Funds to cover the cost. But state officials say most of those funds have already been obligated.
A short-term fix: The Trump unemployment plan revolves around redistributing about $44 billion in unspent funds at the Federal Emergency Management Agency. Critics have noted that if all states participate, the money would last a little more than a month – and asking if all of the legal and fiscal wrangling makes this the right path to take.
“It’s going to take a long time to set up, and it’s not going to last a long time at all,” Josh Bivens of the left-leaning Economic Policy Institute told The Washington Post.


thefiscaltimes--2020-08-10--$600 Weekly Unemployment Boost Cost Nearly $250 Billion in Total

The $ 600 boost to weekly unemployment benefits created by the CARES Act cost the federal government nearly $ 250 @ @ @ @ @ the end of July , according to Labor Department data reported by The Wall Street @ @ @ @ @ period for payments was the week ending June 26 , the Journal said , when @ @ @ @ @ was distributed – the rough equivalent of 31 million $ 600 payments .
Unemployed workers @ @ @ @ @ receive the largest total benefits ( $ 38.4 billion ) , while those in South @ @ @ @ @ $ 177.1 million ) .
Adjusted for workforce size , Michigan , New York and @ @ @ @ @ with Michigan getting about $ 2.9 million per 1,000 workers , nearly twice the national @ @ @ @ @ .
Congress passed the enhanced benefit in March as large parts of the economy were @ @ @ @ @ workers lost their jobs .
The boost – officially called Federal Pandemic Unemployment Compensation – @ @ @ @ @ July .

The $600 boost to weekly unemployment benefits created by the CARES Act cost the federal government nearly $250 billion from early April to the end of July, according to Labor Department data reported by The Wall Street Journal Monday.
The peak period for payments was the week ending June 26, the Journal said, when $18.6 billion in benefits was distributed – the rough equivalent of 31 million $600 payments.
Unemployed workers in the state of California receive the largest total benefits ($38.4 billion), while those in South Dakota received the least ($177.1 million). Adjusted for workforce size, Michigan, New York and Pennsylvania received the most, with Michigan getting about $2.9 million per 1,000 workers, nearly twice the national average of $1.5 million.
Congress passed the enhanced benefit in March as large parts of the economy were shutting down and millions of workers lost their jobs. The boost – officially called Federal Pandemic Unemployment Compensation – expired at the end of July.


thefiscaltimes--2020-08-10--Trump’s Executive Actions on Coronavirus Leave Many Questions Unanswered

President Trump said the series of executive orders he signed on Saturday were intended to bypass stalled negotiations in Congress and deliver some economic relief to millions of Americans hurt by the coronavirus recession .
Trump said the orders — which he called bills , a term for legislation considered by Congress — “ will take care of , pretty much , this entire situation.
” That 's clearly not the case .
For one thing , one or more of the orders — a new federal unemployment benefit , a temporary deferral of payroll taxes , an eviction moratorium @ @ @ @ @ @ @ face legal challenges .
House Speaker Nancy Pelosi ( D-CA ) called them “ absurdly unconstitutional , ” though she and Senate Minority Leader Chuck Schumer ( D-NY ) both stopped short of saying whether they would sue to block them .
Even leaving potential legal challenges aside , the effects of Trump ’ s actions were not as straightforward as the president made them out to be , casting doubt as to how much relief they might ultimately provide .
CNN reports that “ a close read of the actual text of @ @ @ @ @ @ @ Saturday suggests that even if they are deemed constitutional , they will not quickly deliver the aid Trump promised .
They may not deliver much at all.
” Far less questionable is that the president ’ s unilateral actions — not bills , but three memoranda and an executive order — collectively represent another Trump administration challenge to the constitutional tax and spending powers of Congress .
Experts also warn that one of the actions , a deferral of payroll tax collection , could threaten funding for Social Security and Medicare , exacerbating @ @ @ @ @ @ @ face .
Here ’ s a breakdown of the executive actions and what they really mean .
Unemployment benefits : The Trump memorandum would provide $ 400 in enhanced unemployment benefits to eligible workers , down from the $ 600 provided by the CARES Act passed in March .
The Trump plan also has strings attached that could limit the number of people who get the benefit .
Unemployed workers must receive at least $ 100 a week in other unemployment benefits in order to qualify for the $ 300 federal benefit , @ @ @ @ @ @ @ the federal assistance .
And states , many already financially strapped , must agree to cover 25 % of the cost , or $ 100 per payment .
Trump said that states would be able to cover their costs by using money provided under the CARES Act or other state funding , but some states may not be able to afford the additional cost .
States that don ’ t enter into the agreement with the federal government or don ’ t have the funds to cover their share of the payments would @ @ @ @ @ @ @ benefit .
Treasury Secretary Steven Mnuchin suggested on “ Fox News Sunday ” that the president would be willing to waive the 25 % contribution from states .
States will also have to set up new systems to deliver aid under Trump ’ s plan , which reportedly could take months .
“ This is a brand new program , it 's an assistance program for lost wages , it requires the creation of an entirely new administrative system .
The states that do n't get the program set up as quickly as @ @ @ @ @ @ @ any funding because it will run out , ” Michelle Evermore , an unemployment expert at the National Employment Law Project , told CNN .
Federal funding for the program is also a question .
Trump said he would use $ 44 billion allocated for disaster relief , but economists cited by The Washington Post project that would only cover some five weeks of payments based on current unemployment levels .
Payroll tax deferral : Trump ordered collection of the employee portion of payroll taxes — 6.2 % for Social Security — to @ @ @ @ @ @ @ of the year for Americans earning less than $ 104,000 annually .
That means workers could eventually get hit with a big tax bill .
As a result , and given the complexities involved , employers may continue to withhold the money to cover the taxes when they ’ re due .
Trump pledged Saturday to forgive the taxes and make the cuts permanent if he wins reelection .
That pledge may give him a tax cut he can campaign on , but experts and critics warn that making such cuts permanent would @ @ @ @ @ @ @ “ He is putting Social Security at grave risk at a time when seniors are suffering the overwhelming impact of a pandemic he has failed to get under control , ” Joe Biden , the presumptive Democratic presidential nominee , said .
“ He is laying out his roadmap to cutting Social Security.
” Mnuchin claimed Sunday that the suspension of payroll tax collections would not mean a reduction in benefits and that the shortfall in revenue to the Social Security Trust Fund would be made up by a transfer from the Treasury @ @ @ @ @ @ @ moratorium : The executive order addressing housing doesn ’ t reinstate an earlier moratorium on some types of evictions , which lapsed in July .
Instead , it calls on the leaders of Health and Human Services and the Centers for Disease Control to “ consider ” whether such a ban is “ necessary to prevent the further spread of COVID-19.
” Student loan deferral : Trump waived all interest and allowed people to delay payments on student loans held by the federal government through the end of the year .
What ’ @ @ @ @ @ @ @ actions : Trump ’ s actions don ’ t cover many of the other relief programs lawmakers had considered , including another round of $ 1,200 stimulus checks ; funding for schools , election security and the U.S .
Postal Service ; an extension of the Paycheck Protection Program of loans to small businesses ; and aid to state and local governments .
“ The downside of executive orders is you can ’ t address some of the small business incidents that are there , ” White House Chief of Staff Mark Meadows @ @ @ @ @ @ @ necessarily get direct payments , because it has to do with appropriations .
That ’ s something that the president doesn ’ t have the ability to do .
So , you miss on those two key areas .
You miss on money for schools .
You miss on any funding for state and local revenue needs that may be out there.
” What ’ s next : Democrats responded to Trump ’ s actions by urging the White House to come back to the negotiating table and meet them halfway .
Trump @ @ @ @ @ @ @ want to make a deal and have his phone number , but Democrats said there ’ s been no contact with the White House since Friday .
Mnuchin told CNBC that the White House was “ prepared to put more money on the table , ” to reach an agreement .
“ If we can get a fair deal , we ’ re willing to do it this week , ” he said .
The bottom line : There are no talks scheduled and if negotiations don ’ t resume , Trump is @ @ @ @ @ @ @ given all the questions surrounding his executive actions .
First , that the economy he desperately wants to recover in time for the November elections won ’ t be further damaged by the lack of a broader deal .
Economists warn that more aid will be needed .
And as Jim Tankersley of The New York Times suggests , if the aid doesn ’ t arrive and the economy does slump toward recession again , Trump may well be betting his political future on the idea “ that it is better to tell @ @ @ @ @ @ @ than to have actually helped it.
” This article was updated on Tuesday , August 11 .

