Written by rjs, MarketWatch 666
News posted last week about economic effects related to the coronavirus 2019-nCoV (aka SARS-CoV-2), which produces COVID-19 disease, has been surveyed and some articles are summarized here. We cover the latest economic data, especially renewed talk of coronavirus relief bill, government funding, the latest employment data, housing market reports, mortgage delinquencies & forbearance, layoffs, lockdowns, and schools, as well as GDP. The bulk of the news is from the U.S., with a few articles from overseas at the end. (Picture below is morning rush hour in downtown Chicago, 20 March 2020.) News items about epidemiology and other medical news for the virus are reported in a companion article.
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FOMC Statement: No Change — Fed Chair Powell press conference video here starting at 2:30 PM ET. FOMC Statement:
The Federal Reserve is committed to using its full range of tools to support the U.S. economy in this challenging time, thereby promoting its maximum employment and price stability goals.The COVID-19 pandemic is causing tremendous human and economic hardship across the United States and around the world. Economic activity and employment have continued to recover but remain well below their levels at the beginning of the year. Weaker demand and earlier declines in oil prices have been holding down consumer price inflation. Overall financial conditions remain accommodative, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses.The path of the economy will depend significantly on the course of the virus. The ongoing public health crisis will continue to weigh on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term.The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. With inflation running persistently below this longer-run goal, the Committee will aim to achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time and longer-term inflation expectations remain well anchored at 2 percent. The Committee expects to maintain an accommodative stance of monetary policy until these outcomes are achieved. The Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the Committee’s assessments of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time. In addition, the Federal Reserve will continue to increase its holdings of Treasury securities by at least $80 billion per month and of agency mortgage-backed securities by at least $40 billion per month until substantial further progress has been made toward the Committee’s maximum employment and price stability goals. These asset purchases help foster smooth market functioning and accommodative financial conditions, thereby supporting the flow of credit to households and businesses.
Fed Chair Powell Opens a Big Can of Worms at His Press Conference – Pam Martens -There was a jaw-dropping exchange between Politico reporter Victoria Guida and Fed Chair Jerome Powell at his press conference yesterday following the two-day meeting of the Fed’s Federal Open Market Committee (FOMC). Powell first acknowledged in his opening statement that “the current economic downturn is the most severe of our lifetimes.” But he then proceeds to tell Guida that the Fed has given no thought at all to what kind of emergency lending it might engage in under the incoming Biden administration. Treasury Secretary Steve Mnuchin has kneecapped the Fed’s existing emergency loan facilities by demanding that the Fed return the Treasury’s unused money that is backstopping these facilities as loss-absorbing capital. The Fed has for years attempted to reassure markets that there will be no surprises from the Fed; that it will be providing lots of forward guidance to Wall Street to assuage any nervous jitters about its actions. And yet this is what Powell tells Guida about the Fed’s future plans for emergency lending facilities: “We’re very focused on getting through year end. We’ve been very focused on the issues that are right in front of us. And honestly, we’re not planning on anything or having any discussions about what we might do down the road.” If that were true, which it clearly isn’t, it would be incompetency of the highest order in the midst of what Powell himself describes as the worst economic downturn of our lifetimes. Guida also dropped the bombshell on Powell (and the full press conference) that she is aware that there is absolutely nothing in the Federal Reserve Act’s Section 13(3) that requires the Fed to get the Treasury to provide loss-absorbing capital from the taxpayer in order for the Fed to create its emergency lending facilities. Guida states:
“Chair Powell, you’ve said that you accept Treasury Secretary Mnuchin’s interpretation of the statute of the CARES Act on what should happen with those programs. So, first of all, I’m curious whether under a new Treasury Secretary, you will accept whatever legal interpretation they put forward for those programs. And then, also, given that there isn’t a statutory requirement for you to have financial backing from Treasury for 13(3) facilities, do you have any plans for any future facilities that don’t require Treasury backing?”
Powell responds:
“Certainly, we would have the ability to do facilities under 13(3) in some cases with no backing, but we can’t do any 13(3) facilities without the approval of the Treasury Secretary. Right. But we did some facilities. I think one of our facilities this time didn’t have any Treasury backing. And I think some in the round of during the global financial crisis also didn’t have any.”
The Fed has seven emergency loan programs today that are using Treasury money as backstops. It has two that are not: the Primary Dealer Credit Facility and the Paycheck Protection Program Liquidity Facility. Powell has been on the Board of the Federal Reserve since May 25, 2012. He’s been its chair since February 5, 2018. And he has just voiced the opinion that the U.S. Treasury backstopped most of the 13(3) emergency lending facilities during the 2007 to 2010 financial crisis while only “some” of those facilities didn’t have that Treasury backstop. The fact is that according to the government’s in-depth audit of those facilities that was released by the Government Accountability Office (GAO) on July 21, 2011, of the Fed’s six 13(3) emergency loan facilities that were operational during the last financial crisis, just one had any funding support from the Treasury. Those six facilities were the Term Auction Facility (TAF); the Term Securities Lending Facility (TSLF); the Primary Dealer Credit Facility (PDCF); the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility (AMLF); the Commercial Paper Funding Facility (CPFF); and the Term Asset-Backed Securities Loan Facility (TALF). According to the GAO audit, the Fed dispersed a total of $16.1 trillion in cumulative loans through these facilities (see graph below) and all it ever got from the Treasury was a $20 billion backstop for TALF, which was eventually reduced to $4.3 billion in July 2010.
Q4 GDP Forecasts –Economic activity in the fourth quarter is dependent on the impact of the pandemic. With the number of new cases of COVID over 200,000 per day, hospitalizations at record levels (over 104,000), and deaths per day at new record highs (almost 3,500 each of the last two days), it appears that economic activity has slowed in December. Initial unemployment claims have increased sharply over the last two weeks, suggesting that layoffs have increased. Last week was the BLS reference week for December, and the increase in weekly claims suggest a weak employment report for December. However, economic activity was solid in October, and that would suggest PCE growth of close to 6% in Q4, even if November and December see no month-over-month growth. It is possible that activity slowed in November and will decline in December. From Goldman Sachs: We left our Q4 GDP tracking estimate unchanged at +5.0% (qoq ar). [Dec 17 estimate] From Merrill Lynch: We revise up our 4Q20 GDP forecast to 5.0% qoq saar from 4.0% previously, marking to market with our latest tracking estimate. This lifts our 2021 annual forecast by a tenth to 4.6% while 2020 remains at -3.5%. [Dec 18 estimate] From the NY Fed Nowcasting Report: The New York Fed Staff Nowcast stands at 2.4% for 2020:Q4 and 5.6% for 2021:Q1. A negative surprise from retail sales data more than offset positive news from housing sector data in both quarters. [Dec 18 estimate] And from the Altanta Fed: GDPNow: The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in thefourth quarter of 2020 is 11.1 percent on December 17, up from 11.0 percent on December 16. After this morning’s housing starts report from the U.S. Census Bureau, the nowcast of fourth-quarter real residential investment growth increased from 31.0 percent to 33.1 percent. [Dec 17 estimate]
Seven High Frequency Indicators for the Economy – These indicators are mostly for travel and entertainment. It will interesting to watch these sectors recover as the vaccine is distributed. The TSA is providing daily travel numbers. This data shows the seven day average of daily total traveler throughput from the TSA for 2019 (Blue) and 2020 (Red). This data is as of December 13th. The seven day average is down 67.9% from last year (32.1% of last year). (Dashed line) The second graph shows the 7 day average of the year-over-year change in diners as tabulated by OpenTable for the US and several selected cities. This data is updated through December 5, 2020. This data is “a sample of restaurants on the OpenTable network across all channels: online reservations, phone reservations, and walk-ins. For year-over-year comparisons by day, we compare to the same day of the week from the same week in the previous year.” Note that dining is generally lower in the northern states – Illinois, Pennsylvania, and New York – but declining in the southern states. Note that California dining is off sharply with new orders to close. This data shows domestic box office for each week (red) and the maximum and minimum for the previous four years. Data is from BoxOfficeMojo through December 10th. Movie ticket sales have picked up slightly over the last couple of months, but were down last week to $10 million (compared to usually around $125 million per week at this time of year). Some movie theaters have reopened (probably with limited seating). This graph shows the seasonal pattern for the hotel occupancy rate using the four week average. The red line is for 2020, dash light blue is 2019, blue is the median, and black is for 2009 (the worst year since the Great Depression for hotels – prior to 2020). This data is through December 5th. Hotel occupancy is currently down 37.9% year-over-year. Since there is a seasonal pattern to the occupancy rate, we can track the year-over-year change in occupancy to look for any improvement. This table shows the year-over-year change since the week ending Sept 19, 2020: This suggests no improvement over the last few months. This graph, based on weekly data from the U.S. Energy Information Administration (EIA), shows gasoline supplied compared to the same week last year. At one point, gasoline supplied was off almost 50% YoY. As of December 4th, gasoline supplied was off about 14.4% YoY (about 85.6% of last year). This graph is from Apple mobility. From Apple: “This data is generated by counting the number of requests made to Apple Maps for directions in select countries/regions, sub-regions, and cities.” This is just a general guide – people that regularly commute probably don’t ask for directions. There is also some great data on mobility from the Dallas Fed Mobility and Engagement Index. This data is through December 12th for the United States and several selected cities. The graph is the running 7 day average to remove the impact of weekends. Here is some interesting data on New York subway usage (HT BR). This graph is from Todd W Schneider. This is daily data for this year. This data is through Friday, December 11th. Schneider has graphs for each borough, and links to all the data sources.
Experts say stimulus deal could head off double-dip recession – Some economists believe the stimulus deal congressional leaders are crafting could avert a double-dip recession, but argue more will likely be needed to ensure the recovery is robust. “It’s enough to avert a double-dip recession, but just enough,” said Mark Zandi, chief economist at Moody’s Analytics. “It doesn’t forestall a few bad months,” he added. The emerging deal largely builds off the $908 billion proposal that a bipartisan group of legislators put out two weeks ago to revive negotiations on a fifth COVID-19 package. Economists worried that congressional gridlock would lead to a slew of safety net programs expiring, dropping the floor out from people grappling with unemployment and potential evictions at a time when a surge in COVID-19 cases has led to renewed restrictions on businesses. “It gets us over this cliff,” said Andrew Stetner, a fellow at the left-leaning Century Foundation. “It will prevent 7.6 million Americans from going into poverty in January at a time when 5 million are worried about being evicted.” But while the deal is expected to include hundreds of billions for small businesses, funding for vaccine distribution and medical protective equipment, and an extension for central unemployment insurance programs, it also contains one major difference from the bipartisan proposal. The deal, which as of publication has not been finalized, is expected to redirect $160 billion originally earmarked for state and local aid toward a second, smaller round of stimulus checks. A Moody’s analysis out Thursday will show a collective $170 billion deficit for state governments through June of 2022. “That’s meaningful. They’re going to have to fill those holes by cutting jobs, programs and services,” Zandi said. Although stimulus checks are broadly popular, Zandi says they are less effective at boosting the economy than state and local aid. “Swapping out state and local aid for stimulus checks is a downgrade,” he said. For every dollar the federal government spends on stimulus, economists calculate a “multiplier” showing how much that dollar will boost GDP. The most effective expenditures for stimulus purposes tend to be those that will be spent quickly, rather than saved up. When it comes to multipliers, at the top of the list is unemployment benefits, which are likely to be spent quickly because they are directed at people who rely on them for income. Unemployment benefits are likely to be spent on rent, food, medicine and the usual expenses that families might cut back on without any economic support. But state and local aid is a close second. “The last thing the economy needs right now is another round of layoffs, but if aid is dropped states and localities will very likely lay off more teachers, health care workers, and others, and cut spending in other ways, and that will worsen the recession,” said Michael Leachman, Vice President for State Fiscal Policy at the Center for Budget and Policy Priorities. Leachman says even a delay on state aid will be detrimental.”The time to provide aid is now. Starting in January, states will head into legislative sessions at which they’ll make consequential decisions about balancing this year’s budgets and writing their budgets for next year,” he said.”Aid is needed before states start laying off workers and cutting in other ways,” he added.
Bipartisan group unveils two-part $908 billion coronavirus package – A bipartisan group of lawmakers on Monday unveiled its $908 billion coronavirus relief package as Congress faces a time crunch to pass more aid. The proposal is split into two parts: One $748 billion piece includes another round of Paycheck Protection Program assistance for small businesses, an unemployment benefit, and more money for schools, vaccine distribution and other widely agreed-upon items. The second $160 billion piece ties together the two most controversial elements of the coronavirus negotiations: more money for state and local governments and protections for businesses from coronavirus-related lawsuits. “I think we’ve had a Christmas miracle occur in Washington,” said Sen. Susan Collins (R-Maine). “These bills are not only bipartisan products; they are bicameral as well. My hope is that our hard work will spur our leadership on both sides.” The text of the two bills comes after the group announced two weeks ago that it had reached an agreement on a framework for a $908 billion proposal. But the group, after announcing the framework, still had daily closed-door and Zoom meetings as it has tried to work out what to do about more money for states and liability protections. The first is a top priority for Democrats, while Senate Majority Leader Mitch McConnell (R-Ky.) has long pointed to legal protections as his “red line.” Splitting off the two issues could make it easier to convince congressional leaders to take up a smaller coronavirus deal and either pass it or add it to a must-pass government funding deal. Appropriators are on the cusp of agreeing to a mammoth omnibus bill, which is expected to be the vehicle for any year-end coronavirus relief. “Now it’s up to the leadership to take it and make this happen in a timely basis,” said Sen. Joe Manchin (D-W.Va.). But whether congressional leadership will take up the bipartisan bill remains unclear. Leadership and top appropriators were discussing dropping parts of coronavirus aid into the omnibus. Sen. John Cornyn (R-Texas), an adviser to McConnell, called the bipartisan bills “good stuff” but said any coronavirus relief was likely going to need to be agreed upon by leadership. “My understanding is that they are looking at what the bipartisan group has come up with … and a lot of it is good stuff for potential inclusion in the year-end spending bill,” Cornyn said. “I think it’s having a … positive influence on what will be ultimately included.” Cornyn added that he thought everything but the “truly controversial” items – state and local funding and liability protections – could get added into the spending bill. McConnell spoke from the Senate floor on Monday about the need for more coronavirus relief. He also has opened the door to dropping liability protections and state and local aid. “The next several days are going to bring about one of two outcomes. Either 100 Senators will be here shaking our heads, slinging blame and offering excuses about why we still have not been able to make a law … or we will break for the holidays having sent another huge dose of relief out the door for the people who need it,” McConnell said. But the GOP leader did not mention the bipartisan group’s proposal either during his speech or respond to questions about it as he walked to the Senate floor.
Lawmakers call for including creation of Latino, women’s history museums in year-end spending deal – A bipartisan group of lawmakers is calling on congressional leaders to include legislation that would create Smithsonian museums dedicated to Latino and women’s history as part of the year-end government spending package. Legislation to keep the government funded past Friday, Dec. 18, is expected to be unveiled as soon as Tuesday. The bill is also expected to serve as a legislative vehicle for COVID-19 relief since it needs to be passed by Friday to avoid a government shutdown. Members of the House and Senate from both parties acknowledged the “delicate nature of ongoing negotiations” over the spending package but argued that the largely noncontroversial museum proposals should be part of what’s expected to be the final major bill that Congress passes this year. “We believe this represents our last best hope in seeing these museums become a reality for millions of Americans who lack historical and cultural representation within the Smithsonian,” the lawmakers wrote in a letter to House and Senate party leaders. The letter was signed by Reps. Jose Serrano (D-N.Y.), Carolyn Maloney (D-N.Y.), Will Hurd (R-Texas) and Brian Fitzpatrick (R-Pa.), as well as Sens. Bob Menendez (D-N.J.), John Cornyn (R-Texas), Susan Collins (R-Maine) and Dianne Feinstein (D-Calif.). The House has passed versions of the bills to create the Latino and women’s history museums with bipartisan support. The House passed a bill, authored by Serrano, to establish a Smithsonian National Museum of the American Latino by voice vote in July. And in February, the House passed legislation 374-37 to create a women’s history museum that has been championed for two decades by Maloney, the first woman to chair the House Oversight and Reform Committee. But Sen. Mike Lee (R-Utah) blocked the legislation Thursday, arguing that creating new museums dedicated to those groups would exacerbate national divisions. He suggested that he would support more representation of Latinos and women within the existing Smithsonian Museum of American History. “Within the walls of a Smithsonian museum just like at the National Gallery of Art or the great memorials that dot this city, there is no us and them. There’s only us. And so my objection to the creation of a new Smithsonian museum or series of museums based on group identity, what Theodore Roosevelt called hyphenated Americanism, is not a matter of budgetary or legislative technicalities. It is a matter of national unity and cultural inclusion,” Lee said. “I understand what my colleagues are trying to do and why. I respect what they’re trying to do. I even share their interests in ensuring that these stories are told. But the last thing we need is to further divide an already divided nation within an array of separate but equal museums of hyphenated identity groups,” Lee added. A bipartisan group of senators unveiled a two-part $908 billion COVID-19 relief package on Monday with another round of Paycheck Protection Program assistance for small businesses, unemployment insurance, and funding for schools and vaccine distribution while separating the more nettlesome issues of state and local government funding and liability protections for businesses into another measure. It remains unclear, however, if congressional leaders will take up the bipartisan proposal.
Democratic leaders under pressure to agree to slimmed-down COVID-19 relief deal – Senate Minority Leader Charles Schumer (D-N.Y.) and Speaker Nancy Pelosi (D-Calif.) are under growing pressure from fellow Democrats to back off their insistence that a year-end COVID-19 relief package include another large tranche of federal aid for cash-strapped state and local governments. Schumer and Pelosi last week shot down a proposal by Senate Majority Leader Mitch McConnell (R-Ky.) to set aside the two most controversial items of the relief talks: aid for state and local governments and liability protection for businesses and other organizations. On Tuesday, the two Democrats met with McConnell and House Minority Leader Kevin McCarthy (R-Calif.) to discuss attaching a relief package to the $1.4 trillion omnibus package funding general government operations. Treasury Secretary Steven Mnuchin joined by phone. Schumer and Pelosi have eased up on their demands in recent days amid growing calls from fellow Democrats for a coronavirus relief deal before Congress leaves for the Christmas break. Even Democrats who have blasted Republicans for not supporting a larger relief package have signaled a willingness to accept a smaller bill before Christmas. “I think we’ve got to get what we can get now,” said Sen. Sherrod Brown (D-Ohio). He said he thought the GOP’s opposition to a larger bill was “outrageous.” “This administration has betrayed workers and consumers every step of the way and it’s clear they side with corporate interests over workers every single time,” he said. But Brown added that Democrats can make another bid for state and local relief funding next year after President-elect Joe Biden is sworn into office. “I would hope the pressure on Republican senators would be such that McConnell would have to at least acknowledge” it, Brown added. Sen. Chris Coons (D-Del.), one of Biden’s closest allies on Capitol Hill, on Tuesday called on congressional leaders to accept a bipartisan $748 billion COVID-19 relief proposal that does not include $160 billion in state and local aid that was removed in recent days to break a stalemate. “We have to move forward on this $748 billion that we all agree on. We should not go home without enacting significant relief for the American people who are so much in need right now as we go into the holidays,” Coons said on CNN’s “New Day.” A group of Democrats on Monday joined a group of moderate Republicans in announcing support for the $748 billion package without the $160 billion bloc of state and local funding: Sens. Joe Manchin (D-W.Va.), Jeanne Shaheen (D-N.H.), Maggie Hassan (D-N.H.), Dick Durbin (D-Ill.) and Angus King (I-Maine), who caucuses with Democrats. The package includes $300 in weekly federal supplemental unemployment assistance for a period of 16 weeks, $300 billion for the Small Business Administration to make a second round of Paycheck Protection Program loans, $13 billion in emergency food assistance and $25 billion in emergency rental assistance. It also extends student loan forbearance through April, provides $35 billion for a health care provider relief fund, $16 billion for virus testing and vaccine distribution, $82 billion in funding for K-12 schools and higher education, and $45 billion in emergency funding for airlines, airports, buses, Amtrak and public transit. It’s a far cry from the $2.2 trillion HEROES Act that Schumer and Pelosi said should be the “starting point” of the negotiations on Nov. 12. Durbin explained on the Senate floor Tuesday that state and local funding and liability protection provisions “were not included in the last consensus bill because we couldn’t reach a consensus on them.” Durbin, however, said he hoped that Senate and House leader still might find a way to put state and local relief in the bill.
Congress close to coronavirus deal that includes stimulus checks – Senate and House leaders are on the cusp of a coronavirus relief deal that will include direct $600 to $700 direct stimulus payments and $300-per-week supplemental unemployment assistance, according to sources familiar with the talks. The $900 billion package is the result of months of stop-and-start negotiations that received a boost in early December when a bipartisan group of senators and House members unveiled their own $908 billion package after talks between Democratic leaders and the White House stalled. The emerging deal, however, will not include $160 billion in new state and local aid or liability protection for businesses and other organizations – two of the most contentious issues of the talk. The new round of stimulus checks cost approximately the same as the $160 billion in state and local aid that negotiators have set aside in hopes of reaching a deal by week’s end. Senate and House leaders want to attach the new coronavirus relief package to a $1.4 trillion omnibus spending package that needs to pass by Dec. 18 to keep the government funded. The emerging deal is based largely on a revised $748 billion relief bill that the bipartisan group of Senate and House moderates unveiled Monday, which left aside state and local funding and the liability protection provisions. Senate Republican Whip John Thune (S.D.), a member of the Senate Finance Committee, told reporters Wednesday the stimulus checks will be $600 to $700 per individual.” Thune said he expects the package to provide $300 a week in supplemental federal unemployment assistance through March and confirmed that it would not include additional state and local aid funding. The senator said there could be language in the deal aimed at addressing concerns that people who receive both enhanced unemployment benefits and stimulus checks would be getting a “double benefit.” Tax experts said that it would be difficult for the IRS to administer a provision that prevents unemployment recipients from getting direct payments. Thune said the plan for the House to act on the combined COVID relief-omnibus spending package first and send it to the Senate to pass before the Friday night deadline. In a win for Republicans, the cost of the COVID-relief portion of the package is below $1 trillion, an upper boundary set by Senate Majority Leader Mitch McConnell (R-Ky.) and Senate Republicans earlier this year. While the package does not include the $160 billion tranche for state and local government, a person familiar with the negotiations says it includes “other avenues to deliver aid to states, localities, territories and tribes” and emphasized the McConnell did not get the liability provisions he said earlier this year would be part of any deal. It would provide between $320 billion and $330 billion for the second round of Paycheck Protection Program small-business loans, according to sources familiar with the talks, as well as money for broadband Internet services, food assistance and rental insurance. “We made major headway toward hammering out a targeted pandemic relief package that would be able to pass both chambers with bipartisan majorities,” McConnell announced on the Senate floor Wednesday morning. “We committed to continuing these urgent discussions until we have an agreement and we agreed we will not leave town until we’ve made law,” the GOP leader added. “The American people need more help, it’s that simple. Further targeted relief is now months overdue.”
Powell praises progress on COVID-19 relief bill as economy weakens – Federal Reserve Chairman Jerome Powell on Wednesday praised progress toward another coronavirus economic relief bill as the U.S faces a daunting and deadly winter. During a Wednesday press conference, Powell hailed lawmakers for nearing an agreement on a “substantial” relief bill with just weeks before crucial coronavirus aid programs expire. “The case for fiscal policy right now is very, very strong, and I think that is widely understood,” Powell said, repeating his longstanding call for a government relief bill that would help struggling households and businesses make it through what may be the most challenging stretch of the coronavirus pandemic. Powell’s comments came soon after Democratic and Republican congressional leaders voiced optimism that ongoing negotiations would finally yield a bipartisan coronavirus relief deal after months of fitful talks. Both sides are nearing an agreement on a roughly $900 billion measure that will include $600 to $700 direct stimulus payments and $300-per-week boost to unemployment benefits. Powell, like many economists, has urged Congress for months to pass another round of fiscal relief that would provide direct aid to millions of unemployed Americans, the families that depend on them, and small businesses in sectors upended by the pandemic. At least 9 million Americans are set to lose their unemployment benefits and more than 10 million households could face eviction or foreclosure by the end of the year if Congress does not extend protections that are set to expire on Dec. 31, according to estimates from economists. Nearly 8 million Americans have fallen into poverty since June due to a combination of rising coronavirus cases and dwindling federal support, according to a study released Wednesday by economists at the University of Chicago and the University of Notre Dame. And biweekly survey data released Wednesday by the Census Bureau showed that 85.4 million American adults, or 35.6 percent, reported having trouble paying for typical household bills such as food, medicine and rent. While the economy on a whole has recovered quicker than initially expected, Powell said Wednesday, millions of Americans and businesses least able to withstand the coronavirus recession are still in dire trouble.
Congress to Pass $17 Billion Bailout of Airlines, to Top Off Prior Bailout – Wolf Richter –Top 4 airlines burned $45 billion on share buybacks since 2012. If airlines run out of money, Chapter 11 bankruptcy works. Airlines proved it.Airlines in the US will get another $17 billion taxpayer-funded bailout if the $748 billion “bipartisan” stimulus proposal that the four most senior Congressional leaders are discussing this afternoon makes it into law.There is a commitment now to pass something. Many items that either party wanted but that the other refused to yield on have been trimmed out of this proposal, including the $1,200 stimulus checks. But their airline bailout is in it.Democrats and Republicans may not agree on much of anything these days, but they both love to bail out airline shareholders and bondholders. And that’s what this is – dressed up as payroll protection and airline support program.The Democratic-backed $2.2 trillion stimulus package that the House passed at the end of September but that was not taken up by the Senate included $25 billion to bail out airline shareholders and bondholders. The airline industry has been lobbying with all its might to get this money. So now, it looks like they will have to make do with $17 billion.This new bailout comes on top of the original stimulus bill, which was passed in March and which came with $25 billion in so-called payroll support for the airlines, an additional $25 billion in loans for passenger airlines, and over $10 billion in grants and loans for cargo airlines and aviation contractors. The payroll protection provisions expired on September 30, under the assumption that by then the airlines would be operating more or less back at normal.But they’re not. Delta Air Lines, American Airlines, and United Airlines have warned in recent days about once-again declining bookings following the Thanksgiving surge of Covid infections. Airlines have reported spikes in cancellations. Leisure travel had picked up, but the very lucrative business travel and international travel remain in a zombie state. The V-shaped airline recovery that Wall Street had promised in late spring and early summer has gotten crushed The number of passengers going through TSA checkpoints to enter the secured areas at US airports through December 14 has dropped sharply since late November. The chart shows the number of TSA checkpoint screenings in 2020 (red) and 2019 (green) per day (thin lines) and the seven-day moving averages (bold lines): The daily checkpoint screenings are now down 68% (seven-day moving average) from where they’d been on the same day in the same week a year ago, the worst levels since early September:
Sweeping COVID-19, spending deal hits speed bumps – Negotiations over a $900 billion coronavirus relief bill are running into eleventh-hour snags, threatening to push Congress into a rare weekend session. Lawmakers had hoped to clinch a sweeping deal, which would also fund the government through Oct. 1, on Wednesday after the top four congressional leaders signaled that they were closing in on an agreement after months of stalemate. But instead lawmakers and staff warned that – while they still thought they would get the agreement – the final stages of the talks are moving slowly as they continue to haggle over the details and field requests for changes. “It’s still a ways off, I think. They’ve still got some things they’re negotiating. … It’s been a slow roll so far,” said Sen. John Thune (S.D.), the No. 2 Republican in the upper chamber, after he left the Capitol following the Senate’s final votes of the day. Adding to the difficulty, the package being negotiated by leadership includes two separate parts: A roughly $900 billion deal on long-stalled coronavirus relief and a separate $1.4 trillion deal to fund the government. Because they are hitched together, leadership is unlikely to announce a deal on one part without also simultaneously announcing an agreement on the other. It also means Congress has to pass the sweeping legislation – or another continuing resolution (CR) – by the end of Friday in order to prevent a government shutdown. And both are facing last-minute wrinkles that complicate the path for quickly announcing a mammoth, sweeping agreement that would wrap up Congress’s work for the year. Sen. Roy Blunt (Mo.), the No. 4 GOP senator, pointed to a myriad of moving parts, including lawmakers trying to hitch their legislative pet projects on the final moving train of the year, that are throwing a curveball into the timing of an agreement. “We’re close enough that these could close pretty quickly but they might not,” he said. “You’ve got the omni, you’ve got COVID and then you’ve got all these little extraneous pieces.” A GOP aide, asked about the chances of a deal in principle on Wednesday night, said they “doubt it.” The inability to clinch a deal by early Wednesday evening comes after leadership started off feeling optimistic about their chances, with both Senate Majority Leader Mitch McConnell (R-Ky.) and Senate Minority Leader Charles Schumer (D-N.Y.) sounding upbeat during their daily floor comments. “We made major headway toward hammering out a targeted pandemic relief package that would be able to pass both chambers with bipartisan majorities,” McConnell said from the floor. Schumer added to reporters that “we’re feeling pretty good.” “I hope we can reach an agreement today,” he said. A GOP senator still appeared bullish on Wednesday afternoon that leadership could at least get a deal in principle by Wednesday night, saying that “by late tonight they should have a feel and concepts.”
Republicans push to terminate CARES Act facilities for good – Senate Republicans are proposing legislation to prevent the Federal Reserve from reviving emergency lending facilities launched earlier in the coronavirus crisis that the central bank plans to shut down at yearend. Sen. Pat Toomey of Pennsylvania, who will likely chair the Senate Banking Committee if the GOP holds its majority, said on a Thursday conference call with reporters that Republicans are in agreement that the next coronavirus relief package should explicitly and permanently terminate the Fed facilities funded by the Coronavirus Aid, Relief and Economic Security Act. “The facilities that were funded through the CARES Act were to be temporary, they were to provide a backstop, and in all cases would cease operations no later than the end of 2020,” Toomey said. Those facilities include the Main Street Lending Program, through which the Fed can buy pieces of bank loans issued to midsize businesses hampered by the pandemic. They also include the Primary Market Corporate Credit Facility, Secondary Market Corporate Credit Facility, Municipal Liquidity Facility, and the Term Asset-Backed Securities Loan Facility. To be clear, the Fed maintains broad emergency lending powers under Section 13(3) of the Federal Reserve Act, enabling the central bank to operate credit facilities without an act of Congress as long as the Treasury Department approves it and the facility provides broad-based support, not just for specific companies. Treasury, under Secretary Steven Mnuchin, has already compelled the Fed to agree to return unused CARES Act funds and at yearend terminate those facilities backed by Congress. However, Mnuchin and Fed Chairman Jerome Powell agreed to extend four of the non-CARES facilities through the end of March 2021. Toomey said the bill would not affect the Fed’s general emergency lending powers. “The 13(3) legislation remains on the books, and the Fed’s 13(3) authority will continue,” he said. Some have expressed hope that the incoming Biden administration could maneuver to let the Fed once again tap CARES Act funds to provide emergency relief in 2021. But Toomey said the proposed legislation would ensure that unused funds from CARES Act emergency lending facilities remain with the Treasury and that the Fed cannot relaunch programs that it plans to shut down at the end of this month. “In our language, we do have the repurposing of this money,” Toomey said. “We also reiterate that these facilities all expire at the end of this year as Congress intended and the law requires. And we ensure that you couldn’t just create a new clone of one or more of these programs.” Democratic lawmakers have blasted Mnuchin’s move as political, arguing that returning the funds to the Treasury Department’s general fund would prevent the incoming Biden administration from deploying them to help stabilize the economy. Toomey insisted that the legislation was not political and that it is strictly meant to clarify the original intent of the CARES Act.
Toomey’s proposal to restrict Fed powers draws Democratic rebuke – A proposal to restrict the Federal Reserve’s use of its emergency lending powers was met with swift objections from leading Democrats Friday as lawmakers continued to negotiate a new fiscal stimulus bill. Several senior Democratic lawmakers criticized a proposal by Sen. Pat Toomey, R-Pa., on Thursday that would prevent the Fed from reviving facilities launched earlier in the coronavirus crisis that the central bank plans to shut down at year-end. “The GOP Senate’s dangerous demand to include Senator Toomey’s poison pill provision in the COVID-19 relief bill threatens to hamstring our nation’s response to the historic economic crisis of the coronavirus,” House Financial Services Committee Chairwoman Maxine Waters, D-Calif., and House Ways and Means Committee Chairman Richard Neal, D-Mass., said in a joint statement. “If implemented, this unprecedented change to the law would block the Federal Reserve from ever creating lending facilities that help small businesses and state and local governments, taking away one of the important tools to fight this or any future economic crisis.” The Democrats’ key objection to the amendment is that it will inhibit the incoming administration of President-elect Joe Biden in its ability to stabilize the economy as the coronavirus pandemic continues to take a toll on U.S. businesses. “Now they insist on sabotaging the economy before the next administration comes in by hamstringing the Federal Reserve’s ability to support the economy, small businesses, and struggling communities in the future,” said Sen. Sherrod Brown of Ohio, the top Democrat on the Senate Banking Committee. “Enough is enough.” Sen. Elizabeth Warren, D-Mass., noted that the proposed amendment, which Toomey detailed in a call with reporters on Thursday, comes as several Republicans have still not recognized the results of the November presidential election. “After weeks of refusing to acknowledge Biden’s victory, some Republicans have now decided that sabotaging his presidency is more important than helping our economy recover by insisting that any COVID relief legislation also restrict the ability of the Federal Reserve and the new Administration to help states, cities, and American businesses next year,” said Warren. “Proposals to sabotage President Biden and our nation’s economy are reckless, they’re wrong, and they have no place in this legislation.”
Fed fight spills into stimulus talks on pivotal day – Democrats are accusing GOP Sen. Pat Toomey’s insistence on winding down a key Federal Reserve program as the primary impediment to finishing up a $900 billion coronavirus aid package. Though Senate Majority Leader Mitch McConnell said on Friday that he’s “even more optimistic now than I was last night that a bipartisan, bicameral framework for a major rescue package is very close at hand,” the finger-pointing at Toomey (R-Pa.) in the frantic negotiations suggested a tough road ahead for negotiators. A senior Democratic aide said “an agreement was in sight” until Toomey and the GOP made a new ask on the Fed’s emergency lending programs. Toomey has pushed for similar provisions since July, but Democrats argue his latest proposal is more restrictive. The current version of Toomey’s plan would prevent the emergency lending program established by the CARES Act from continuing next year and would also bar the central bank from starting any similar program, according to a draft viewed by POLITICO. “Sen. Toomey and Republicans inserted an 11th hour purely political, unrelated provision to tie [Joe] Biden’s hands and risk throwing the economy into a tailspin. The Toomey provision would be an unprecedented change to the law to strip the Fed chair of one of their most important tools to quickly respond to any future economic crisis,” the aide said. A Republican aide shot back that the Democrats’ comments are “funny when you consider not 9 months ago, these facilities constituted a slush fund for Republicans to enrich their billionaire friends.” And Toomey told reporters on Thursday that this provision is “the most important thing” to him in the bill. He said it is about “preventing the Fed from being politicized” and misused by being pressured into bailing out municipalities and companies and that his effort was not “an effort to in any way hamstring the Biden administration or weaken our economy.” The battle is an ominous sign for one of the most pivotal days of Congress this year. That’s because Congress woke up on Friday morning with a major to-do-list: preventing a government shutdown at midnight and clinching the $900 billion coronavirus deal. While congressional leaders have struck a deal on the broad outlines of a package that would deliver $600 stimulus checks to many individuals and children, $325 billion for small businesses and a $300 weekly unemployment boost, finalizing the deal has proven stubbornly difficult.