President Trump said the series of executive orders he signed on Saturday were intended to bypass stalled negotiations in Congress and deliver some economic relief to millions of Americans hurt by the coronavirus recession. Trump said the orders — which he called bills, a term for legislation considered by Congress — “will take care of, pretty much, this entire situation.”
That's clearly not the case. For one thing, one or more of the orders — a new federal unemployment benefit, a temporary deferral of payroll taxes, an eviction moratorium and student loan relief — could still face legal challenges. House Speaker Nancy Pelosi (D-CA) called them “absurdly unconstitutional,” though she and Senate Minority Leader Chuck Schumer (D-NY) both stopped short of saying whether they would sue to block them.
Even leaving potential legal challenges aside, the effects of Trump’s actions were not as straightforward as the president made them out to be, casting doubt as to how much relief they might ultimately provide. CNN reports that “a close read of the actual text of executive actions [the president] signed Saturday suggests that even if they are deemed constitutional, they will not quickly deliver the aid Trump promised. They may not deliver much at all.”
Far less questionable is that the president’s unilateral actions — not bills, but three memoranda and an executive order — collectively represent another Trump administration challenge to the constitutional tax and spending powers of Congress. Experts also warn that one of the actions, a deferral of payroll tax collection, could threaten funding for Social Security and Medicare, exacerbating the long-term cash shortfalls the programs already face.
Here’s a breakdown of the executive actions and what they really mean.
Unemployment benefits: The Trump memorandum would provide $400 in enhanced unemployment benefits to eligible workers, down from the $600 provided by the CARES Act passed in March. The Trump plan also has strings attached that could limit the number of people who get the benefit. Unemployed workers must receive at least $100 a week in other unemployment benefits in order to qualify for the $300 federal benefit, potentially leaving many low-income workers ineligible for the federal assistance. And states, many already financially strapped, must agree to cover 25% of the cost, or $100 per payment.
Trump said that states would be able to cover their costs by using money provided under the CARES Act or other state funding, but some states may not be able to afford the additional cost. States that don’t enter into the agreement with the federal government or don’t have the funds to cover their share of the payments would see the unemployed get no extra federal benefit. Treasury Secretary Steven Mnuchin suggested on “Fox News Sunday” that the president would be willing to waive the 25% contribution from states.
States will also have to set up new systems to deliver aid under Trump’s plan, which reportedly could take months. “This is a brand new program, it's an assistance program for lost wages, it requires the creation of an entirely new administrative system. The states that don't get the program set up as quickly as other states aren't going to get any funding because it will run out,” Michelle Evermore, an unemployment expert at the National Employment Law Project, told CNN.
Federal funding for the program is also a question. Trump said he would use $44 billion allocated for disaster relief, but economists cited by The Washington Post project that would only cover some five weeks of payments based on current unemployment levels.
Payroll tax deferral: Trump ordered collection of the employee portion of payroll taxes — 6.2% for Social Security — to be deferred from September through the end of the year for Americans earning less than $104,000 annually. That means workers could eventually get hit with a big tax bill. As a result, and given the complexities involved, employers may continue to withhold the money to cover the taxes when they’re due.
Trump pledged Saturday to forgive the taxes and make the cuts permanent if he wins reelection. That pledge may give him a tax cut he can campaign on, but experts and critics warn that making such cuts permanent would weaken the finances of Social Security. “He is putting Social Security at grave risk at a time when seniors are suffering the overwhelming impact of a pandemic he has failed to get under control,” Joe Biden, the presumptive Democratic presidential nominee, said. “He is laying out his roadmap to cutting Social Security.”
Mnuchin claimed Sunday that the suspension of payroll tax collections would not mean a reduction in benefits and that the shortfall in revenue to the Social Security Trust Fund would be made up by a transfer from the Treasury Department’s General Fund.
Eviction moratorium: The executive order addressing housing doesn’t reinstate an earlier moratorium on some types of evictions, which lapsed in July. Instead, it calls on the leaders of Health and Human Services and the Centers for Disease Control to “consider” whether such a ban is “necessary to prevent the further spread of COVID-19.”
Student loan deferral: Trump waived all interest and allowed people to delay payments on student loans held by the federal government through the end of the year.
What’s not covered by Trump’s actions: Trump’s actions don’t cover many of the other relief programs lawmakers had considered, including another round of $1,200 stimulus checks; funding for schools, election security and the U.S. Postal Service; an extension of the Paycheck Protection Program of loans to small businesses; and aid to state and local governments.
“The downside of executive orders is you can’t address some of the small business incidents that are there,” White House Chief of Staff Mark Meadows said. “You can’t necessarily get direct payments, because it has to do with appropriations. That’s something that the president doesn’t have the ability to do. So, you miss on those two key areas. You miss on money for schools. You miss on any funding for state and local revenue needs that may be out there.”
What’s next: Democrats responded to Trump’s actions by urging the White House to come back to the negotiating table and meet them halfway. Trump tweeted Monday that Schumer and Pelosi now want to make a deal and have his phone number, but Democrats said there’s been no contact with the White House since Friday. Mnuchin told CNBC that the White House was “prepared to put more money on the table,” to reach an agreement. “If we can get a fair deal, we’re willing to do it this week,” he said.
The bottom line: There are no talks scheduled and if negotiations don’t resume, Trump is making a pair of risky bets, given all the questions surrounding his executive actions. First, that the economy he desperately wants to recover in time for the November elections won’t be further damaged by the lack of a broader deal. Economists warn that more aid will be needed. And as Jim Tankersley of The New York Times suggests, if the aid doesn’t arrive and the economy does slump toward recession again, Trump may well be betting his political future on the idea “that it is better to tell voters he tried to help the economy than to have actually helped it.”
This article was updated on Tuesday, August 11.