McConnell getting much of what he wants in emerging relief deal – Senate Majority Leader Mitch McConnell (R-Ky.) is getting much of what he wants in an emerging coronavirus relief package, after months of digging in his heels against a demand by Democratic leaders to pass a multi-trillion-dollar package that would shore up the ailing finances of state and local governments. The GOP leader isn’t getting liability protection for businesses and other organizations but McConnell himself last week proposed dropping that controversial item along with another large tranche of funding for state and local government. State and local funding was a top priority of Speaker Nancy Pelosi (D-Calif.) and Senate Minority Leader Charles Schumer (D-N.Y.). Democrats are getting $90 billion in relief for local governments but it will be distributed by the Federal Emergency Management Agency, meaning city and state leaders will have less control. Democrats say that money for housing assistance will also help ease the fiscal burdens on states. But McConnell is getting a deal a lot closer to what Democrats dismissed as the “emaciated” plan he pushed in recent months than the $2.2 trillion Heroes Act that Pelosi and Schumer said should have been the “starting point” of the talks. That was quickly leading to some criticism on Wednesday as it emerged the sides were closing in on an agreement, though in Congress, some Democrats taking shots at the package still said it should be approved. “This is not any place close to what is needed,” Sen. Elizabeth Warren (D-Mass.) said of the emerging $900 billion deal. But Warren said Democrats have little choice but to accept a much smaller relief package than they wanted in order to get a deal. “That makes for a very difficult negotiation,” she said of McConnell’s staunch insistence on a “targeted” package below $1 trillion. She faulted the GOP leader, saying “Mitch McConnell is willing to let American families walk away with nothing.” Sen. Bernie Sanders (I-Vt.) similarly criticized the bill while giving his blessing to its outlines. Sanders had pushed for a new round of stimulus checks, something that will be a part of the final package. But the checks will not be as large as he wished, and it will not include other provisions including he aid to local governments that he’d backed. “There is simply not enough money in the proposal to deal with the unprecedented crises that we now face,” Sanders said Wednesday.
“Amazing” Hypocrisy: Democrats Make Wreck of Covid-19 Relief Negotiations – Democrats stonewalled all year on a new pandemic relief package. Now they’re proposing a new plan that undercuts even Republican proposals, and screws everyone but – get this – defense contractors – Matt Taibbi – A senior Democratic congressional aide is irate tonight.”The Democrats,” the aide seethed, “have just done the worst negotiating in modern history.”At issue: a pair of new Covid-19 relief bills, just submitted by a bipartisan group of Senators. Republican Senator Susan Collins gushed that a”Christmas Miracle” allowed the two parties came together on the twin bills, which the press describes as totaling $748 billion and $160 billion, respectively. “Bipartisanship and compromise is [sic] alive and well in Washington,” clucked West Virginia Democrat Joe Manchin. It sure is. With the election over, the Democratic leadership in the space of a few weeks somehow negotiated against themselves, working with Republicans to push the total amount of a Covid-19 relief deal further and further downward, to the point where previous plans offered by the likes of Mitch McConnell and Steve Mnuchin now look like LBJ’s Great Society.Democrats ultimately settled for less than a third of what they had set as a baseline for state and local aid, accepted a package without any $1,200 direct payments, and signed off on a plan that, after offsets, includes less than $350 billion in new money, well below a slew of pre-election proposals rejected by Democrats like Nancy Pelosi and Chuck Schumer as being too low.“They totally caved,” the aide says.Back in May, the Democrat-led House passed the HEROES Act, a $3.4 trillion relief package that was pitched as the bill Democrats really wanted. It contained $413 billion new dollars for $1,200 direct payments to citizens, as well as $437 billion in additional unemployment benefits, and a whopping $1.13 trillion for state and local governments.Trump said the bill was “dead on arrival,” McConnell blasted it as a “$3 trillion left-wing wish list,” and the anti-spending group Taxpayers for Common Sense seethed that Democrats unrealistically put “everything they could think of” in the bill. Still, Democrats insisted this was the right amount, at the right time, a moral necessity.”The House has passed a major bill dealing with COVID,” Schumer said in May, blasting his Senate Republican colleagues for a “pause” in negotiations. “We have done nothing.” Republicans, via McConnell, countered in July with the unfortunately named HEALS Act, reported as a roughly $1 trillion aid deal. The bill included another round of $1,200 relief checks. Pelosi in August ripped the plan as “meager measures,” and said Republicans were refusing to take action to feed hungry children: When Republicans ended up backing a so-called “Skinny” $650 billion deal, it was reported as a signal that the GOP opposition was determined not to budge above what the Trump administration was willing to offer, at the time rumored to be somewhere between $1-$1.5 trillion. Democrats countered soon after by passing an updated version of the HEROES Act that offered $2.2 trillion in relief. The Republicans, this time led by Steve Mnuchin and an increasingly desperate-seeming Donald Trump, came back on October 9th with a $1.8 trillion proposal. Reeling as he stumbled toward Election Day thanks to a series of missteps and scandals, Trump seemed anxious to go beyond his previous numbers, if it meant he’d get to sign more checks before Election Day:
Ocasio-Cortez: I’m ‘not ready’ to be Speaker but Pelosi and Schumer need to go – Rep. Alexandria Ocasio-Cortez (D-N.Y.) said she is “not ready” to be Speaker but lamented that the Democratic Party desperately needs new leadership and that Speaker Nancy Pelosi (D-Calif.) and Senate Minority Leader Charles Schumer (D-N.Y.) need to go. In an interview with The Intercept’s podcast, the progressive hero and firebrand said that Democrats have failed to create a succession plan once Pelosi and her generation of longtime leaders – many of them now in their 80s – step aside. Pelosi has indicated that this upcoming two-year term will be her last as Speaker. “I do think that we need new leadership in the Democratic Party … the internal dynamics of the House has made it such that there’s very little option for succession,” said Ocasio-Cortez, who is 31. “It’s easy for someone to say, ‘Oh well, you know, why don’t you run?’ but the House is extraordinarily complex, and I’m not ready. It can’t be me. I know that I couldn’t do that job.” “Even conservative members of the party who think Nancy Pelosi is far too liberal for them don’t necessarily have any viable alternatives, which is why whenever there’s a challenge, it kind of collapses,” she continued. “And that is, I think, the result of just many years of power being concentrated in leadership with lack of … real grooming of a next generation of leadership.” Ocasio-Cortez’s remarks were an indirect jab at House Democratic Caucus Chairman Hakeem Jeffries, a fellow New York Democrat and a Congressional Black Caucus member whom many Democratic colleagues have pointed to as a natural heir to Pelosi once she leaves. Another possible successor is incoming Assistant Speaker Katherine Clark (D-Mass.). Pelosi’s caucus unanimously nominated her last month to serve another two years as Speaker after she ran unopposed. But it’s not absolutely certain she can win the Speaker’s gavel in a House floor vote on Jan. 3. Because House Democrats unexpectedly lost more than a dozen seats in the November election, their majority is now down to just single digits, meaning a handful of Democratic defections could deny Pelosi of another term leading the party. Ocasio-Cortez, however, gave no indication that she will vote against Pelosi on the floor, even as other moderate Democrats have. Some progressives have also floated Ocasio-Cortez as a potential primary challenger to Schumer in 2022, though she’s sidestepped questions about whether she’s interested in running. Many of her fans want Ocasio-Cortez, who backed Sen. Bernie Sanders (I-Vt.) in the Democratic primary this year, to run for president after she turns 35 year old. She would be eligible to run for the White House in 2024.
Kathleen Rice picked over Ocasio-Cortez for spot on House Energy and Commerce committee – House Speaker Nancy Pelosi announced appointments to several powerful committees on Thursday, most notably the selection of Rep. Kathleen Rice over fellow New Yorker Rep. Alexandria Ocasio-Cortez on the House Committee on Energy and Commerce.The New York lawmakers had been jockeying for a seat on the panel, according to several media reports, and lobbying to colleagues behind the scenes for weeks, Politico reported.The committee oversees a broad range of issues, including consumer protection, food and drug safety, public health, health care policy and climate issues.Politico reported that there was a contentious private meeting on Thursday at the Steering and Policy Committee, where there was a secret ballot to vote on the two candidates. The news outlet said the vote was 46-13.Ocasio-Cortez, a member of the Congressional Progressive Caucus and a rising star in the party, has been outspoken on many of the issues the committee would tackle. She is currently a member of the powerful House Committee on Oversight and Reform. She also co-chaired a panel advising President-elect Joe Biden on climate policy during his campaign. Rice is a more moderate member of the party, a former district attorney who represents parts of Long Island. She currently serves on the House Committee on Homeland Security. Rice’s office did not immediately respond to a request for comment.
Government shutdown looms as Congress crafts coronavirus stimulus bill – Congress moved perilously close to letting the government shut down as lawmakers failed Friday to put the finishing touches on a massive spending and coronavirus rescue package. Ahead of the midnight Friday deadline to pass a spending bill, the House introduced a two-day stopgap bill to keep the government running. Lawmakers gave themselves about seven-and-a-half hours to get it through both chambers of Congress, including a Senate where one member’s objection can block its swift passage. Leaders on Capitol Hill have said for days they are close to a deal on a $900 billion relief proposal that would accompany a $1.4 trillion spending bill. However, some new disputes have prevented Washington from sending fresh aid to struggling Americans for the first time in nearly nine months. Reaching a deal on an enormous spending and pandemic aid plan, let alone stopping government spending from lapsing, looked challenging by Friday afternoon. While bipartisan House officials including Minority Leader Kevin McCarthy, R-Calif., backed the temporary funding bill, the Senate will pose bigger problems. Passing a temporary spending measure known as a continuing resolution “could prove to be a pretty heavy lift,” No. 2 Senate Republican John Thune of South Dakota told reporters Friday. To approve the measure quickly, the Senate would need the support of every senator. A handful of lawmakers have suggested they could hold up passage of a short-term spending bill. Thune also signaled it could take days more to iron out a final coronavirus aid package as millions of Americans await help. “It’s coming together, it’s just taking time, but it’s slower,” he said. “And you know I think we have to assume that even when there’s a deal announced, that by the time it gets written up and processed, we’re going to be pushing through the weekend.” Just after 2 p.m. ET on Friday, House Majority Leader Steny Hoyer, D-Md., said the chamber would go into a recess until 5 p.m. while congressional leaders try to get a “clearer picture” of how to move forward. He told representatives to keep Friday night, Saturday and Sunday free. If lawmakers can approve a spending bill before Monday, the damage from a lapse in federal funding would be limited. Congressional leaders have pledged to work through the weekend and pass a bill before they head home for the holidays. The health and livelihoods of millions of Americans depend on Congress sending out more aid before the end of the year.
Coronavirus Relief Package Stalled Ahead Of Shutdown Deadline – Hours before the federal government runs out of money, bipartisan leaders of the House and Senate were still negotiating on a coronavirus relief package to attach to the annual spending bill. Lawmakers from both parties insist they will not leave Washington for the holidays until they get a deal, and they say there won’t be a shutdown, even as federal agencies are set to run out of money at midnight Friday. As the deadline grew closer, House and Senate leaders moved to pass a two-day stopgap funding bill to continue negotiations over the weekend. But some outside the small group of the top leaders finalizing the roughly $900 billion package – House Speaker Nancy Pelosi, Senate Majority Leader Mitch McConnell, House Minority Leader Kevin McCarthy and Senate Minority Leader Chuck Schumer – are frustrated the details of the emerging deal haven’t been shared more widely. “I think this is reaching a point – it’s beginning to reach a point of absurdity. … It’s time for leadership to put on the table what they’ve got. It’s time for them to brief members what they got,” GOP Sen. Josh Hawley of Missouri told reporters. Hawley has been pushing for another round of direct payments in the legislation, along with Sen. Bernie Sanders of Vermont. The bill is expected to include this type of assistance, but it’s unclear how large the checks will be. Article continues after sponsor message It’s unclear whether Senate leaders will get commitments from lawmakers in the upper chamber to back a stopgap bill to avoid a shutdown – as Sanders has not said whether he will agree and only one objection can block quick passage. Separately, Democrats are objecting to efforts by Sen. Pat Toomey, R-Pa., to add a provision to the bill that they say will make it more difficult for the incoming Biden administration to access emergency powers for additional lending authority. GOP Sen. John Cornyn of Texas admitted to reporters it was a difficult issue to resolve. He said what Toomey is aiming to do is to ensure the lending authority isn’t used by the Federal Reserve for “unauthorized purposes.” “It could potentially be used as a backdoor to do state local aid, which I think is the idea, without Congress’ approval, and particularly when we negotiated these other items,” Cornyn said. House Majority Leader Steny Hoyer blamed the top Senate Republican for the hold up on the COVID-19 package. “I think McConnell is the principal culprit. But I don’t think the rest of us are without blame,” he said. Hoyer noted that Democrats set aside their demands for more money for state and local governments. “But right now what I think the Republicans are doing are trying to get an advantage against Biden in the next administration. That’s what this Toomey amendment is about.” Biden’s camp is also pushing back at including the provision.The main elements of the bipartisan legislation include more money for the Paycheck Protection Program to help struggling small businesses, help for unemployed Americans and resources for vaccine distribution. Lawmakers from both parties also largely agreed on an annual spending bill that would fund federal departments through September 2021.
GOP senator blocks bill to provide $1,200 stimulus checks – GOP Sen. Ron Johnson (Wis.) on Friday blocked an effort to pass a second round of stimulus checks, arguing coronavirus relief needs to be targeted and raising concerns about the country’s debt. Sen. Josh Hawley (R-Mo.) tried to get consent, which requires the cooperation of every senator, to pass his bill that would provide $1,200 for individuals who make up to $75,000 – the exact same language that Congress passed as part of the CARES Act in March. “What I’m proposing is what every senator has supported already, this year. … What I’m proposing will give working folks in my state and across this country a shot … at getting back up on their feet,” Hawley said from the Senate floor. But Johnson objected. Under the Senate’s rules any one senator can request to pass a bill but any other senator can object and block it. “I completely support some kind of program targeted for small businesses. … So what I fear we’re going to do with this bipartisan package and what the senator from Missouri is talking about is the same thing, is a shotgun approach,” Johnson said. “We will not have learned the lessons from our very hurried, very rushed earlier relief packages,” Johnson added. Hawley, a potential 2024 presidential contender, has been pushing for Congress to pass a second round of stimulus checks before the end of the year. He teamed up with Sen. Bernie Sanders (I-Vt.) to try to get it into a one-week continuing resolution (CR) that passed last week or part of a sweeping deal to provide year-end coronavirus relief and fund the government until Oct. 1, which is still being negotiated. Congress needs to pass the agreement, or a stopgap bill, by the end of Friday in order to prevent a government shutdown. Hawley warned Friday that he won’t allow a CR to pass until he knows what’s in the potential agreement. “I’m not going to allow a CR to go through until I know what’s actually in the package,” he said.
Congress passes bill to avert shutdown as coronavirus talks drag into weekend –Congress passed a days-long stopgap bill on Friday, hours before the government was scheduled to shut down, as negotiations over another coronavirus stimulus bill stretched into the weekend. The legislation, which passed the Senate in a voice vote, extends the government funding deadline from Dec. 18 to the end of Dec. 20, giving negotiators more time to finish a sweeping deal to provide year-end coronavirus relief and fund the government through Oct. 1. The House already passed the two-day continuing resolution (CR), meaning it now goes to President Trump’s desk. He’ll need to sign it before midnight in order to prevent a temporary, middle-of-the-night lapse in government funding. “I think all of our colleagues understand our present situation. Both sides of the aisle are firmly committed to finalizing another pandemic rescue package. … But alas we are not there yet. Given that, our urgent task is to pass a stopgap funding measure,” said Senate Majority Leader Mitch McConnell (R-Ky.). It wasn’t clear throughout Friday that the Senate would be able to pass the stopgap bill, with several senators being noncommittal. Because the Senate went down to the deadline, they needed agreement from every senator in order to allow the CR to be voted on and passed Friday night. Sen. Bernie Sanders (I-Vt.) initially interrupted passage of the bill on Friday night as though to object but ultimately did not. “Majority Leader McConnell and I do not agree on much but as I understand it we are in agreement on at least one point and that is that the Senate cannot go home until a COVID emergency relief bill is passed,” Sanders said. Lawmakers approved the stopgap bill with leaders still haggling over a deal that would tie roughly $900 billion in coronavirus aid to a $1.4 trillion bill to fund the government. Leaders had indicated Tuesday night that they were closing in on an agreement, after months of stalemate, only for the talks to drag on for days over a myriad of last-minute hurdles that Sen. John Thune (S.D.), the No. 2 Senate Republican, compared to “whack-a-mole.” “There’s some, always last-minute stuff that pops up, but it’s coming together. It’s just taking time but it’s slower and, you know, I think we have to assume that even when there’s a deal announced that by the time it gets written up and processed we’re going to be pushing through the weekend,” Thune told reporters Friday. Negotiators had hoped to be able to announce a deal on an overarching package by Friday night’s deadline, but have yet to resolve several key sticking points. Tensions flared Friday over an effort by Sen. Pat Toomey (R-Pa.) to include language in the bill codifying the end of an emergency federal lending facility and preventing the incoming Biden administration from restarting it. Democrats view the demand as a non-starter but the push has wide support among Republicans. “Legal experts, senior banking officials, and former Republican and Democratic regulatory officials all agree: the proposal to pull back on the Fed’s 13(3) authority would set a terrible precedent, hurt the Fed’s independence, and weaken its ability to respond quickly to future crises,” said Sen. Mark Warner (D-Va.). A Democratic aide characterized the Toomey language as a “purely political, unrelated provision to tie Biden’s hands and risk throwing the economy into a tailspin.”
Trump signs bill to keep government open amid relief talks – President Trump on Friday signed a stopgap funding measure that will keep the government funded for another 48 hours while lawmakers attempt to finalize an agreement on an economic relief bill.Trump signed the bill just after 10 p.m., according to the White House.The House passed the continuing resolution (CR) by a vote of 320-60, while the Senate passed it unanimously. Government funding would have expired at midnight had Congress not passed the stopgap measure.Congressional leaders are planning to attach the coronavirus relief to a massive spending package to keep the government funded through the rest of the fiscal year. Lawmakers have in recent days insisted they are close to a final agreement on the relief package, but it has been held up by thorny issues.Democrats have balked at language supported by Sen. Pat Toomey (R-Pa.) that would wind down the Federal Reserve’s authority to set up credit lending facilities. Meanwhile, Sens. Josh Hawley (R-Mo.) and Bernie Sanders (I-Vt.) have pushed for the inclusion of $1,200 direct stimulus payments to Americans, but Sen. Ron Johnson (R-Wis.) blocked the proposal Friday. Instead, negotiators are likely to agree on $600 direct payments.The two parties have struggled to reach an agreement on coronavirus relief since the summer. But the negotiations have gained momentum after a bipartisan group of lawmakers provided a $908 billion framework earlier this month. The pandemic has worsened in the U.S. while Congress fails to pass relief. The country surpassed 300,000 deaths from the coronavirus earlier this week, and on Wednesday set a record for deaths in a single day at more than 3,600.
Jeff Stein: Trump’s last-minute push for larger stimulus checks example of ‘long-running tension’ with other Republicans Washington Post economics reporter Jeff Stein on Friday highlighted his reporting that White House aides intervened Thursday to prevent President Trump from publicly calling for larger coronavirus stimulus checks amid negotiations on Capitol Hill, an incident Stein called part of a “long-running tension” between the president and establishment Republicans. In an interview on Hill.TV’s “Rising,” Stein said Trump had told allies that he wanted new stimulus checks as large as $2,000 per person, even as congressional leadership is preparing a package that would provide checks of just $600 each. “I think as Trump leaves, one of the only recent presidents to be defeated after one term, one of the major questions is, did the economic populism that he at least superficially campaigned on in 2016 … did he abandon that office?” the Post reporter said. “I think the question of his inability to get another round of stimulus checks is sort of bringing that question to the fore.” “We’ve seen this over and over again where he has these impulses that are not like the normal, traditional business Republicans, and often he’s surrounded himself, including by the aides that are in the story, by people who are skeptical of that mission,” Stein continued. “There’s sort of this long-running tension between Trump’s sort of quasi-economic populist instinct at least and the governance reality and his coalition partners within the Republican party, and this is such a vivid, dramatic and kind of honestly fun example of that.” Watch part of Stein’s interview above.
Senators urge IRS to provide late filing and payment relief amid pandemic- A bipartisan group of senators is urging the IRS to provide relief for taxpayers who had difficulties filing and paying on time because of the coronavirus pandemic. “The pandemic has created unique challenges for the Internal Revenue Service (IRS), tax practitioners, and taxpayers alike,” the lawmakers wrote in a letter this week to Treasury Secretary Steven Mnuchin and IRS Commissioner Charles Rettig. “It is clear that Americans need a concerted effort by the IRS to work in good faith with them to address the challenges facing taxpayers during this pandemic.” Fourteen senators signed the letter, including Kevin Cramer (R-N.D.), John Kennedy (R-La.), Dianne Feinstein (D-Calif.) and Kyrsten Sinema (D-Ariz.). The IRS took a number of steps earlier this year to help taxpayers during the pandemic, including extending the tax filing and payment deadlines from April 15 to July 15. As is typically the case, taxpayers were able to request filing extensions to Oct. 15. But some still had challenges filing and paying taxes on time as a result of the pandemic. The senators said that the IRS should do more to ease burdens. They recommended that the IRS create a special first time tax abatement program for those who had difficultly filing their returns because of the pandemic, provide written guidance that directs IRS customer service representatives to liberally grant coronavirus-related abatement requests, provide coronavirus-related examples to customer service representatives of situations that qualify for reasonable cause tax abatements, and create a dedicated telephone line for taxpayers and their representatives to use to request coronavirus-related penalty relief. Additionally, the senators urged the IRS to consider stopping sending correspondence about tax compliance until the agency resolves its mail backlog, in an effort to “limit taxpayer confusion and reduce unnecessary correspondence with the IRS.” “Many taxpayers are facing economic hardships, and business closures due to COVID-19,” the senators wrote. “Taxpayers expect fair treatment from their government, and the current unwillingness to provide an expedited process for taxpayers and their advisors to request pandemic-specific relief places an undue burden on them.” The senators’ letter is similar to requests that groups representing tax preparers have made to the IRS.
U.S. calls Switzerland, Vietnam currency manipulators in Trump trade shot (Reuters) – The Trump administration labeled Switzerland and Vietnam currency manipulators on Wednesday, in another parting shot at trading partners that could complicate matters for U.S. President-elect Joe Biden’s incoming team. emergency use. In a long-overdue report, the U.S. Treasury also added India, Thailand and Taiwan to a list of trading partners it says may be deliberately devaluing their currencies against the dollar. The COVID-19 pandemic has skewed trade flows and widened U.S. deficits with trading partners, an irritant to outgoing President Donald Trump, who won office four years ago partly on a promise to close the U.S. trade gap. The Swiss National Bank said it does not manipulate its currency and “remains willing to intervene more strongly in the foreign exchange market”. Vietnam’s central bank said it would work with U.S. authorities to ensure a “harmonious and fair” trade relationship. “Vietnam’s foreign exchange rate policy has for years been managed in a way to contain inflation, ensure macro stability and not to create unfair trade advantage,” the State Bank of Vietnam said in a statement. The manipulator labels will ramp up pressure on Biden before he takes over, Per Hammered, chief emerging markets strategist at SEB in Stockholm, said. “You set the agenda and force him (Biden) into positions that he will have to get out of somehow,” Hammered said. A U.S. Treasury official said Biden’s transition team had not been briefed, adding: “They are not implicated in this.” U.S. Treasury Secretary nominee Janet Yellen could alter the findings in her first currency report, which is due in April.
Head of White House security office has his right foot amputated because of severe COVID-19 and is facing ‘staggering medical bills – Crede Bailey, who heads the White House security office, lost part of his lower right leg, including his foot, and a toe of his left foot during a months-long battle with COVID-19, Bloomberg reported on Monday.Bailey, whose office handles White House credentials and works with the Secret Service, contracted the coronavirus in September. He’s been hospitalized for three months but is said to be recovering from the illness.Friends of Bailey’s have raised more than $35,000 through a GoFundMe campaign to help pay for his rehabilitation and healthcare.”Crede beat COVID-19 but it came at a significant cost: his big toe on his left foot as well as his right foot and lower leg had to be amputated,” Dawn McCrobie, who organized the fundraiser, wrote in an update last week.A White House representative declined to comment about Bailey’s condition to Business Insider. Bloomberg reported that Bailey’s family requested that the White House not publicly acknowledge his illness.McCrobie wrote last month that Bailey’s family “has staggering medical bills from a hospital stay of 2+ months and still counting in the ICU and a long road ahead in rehab before he can go home.” She added that Bailey would need to pay for alterations to his home and a car he could operate to accommodate his disability. Dozens of top administration officials and people tied to the White House have contracted COVID-19, and President Donald Trump has consistently downplayed the threat the virus poses. The president, who contracted the virus and was hospitalized for several days in October, has told Americans not to be afraid of COVID-19, mocked those who wear face masks, and condemned states’ aggressive measures to slow the spread of the virus.
Interior secretary tests positive for COVID-19 after two days of meetings with officials: report – Department of Interior Secretary David Bernhardt has tested positive for COVID-19 following days of meetings with political appointees, a department spokesman confirmed to The Washington Post Wednesday. Interior spokesman Nicholas Goodwin told the Post in an email that Bernhardt, 51, received the diagnosis ahead of a scheduled Cabinet meeting with President Trump Wednesday, which Bernhardt did not attend following his positive test. “He is currently asymptomatic and will continue to work on behalf of the American people while in quarantine,” Goodwin added. The spokesman also said that the secretary is “following all CDC guidelines and consulting with medical professionals as appropriate,” and that, “Interior will continue to follow all CDC guidelines (i.e. identifying close contacts, cleaning work spaces, etc.) regarding the Secretary’s positive test result.” The Post reported that Bernhardt has spent the past two days in meetings with a number of Trump officials, and also attended a portrait unveiling for former secretary Ryan Zinke last week. Others at that gathering included Sens. John Barrasso (R-Wyo.), Steve Daines (R-Mont.) and Kevin Cramer (R-N.D.). Two individuals who spoke to the Post on the condition of anonymity to openly discuss internal discussions said that employees at Interior were informed that a holiday party scheduled for Thursday has been cancelled due to Bernhardt’s diagnosis. According to the Post, Bernhardt is at least the third top Interior official to test positive for COVID-19 since November, following Daniel Jorjani after he served as an election observer in Pennsylvania and U.S. Fish and Wildlife Service Director Aurelia Skipwith. Bernhardt’s positive test comes the same day the State Department canceled its holiday party after Secretary of State Mike Pompeo was forced to go into quarantine after being exposed to someone with the virus. The party’s guest list had included 180 foreign ambassadors, chiefs of missions and their spouses, the Post reported. A State Department spokesperson had confirmed that Pompeo entered quarantine after coming into contact with someone who tested positive for COVID-19. He had tested negative, but was “being closely monitored by the Department’s medical team,” the spokesperson said.
Reporter covering Biden tests positive for COVID-19 – A member of the press who traveled with President-elect Joe Biden to Georgia on Tuesday has since tested positive for the novel coronavirus, leading the transition team to direct one of its communications staffers to quarantine out of an abundance of caution, Biden’s office said. The journalist received a positive COVID-19 test Wednesday, after serving in the Biden transition press pool on both Monday and Tuesday. Biden’s office said in a statement that officials “immediately” began contact tracing and determined that the member of the press was never in close contact with Biden as defined by the Centers for Disease Control and Prevention (CDC). “Out of an abundance of caution, one member of our traveling communications team who was in close contact with this individual will self-quarantine for 7 days and other members of the traveling press pool who were in close contact with this individual are not on pool duty today and will not be until they clear the window for being infectious,” Biden’s office said. “No other member of the President-elect’s staff has been assessed to be at risk for exposure or transmission of the virus.” The White House Correspondents’ Association in an email to reporters disclosing the positive test said the individual in question is experiencing “mild symptoms” and isolating so as not to spread the virus. The case was revealed just before Biden introduced Pete Buttigieg as his nominee for Transportation secretary in Wilmington, Del. Coronavirus cases are surging across the country and the United States surpassed 300,000 deaths due to COVID-19 earlier this week. Health experts have warned that cases could further increase after the holidays and have discouraged Americans from traveling or gathering in large numbers.
Biden Orders Hazmat “Exorcism” of Trump White House — President-elect Joe Biden has ordered what is being called an “exorcism” of the Trump White House before he makes it his home next month. Biden told his staff that he wants the large building to be thoroughly disinfected before he moves in. White House historian Kate Andersen Brower said that, “There is a five-hour window between presidents. That’s when 95 staff will have to pack up all the Trump possessions and move the Bidens in. They will clean or replace everything.” In that short time, a team in hazmat suits will spray the entire building with disinfectant, along with removing carpets, curtains, and furniture, then replacing them with new selections. ‘The incoming President and First Lady get to choose their new furniture from a secret warehouse,” Andersen said, according to the Mail Online. A member of Biden’s transition team said that the precautions are due to the large number of coronavirus infections that spread throughout the Trump administration. “Mr Trump’s administration has been riddled with the coronavirus. The Bidens are taking no chances. The entire property will be deep-cleaned down to replacing doorknobs and taking down soft furnishings. The virus can linger on hard surfaces so the entire residence and executive offices will be wiped clean with disinfectant to exorcise any trace of Team Trump,” the staff member said. Just last week, Trump announced that his lawyer Rudy Guiliani had tested positive for the virus. CNN reported that Giuliani has exposed hundreds of people to the virus in the time that he was contagious. Last month, Giuliani’s son, Andrew, who is a White House staffer, tested positive for COVID after attending a Trump campaign legal team news conference with his father in Washington, DC. Donald Trump Jr. was also infected with the virus last month. He was at the White House on election night where several of Trump’s staff later tested positive for COVID, including White House chief of staff Mark Meadows.
Baffling’: Trump Admin Reportedly Slashing Vaccine Allocations to States While Millions of Doses Sit on Shelves –Officials from more than a dozen states say the Trump administration has informed them that next week’s Pfizer-BioNTech Covid-19 vaccine allotments to their jurisdictions are being substantially reduced, prompting confusion and outrage. The development comes even as Pfizer insists that it has millions of doses ready to ship if given instructions by the federal government.Coronavirus inoculation in the U.S. began Monday as the country’s pandemic death tollsurpassed 300,000. Hundreds of thousands of people – mostly frontline healthcare workers and nursing home residents whom the Centers for Disease Control and Prevention (CDC) agreed to prioritize – have already received their first dose of the vaccine.But Washington Gov. Jay Inslee (D) tweeted Thursday that the CDC “has informed us that [Washington’s] vaccine allocation will be cut by 40% next week – and that all states are seeing similar cuts.””This is disruptive and frustrating,” Inslee added. “We need accurate, predictable numbers to plan and ensure on-the-ground success. No explanation was given.”The Associated Press reported Friday that “California, where an explosion in cases is straining intensive care units to the breaking point, will receive 160,000 fewer vaccine doses than state officials had anticipated next week – a roughly 40% reduction.”Maryland Gov. Larry Hogan (R) said his state was also told it would receive a smaller shipment than expected, The Hill reported Thursday. In addition, Illinois Gov. J.B. Pritzker (D) on Wednesday said he “anticipates about half as many doses as was originally promised.”Other affected states, AP reported, include Connecticut, Georgia, Hawaii, Indiana, Iowa, Kansas, Michigan, Missouri, Montana, Nebraska, Nevada, and New Hampshire.Adding to the chorus of governors expressing concern was Florida Gov. Ron DeSantis (R), who said Wednesday that “new shipments were ‘on hold,’ and that if they arrive, he is anticipating fewer doses than he was previously told,” The Hill reported. But unlike his colleagues in other states, DeSantis blamed unspecified “production issues.”Pfizer on Thursday denied that underproduction is the cause of diminished vaccine distributions, instead assigning fault to the lack of direction provided by the Trump administration.In a statement, the company said that it “successfully shipped all 2.9 million doses that we were asked to ship by the U.S. government to the locations specified by them.” “We have millions more doses sitting in our warehouse but, as of now, we have not received any shipment instructions for additional doses,” Pfizer added.
MacKenzie Scott, ex-wife of Jeff Bezos, gives away $4 billion in four months – Author Mackenzie Scott donated more than $4 billion over just four months this year, still just a small dent in her pledge to give away a majority of her wealth. A year after Scott, who is the 18th richest person in the world according to the Bloomberg Billionaires Index, signed onto the Giving Pledge, she announced she had donated $1.7 billion to 116 non-profit organizations. Since then, she has given an additional almost $4.2 billion in gifts to 384 organizations across all 50 states, Puerto Rico and Washington D.C. “Though I’m far from completing my pledge, this year of giving began with exposure to leaders from historically marginalized groups fighting inequities, and ended with exposure to thousands of organizations working to alleviate suffering for those hardest hit by the pandemic,” she wrote in a blog post on Medium. Through the pledge, established in 2010 by billionaires Bill and Melinda Gates and Warren Buffett, Scott made a public commitment to donating a majority of her wealth. With a net worth of $60 billion, her donation thus far accounts for roughly ten percent of her divorce settlement with Amazon CEO Jeff Bezos alone. In addition to being an award-winning author, Scott is also a major shareholder of Amazon, which had a revenue of $281 billion in 2019. In the wake of Black Lives Matter protests this summer, Scott focused heavily on social justice philanthropy. As of a post in July, 91 percent of the racial equity organizations she had donated were run by leaders of color, 100 percent of the LGBTQ+ equity organizations were run by LGBTQ+ leaders and 83 percent of the gender equity organizations were run by women. Her update on Dec. 15, titled “384 Ways to Help,” included a list of those organizations and others chosen through a rigorous process of research. “We do this research and deeper diligence not only to identify organizations with high potential for impact, but also to pave the way for unsolicited and unexpected gifts given with full trust and no strings attached,” she said in the post.