thefiscaltimes--2020-08-12--Tax Day Delay Shrinks Budget Deficit in July

The federal budget deficit dropped sharply in July , coming in at a mere $ 68 billion , down from @ @ @ @ @ recorded in June , the Treasury Department said Wednesday .
The huge decline had a @ @ @ @ @ day from April 15 to July 15 due to the coronavirus .
`` We are @ @ @ @ @ taxes that would otherwise be paid in April , '' Marc Goldwein of the nonpartisan @ @ @ @ @ Budget told The Washington Post .
`` The vast majority of the lower deficit is @ @ @ @ @ tax season . ''
Despite the big drop last month , the annual deficit is @ @ @ @ @ .
Now standing at $ 2.8 trillion , the deficit is expected to top $ @ @ @ @ @ of the fiscal year in September .

The federal budget deficit dropped sharply in July, coming in at a mere $68 billion, down from the eye-popping $864 billion recorded in June, the Treasury Department said Wednesday.
The huge decline had a simple cause: moving tax day from April 15 to July 15 due to the coronavirus. "We are seeing a huge influx of taxes that would otherwise be paid in April," Marc Goldwein of the nonpartisan Committee for a Responsible Federal Budget told The Washington Post. "The vast majority of the lower deficit is driven by the delay of tax season."
Despite the big drop last month, the annual deficit is still headed for record territory. Now standing at $2.8 trillion, the deficit is expected to top $3 trillion by the end of the fiscal year in September.


thefiscaltimes--2020-08-12--Trump’s Unemployment Plan Would Provide an Extra $300 per Week: White House

President Trump ’ s effort to replace a portion of the now-expired $ 600 per week in supplemental unemployment benefits has produced lots of questions about the size and scope of the program .
Following considerable pushback on the plan from state officials , the White House provided some clarifications on Tuesday : • Although Trump on Saturday said the plan would provide $ 400 per week for qualified unemployed workers , the White House said on Tuesday that the weekly aid would top out at $ 300 per week .
• Reversing a previously stated requirement that states contribute @ @ @ @ @ @ @ toward the enhanced payment , the White House said Tuesday that there was no requirement for states to cover a portion of the cost .
The clarifications – which clearly involve last-minute rule changes , with White House National Economic Council Director Larry Kudlow saying , “ We modified slightly the mechanics of the deal ” – mean that the Trump plan would replace about half of the lost federal unemployment payments , which will drop from $ 600 per week to $ 300 .
Questions remain : It ’ s not clear @ @ @ @ @ @ @ to arrive , or if all states will participate in the program .
The money , which is being drawn from $ 44 billion in unused disaster relief funds , will not flow through existing state unemployment systems , since it ’ s technically “ lost wages assistance ” and not unemployment insurance .
Instead , states are required to set up new payment systems , a process that could take weeks or months and further stress already overwhelmed employment offices .
Given that the funds are limited , some states may opt @ @ @ @ @ @ @ could run of money in just a few weeks While Kudlow said Tuesday that it would take “ about two weeks ” for people to start receiving aid , Eliza Forsythe , a labor economist and assistant professor at the University of Illinois at Urbana-Champaign , told CNBC that , “ It ’ s not something that ’ s going to be quick .
I don ’ t think anybody knows how long it will take , but it ’ s certainly not something any unemployed person can count on within a few @ @ @ @ @ @ @ s not clear how many unemployed workers would actually qualify for the program .
Some low wage workers may not qualify , depending on how states implement their programs .
And Forsythe estimates that nearly a third of self-employed workers who received payments through the enhanced benefits program would be ineligible for the new program .

President Trump’s effort to replace a portion of the now-expired $600 per week in supplemental unemployment benefits has produced lots of questions about the size and scope of the program. Following considerable pushback on the plan from state officials, the White House provided some clarifications on Tuesday:
Although Trump on Saturday said the plan would provide $400 per week for qualified unemployed workers, the White House said on Tuesday that the weekly aid would top out at $300 per week.
Reversing a previously stated requirement that states contribute 25%, or $100, toward the enhanced payment, the White House said Tuesday that there was no requirement for states to cover a portion of the cost.
The clarifications – which clearly involve last-minute rule changes, with White House National Economic Council Director Larry Kudlow saying, “We modified slightly the mechanics of the deal” – mean that the Trump plan would replace about half of the lost federal unemployment payments, which will drop from $600 per week to $300.
Questions remain: It’s not clear how long it will take the payments to arrive, or if all states will participate in the program. The money, which is being drawn from $44 billion in unused disaster relief funds, will not flow through existing state unemployment systems, since it’s technically “lost wages assistance” and not unemployment insurance. Instead, states are required to set up new payment systems, a process that could take weeks or months and further stress already overwhelmed employment offices. Given that the funds are limited, some states may opt not to participate, since the program could run of money in just a few weeks
While Kudlow said Tuesday that it would take “about two weeks” for people to start receiving aid, Eliza Forsythe, a labor economist and assistant professor at the University of Illinois at Urbana-Champaign, told CNBC that, “It’s not something that’s going to be quick. I don’t think anybody knows how long it will take, but it’s certainly not something any unemployed person can count on within a few weeks.”
In addition, it’s not clear how many unemployed workers would actually qualify for the program. Some low wage workers may not qualify, depending on how states implement their programs. And Forsythe estimates that nearly a third of self-employed workers who received payments through the enhanced benefits program would be ineligible for the new program.


thefiscaltimes--2020-08-12--State and Local Cutbacks Will Cost Millions of Jobs, Reduce GDP: Report

State and local governments are reducing services and laying off workers , and unless the federal government steps in with a substantial aid package the cutbacks will drag on U.S. economic growth and cost millions of jobs , according to Moody ’ s Analytics data reported by The Wall Street Journal Wednesday .
Moody ’ s estimates that reductions in spending at the state and local level will total about $ 500 billion during the next two fiscal years , enough to lower GDP by three percentage points .
The cutbacks will also reduce employment by about 4 million .
@ @ @ @ @ @ @ and local governments play an important role in the U.S. economy , employing about 13 % of all workers .
In 2019 , they spent and invested about $ 2.3 trillion , equal to roughly 11 % of GDP .
Providing more federal aid to boost state and local budgets makes sense from an economic standpoint , Michael Strain of the conservative American Enterprise Institute told the Journal .
“ The more state and local employees who are laid off , the higher the unemployment rate goes and the longer it takes to @ @ @ @ @ @ @ ” the economist said .
What ’ s next : Aid for state and local governments is one of the main sticking points in the now-dormant negotiations over the next coronavirus relief bill .
Democrats are seeking $ 950 billion , while Republicans are offering $ 150 billion , the same amount provided in the last relief package .
House Speaker Nancy Pelosi said Wednesday that the two sides are still “ miles apart ” in the discussions .