Banks’ billions in payouts hinge on Fed’s view of the pandemic – As with most things related to 2020, COVID-19 will be a deciding factor as the Federal Reserve considers whether banks are able to increase their dividends or resume share buybacks. The central bank releases results of its second round of stress tests at the end of the week. It scheduled the review to better understand the potential long-term effects of the pandemic on banks’ finances after coming up with a temporary formula earlier this year to determine its payout policy, which included a suspension of share buybacks. Two banks had to also curtail dividends as a result of those rule changes. “A lot of uncertainty was introduced during the pandemic, and now we’re in a second wave,” said Monica O’Reilly, who leads the U.S. financial services industry group for Deloitte. “Even as the vaccine arrives, there’s no certainty of the economic repercussions for the next six months. The Fed has to take that into account.” Even though the central bank has published detailed economic scenarios it will use to test the firms’ financial strength in the second round, many analysts have instead been looking at policymakers’ speeches and other signs to guess whether the restrictions will be eased or kept in place a bit longer when results come out Friday afternoon. Fed Gov. Lael Brainard has criticized the central bank’s willingness to permit limited dividends, arguing that the crisis is still raging and banks may need that capital before it’s over. That view has been echoed by prominent Democrats on the Senate Banking Committee, including its ranking member, Sen. Sherrod Brown, and Sen. Elizabeth Warren. On the other side, Randal Quarles, the Fed’s vice chairman for supervision, has praised banks as a “source of strength” to the economy, and said he hopes Friday’s results will let the industry return to “regular order.” The Fed will no longer need temporary payout restrictions “after we emerge from the COVID event,” Quarles said in a speech last week. JPMorgan Chase and other large U.S. banks have indicated they’re ready to restart buybacks in the first quarter, as soon as the central bank gives the green light. But Brian Kleinhanzl, an analyst at Keefe, Bruyette & Woods, said it’s a “fool’s errand” trying to predict when that will happen. “The test just gives them cover to do whatever they want,” Kleinhanzl said in an interview. “COVID isn’t going in the right direction and they still seem worried about the economy, so they might keep the buyback ban for six more months. Or they may allow a few to resume repurchases. Anything is possible.” The Fed’s bank-by-bank approach contrasts with European regulators, who instituted blanket bans on capital distributions at the outset of the pandemic. Now they’re relaxing some of the prohibitions introduced in March. The Bank of England said last week that while banks can resume paying dividends, they will have to be capped at about 25% of quarterly profit, among other rules. The European Central Bank said Tuesday that it would allow the resumption of dividends with multiple conditions, including that they don’t exceed 15% of a firm’s cumulative profit for 2019 and 2020. Those are similar to the Fed’s current restrictions, which froze dividends at their midyear level, corresponding to about 25% of income for the top six banks.
Fed extends dividend restrictions after stress test results – The Federal Reserve is extending restrictions on bank dividend payments and share repurchases into the first quarter of next year, but will still allow banks to make payments to shareholders based on income earned over the past year. The Fed announced its decision as it released results of the first-ever “mid-cycle” stress tests. The central bank added the supplemental test in light of economic uncertainties from the coronavirus pandemic. The balance sheets of 34 banks with at least $100 billion of assets were assessed against a “severely adverse” and an “alternative severe” scenario, using data collected from after the onset of the pandemic. The central bank also voted unanimously not to adjust any firm’s stress capital buffer, in an effort to prevent banks from having to raise additional capital in the midst of stressed economic conditions, according to senior Fed officials. The analyses found that the firms in aggregate would achieve risk-based capital ratios well above the required minimum even under the most stressed circumstances, and that banks have actually built combined capital thanks both to the Fed’s earlier restrictions on dividend payments and to large loan-loss reserves. However, a number of institutions were only able to meet roughly the minimum in their individual scores. And in a less severe scenario – envisioning a slow recovery coming out of the pandemic – 19 of the 34 banks were only able to achieve the minimum capital ratio that the central bank used as its basis. The institutions meeting just the minimum in the less severe scenario included Bank of America, Capital One Financial, Credit Suisse and PNC Financial Services Group. The other 15 exceeded the minimum standard. In a statement, Fed Gov. Lael Brainard cited that performance as the reason for her dissent from the Fed’s decision to restrict dividends and share repurchases. She had also voted against the Fed’s earlier restrictions announced in June, arguing that more dramatic actions were warranted. “For several large banks, projected losses take capital levels very close to the minimum requirement, in the range where banks tend to pull back from lending, even before payouts,” Brainard said. “Today’s action nearly doubles the amount of capital permitted to be paid out relative to last quarter. Prudence would call for more modest payouts to preserve lending to households and borrowers during an exceptionally challenging winter.” In the most severe scenario – which envisioned a double-digit unemployment rate at the end of 2021 as well as a sharp global slowdown – the capital ratio of banks in aggregate would decline from 12.2% to 9.6%, well above the minimum 4.5% requirement. However, the Fed found that under both of the tested scenarios, banks would still suffer more than $600 billion in total losses. The Fed cited the economic uncertainty stemming from the persistent pandemic as the primary reason for extending its restrictions on dividends and share repurchases. Since the end of June, banks have not been allowed to repurchase shares and have had to limit dividend distributions to the levels banks paid out in the second quarter. But the Fed, in the first quarter of next year, will instead adjust the maximum amount banks can pay out and buy back to an amount based on income earned this past year. If a bank did not earn income, it will be prohibited from paying out dividends or buying back shares entirely. “The modified restriction will continue to preserve capital and ensure that large banks can still lend to households and businesses,” the Fed said in a release.
FDIC report suggests M&A has been positive for many small banks – Community banks are still consolidating at a quick pace, but fewer new charters are more to blame than mergers and many smaller institutions are even reaping the rewards of the industry’s restructuring, the Federal Deposit Insurance Corp. said Wednesday. In a sweeping report on community banking trends, the FDIC found that the number of local financial institutions continues to dwindle – from 6,802 community banks in 2011 to 4,750 at the end of 2019. But the report, which is an update to a previous study released in 2012, found that community bank performance was strong heading into the pandemic year of 2020. And while hundreds of banks are still being acquired through mergers and acquisitions, the vast majority of those deals involved a community bank as the acquirer. (The reported contained data updated through the end of last year.) “After the 2012 study the banking industry continued to consolidate, but existing community banks were less likely to close than noncommunity banks,” the agency said in the report. “Of the 6,802 institutions identified as community banks at year-end 2011, just under 30 percent had closed by year-end 2019. In comparison, over the same period, more than 36 percent of the 555 institutions that identified as noncommunity banks had closed.” Still, the dominance of industry assets by the largest banks has continued to grow. In 2019, the average asset size of noncommunity banks was $38.4 billion, about 80 times larger than the average size of community banks. In 2009, that gap was only about 50 times. “Look, community banks are still consolidating,” said Diane Ellis, director of insurance and research at the FDIC. “That definitely is the state of affairs right now.” “It’s still a consolidating industry and I think our expectation is that it’s going to continue,” she added. While the report clearly is focused on smaller banks, the FDIC does not use asset size strictly to determine which institutions fall into the community bank bucket. The agency instead uses a mix of factors like geographic spread and financial ratios such as core deposits to loans. Banks with only a specialty focus, like credit card lending, are excluded from the designation. Banks below an “indexed asset threshold” of $1.65 billion are assumed to be included, but the study includes certain banks above that threshold and leaves out other institution below that threshold. The report also found that when community bank consolidation does occur, more often than not the buyers have been other community banks. Among community banks that ceased operations between 2012 and 2019, two-thirds were acquired by other community banks. Among banks with less than $100 million of assets, 89% of buyers were community banks, compared to 65% of banks between $100 million and $500 million, and 32% of banks between $500 and $1 billion. As bank failures declined in the years after the financial crisis, the FDIC found that voluntary mergers between unaffiliated institutions – meaning banks not already owned by the same holding company – was the “predominant cause of the decline in the number of insured depository institutions.” But notably, the FDIC found that “the main contributor” to the actual number of banks dropping industry-wide stemmed less from consolidation and more from a drastic decline in the number of newly chartered institutions. From the end of 2011 to the end of 2019, the total number of depository institutions fell from 7,357 to 5,177.
CFPB finalizes disclosure requirements for debt collectors – The Consumer Financial Protection Bureau issued a final rule outlining steps debt collectors must take to disclose the existence of a debt to a consumer, and prohibiting collectors from taking legal action over so-called time-barred debts. The rule released Friday requires that debt collectors provide detailed disclosures at the beginning of any oral, written or electronic communication with a consumer about a debt, as well as information to help the consumer respond. The rule also bars collectors from filing a lawsuit or threatening to do so to collect a time-barred debt that has exceeded the statute of limitations. The rule goes into effect Nov. 30, 2021. “Today’s final rule provides clear rules of the road for debt collectors on how to disclose details about a consumer’s debt and informs consumers how they may respond to the collector, if they choose to do so,” CFPB Director Kathy Kraninger said in a press release. “Our final rule reflects our commitment to ensuring that consumers are better informed; informed consumers are empowered consumers.” The 354-page rule revises Regulation F, which implements the Fair Debt Collection Practices Act. It generally requires collectors to take one of several actions to contact a consumer about a debt. Collectors can speak to consumers by phone, mail a letter or send an electronic text message. For texts and “snail” mail, debt collectors have to wait roughly 14 days before sending information to a credit bureau. If the collector receives a notice that such communications were “undeliverable,” then additional steps have to be taken to reach the consumer. The final rule also requires that debt collectors provide information that a consumer can use to dispute the debt or to request information about the original creditor. The rule also provides a safe harbor for compliance with the disclosure requirements for debt collectors that use a model validation notice provided by the bureau. The rule comes less than two months after the CFPB issued a broad debt collection rule that restricts how often debt collectors can call borrowers. That October rulemaking for the first time said debt collectors can use voice mail, email and text messages to communicate with borrowers. Consumers can opt out of those technologies.
Mnuchin rules out freeing Fannie-Freddie before Biden takes over – Treasury Secretary Steven Mnuchin has all but ruled out letting Fannie Mae and Freddie Mac exit U.S. control before he steps down, leaving it to the Biden administration to decide the fates of the mortgage giants. In a Wall Street Journal interview, Mnuchin said he’s not going to pursue any actions that put taxpayers at risk or limit consumers’ access to home loans. His decision prevents a major policy change in the last days of the Trump administration that risked disrupting the $10 trillion mortgage market. Because of the stakes involved, freeing Fannie and Freddie before President-elect Joseph Biden’s Jan. 20 inauguration has long been considered a long shot. But it’s an approach that Federal Housing Finance Agency Director Mark Calabria, the companies’ regulator, has been pushing for behind the scenes. The agreements that provide the companies with government support prevent them from leaving federal control without the Treasury Department’s sign-off. Fannie fell 8.8% to $2.50 at 8:23 am New York time in pre-market trading Tuesday, while Freddie slipped almost 14% to $2.33. Before today, Fannie had fallen 12% this year and Freddie had declined 10%. Mnuchin’s decision means he will fall short of a goal he pledged to accomplish relatively quickly just days after President Donald Trump’s 2016 election win. But fully privatizing Fannie and Freddie proved more complicated than the Treasury secretary might have assumed. It also got sidetracked by more pressing issues, like pushing Trump’s tax cut through Congress and responding to the COVID-19-fueled economic downturn. Speaking to reporters last week, Mnuchin described Fannie and Freddie as “the one area I feel like we didn’t make enough progress.” In recent weeks, Mnuchin has told government officials that he plans to agree to at least some sort of changes to Fannie and Freddie’s bailout agreements, as well as to create a blueprint for what he thinks should happen with the housing-finance system after he leaves. He indicated in the Wall Street Journal interview that he would likely permit the companies to hold more capital, without stating a specific amount. Fannie and Freddie don’t make mortgages. They buy them from lenders, wrap them into securities and guarantee to investors the payment of principal and interest – essentially backstopping roughly $5 trillion of home loans. The government took them over during the 2008 financial crisis, putting them under the FHFA in conservatorships. Private shareholders of Fannie and Freddie shares, which include major hedge funds, have clamored for the companies to be released, which would potentially allow them to start collecting profits again. The option that Calabria had advocated for would allow Fannie and Freddie to leave conservatorship with close to their current levels of capital. The companies would operate under a consent order that limits their dividends and other business activities until they reach the hundreds of billions of dollars in capital that the FHFA says they need to operate safely.
FHFA proposes formal liquidity rules for GSEs – The Federal Housing Finance Agency is proposing to codify banklike liquidity requirements it already imposed on Fannie Mae and Freddie Mac that will require the mortgage giants to hold more liquid assets to cover sudden funding shortfalls even after they exit conservatorship. The proposal, which builds on existing FHFA guidance issued to the government-sponsored enterprises earlier this year, is designed to “protect taxpayers and support the mortgage market,” the agency said in a release. “A companion to the new capital rule, today’s proposed rule will better ensure that the Enterprises are positioned to fulfill their countercyclical mission,” FHFA Director Mark Calabria said in a news release. “Requiring the Enterprises to have enough liquid assets to continue supporting the mortgage market during times of severe stress protects taxpayers and the housing market.” The proposed liquidity rules, like the FHFA guidance that the GSEs are already complying with, are broken into four components: a 30-day “cash flow stress test” enabling the GSEs to continue providing market liquidity while also holding a $10 billion buffer; a measure of the companies’ ability to meet cash flows for a year to provide market liquidity under stressed conditions; a minimum ratio of long-term debt to “less-liquid” assets; and minimum standards for the term of liabilities relative to assets. The requirements resemble liquidity rules the U.S. regulators developed for banks with more than $250 billion of assets following the financial crisis. This includes the so-called Liquidity Coverage Ratio, which went into effect in 2015 and requires financial institutions to hold an amount of high-quality liquid assets that would be enough to fund cash outflows for at least 30 days in a period of stress. In theory, the proposal would replace the existing liquidity benchmarks, and would be a requirement for the GSEs to meet once the companies are returned to private hands. The GSEs had warned in filings earlier this year that the new requirements could result in lower net interest income. “The updated liquidity guidance is more stringent than our existing liquidity requirements and liquidity requirements of banks and other depository institutions, which could result in higher funding costs in the future and may negatively affect our net interest income,” Freddie said in its second-quarter 10-Q filing. “In addition, the updated liquidity guidance may impact the size and the allowable investments in our other investments portfolio.”
‘Seriously delinquent’ mortgages remain elevated, OCC says -Delinquency rates on residential mortgages held by the nation’s top banks remained elevated in the third quarter but showed some improvement from the second quarter, the Office of the Comptroller of the Currency said Wednesday. The percentage of seriously delinquent mortgages that are 60 or more days past due hit 5.8% in the third quarter, compared with 1.5% a year earlier, according to the OCC’s Mortgage Metrics report. However, the third-quarter decline marked an improvement from the second quarter when 6.8% of mortgages were seriously delinquent. The Coronavirus Aid, Relief, and Economic Security Act provided 180 days of forbearance and another 180 days, if needed, to struggling borrowers while also waiving late fees and additional interest. While that relief only applied to loans backed by Fannie Mae, Freddie Mac, the Federal Housing Administration and other smaller agencies, the OCC said that “banks implemented the CARES Act forbearance moratoriums for all covered loans.” The CARES Act prohibits servicers from reporting borrowers as delinquent if they have asked for forbearance. Some borrowers have stopped paying their mortgage and have not asked their servicer for relief, resulting in higher delinquency rates. Despite the financial devastation of the coronavirus pandemic, foreclosures have largely been put on hold because of a national moratorium that was extended until the end of the year by the Federal Housing Finance Agency. Mortgage servicers initiated just 329 new foreclosures in the third quarter, up from 249 in the second quarter, and nearly 20,000 in the first quarter. The figures include loans held by borrowers in bankruptcy whose payments are 30 or more days past due, the OCC said. “Events associated with the COVID-19 pandemic, including foreclosure moratoriums that began March 18, 2020, and have been extended to January 31, 2021, have caused significant decreases in these metrics,” the report stated. Additionally, servicers completed 14,097 mortgage modifications in the third quarter, of which roughly 71% included multiple actions such as an interest rate reduction and a term extension. Roughly 41% of loan modifications in the third quarter reduced a borrower’s monthly payments, the OCC said. The OCC’s data covers first-lien residential mortgage loans serviced by seven national banks: Bank of America, Citigroup, HSBC, JPMorgan Chase, PNC Financial Services Group, U.S. Bancorp, and Wells Fargo. The banks serviced roughly 14.4 million loans or 27% of all residential mortgage debt outstanding, as of Sept. 30.
Tenants of Donald Trump and Jared Kushner companies receive $3.65m in PPP loan money, report says – Tenants in real estate properties owned by President Donald Trump and his son-in-law Jared Kushner received $3.65m of loan money through the Paycheck Protection Program (PPP), according to an analysis by NBC News. The news organisation analysed what businesses benefited from pandemic relief programs put in place by the federal government. Data from the Small Business Administration (SBA) found that companies linked to the Trump Organisation as well as the Kushner Companies, which is owned by Mr Kushner’s family, received funding. More than 25 PPP loans were given to businesses located in properties owned by Trump Organisation or Kushner Companies, and paying rent to those landlords, NBC News reports. The SBA released data on Tuesday night about every small business that received either PPP loans or Economic Injury Disaster (EIDL) loans after months of litigation. These loans, created by the federal government, were intended to give small businesses emergency relief in order to pay employees, rent, and mortgage expenses. The loans to the president and his family’s tenants included one to Triomphe Restaurant Corp., at the Trump International Hotel & Tower in New York City for the sum of $2.14m. Additionally, two tenants in Trump Tower in NYC received $100,000 each but only kept three jobs, which went against the requirements of receiving a PPP loan. Four tenants at a Manhattan building owned by Mr Kushner each received more than $204,000, but they only kept six jobs. White House press secretary Kayleigh McEnany and her family also benefited from the program. Her parent’s Florida roofing company received $2m from the program. It was previously disclosed in July that the company was one of the PPP recipients. The SBA argued that 87 per cent of loans went to small businesses prior to the data release, but a majority of the loans actually went to larger corporations, The Washington Post reports.
MBA Survey: “Share of Mortgage Loans in Forbearance Decreases to 5.48%”, More Borrowers Seeking Relief — Note: This is as of December 6th. From the MBA: Share of Mortgage Loans in Forbearance Decreases to 5.48% The Mortgage Bankers Association’s (MBA) latest Forbearance and Call Volume Survey revealed that the total number of loans now in forbearance decreased from 5.54% of servicers’ portfolio volume in the prior week to 5.48% as of December 6, 2020. According to MBA’s estimate, 2.7 million homeowners are in forbearance plans. … “The share of loans in forbearance decreased in the first week of December. However, more borrowers sought relief, with new forbearance requests reaching their highest level since the week ending August 2, and servicer call volume hitting its highest level since the week ending April 19,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “Compared to the last two months, more homeowners exiting forbearance are using a modification – a sign that they have not been able to fully get back on their feet, even if they are working again.” Added Fratantoni, “The latest economic data is showing a slowdown, particularly an increase in layoffs and long-term unemployment. Coupled with the latest surge in COVID-19 cases, it is not surprising to see more homeowners seeking relief.” … By stage, 18.72% of total loans in forbearance are in the initial forbearance plan stage, while 78.72% are in a forbearance extension. The remaining 2.56% are forbearance re-entries. This graph shows the percent of portfolio in forbearance by investor type over time. Most of the increase was in late March and early April, and has been trending down for the last few months. The MBA notes: “Total weekly forbearance requests as a percent of servicing portfolio volume (#) increased relative to the prior week: from 0.08% to 0.12%. … As a percent of servicing portfolio volume (#), calls increased from the previous week from 5.3% to 9.4%.”
Black Knight: Number of Homeowners in COVID-19-Related Forbearance Plans Increased Slightly – Note: Both Black Knight and the MBA (Mortgage Bankers Association) are putting out weekly estimates of mortgages in forbearance. This data is as of December 15th. From Black Knight: Past Week Sees an Expected Mid-Month Rise in Forbearance Plans: After a slight decline last week (-12,000) forbearances have increased once again, but there is some good news in terms of plan starts. Our weekly snapshot of McDash Flash daily tracking data showed the number of mortgages in active forbearance saw a 37,000 increase from last Tuesday, mirroring what’s become a common trend of mid-month upticks that we’ve observed so far in 2020. As a reminder, since the recovery started, we’ve regularly seen the strongest declines early in the month, as expiring forbearance plans are removed. The primary driver behind this week’s rise – as is the case with the aforementioned trend of mid-month upticks in general – came from a pullback in such plan exits, which were down considerably – but expectedly – week over week. With more than 550,000 plans still set to expire at the end of December, we could see more positive news in terms of plan removals in the first week of January. Overall, the number of active forbearance plans is now up 31,000 from the same time last month, and – as of December 15 – 5.3% of all mortgages (2.79 million) are in forbearance. Together, they represent $563 billion in unpaid principal. The week saw an increase of 18,000 FHA/VA forbearance plans, 14,000 among PLS/portfolio loans and a modest 5,000 rise in GSE plans. Overall forbearance plan starts, along with both new plans and re-starts, fell this week, which can be seen as good news given last week’s increases among all three of those categories.
Housing Starts increased to 1.547 Million Annual Rate in November — From the Census Bureau: Permits, Starts and Completions: Privately-owned housing starts in November were at a seasonally adjusted annual rate of 1,547,000. This is 1.2 percent above the revised October estimate of 1,528,000 and is 12.8 percent above the November 2019 rate of 1,371,000. Single-family housing starts in November were at a rate of 1,186,000; this is 0.4 percent above the revised October figure of 1,181,000. The November rate for units in buildings with five units or more was 352,000. Privately-owned housing units authorized by building permits in November were at a seasonally adjusted annual rate of 1,639,000. This is 6.2 percent above the revised October rate of 1,544,000 and is 8.5 percent above the November 2019 rate of 1,510,000. Single-family authorizations in November were at a rate of 1,143,000; this is 1.3 percent above the revised October figure of 1,128,000. Authorizations of units in buildings with five units or more were at a rate of 441,000 in November.The first graph shows single and multi-family housing starts for the last several years. Multi-family starts (red, 2+ units) increased slightly in November compared to October. Multi-family starts were down 18% year-over-year in November. Single-family starts (blue) increased in November, and were up 27% year-over-year. This is the highest level for single family starts since 2007. The second graph shows total and single unit starts since 1968. The second graph shows the huge collapse following the housing bubble, and then eventual recovery (but still historically low). Total housing starts in November were slightly above expectations, however starts in September and October were revised down, combined. …
Comments on November Housing Starts – McBride – Earlier: Housing Starts increased to 1.547 Million Annual Rate in NovemberTotal housing starts in November were slightly above expectations, however starts in September and October were revised down, combined. The single family sectors has increased sharply, but the volatile multi-family sector is down year-over-year (apartments are under pressure from COVID).The housing starts report showed starts were up 1.2% in November compared to October, and starts were up 12.8% year-over-year compared to November 2019.Single family starts were up 27% year-over-year. Low mortgage rates and limited existing home inventory have given a boost to single family housing starts.The first graph shows the month to month comparison for total starts between 2019 (blue) and 2020 (red). A key point: Housing starts averaged 1.590 million SAAR in the three months prior to the pandemic! That is higher than the last couple of months. 2020 was off to a strong start, and with low interest rates and little competing inventory, starts are solid.Starts were up 12.8% in November compared to November 2019. Last year, in 2019, starts picked up at the end of the year – and were strong in early 2020 – so the comparison next month will be more difficult. Don’t be surprised if starts are down year-over-year sometime over the next few months.Starts, year-to-date, are up 7.0% compared to the same period in 2019. This is close to my forecast for 2020, although I didn’t expect a pandemic!I expect starts to remain solid, but the growth rate will slow.Below is an update to the graph comparing multi-family starts and completions. Since it usually takes over a year on average to complete a multi-family project, there is a lag between multi-family starts and completions. Completions are important because that is new supply added to the market, and starts are important because that is future new supply (units under construction is also important for employment). These graphs use a 12 month rolling total for NSA starts and completions.The blue line is for multifamily starts and the red line is for multifamily completions.The rolling 12 month total for starts (blue line) increased steadily for several years following the great recession – then mostly moved sideways. Completions (red line) had lagged behind – then completions caught up with starts- then starts picked up a little again late last year, but have fallen off the pandemic. The last graph shows single family starts and completions. It usually only takes about 6 months between starting a single family home and completion – so the lines are much closer. The blue line is for single family starts and the red line is for single family completions.Single family starts are getting back to more normal levels, and I expect some further increases in single family starts and completions on rolling 12 month basis.
AIA: “Architecture billings lose ground in November” -Note: This index is a leading indicator primarily for new Commercial Real Estate (CRE) investment.From the AIA: Architecture billings lose ground in November:Architecture firm billing activity is contracting once again after two months of a slowing decline, according to a new report from the American Institute of Architects (AIA).The pace of decline during November accelerated from October, posting an Architecture Billings Index (ABI) score of 46.3 from 47.5 (any score below 50 indicates a decline in firm billings). The pace of inquiries into new projects slowed, but remained positive with a score of 52.0, however the value of new design contracts dipped back into negative territory with a score 48.6.”In previous design cycles, we typically haven’t seen a straight line back to growth after a downturn hits,” said AIA Chief Economist, Kermit Baker, Hon. AIA, PhD. “The path to recovery is shaping up to be bumpier than we hoped for. While there are pockets of optimism in design services demand, the overall construction landscape remains depressed.”…
Regional averages: Midwest (50.1); West (48.3); South (46.7); Northeast (38.7)
Sector index breakdown: multi-family residential (52.2); mixed practice (49.5); commercial/industrial (47.5); institutional (41.9) This graph shows the Architecture Billings Index since 1996. The index was at 46.3 in November, down from 47.5 in October. Anything below 50 indicates contraction in demand for architects’ services.
Note: This includes commercial and industrial facilities like hotels and office buildings, multi-family residential, as well as schools, hospitals and other institutions. This index has been below 50 for nine consecutive months. This represents a significant decrease in design services, and suggests a decline in CRE investment through most of 2021 (This usually leads CRE investment by 9 to 12 months).This weakness is not surprising since certain segments of CRE are struggling, especially offices and retail.
NAHB: Builder Confidence Decreased to 86 in December –The National Association of Home Builders (NAHB) reported the housing market index (HMI) was at 86, down from 90 in November. Any number above 50 indicates that more builders view sales conditions as good than poor. From the NAHB: Builder Confidence Down from Record High, Still Strong Ending a string of three successive months of record highs, builder confidence in the market for newly built single-family homes fell four points to 86 in December, according to the latest NAHB/Wells Fargo Housing Market Index (HMI) released today. Despite the decline, this is still the second-highest reading in the history of the series after last month’s mark of 90.”Housing demand is strong entering 2021, however the coming year will see housing affordability challenges as inventory remains low and construction costs are rising,” said NAHB Chairman Chuck Fowke. “Policymakers should take note to avoid increasing regulatory costs associated with land development and residential construction.””Builder confidence fell back from historic levels in December, as housing remains a bright spot for a recovering economy,” said NAHB Chief Economist Robert Dietz. “The issues that have limited housing supply in recent years, including land and material availability and a persistent skilled labor shortage, will continue to place upward pressure on construction costs. As the economy improves with the deployment of a COVID-19 vaccine, interest rates will increase in 2021, further challenging housing affordability in the face of strong demand for single-family homes.”…The HMI index gauging current sales conditions dropped four points to 92, the component measuring sales expectations in the next six months fell four points to 85 and the gauge charting traffic of prospective buyers also decreased four points to 73.Looking at the three-month moving averages for regional HMI scores, the Northeast fell one point to 82, the Midwest was up one point to 81, the South rose one point to 87 and the West increased two points to 96.
Hotels: Occupancy Rate Declined 37.4% Year-over-year — From HotelNewsNow.com: STR: US hotel results for week ending 12 December: U.S. weekly hotel occupancy remained relatively flat from the previous week, according to the latest data from STR through 12 December.
6-12 December 2020 (percentage change from comparable week in 2019):
Occupancy: 37.8% (-37.4%)
Average daily rate (ADR): US$85.88 (-31.7%)
Revenue per available room (RevPAR): US$32.49 (-57.3%)
Since there is a seasonal pattern to the occupancy rate – see graph below – we can track the year-over-year change in occupancy to look for any improvement. This table shows the year-over-year change since the week ending Sept 19, 2020: This suggests no improvement over the last 3 months. The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average. The red line is for 2020, dash light blue is 2019, blue is the median, and black is for 2009 (the worst year since the Great Depression for hotels – before 2020). Seasonally we’d expect the occupancy rate to decline into the new year..
48% Of US Small Businesses Fear That They May Be Forced To “Shut Down Permanently” Soon — What would the United States look like if we lost half of our small businesses? The reason I ask that question is because approximately half of all small business owners in the entire country believe that they may soon be forced to close down for good. Not even during the Great Depression of the 1930s did we see anything like this. The big corporate giants with extremely deep pockets will be able to easily weather another round of lockdowns, but for countless small businesses this is literally a matter of life and death. Every day we are seeing new restrictions being implemented somewhere in the nation, and the politicians that are doing this are killing the hopes and dreams of countless small business owners. According to a recent Alignable survey, 48 percent of U.S. small business owners fear that they could be forced to “shut down permanently” in the very near future … Based on this week’s Alignable Q4 Revenue Poll of 9,201 small business owners, 48% could shut down permanently before year’s end. In fact, this number jumped from 42% just two months ago, demonstrating how several factors have converged to devastate small businesses: COVID resurgences, forced government reclosures, elevated customer fears, and a surge in online shopping at Amazon and other national ecommerce giants. When a small business with only a few employees closes down forever, it never makes any national headlines. But the truth is that small businesses are the heart and soul of our economy, and we are losing more of them with each passing day.
Retail Sales decreased 1.1% in November — On a monthly basis, retail sales decreased 1.1 percent from October to November (seasonally adjusted), and sales were up 4.1 percent from November 2019. From the Census Bureau report: Advance estimates of U.S. retail and food services sales for November 2020, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $546.5 billion, a decrease of 1.1 percent from the previous month, but 4.1 percent above November 2019. Total sales for the September 2020 through November 2020 period were up 5.2 percent from the same period a year ago. The September 2020 to October 2020 percent change was revised from up 0.3 percent to down 0.1 percent.This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline). Retail sales ex-gasoline were down 1.0% in November. The second graph shows the year-over-year change in retail sales and food service (ex-gasoline) since 1993. Retail and Food service sales, ex-gasoline, increased by 5.9% on a YoY basis. The decrease in November was well below expectations, and sales in October were revised down (September was revised up).
Flow Of US Imports Continues To Surge, Now At Twice The Rate Of Exports – With no let-up in consumer demand, container imports into the 10 largest US ports soared by 25% last month,compared with the previous year. And with the forward booking visibility of transpacific carriers indicating that the US import boom is set to continue to at least the Chinese New Year in February, import throughput is likely to stay high.However, the intense focus on repositioning empty equipment back to Asia, to meet export demand and benefit from the exceptional high market rates, has skewed the trade imbalance further. Blue Alpha Capital’s analysis of the top ten US ports recorded a 24.5% jump in imports through the west coast in November to 1,042,331 teu, and 26.6% more containers for east and Gulf coast ports to 965,485 teu.This combined total of 2,007,816 teu takes throughput for September, October and November to over 6.1m teu – 18.8% higher than the year before. And with December import volumes equally strong – port of Los Angeles Signal data for this week and next forecasts increases of 49% and 46% – the year is set to record ‘modest growth’.But this seemed inconceivable at the start of the pandemic, said Blue Alpha Capital founder John McCown, adding: “With the likely gain for December, 2020 will close out with an annual gain in the 1.5% range. That would have been unthinkable at the outset of Covid in March and would be a reversal of the modest 0.9% decrease in 2019.”The consultant noted that several import sectors saw big spikes in volume during November, the furniture, sporting goods and toy categories recording a 55% gain, up on the 52% and 41% gains seen in October and September.“The stay-at-home lifestyle has generated volume in an array of consumer products,” said Mr McCown, and he added that some of the demand surge was due to consumers reallocating what they would normally spend on vacations, dining out and entertainment. Despite the positive import numbers, November US exports fell 4.2%, the ninth consecutive monthly drop, further worsening the trade imbalance to a near-historical record ratio of 2.32 import loads for every one export, according to Blue Alpha Capital.
Philly Fed Manufacturing “growth was less widespread” in December, Kansas City Fed “Activity Expanded Further” –From the Philly Fed: December 2020 Manufacturing Business Outlook Survey Manufacturing activity in the region continued to grow, but growth was less widespread, according to firms responding to the December Manufacturing Business Outlook Survey. The survey’s current indicators for general activity, new orders, and shipments remained positive for the seventh consecutive month but fell notably from their readings in November. Some future indexes also moderated this month but continue to indicate that firms expect growth over the next six months. The diffusion index for current activity fell 15 points to 11.1 in December, its lowest positive reading following its fall to long-term lows in April and May… On balance, fewer firms reported increases in manufacturing employment this month. The current employment index has remained positive for six consecutive months but decreased 19 points to 8.5 in December. This was lower than the consensus forecast.And from the Kansas City Fed: Tenth District Manufacturing Activity Expanded Further: The Federal Reserve Bank of Kansas City released the December Manufacturing Survey today. According to Chad Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas City, the survey revealed that Tenth District manufacturing activity expanded further in December. Manufacturing activity was still below year ago levels, but expectations for future activity were positive.”Regional factories reported another month of solid growth, but activity continues to lag preCOVID levels,” said Wilkerson. “The recent wave of COVID-19 has negatively affected manufacturers, but many firms still indicated significant capital spending plans for the coming year.”…The month-over-month composite index was 14 in December, up from 11 in November and 13 in October Here is a graph comparing the regional Fed surveys and the ISM manufacturing index: These early reports suggest the ISM manufacturing index will show expansion in December, but will likely decrease from the November level.
The Employment Situation is Worse than the Headline Unemployment Rate Suggests – Mcbride – The headline unemployment rate has fallen to 6.7% in November, but that significantly understates the current situation. Note that the headline unemployment rate was 3.5% at the end of 2019. Here is a table that shows the current number of unemployed and the unemployment rate. Then I calculated the unemployment rate by including the number of people that have left the labor force since early 2020, and the expected growth in the labor force. As the economy recovers, many of the people that left the labor force will probably return, and there will likely be more entrants into the labor force (although recent demographic data has been dismal). This will keep the unemployment rate elevated for some time, and suggests the need for additional disaster relief. This is just the headline unemployment rate. There are also 2.3 million additional involuntary part time workers than in February (these workers are included in U-6). Note: I’d be careful looking at the weekly initial claims report in addition to the BLS report. The weekly claims report suggests there are millions of workers receiving pandemic assistance, but this should be captured in the BLS household surveys (so I wouldn’t add the numbers together).