State and local governments are reducing services and laying off workers, and unless the federal government steps in with a substantial aid package the cutbacks will drag on U.S. economic growth and cost millions of jobs, according to Moody’s Analytics data reported by The Wall Street Journal Wednesday.
Moody’s estimates that reductions in spending at the state and local level will total about $500 billion during the next two fiscal years, enough to lower GDP by three percentage points. The cutbacks will also reduce employment by about 4 million.
What’s at stake: State and local governments play an important role in the U.S. economy, employing about 13% of all workers. In 2019, they spent and invested about $2.3 trillion, equal to roughly 11% of GDP.
Providing more federal aid to boost state and local budgets makes sense from an economic standpoint, Michael Strain of the conservative American Enterprise Institute told the Journal. “The more state and local employees who are laid off, the higher the unemployment rate goes and the longer it takes to get the economy back to normal,” the economist said.
What’s next: Aid for state and local governments is one of the main sticking points in the now-dormant negotiations over the next coronavirus relief bill. Democrats are seeking $950 billion, while Republicans are offering $150 billion, the same amount provided in the last relief package. House Speaker Nancy Pelosi said Wednesday that the two sides are still “miles apart” in the discussions.


thefiscaltimes--2020-08-13--Is Trump’s Unemployment Benefit Plan Legal?

The White House scrambled earlier this week to clarify President Trump ’ s effort to provide extra weekly payments to unemployed workers , settling on the idea that the new program would provide workers with up to $ 300 per week in enhanced payments , without requiring states to contribute .
But The Washington Post ’ s Catherine Rampell says the plan is anything but clear , with the administration providing “ at least five contradictory versions of this parallel benefit system ” announced by president .
Citing Georgetown law professor David Super , Rampell adds that in addition to @ @ @ @ @ @ @ as currently described is probably illegal .
Trump ’ s original plan required states to contribute 25 % of the cost of the new unemployment benefit , or $ 100 , bringing the total to $ 400 per week – a number that has been cited by numerous White House officials .
But following a wave of complaints from cash-strapped states , the White House says it has changed the rules to eliminate that contribution .
The problem , Rampell says , is that the 25 % cost-sharing payment was part of the @ @ @ @ @ @ @ state funding match included in Trump ’ s executive action wasn ’ t there just for kicks , ” Rampell writes .
“ It was there because it ’ s required under the law Trump cited as giving him authority to create this benefit program : the Stafford Act.
” And that ’ s not the only legal issue : “ Counting existing state spending on jobless benefits , rather than new spending , to meet the state-match requirement would also violate Office of Management and Budget Circular A-87 , ” Rampell says @ @ @ @ @ @ @ the basic but profound issue of public officials following the law , the suspect legal standing of Trump ’ s plan could prevent states from participating in the program .
“ It ’ s not a matter of whether states are willing to sign on the dotted line , ” Super told Rampell .
“ It ’ s : What are you actually asking me to sign up for ?
”

The White House scrambled earlier this week to clarify President Trump’s effort to provide extra weekly payments to unemployed workers, settling on the idea that the new program would provide workers with up to $300 per week in enhanced payments, without requiring states to contribute. But The Washington Post’s Catherine Rampell says the plan is anything but clear, with the administration providing “at least five contradictory versions of this parallel benefit system” announced by president.
Citing Georgetown law professor David Super, Rampell adds that in addition to being a moving target, the program as currently described is probably illegal. Trump’s original plan required states to contribute 25% of the cost of the new unemployment benefit, or $100, bringing the total to $400 per week – a number that has been cited by numerous White House officials. But following a wave of complaints from cash-strapped states, the White House says it has changed the rules to eliminate that contribution.
The problem, Rampell says, is that the 25% cost-sharing payment was part of the plan for a reason. The “state funding match included in Trump’s executive action wasn’t there just for kicks,” Rampell writes. “It was there because it’s required under the law Trump cited as giving him authority to create this benefit program: the Stafford Act.”
And that’s not the only legal issue: “Counting existing state spending on jobless benefits, rather than new spending, to meet the state-match requirement would also violate Office of Management and Budget Circular A-87,” Rampell says.
Why it matters: Aside from the basic but profound issue of public officials following the law, the suspect legal standing of Trump’s plan could prevent states from participating in the program. “It’s not a matter of whether states are willing to sign on the dotted line,” Super told Rampell. “It’s: What are you actually asking me to sign up for?”


thefiscaltimes--2020-08-13--New Jobless Claims Drop Below 1 Million

New Jobless Claims Drop Below 1 Million

The number of new unemployment claims fell below 1 million for this first time since March , the Labor Department announced Thursday .
About 963,000 Americans filed for state unemployment benefits for the week ending August 8 , a drop of more than 200,000 from the week before .
Another 488,000 people filed for benefits through the Pandemic Unemployment Assistance program created to assist self-employed workers , down 167,000 from the previous week .
The number of people receiving some form of unemployment benefits fell by 3.1 million from the week before , but the number is still at an @ @ @ @ @ @ @ The weekly data bring the total number of unemployment filings since the pandemic took hold to more than 55 million .
“ Another larger-than-expected decline in jobless claims suggests that the jobs recovery is regaining some momentum but with a staggering 28 million workers still claiming some form of jobless benefits , much labor market progress remains to be done , ” Lydia Boussour and Gregory Daco of Oxford Economics said in a note to clients .
Reduced pressure for another relief package ?
The larger than expected drop in jobless claims won @ @ @ @ @ @ @ negotiators to agree on a new coronavirus relief package .
Republicans will likely see the data as support for their claims that the $ 600 per week in extra unemployment benefits millions of workers were receiving through the end of July was acting as a brake on the recovery , and that the economy is now in the middle of a rapid , V-shaped recovery .
“ The numbers are coming in very , very nicely , '' White House economic adviser Larry Kudlow said earlier this week , adding that he didn @ @ @ @ @ @ @ new relief bill would harm the economy .
Many economists have their doubts about the v-shaped recovery , though , given the size of the current economic hole and the inability of the U.S. to control the pandemic .
“ The reality is that millions of people have lost their jobs , '' AnnElizabeth Konkel of the Indeed Hiring Lab told CNN .
“ These people are faced with mounting bills , and are struggling to find work .
The expiration of the expanded $ 600 federal unemployment benefit has only compounded the @ @ @ @ @ @ @ source of all this economic hardship , the coronavirus , remains unchecked.
” CNBC ’ s Steve Liesman summarized the skeptics ’ view in a tweet : `` If jobless claims running just under a million in the fifth month of the recession is your benchmark for an economy being in good shape , may i suggest you ’ ve set the bar too low ?
That ’ s still 4x the pre-recession level and about 300k above the worst level of ‘ 08 . ''