Weekly Initial Unemployment Claims increased to 885,000 – The DOL reported: In the week ending December 12, the advance figure for seasonally adjusted initial claims was 885,000, an increase of 23,000 from the previous week’s revised level. The previous week’s level was revised up by 9,000 from 853,000 to 862,000. The 4-week moving average was 812,500, an increase of 34,250 from the previous week’s revised average. The previous week’s average was revised up by 2,250 from 776,000 to 778,250.This does not include the 455,037 initial claims for Pandemic Unemployment Assistance (PUA) that was up from 415,037 the previous week. The following graph shows the 4-week moving average of weekly claims since 1971.
Jobless claims negative trend reversal likely; expect a poor December jobs number * This week new jobless claims rose further from their recent pandemic lows, while continuing claims, seasonally adjusted, made a new pandemic low. Nevertheless I strongly suspect the downward trend has broken. On a unadjusted basis, new jobless claims declined by 21,335 to 935,138. Seasonally adjusted claims, on the other hand, rose by 23,000 to 885,000. The 4 week moving average also rose by 34,250 to 812,500, the highest reading in a over a month. Here is the close up since the end of July (for comparison, remember that these numbers were in the range of 5 to 7 million at their worst in early April): Because of the huge distortions caused by the pandemic in seasonally adjusted numbers, and because we are at a time of year when seasonality causes the most distortions in any event, let’s also take a look at the YoY changes in all of the above metrics: There is now a 5 week trend of increasing YoY comparisons of the weekly data, and the 4 week average also looks like it has started a trend higher YoY. Thus it is very likely that the renewed explosion of the pandemic has indeed caused new jobless claims to break into an upward trend due to the rampaging pandemic. Nevertheless, as I wrote last week, I won’t feel certain unless and until seasonally adjusted new claims rise over 900,000 and the 4 week average over 850,000, which would take both out of the range they have been in over the past 4 months. We’re not quite there yet. The “good” news was that continuing claims, which historically lag initial claims typically by a few weeks to several months, fell by 312,257 to 5,492,701 on an unadjusted bases, and also declined by 273,000 to 5,508,000 after seasonal adjustment, a new pandemic low: Because these lag initial claims, I strongly suspect we will see an upward reversal in the next few weeks. Additionally, although I won’t bother with a graph, both initial and continued claims remain at or above their worst levels from the Great Recession. Finally, the increase in new jobless claims has averaged 72,000 in the past 4 weeks. Here’s what that looks like vs. monthly job gains or losses this year (note that the 2 week change in jobless claims is inverted so that an increase shows as a downward bar: I mention this because such a dramatic increase in jobless claims over a month has never occurred outside of a recession, and has always coincided with a *loss* of jobs in the monthly report: Because we are in uncharted territory all I really feel comfortable saying is that I suspect that the December jobs report is going to be the weakest since May. A negative number is very possible, and if there is a positive number, it looks likely to be well under 200,000. Additionally, I also suspect the unemployment claims situation is going to continue to worsen as long as the pandemic does. I have no idea how much worse it will get.
US retail giants shut off pandemic hazard pay to workforce while funneling billions into share buybacks – The Brookings Institution, a Washington, DC-based think tank, released a report in November examining how the largest store chains in the United States have cut off critical pay support for workers even as cases of COVID-19 are spiking. The study, titled “Windfall Profits and Deadly Risks,” examined pandemic hazard pay at Amazon, Walmart, Target, Kroger, Costco, Albertsons, Ahold Delhaize (which owns the grocery store chain Giant Foods), Walgreens, CVS Health, Home Depot, Lowe’s, Best Buy, and Dollar General. These 13 companies, ranging from big-box stores to grocery chains to electronics stores and pharmacies, are all among the 20 largest retail companies in the US and collectively employ over six million workers. They account for more than one third of employment in the US retail sector, which had about 15 million workers in 2019, equal to about one in 10 workers. Wages in retail were already at or below poverty level before the pandemic. The median starting wage for retail jobs such as cashiers and stock clerks at companies like Kroger and CVS is between $11 and $12 an hour. At the 13 companies examined by Brookings for the report, only Amazon and Costco had a starting wage of $15 or more before the pandemic started. Since the pandemic started, Target and Best Buy have raised their starting pay to $15. All the companies in the report implemented so-called “hero pay” or “Appreciation Pay” as COVID-19 was beginning to spread, which amounted to an average of only $1.11 an hour over the course of the entire pandemic. Eight of the 13 companies paid their workers less than $1 an hour extra during the pandemic when spread out over the entire course of March to today. At Albertsons, employees have earned an average of just $0.83 per hour extra when spread out over the course of the pandemic. At CVS Health, hazard pay spread out since March has amounted to a meager $0.21 per hour in additional pay for cashiers and clerks. “Amazon and Walmart could have quadrupled the hazard pay they gave their frontline workers and still earned more profit than the previous year,” the report states. However, almost every company ended additional hazard pay by early summer as lockdown measures across the country were being relaxed. According to the report, on average, workers have been on the job for 133 days since last receiving hazard pay. The report declares: “The numbers are stark – they paint a picture of most companies prioritizing profits and wealth for shareholders over investments in their employees.” On average, the companies paid workers hazard pay for only 79 days of the pandemic. When averaged out over the past nine months, the average wage increase was miniscule. Workers received an additional $0.95 an hour at Amazon and $0.63 more at Walmart, about a 6 percent raise. Almost all of the companies studied phased out their hazard pay by June, however. As the US case numbers continue to escalate into uncharted territory, not one of the 13 companies studied has reinstated hazard pay for frontline workers.
Tyson Foods Fires 7 Plant Managers Over Betting Ring On Workers Getting COVID-19 : NPR – Tyson Foods has fired seven managers at an Iowa pork plant after investigating allegations they bet on how many workers there would get sick from the coronavirus. The company, one of the country’s largest meat suppliers, launched an independent investigation into the complaints last month, suspending without pay the managers allegedly involved. Former U.S. Attorney General Eric Holder led the investigation. “The behaviors exhibited by these individuals do not represent the Tyson core values, which is why we took immediate and appropriate action to get to the truth,” Tyson Foods President and CEO Dean Banks said in a statement Wednesday. “Now that the investigation has concluded, we are taking action based on the findings.” A spokesperson for Tyson, Gary Mickelson, told NPR that there isn’t a report to share from the investigation, but “we can tell you that Mr. Holder and his team looked specifically at the gaming allegations and found sufficient evidence for us to terminate those involved.” Banks traveled to the plant on Wednesday to meet with workers and community leaders. More than 1,000 employees at the plant in Waterloo have been infected by the virus, and at least six have died. The virus spread across the community: Black Hawk County has seen some 12,000 cases and 193 deaths. Many of the plant’s 2,800 employees are immigrants and refugees. Black Hawk County Sheriff Tony Thompson visited the plant along with health officials in April. He told The New York Times that working conditions there – workers crowded elbow to elbow, not wearing face coverings – “shook me to the core.” Thompson and other officials lobbied for Tyson to close the plant, but the company refused. It was around this time, according to a complaint from the family of one employee who died, that the manager of the Waterloo facility organized a “cash buy-in, winner-take-all betting pool for supervisors and managers to wager how many employees would test positive for COVID-19.” According to the lawsuit filed by the family of Isidro Fernandez, who died in April, Tyson had employees move between a different Iowa plant where an outbreak was occurring and the Waterloo plant, and did not adequately test or quarantine them before they entered the Waterloo facility. The lawsuit also alleges that supervisors outwardly denied there were cases of the virus at the Waterloo plant but began avoiding the plant floor because they were afraid of contracting the virus. The complaint says Tyson offered $500 “thank you bonuses” to employees who showed up for every scheduled shift for three months – a policy that the plaintiffs argue incentivized sick workers to keep working.
New York Times smears COVID-19 whistleblower Rebekah Jones – On Friday the New York Times published an article aimed at smearing COVID-19 whistleblower Rebekah Jones. Jones was fired from her position in the Florida Department of Health in May for refusing to manipulate data to support Florida’s Republican Governor Ron DeSantis’ back-to-work and back-to-school campaign. She went on to help create and oversee Florida COVID Action and The COVID Monitor, the most comprehensive databases for tracking COVID-19 infections and deaths in Florida and in K-12 schools across the US, respectively. In retaliation, Florida state police barged into Jones’ home last week with guns aimed at her and her family. The officers seized her phone, computer and several hard drives, preventing her from continuing to publish data on COVID-19 outbreaks. The Times, which provides the line of the Democratic Party, has not published a single denunciation of this vicious attack on democratic rights. Instead, the so-called “newspaper of record” is digging up completely irrelevant episodes from Jones’ past in an effort to discredit her work in exposing the state cover-up of COVID-19 cases, and particularly the spread of the virus in schools. Downplaying the significance of the attack on her, the Times refers to Jones’ “tiff with the governor,” as if what is involved is just a petty quarrel. The Times then provides an account of the raid that is devoted largely to repeating the claims of the police. In fact, the police footage itself shows a police officer pointing a gun at Jones, and the officer then enters the house with the gun. Footage released by Jones shows the police pointing a gun up the stairs at her family. As for the warrant, Jones notes that she was only presented with it hours after the raid began, as officers were leaving. In an attempt to further discredit her, Mazzei writes that “the search warrant served this week did not represent Ms. Jones’s first brush with the law.” It goes on to highlight criminal charges Jones faced in Florida involving a relationship with one of her students when she was a graduate assistant at Florida State University – none of which resulted in a conviction. How any of these allegations have to do with, let alone justify, the fascistic police raid on her home and family is not explained. However, the implication is that Jones has a criminal past and perhaps is responsible for her present “brush with the law.”
New York City to halt indoor dining as coronavirus cases surge — Restaurants in New York City will be required to close their indoor dining rooms on Monday until further notice, Gov. Andrew Cuomo announced Friday. The increased restrictions come as coronavirus cases in New York City surge alongside the US at large. The five boroughs averaged 41 new cases per 100,000 people over a 14-day time span, with the number gradually increasing in recent weeks. Indoor dining resumed in the city in September with capacity limited to 25%. “We learned this lesson in the spring the hard way: the crowding is a problem,” Cuomo said. Restaurant closings have become a hotbed issue after federal economic relief largely ran out over the summer. Los Angeles County, the most populous in the country, suspended all in-person restaurant dining – both indoor and outdoor – in November, causing outrage from some business owners. Major US stock indexes hit session lows as Cuomo announced the news. Roughly 17% of US restaurants have permanently closed this year, and industry groups are warning thousands more will come soon without further loans or grants allowing owners to close without causing more financial pain. “The federal government must provide relief to bars and restaurants in this next package,” Cuomo said, adding that the state will extend its commercial eviction moratorium. Efforts to pass a second relief package have been mired in congressional gridlock since August.
Mobility is NOT a business: Why the pandemic-induced collapse of mass transit should concern us all – People have always needed to get from here to there whether by foot, by horse, by ship, by train, by car, by bus or by plane. Civilization DEPENDS on the mobility of humans and the produce they cultivate and extract from the earth. Without mobility everything would grind to a halt. Governments typically organize transportation systems and then build the necessary infrastructure and purchase the vehicles or license the purchase of vehicles by others. This is how it is done because mobility is NOT optional for civilization. Mass transit – the kind of transit in deep trouble right now because of the pandemic – is a product of cities’ dense accumulations of people. Though we identify mass transit with the modern industrial city, it has been around for as long as cities themselves. Any locale where there has been a rickshaw, livery horse or carriage for hire has mass transit – by which I mean a system of vehicles that is SHARED by unrelated persons. You can easily find stories today about the deepening financial distress of mass transit systems in New York City and Washington, D.C. In my experience, the Washington Metro, the tri-state light rail system, isn’t entirely empty as depicted in the linked story. But it is very far from the packed-to-gills, standing-room-only affair it used to be during rush hour. Ridership is reported to be down 80 percent. In the San Francisco Bay Area, theBART light rail system in down 90 percent. Who still rides on these systems? People who have to because their livelihoods depend on it. This is another grouping of essential workers who tend the grocery stores, staff the hospitals, round out the construction crews and serve at the few restaurants still open. They also tend to other people’s children and clean other people’s houses and care for other people’s gardens and lawns. These activities depend heavily on the reliability and availability of public transit. What most people don’t know is that public transit systems get only a little more than a third of their operating revenues from fares. So, while the drop in fares has been painful, the expected drop in local and state funding due to plummeting tax revenues and transit-dedicated sales and property taxes will be even more painful. Cities and states do not have the option of running deficits. The U.S. federal government can run deficits, and it is running huge ones already to combat the economic downturn associated with the pandemic. With cities and states faced with having to shrink their spending at a time of rising need, there is a big fight in the Congress over providing more aid to cities and states. Those who pretend to be concerned with the health of Americans and of the American economy need to understand that the two are heavily dependent on the essentials of civilization which government must generally organize and substantially fund. Transit is one of those essentials. To expect transit to “pay for itself” is fundamentally to misunderstand its purpose. Transmit makes possible much of the private commercial activity of cities, not the other way around.
Washington Monument closed after visit from Interior secretary who’s positive for COVID-19 –The National Park Service temporarily closed the Washington Monument on Friday after a recent visit by Interior Secretary David Bernhardt, who tested positive for the coronavirus on Wednesday. Bernhardt, a Colorado native, visited the iconic District of Columbia monument “recently,” Interior Department spokesman Nicholas Goodwin said in an email. Employees who came into contact with the secretary had to quarantine, leaving too few to safely operate the site. Tourists normally ride an elevator to the observation deck 500 feet up, where they can enjoy views for miles. “Out of an abundance of caution, a couple of employees have quarantined resulting in a temporary workforce reduction at the monument and its temporary closure,” Goodwin wrote. The National Park Service posted an alert to potential visitors with a similar explanation on its website. “Washington Monument is temporarily closed due to a reduction in its workforce resulting from a potential COVID-19 exposure,” the alert said. The Washington Post reported that Bernhardt gave a group of appointees a tour of the site this week. The Park Service is part of Interior.
Temporary halt to Detroit water cutoffs extended until 2022 due to COVID-19 – Last Tuesday, Detroit Mayor Mike Duggan extended the moratorium on water shutoffs that the city began in March due to the COVID-19 pandemic until 2022. The abatement had been scheduled to end on December 31, but it has now become clear that the coronavirus outbreak is out of control and will continue to rage well into next year. The respite in the city’s cruel water cutoff policy is a welcome development for thousands of Detroit residents, especially in the midst of the pandemic during which basic hygienic practice and frequent washing of hands are essential in the prevention of the spread of the disease. It is, however, in no way a commitment by the city administration to anything of substance. The tiger has not changed its stripes. As President-elect Joe Biden casually announces that another quarter million people will die in the US by February, the Democrats, along with the Republicans, refuse to take any measures to prevent the massive spread of the virus. The bipartisan demand that workers accept the opening of schools and workplaces is a program of social murder. While the severity of the pandemic has compelled Duggan to enact a hiatus on the most egregious of offenses against the population, workers should have no illusions that this represents any real solution. He declared his goal “is to stop water shutoffs to low-income Detroiters once and for all,” yet this amounts to an empty promise. Just six months before Duggan and Michigan Governor Gretchen Whitmer had implemented the emergency moratorium on cutoffs, the health department under Whitmer denied a legal appeal to prohibit water shutoffs for the health dangers lack of access to water creates. There is no commitment to protect the social rights of the working class. Middle-class radicals, pseudo-lefts and self-described water activists who operate firmly in the orbit of the Democratic Party work might and main to sow illusions that protests and legal campaigns are all that is necessary to resolve what are the most foul examples of class oppression. These layers end up collaborating with kleptocrats like Duggan.
Eight million plunged into poverty since US coronavirus aid ended –The cutoff of federal supplemental unemployment benefits in July has driven eight million Americans into poverty in the ensuing five months, according to a study published Wednesday by the University of Chicago and the University of Notre Dame. The increase of 2.4 percentage points in the poverty rate, in the space of only five months, is the fastest increase since the US government began collecting figures on poverty in 1960. It is twice the size of the worst previous increase, during the 1979 – 1980 oil crisis. The increase in poverty is greater for African Americans (3.1 percentage points) and for those with only a high school education or less (5.1 percentage points). The biggest increases in poverty were found in those states with the most primitive unemployment compensation systems, such as Florida. Even these figures grossly understate the colossal impact of the coronavirus pandemic on working-class living standards. The official US poverty line stands at $26,200 for a family of four, an income that would leave such a family homeless or near starvation in most major US metropolitan areas. The study confirms that driving workers and their families into poverty is the deliberate policy of the US government and the two corporate-controlled political parties. The bipartisan CARES Act, adopted in March, led to a significant decline in poverty during the first three months of the pandemic. The $600-a-week federal supplemental benefit and other subsidies, such as the one-time $1,200-per-person check from the Treasury, were more than many workers had received in low-paying jobs which they lost because of the coronavirus pandemic. Once the back-to-work drive began in May, employers began to complain that workers would not go back to their jobs, mainly out of fear of contracting coronavirus, but in part because they would actually lose money. Senate Republicans and the Trump administration blocked any extension of the federal benefit past the July 31 deadline which they had agreed on with the Democrats, and the federal supplement expired, leaving most workers with nothing more than state unemployment compensation. US state-paid unemployment insurance is among the worst of any industrialized country and expires after six months in most states, and even sooner in some. In many European countries, by contrast, unemployment benefits can last for as long as two years and pay 80 percent of lost wages, while US jobless benefits average only 20 percent. With workers reduced to benefits as low as $100 a week, the poverty rate accordingly began to increase significantly. As the study details: “Poverty rose by 2.4 percentage points from 9.3 percent in June to 11.7 percent in November, adding 7.8 million to the ranks of the poor.” The increase comes despite the decline in the official unemployment rate from 11.1 percent to 6.7 percent during this period. This latter figure is a dubious one, since millions of workers dropped out of the labor force and are no longer being counted.