The number of new unemployment claims fell below 1 million for this first time since March, the Labor Department announced Thursday.
About 963,000 Americans filed for state unemployment benefits for the week ending August 8, a drop of more than 200,000 from the week before. Another 488,000 people filed for benefits through the Pandemic Unemployment Assistance program created to assist self-employed workers, down 167,000 from the previous week.
The number of people receiving some form of unemployment benefits fell by 3.1 million from the week before, but the number is still at an historically high level of 28.2 million. The weekly data bring the total number of unemployment filings since the pandemic took hold to more than 55 million.
“Another larger-than-expected decline in jobless claims suggests that the jobs recovery is regaining some momentum but with a staggering 28 million workers still claiming some form of jobless benefits, much labor market progress remains to be done,” Lydia Boussour and Gregory Daco of Oxford Economics said in a note to clients.
Reduced pressure for another relief package? The larger than expected drop in jobless claims won’t make it any easier for negotiators to agree on a new coronavirus relief package. Republicans will likely see the data as support for their claims that the $600 per week in extra unemployment benefits millions of workers were receiving through the end of July was acting as a brake on the recovery, and that the economy is now in the middle of a rapid, V-shaped recovery. “The numbers are coming in very, very nicely," White House economic adviser Larry Kudlow said earlier this week, adding that he didn’t think the lack of a new relief bill would harm the economy.
Many economists have their doubts about the v-shaped recovery, though, given the size of the current economic hole and the inability of the U.S. to control the pandemic. “The reality is that millions of people have lost their jobs," AnnElizabeth Konkel of the Indeed Hiring Lab told CNN. “These people are faced with mounting bills, and are struggling to find work. The expiration of the expanded $600 federal unemployment benefit has only compounded the dire situation they face. Meanwhile the source of all this economic hardship, the coronavirus, remains unchecked.”
CNBC’s Steve Liesman summarized the skeptics’ view in a tweet: "If jobless claims running just under a million in the fifth month of the recession is your benchmark for an economy being in good shape, may i suggest you’ve set the bar too low? That’s still 4x the pre-recession level and about 300k above the worst level of ‘08."


thefiscaltimes--2020-08-12--Coronavirus Relief Talks Still ‘Miles Apart’

Democratic leaders Nancy Pelosi and Chuck Schumer said Wednesday that they had turned down an overture from Treasury Secretary Steven Mnuchin for the two sides negotiating a stalled coronavirus relief package to resume talks .
The White House , Democrats said , isn ’ t budging from its demands for a smaller aid package .
`` We have made clear to the Administration that we are willing to come down $ 1 trillion if they will come up $ 1 trillion , '' the Democratic leaders said in a joint statement .
`` However , it is clear that the @ @ @ @ @ @ @ of the problems that American families are facing .
We have again made clear to the Administration that we are willing to resume negotiations once they start to take this process seriously . ''
Mnuchin said Pelosi ’ s statement was `` not an accurate reflection of our conversation , '' adding that Pelosi was `` unwilling to meet to continue negotiations unless we agreed in advance to her proposal , costing at least $ 2 trillion . ''
Mnuchin told Fox Business that Congress could pass a relief plan costing just over @ @ @ @ @ @ @ remaining issues later .
`` Our view is let ’ s spend a little over a trillion dollars on areas of the economy that are going to be very impactful now that we can agree on , '' Mnuchin said , adding that lawmakers could come back for a sixth relief bill later in the year or in January .
`` The Administration is willing to move forward with legislation that allows for substantial funds for schools , child care , food , vaccines , hospitals , PPP for small businesses , rental @ @ @ @ @ @ @ and local government assistance , and liability protection for universities , schools , and businesses , '' he said in a statement later in the day .
`` The Democrats have no interest in negotiating . ''
Pelosi , however , said that a deal needs to get done now and stimulus measures can ’ t wait .
Asked if she thinks Congress can wait until September , when coronavirus relief measures could become part of deadline-driven talks on funding needed to avoid a government shutdown , Pelosi told reporters : `` I @ @ @ @ @ @ @ die . ''
Still , Pelosi made clear Wednesday she doesn ’ t see any point to negotiating if the White House holds fast to certain positions .
`` When commentators say to me : why ca n't you resolve your differences ?
Because we 're miles apart , '' she told MSNBC earlier in the day , again urging Republicans to meet in the middle .
`` Until they 're ready to do that , it 's no use sitting in a room and let them tell us that states should go @ @ @ @ @ @ @ differences on aid to state and local governments — Democrats are pushing for $ 915 billion , while Republicans have offered $ 150 billion — are rooted in very different outlooks for the pandemic .
`` I think the issue is the way the Democrats come up with this trillion dollars is they look at the next two years and they project losses , '' he said , according to The Hill .
`` They do n't think the economy is going to open up — we do .
And they look at @ @ @ @ @ @ @ which had issues before all of this . ''
The bottom line : `` The high-stakes stalemate now appears likely to drag on for weeks , or even into September , '' Politico reports , citing lawmakers and aides in both parties .

Democratic leaders Nancy Pelosi and Chuck Schumer said Wednesday that they had turned down an overture from Treasury Secretary Steven Mnuchin for the two sides negotiating a stalled coronavirus relief package to resume talks. The White House, Democrats said, isn’t budging from its demands for a smaller aid package.
"We have made clear to the Administration that we are willing to come down $1 trillion if they will come up $1 trillion," the Democratic leaders said in a joint statement. "However, it is clear that the Administration still does not grasp the magnitude of the problems that American families are facing. We have again made clear to the Administration that we are willing to resume negotiations once they start to take this process seriously."
Mnuchin said Pelosi’s statement was "not an accurate reflection of our conversation," adding that Pelosi was "unwilling to meet to continue negotiations unless we agreed in advance to her proposal, costing at least $2 trillion."
Mnuchin told Fox Business that Congress could pass a relief plan costing just over $1 trillion now and deal with remaining issues later. "Our view is let’s spend a little over a trillion dollars on areas of the economy that are going to be very impactful now that we can agree on," Mnuchin said, adding that lawmakers could come back for a sixth relief bill later in the year or in January.
"The Administration is willing to move forward with legislation that allows for substantial funds for schools, child care, food, vaccines, hospitals, PPP for small businesses, rental assistance, broadband, airports, state and local government assistance, and liability protection for universities, schools, and businesses," he said in a statement later in the day. "The Democrats have no interest in negotiating."
Pelosi, however, said that a deal needs to get done now and stimulus measures can’t wait. Asked if she thinks Congress can wait until September, when coronavirus relief measures could become part of deadline-driven talks on funding needed to avoid a government shutdown, Pelosi told reporters: "I hope not, no. People will die."
Still, Pelosi made clear Wednesday she doesn’t see any point to negotiating if the White House holds fast to certain positions. "When commentators say to me: why can't you resolve your differences? Because we're miles apart," she told MSNBC earlier in the day, again urging Republicans to meet in the middle. "Until they're ready to do that, it's no use sitting in a room and let them tell us that states should go bankrupt."
Mnuchin indicated that the differences on aid to state and local governments — Democrats are pushing for $915 billion, while Republicans have offered $150 billion — are rooted in very different outlooks for the pandemic.
"I think the issue is the way the Democrats come up with this trillion dollars is they look at the next two years and they project losses," he said, according to The Hill. "They don't think the economy is going to open up — we do. And they look at some of their most problematic states, which had issues before all of this."
The bottom line: "The high-stakes stalemate now appears likely to drag on for weeks, or even into September," Politico reports, citing lawmakers and aides in both parties.


thefiscaltimes--2020-08-12--The White House Has Explored Ways to Sidestep Congress to Cut Taxes: Report

The White House has explored whether President Trump has the authority to cut taxes without legislation from Congress , The New York Times reports : “ While such a move is not imminent , Mr. Trump ’ s advisers have sought legal guidance from White House lawyers about whether the president has the authority to eliminate certain taxes , including income and business taxes , without the approval of Congress.
” Daniel Hemel , a tax law professor at the University of Chicago , tells the Times that the administration “ clearly can delay pretty much anything for a year.
@ @ @ @ @ @ @ move to defer payroll taxes through the end of the year , White House officials are discussing whether the president can actually “ terminate ” some taxes , as the president said he wants to do with payroll taxes .
Any such effort is bound to run into legal challenges since the Constitution grants Congress the power to enact and collect taxes .
Trump said Monday that he was “ looking very seriously at a capital-gains tax cut and also at an income-tax cut for middle-income families.
” The bottom line : Trump @ @ @ @ @ @ @ as elections draw near , and this time is no different , even if the chances of pushing another big tax cut through Congress appear questionable at best .
“ White House officials believe that temporarily delaying taxes is a powerful political tool for the president , ” the Times ’ s Alan Rappeport writes .
“ It allows him to draw a contrast [ with ] Mr. Biden , who would raise some taxes if elected .
And they believe that it will put Democrats in what will be the uncomfortable position @ @ @ @ @ @ @ when the deferment expires .
”

The White House has explored whether President Trump has the authority to cut taxes without legislation from Congress, The New York Times reports:
“While such a move is not imminent, Mr. Trump’s advisers have sought legal guidance from White House lawyers about whether the president has the authority to eliminate certain taxes, including income and business taxes, without the approval of Congress.”
Daniel Hemel, a tax law professor at the University of Chicago, tells the Times that the administration “clearly can delay pretty much anything for a year.” But unlike Trump’s weekend move to defer payroll taxes through the end of the year, White House officials are discussing whether the president can actually “terminate” some taxes, as the president said he wants to do with payroll taxes. Any such effort is bound to run into legal challenges since the Constitution grants Congress the power to enact and collect taxes.
Trump said Monday that he was “looking very seriously at a capital-gains tax cut and also at an income-tax cut for middle-income families.”
The bottom line: Trump has a habit of talking tax cuts as elections draw near, and this time is no different, even if the chances of pushing another big tax cut through Congress appear questionable at best. “White House officials believe that temporarily delaying taxes is a powerful political tool for the president,” the Times’s Alan Rappeport writes. “It allows him to draw a contrast [with] Mr. Biden, who would raise some taxes if elected. And they believe that it will put Democrats in what will be the uncomfortable position of allowing those taxes to be reinstated when the deferment expires.”


thefiscaltimes--2020-08-18--Universal Savings Accounts Can Help More Americans Save for Their Futures

In the first months of the pandemic shutdown , millions of Americans waited to receive their unemployment insurance , facing delays and glitches following historic application levels .
Even when government programs exist , personal savings is necessary to help bridge gaps when those systems inevitably fall short .
To make saving a little easier , a new idea is gaining popularity : Universal Savings Accounts ( USAs ) .
These savings accounts would help every American save for a rainy day , to start a business or to grow their family .
The current system for personal savings is @ @ @ @ @ @ @ option .
It tells young and lower-income Americans not to save or invest unless you are ready to save for retirement or other government-approved goals .
The existing 401 ( k ) and 529 saving accounts are designed for Americans who are wealthy enough to save for specific purposes and financially secure enough to know that their plans won ’ t change .
USAs provide another option , allowing families to save for the unknowns in life , without strings attached or being penalized by the tax code .
Instead of juggling multiple @ @ @ @ @ @ @ education , health care or child care , a USA would be a new catch-all account that can be used for anything .
So how would these accounts work ?
Individuals would be allowed to contribute up to $ 10,000 in after-tax earnings to their USA each year .
Similar to retirement accounts , the funds could be held in cash , put into interest-bearing bonds or invested in the stock market .
The savings could be used at any time for any purpose .
All withdrawals would be excluded from taxable income @ @ @ @ @ @ @ be tax-free .
No taxes on the interest , no taxes on the capital gains and no taxes on the dividends .
Such a single , simple , universal savings account would make existing savings incentives more readily available to younger , lower-income and self-employed workers who often need the savings most .
Waiting for unemployment benefits , gig-economy workers , such as Uber drivers or TaskRabbit service providers , who are usually not eligible for unemployment , faced some of the longest delays as a newly created , but temporary , system @ @ @ @ @ @ @ working .
Complicated rules and high penalties for misusing government-earmarked savings discourage the use of the existing system among many gig-workers .
They tend to be younger , have lower income and lack access to employer-sponsored retirement or other savings plans .
The existing saving accounts fail to meet the needs of these Americans because they carry strict penalties when workers use their savings in non-approved ways .
Low-income savers , for example , are about 30 % more likely to face tax penalties for improperly withdrawing their money from a tax-preferred saving @ @ @ @ @ @ @ Part of the problem is that current law tries to influence people ’ s behavior rather than allowing them to save , or otherwise do as they wish , with their own money .
Congress implicitly recognizes the failure of single-purpose savings accounts after almost every major natural disaster , by allowing affected Americans to draw on their retirement savings penalty-free .
In the March coronavirus relief package , Congress suspended restrictions on using retirement funds for pandemic emergencies .
They also waived requirements that would have forced some retirees to liquidate their @ @ @ @ @ @ @ market crash .
These were sensible changes .
But by creating a universal savings account , Congress could help Americans build a flexible , self-directed rainy day fund , instead of addressing each crisis with an exception to typically rigid rules .
Similar accounts have succeeded in promoting saving around the world .
The United Kingdom and Canada pioneered the model of simple , flexible savings accounts to help more people save for their own priorities .
Forty-three percent of all households in the U.K. have saved money in these accounts , and @ @ @ @ @ @ @ earning less than $ 26,000 .
Similarly , in Canada , a majority of accounts are owned by lower-income savers , and young people take the most advantage of these programs with those in their 20s contributing at some of the highest rates .
Right now , Americans are also saving more on their own .
In April , people saved one-third of their after-tax income , up from about 8 % in normal times .
While much of this increased saving is people only delaying their spending for fear of leaving their @ @ @ @ @ @ @ ’ t leave ) , people do tend to save more after economic recessions .
Congress could help Americans build a more secure future by allowing them to move some of their savings into a USA .
Whether it ’ s a rainy day fund or savings for a sunny beach vacation , we should be taxing family savings less so Americans can save more .
Adam N. Michel is a Senior Policy Analyst in the Grover M. Hermann Center for the Federal Budget at The Heritage Foundation and author of Center for @ @ @ @ @ @ @ .

In the first months of the pandemic shutdown, millions of Americans waited to receive their unemployment insurance, facing delays and glitches following historic application levels. Even when government programs exist, personal savings is necessary to help bridge gaps when those systems inevitably fall short.
To make saving a little easier, a new idea is gaining popularity: Universal Savings Accounts (USAs). These savings accounts would help every American save for a rainy day, to start a business or to grow their family.
The current system for personal savings is broken and in need of a new option. It tells young and lower-income Americans not to save or invest unless you are ready to save for retirement or other government-approved goals.
The existing 401(k) and 529 saving accounts are designed for Americans who are wealthy enough to save for specific purposes and financially secure enough to know that their plans won’t change. USAs provide another option, allowing families to save for the unknowns in life, without strings attached or being penalized by the tax code.
Instead of juggling multiple savings accounts, specific to retirement, education, health care or child care, a USA would be a new catch-all account that can be used for anything.
So how would these accounts work?
Individuals would be allowed to contribute up to $10,000 in after-tax earnings to their USA each year. Similar to retirement accounts, the funds could be held in cash, put into interest-bearing bonds or invested in the stock market. The savings could be used at any time for any purpose.
All withdrawals would be excluded from taxable income, which means all accrued earnings would be tax-free. No taxes on the interest, no taxes on the capital gains and no taxes on the dividends.
Such a single, simple, universal savings account would make existing savings incentives more readily available to younger, lower-income and self-employed workers who often need the savings most.
Waiting for unemployment benefits, gig-economy workers, such as Uber drivers or TaskRabbit service providers, who are usually not eligible for unemployment, faced some of the longest delays as a newly created, but temporary, system was slow to set up and start working.
Complicated rules and high penalties for misusing government-earmarked savings discourage the use of the existing system among many gig-workers. They tend to be younger, have lower income and lack access to employer-sponsored retirement or other savings plans.
The existing saving accounts fail to meet the needs of these Americans because they carry strict penalties when workers use their savings in non-approved ways. Low-income savers, for example, are about 30% more likely to face tax penalties for improperly withdrawing their money from a tax-preferred saving account during a personal financial crisis.
Part of the problem is that current law tries to influence people’s behavior rather than allowing them to save, or otherwise do as they wish, with their own money.
Congress implicitly recognizes the failure of single-purpose savings accounts after almost every major natural disaster, by allowing affected Americans to draw on their retirement savings penalty-free.
In the March coronavirus relief package, Congress suspended restrictions on using retirement funds for pandemic emergencies. They also waived requirements that would have forced some retirees to liquidate their investments at the bottom of the stock market crash.
These were sensible changes. But by creating a universal savings account, Congress could help Americans build a flexible, self-directed rainy day fund, instead of addressing each crisis with an exception to typically rigid rules.
Similar accounts have succeeded in promoting saving around the world. The United Kingdom and Canada pioneered the model of simple, flexible savings accounts to help more people save for their own priorities.
Forty-three percent of all households in the U.K. have saved money in these accounts, and half of those households are low-income savers earning less than $26,000. Similarly, in Canada, a majority of accounts are owned by lower-income savers, and young people take the most advantage of these programs with those in their 20s contributing at some of the highest rates.
Right now, Americans are also saving more on their own. In April, people saved one-third of their after-tax income, up from about 8% in normal times. While much of this increased saving is people only delaying their spending for fear of leaving their homes (or being told they shouldn’t leave), people do tend to save more after economic recessions.
Congress could help Americans build a more secure future by allowing them to move some of their savings into a USA. Whether it’s a rainy day fund or savings for a sunny beach vacation, we should be taxing family savings less so Americans can save more.
Adam N. Michel is a Senior Policy Analyst in the Grover M. Hermann Center for the Federal Budget at The Heritage Foundation and author of Center for Growth and Opportunity paper Universal Savings Accounts.


thefiscaltimes--2020-08-18--Why Republicans, Democrats Think Differently About Taxes

Opinions about tax policy are divided in the U.S. along fairly predictable partisan lines , with Republicans typically expressing preferences for lower taxes compared to Democrats , but how do those beliefs arise and why do they persist ?
Economist Stefanie Stantcheva , a professor at Harvard University who studies public finance , released a new paper that examines how Americans think about taxes , linking specific questions about fiscal issues to broader issues related to fairness and the role of government .
“ Support for tax policy most strongly correlates with views on fairness & the benefits of redistribution @ @ @ @ @ @ @ ” Stantcheva said Tuesday .
“ Efficiency concerns play a more minor role in people ’ s minds .
It 's thus crucial to study what is considered ‘ fair ’ by different people.
” Fairness is a tricky subject , though , since it is both subjective and hard to define in absolute terms .
Using experiments in which test subjects are exposed to different ideas about taxation and the economy , Stantcheva found that people differ not just in their policy preferences , but also in how they make up their @ @ @ @ @ @ @ world works .
“ Relative to Republicans , Democrats are more likely to believe that taxes have less economic costs , that tax cuts almost never ‘ pay for themselves ’ and that people will not starkly change behaviors in response to tax increases , ” she wrote .
“ Democrats believe less in ‘ trickle-down , ’ whereby tax cuts on high incomes would benefit everyone .
They are also much more likely than Republicans to think that the distributions of income , wealth & inheritances are unfair & that taxing away @ @ @ @ @ @ @ is also what Stantcheva calls a “ polarization of reality ” when it comes to fiscal policies , in which people disagree about even the most basic facts and misperceptions play a role in forming opinions .
“ People on the right perceive current taxes as higher & more progressive than people on the left , ” she says , despite the existence of objective data that could settle those issues one way or another .
At the same time , there are some areas of broad agreement .
For example , the @ @ @ @ @ @ @ who work hard should pay lower taxes .
Surprisingly , they also agree that middle-class tax cuts help shrink the federal deficit .
While more Republicans than Democrats agree , majorities from both parties believe this to be true – despite the fact that it is almost certainly untrue .
( Stantcheva refers to this as a “ Laffer effect , ” after Art Laffer , the conservative economist credited with popularizing the idea that tax cuts increase revenues . )
Ultimately , preferences for different tax policies are driven by ways of @ @ @ @ @ @ @ , Stantcheva says , and people generally don ’ t think like economists .
“ Indeed ... factual knowledge about the exact numbers and statistics of a given policy may be more or less accurate , but the reasoning about it may still be very different across people , especially across political groups , and may matter much more in shaping policy views.
” This suggests that any effort to elevate the public policy debate over taxes needs to focus on broader questions of worldviews and how people actually think , while situating @ @ @ @ @ @ @ fairness .

Opinions about tax policy are divided in the U.S. along fairly predictable partisan lines, with Republicans typically expressing preferences for lower taxes compared to Democrats, but how do those beliefs arise and why do they persist? Economist Stefanie Stantcheva, a professor at Harvard University who studies public finance, released a new paper that examines how Americans think about taxes, linking specific questions about fiscal issues to broader issues related to fairness and the role of government.
“Support for tax policy most strongly correlates with views on fairness & the benefits of redistribution, followed by views on government,” Stantcheva said Tuesday. “Efficiency concerns play a more minor role in people’s minds. It's thus crucial to study what is considered ‘fair’ by different people.”
Fairness is a tricky subject, though, since it is both subjective and hard to define in absolute terms. Using experiments in which test subjects are exposed to different ideas about taxation and the economy, Stantcheva found that people differ not just in their policy preferences, but also in how they make up their minds and their assumptions about how the world works.
“Relative to Republicans, Democrats are more likely to believe that taxes have less economic costs, that tax cuts almost never ‘pay for themselves’ and that people will not starkly change behaviors in response to tax increases,” she wrote. “Democrats believe less in ‘trickle-down,’ whereby tax cuts on high incomes would benefit everyone. They are also much more likely than Republicans to think that the distributions of income, wealth & inheritances are unfair & that taxing away parts of them is fair.”
There is also what Stantcheva calls a “polarization of reality” when it comes to fiscal policies, in which people disagree about even the most basic facts and misperceptions play a role in forming opinions. “People on the right perceive current taxes as higher & more progressive than people on the left,” she says, despite the existence of objective data that could settle those issues one way or another.
At the same time, there are some areas of broad agreement. For example, the majority of respondents say they think people who work hard should pay lower taxes. Surprisingly, they also agree that middle-class tax cuts help shrink the federal deficit. While more Republicans than Democrats agree, majorities from both parties believe this to be true – despite the fact that it is almost certainly untrue. (Stantcheva refers to this as a “Laffer effect,” after Art Laffer, the conservative economist credited with popularizing the idea that tax cuts increase revenues.)
Ultimately, preferences for different tax policies are driven by ways of thinking as much as facts and figures, Stantcheva says, and people generally don’t think like economists. “Indeed ... factual knowledge about the exact numbers and statistics of a given policy may be more or less accurate, but the reasoning about it may still be very different across people, especially across political groups, and may matter much more in shaping policy views.” This suggests that any effort to elevate the public policy debate over taxes needs to focus on broader questions of worldviews and how people actually think, while situating specific proposals within the broader context of fairness.


thefiscaltimes--2020-08-18--IRS Will Send 14 Million Taxpayers Interest on Their Tax Refunds

Nearly 14 million taxpayers who waited until July 15 to file their taxes will be paid interest on their refunds @ @ @ @ @ .
The Treasury Department delayed the tax filing date for three months due to disruptions @ @ @ @ @ , and the tax agency will pay interest on refunds that go out after July @ @ @ @ @ April 15 deadline .
The average payment will be $ 18 – not much , @ @ @ @ @ taxable .
Anyone receiving more than $ 10 in interest will have to report it @ @ @ @ @ return next year .

Nearly 14 million taxpayers who waited until July 15 to file their taxes will be paid interest on their refunds, the IRS said Tuesday.
The Treasury Department delayed the tax filing date for three months due to disruptions caused by the coronavirus pandemic, and the tax agency will pay interest on refunds that go out after July 15 based on the normal April 15 deadline.
The average payment will be $18 – not much, but high enough to be taxable. Anyone receiving more than $10 in interest will have to report it as income on their tax return next year.


thefiscaltimes--2020-08-17--Pentagon Could Slash $2.2 Billion from Military Health Care

Officials at the Defense Department have proposed to cut $ 2.2 billion from health care spending over the next five years , Politico reported Sunday .
The proposed cuts are part of an initiative by Defense Secretary Mark Esper to cut unnecessary spending at the Pentagon .
But two senior defense officials Politico spoke to said the cost-cutting efforts have been executed too hastily , and that the proposed cuts to health care spending would harm patients .
The $ 2.2 billion in cuts would be imposed on the defense health system , which serves nearly 10 million active duty @ @ @ @ @ @ @ Leaders would be tasked with finding spending to cut – and that ’ s where the problem may arise .
“ A lot of the decisions were made in dark , smoky rooms , and it was driven by arbitrary numbers of cuts , ” a senior official told Politico .
“ They wanted to book the savings to be able to report it.
” Another official warned that the proposed reductions would reduce the Pentagon ’ s medical capabilities while saving little money in the end , since the military health system @ @ @ @ @ @ @ private health networks to provide care .

Officials at the Defense Department have proposed to cut $2.2 billion from health care spending over the next five years, Politico reported Sunday.
The proposed cuts are part of an initiative by Defense Secretary Mark Esper to cut unnecessary spending at the Pentagon. But two senior defense officials Politico spoke to said the cost-cutting efforts have been executed too hastily, and that the proposed cuts to health care spending would harm patients.
The $2.2 billion in cuts would be imposed on the defense health system, which serves nearly 10 million active duty personnel, retirees and family members. Leaders would be tasked with finding spending to cut – and that’s where the problem may arise.
“A lot of the decisions were made in dark, smoky rooms, and it was driven by arbitrary numbers of cuts,” a senior official told Politico. “They wanted to book the savings to be able to report it.”
Another official warned that the proposed reductions would reduce the Pentagon’s medical capabilities while saving little money in the end, since the military health system would become more reliant on relatively expensive private health networks to provide care.
Read the full report at Politico.