Pandemic exacerbates internet access crisis in Midwestern US — The US is experiencing a crisis of internet access in rural and urban communities. The continued lack of high-speed internet for millions of people well into the 21st century is called the “digital divide.” This divide was starkly exposed this year as school districts nationwide were forced to implement online instruction programs some or all of the time, and a significant portion of routine health evaluations were also moved online as a consequence of the coronavirus pandemic. Nationwide, around 95 percent of urban areas have broadband access, but less than 60 percent of rural areas do. The Pew Research Center published that nationwide, one in four residents in rural areas does not have access to high-speed internet. The U.S. Federal Communications Commission (FCC) estimates that $80 billion would be required to close the broadband gap across the country. The agency defines broadband as internet service with a minimum download speed of 25 Megabits per second (Mbps) and a minimum upload speed of 3Mbps. These guidelines are themselves inadequate in the modern age, where multiple people in a household are working, streaming video, or gaming at the same time. As a result of the pandemic, states are seeing drastic cuts in their budgets that threaten existing weak and piecemeal broadband expansion plans. Even in states with wider coverage, deeply unequal access persists. One-third to one-half of children in working class and poor neighborhoods of Chicago, including Austin, Humboldt Park and Englewood, lacked broadband access as of April 2020. When schools went online, this lack of basic infrastructure undermined their education. Affluent Chicago neighborhoods have coverage of 90 percent or better. In Detroit, Michigan 45 percent of households lack broadband access. School districts providing hotspots to rural students and teachers is no guarantee of adequate access, as internet speeds will stay slow if the town has poor cell tower coverage. In school districts across the country, school buses equipped with Wi-Fi park in neighborhoods to allow students to complete their coursework. Very poor connectivity was one of the many pressures on rural school districts in the ongoing bipartisan drive to reopen schools full-time and put workers back on the job as COVID-19 infection rates soar. Large internet providers use the profits they make from broadband service in urban areas to increase the dividends of stockholders, instead of using them to improve infrastructure and expand to connect rural customers. While fiber internet is being installed in some rural parts of the country, much of rural America still deals with slower internet speeds than large cities. Nationwide, the U.S. Census Bureau found 36.4 percent of black households, 30.3 of Hispanic households and 21.2 percent of white households have no broadband or computers in 2017.
Michigan high schooler contracts COVID-19 after being forced to take in-person SAT test– A Bloomfield Hills, Michigan physician is speaking out on behalf of a 17-year-old Bloomfield Hills High School student who suffered for more than two months from COVID-19, apparently contracted while taking the SAT college admissions test in-person. The girl had repeatedly requested to be excused from the test rather than take the chance of contracting the disease or potentially infecting her mother who is at-risk. Instead of providing an accommodation, the district told the senior she would not graduate if she failed to report, so she sat for the test in person as required. The child took the test wearing two masks, one over the other, but despite these attempts at precautions she contracted the virus. The student was then forced to quarantine herself in her room, away from her mother for over two months, to protect her family. “She’s doing much better now,” her mother told the Detroit Free Press. She said that most of her child’s symptoms have abated, although severe fatigue was a long-term problem. The family has publicized her case through their physician to preserve anonymity, while warning others not to be pressured into taking college entrance exams. The Michigan Educators Rank-and-File Safety Committee fully opposes these reckless testing policies, which are clearly very dangerous. Our committee is fighting to mobilize the working class across industries to demand the shutdown of schools and save lives. In a statement on December 11, our affiliate, the Texas Educators Rank-and-File Safety Committee, specifically noted, “The state government’s claim that they are conducting … tests out of concern for students’ welfare is fraudulent. Sending students back to school buildings during a pandemic will needlessly put thousands of lives at risk, including those of teachers proctoring the exam.” Michigan state requirements actually do not require that students take the SAT to graduate. Ignoring the rising caseloads in the state and falsely invoking Michigan law, Bloomfield Hills School District officials brazenly insisted to the family that the test was mandatory. A district spokesperson justified the policy to the media, saying, “the vast majority of our students in the class of 2021 took the test” on the same day, September 23. According to the Detroit Free Press, the physician who spoke out about the 17-year-old’s infection also reported that two of the girls’ friends who took the SAT that day “had extremely similar symptoms, all within 12 hours of each other, and this certainly indicates a common source.”
Supreme Court denies request to block Covid restrictions at Kentucky schools – The Supreme Court on Thursday denied a request from a religious school in Kentucky to block regulations that temporarily restrict in-person instruction in elementary, middle and upper schools in the state due to Covid-19. The court’s unsigned order is the most recent to come from the justices dealing with religious groups that are challenging Covid-19 restrictions as a violation of First Amendment rights, although it is the first dealing with a school. In other recent orders, the court had sided with houses of worship and against state officials. Here, the court noted that the state’s regulation expires in the coming days and that there is “no indication that it will be renewed.” The court said that because of the “timing and impending expiration” of the order, it would deny the request to block it but said the school could come back if a new order is issued next year. Justices Neil Gorsuch and Samuel Alito dissented, saying that the executive order from Kentucky Democratic Gov. Andy Beshear “resulted in unconstitutional discrimination against religion.”
Biden breaks the Obama mold on teachers union strife – When teachers were upset about the stringent accountability measures Barack Obama imposed on them as president, their union boss turned to Joe Biden for some empathy. “He listened,” recalls Randi Weingarten, who heads the 1.7 million-member American Federation of Teachers. Obama’s vice president may not have agreed with her during those conversations, Weingarten said in an interview this week, but Biden became her “go-to” when things got tense amid the regime of education reform. Now the good cop has to call the shots – and Biden’s rhetoric and policies suggest the president-elect is still listening closely to teachers unions in a way Obama often did not, including as Biden’s team considers potential nominees for Education secretary. Obama was questioned about possible signs of daylight between the two men on education policy in a recent interview with New York magazine. When asked whether Biden seemed intent on rolling back his “education-reform legacy,” Obama demurred, “Ah, we’ll see.” In the hours between Trump’s exit from the White House and Biden’s entrance, a team of cleaners will wipe down every surface and mist the air with disinfectant. After that, masks will be mandatory and testing will be constant. POLITICO’s Alice Miranda Ollstein breaks down how Biden and his team are working to transform the White House from hotspot to bubble. “Here’s what I know,” Obama said. “Joe Biden and Kamala Harris also believe that every child should get a good education, and that requires changes in how we teach that go beyond just money.” Biden, a self-described “union guy” whose wife is a community college professor, may soon find that it is far easier to be the compassionate vice president than it is to make the tough political calls on education policy himself. While it’s unifying to rally Democrats around their shared hatred for Education Secretary Betsy DeVos and her anti-union agenda, the work of reviving a U.S. education system upended by the pandemic will be difficult and often unpopular. “I know it’s going to be controversial with some of you,” Biden warned governors in a call Wednesday to detail his plans to reopen most U.S. schools within his first 100 days in office.Biden is starting off with a plan that his wife, while pointing to herself, likes to say is “teacher-approved.” He has pledged to nominate a former teacher as his education secretary and told union members, “You will never find in American history a president who is more teacher-centric and more supportive of teachers than me.”Biden is starting off with a plan that his wife, while pointing to herself, likes to say is “teacher-approved.” He has pledged to nominate a former teacher as his education secretary and told union members, “You will never find in American history a president who is more teacher-centric and more supportive of teachers than me.”
Blaming young adults for current COVID-19 surge, Justice orders weekly testing of college students – –As the first doses of COVID-19 vaccine began arriving in West Virginia, Gov. Jim Justice on Monday called for weekly testing of all college students in the state in hopes of curbing an ongoing surge in virus cases.Justice said the state’s third surge of COVID-19 cases is the longest and most severe to date, and blamed 18- to 35-year-olds for the spread. “They’re running around everywhere under the sun, and many of them – many of them – are people with COVID, and they have no idea,” Justice said Monday, blaming young, asymptomatic carriers for the surge. “We need to really bear down on the sector of 18- to 35-year-old people,” Justice said, calling for weekly testing of all college students to reach a portion of that age group. The governor, who in recent weeks has refused to impose any new restrictions on businesses or activities to curb COVID-19 spread, said the magnitude of the current surge is much more severe than surges in April and in late-June through July. On Monday, Justice again downplayed the usefulness of closures, saying, “How many times have I told you? There’s not any need I can see to going into Mineral County and shutting down the bars.” The county, which borders Maryland, has been particularly hard-hit, with daily infection rates approaching 200 per 100,000 population in the past week, or nearly eight times the rate to be designated under the red color code for extremely high rates of spread. On Monday, the state set records for total number of active cases (21,076), total deaths (978), people currently hospitalized (720), and in intensive care (199), as well as for the daily positivity rate (8.33%) and cumulative positivity (4.10%). During his COVID-19 briefing Monday, the governor used charts to show how the spring surge of cases peaked after four weeks and the summer surge peaked after five weeks. The charts showed that the current surge is in its eighth week, with no signs of abating. Justice said he has directed the Department of Health and Human Resources to come up with a plan for weekly testing of college students, potentially by using lower-cost antigen tests, frequently referred to as rapid tests. DHHR Secretary Bill Crouch said the state has about 86,000 antigen tests warehoused, 200,000 tests on order and would need about 550,000 to test college students on four consecutive weeks.
The deadly impact of US college reopenings in the fall, a balance sheet – As the university and college campuses in the US begin to wrap up the fall semester, the devastating impact of campus reopenings for in-person classes in the middle of the worst pandemic in a century is becoming ever more clear. According to new data collected by the New York Times, American college campuses have officially reported nearly 400,000 cases of COVID-19 since the beginning of the pandemic in March. More than 85 campuses have reported at least 1,000 cases each – with some registering well over 5,000. More than 75,000 of the cases have come since early November alone. Those cases include more than 90 deaths involving college employees and students. Contrary to many nefarious statements from school administrators seeking to shift the blame of the outbreaks on students, spread of the virus on campuses has very little to do with misguided social gatherings or partying. The conditions in student dormitories, and even off campus housing, are simply not conducive to proper social distancing. Furthermore, according to census data, more than 1.1 million undergraduates work in health-related occupations, including more than 700,000 who serve as nurses, medical assistants and health care aides in their communities, putting them at higher risk of contracting COVID-19. As was predicted well before the fall semesters began, the spread of the virus among students and faculty was not contained to college campuses. Towns and cities with colleges that reopened for in-person learning, or which, for one reason or another, allowed large numbers of students to return to their dorms, quickly become some of the worst hot spots in the country. The Times data comprises an analysis of more than 200 counties with substantial college student populations. According to the data, the overall COVID-19 deaths have risen faster in these counties than elsewhere in the country. In fact, deaths in those counties have doubled since the end of August, compared with a 58-percent increase elsewhere. The experience over the last four months in the schools, both K-12 and college campuses, have produced incontrovertible evidence that in-person learning has led to an increase in community spread, hospitalizations and deaths.
A Moral Necessity’: House Dems Introduce Resolution Pushing Biden to Cancel Up to $50,000 of Student Loan Debt –Four House Democrats late Thursday unveiled a proposed resolution calling on President-elect Joe Biden to use his executive power to cancel up to $50,000 of student loan debt for borrowers across the U.S., a move they said would immediately boost the economy and help to narrow racial wealth gaps. Reps. Ayanna Pressley (D-Mass.), Ilhan Omar (D-Minn.), Alma Adams (D-N.C.), and Maxine Waters (D-Calif.) introduced the resolution, a companion to a bill introduced in the U.S. Senate earlier this year by Sens. Elizabeth Warren (D-Mass.) and Chuck Schumer (D-N.Y.).Schumer applauded the House members’ resolution.Both proposals push Biden to go beyond the student loan forgiveness plan he has already expressed interest in enacting, which could cancel up to $10,000 of debt for student borrowers. Such a measure would fall short of addressing the student debt crisis as the “racial and economic justice issue” that it is, Pressley said in a statement Thursday.”Broad-based student debt cancellation is precisely the kind of bold, high-impact policy that the broad and diverse coalition that elected Joe Biden and Kamala Harris expect them to deliver,” the congresswoman said, noting that upon taking office on January 20, Biden will have the power to help tens of millions of Americans by canceling billions of dollars in student debt.The resolution calls on Biden to use authorities already granted to the president under the Higher Education Act to direct his education secretary to cancel the debt. It also urged the president-elect to ensure the IRS doesn’t hold borrowers accountable for taxes on their canceled debt to extend President Donald Trump’s suspension of federal student loan payments for the duration of the coronavirus pandemic.The total student loans now owed by Americans has reached about $1.6 trillion, with 45 million people in debt. One in 10 loans are in default, and the Federal Reserve estimates that the average monthly payment is between $200 and $300 – in an economy in which, prior to the pandemic, 78% of people were living paycheck to paycheck and one-third of people had less than $500 saved in case of an emergency.
15-year-old is assassinated while being treated in hospital in Mexico as homicides reach record levels – On Sunday, a 15-year-old youth was shot and wounded and later assassinated while being treated for his wounds at the General Hospital of Tecate in the Mexican state of Baja California. Tecate sits on the US border and is home of the internationally known Tecate beer. This shocking incident has unfolded amid record levels of both coronavirus cases and homicides across the country, which are placing intolerable burdens on the already underfunded health care system. The response by local authorities and the federal government of President Andres Manuel Lopez Obrador (known as AMLO), which inflexibly prioritize capitalist profits over the lives of workers and youth, has only exacerbated the twin crises. While minimizing the danger of COVID-19 and seeking to normalize mass deaths, the AMLO administration refuses to carry out any policies to counter the widespread conditions of poverty and social inequality that lie at the root of the homicide levels and the uncontrolled spread of COVID-19. The government has projected that Mexico will reach 40,000 homicides by the end of the year, breaking 2019’s record of 36,476 killings. The bulk of the homicides are tied to organized crime and operations conducted by the Mexican police and military, ostensibly to combat the drug-trafficking cartels. At the same time, Mexico has reported more than 1,250,000 coronavirus cases and 114,000 confirmed COVID-19 deaths, as hospitals in Mexico City, Ciudad Juflrez and other cities begin to fill up. Hospital occupancy in Baja California has increased from 33 percent to 72 percent since early November. At around 2 in the afternoon on Sunday, 15-year-old Martin W. was shot in the back. A local Facebook news service, CNR TECATE, reported the incident and showed the body of the young man being treated for a gunshot wound by the paramedics. There was reportedly still hope that the youth would recover. After he was transported to the hospital and was being treated for his wounds, a gunman walked into the hospital with the sole mission of finishing him off. The gunman found the youth in the emergency wing of the hospital, where he delivered the coup de grace as horrified medical staff looked on. This sort of barbarism and unabashed act of criminality was once a rarity in the small city of 73,000 people. Nowadays, stories of execution-style murders are becoming ever more common. Organized crime is increasingly taking control of the city, even to the extent that cartel thugs can kill a young man in his hospital bed in plain view of the public.
Dutch government to shut down Netherlands through the holidays The Dutch government will impose further coronavirus restrictions and shut down much of the Netherlands through the holidays starting on Tuesday, the prime minister announced Monday. Dutch Prime Minister Mark Rutte said during a televised briefing that the Netherlands would start a five-week nationwide shutdown, which will close schools, nonessential businesses, museums and gyms, The Associated Press reported. The lockdown is scheduled to be in place until midnight on Jan. 19. As Rutte made the announcement, protesters blew whistles outside in a condemnation of the decision. “We have to bite through this very sour apple before things get better,” Rutte said during his address, according to the AP. “The reality is also that we are not dealing with an innocent flu, which some people, such as the demonstrators outside still think, but with a virus that can hit anyone hard,” he added. The nonessential businesses, including hair salons, museums and theaters, will close on Tuesday, while schools and universities will be required to switch to remote learning by Wednesday. The restrictions limit people to have at most two guests older than 13 years old per day, although the rules will be loosened between Dec. 24 and 26 to allow three guests older than 13 due to the holiday. The announcement sparked lines at nonessential businesses as many people tried to squeeze in Christmas shopping before the shutdown, according to the AP. The Netherlands shut down bars and restaurants to in-person customers in mid-October, although many have continued to provide takeout, which initially reduced the infection rate before it continued to climb. The seven-day average for new daily cases in the country has jumped from 29.22 per 100,000 people on Nov. 29 to 47.47 per 100,000 people on Sunday. In total, the Netherlands has confirmed more than 632,000 cases and 10,168 deaths since the beginning of the pandemic, according to data from Johns Hopkins University. The Dutch prime minister’s announcement came a day after German officials declared that stores would shut down from Wednesday until at least Jan. 10. Germany has also encouraged its residents not to go Christmas shopping amid the rise in cases and new restrictions.
Germany is entering a stricter lockdown through Christmas and into the new year, as its COVID-19 cases reach record highs — Germany will enter a stricter lockdown lasting through Christmas and into the new year, the chancellor, Angela Merkel, said Sunday. “We are forced to act, and we’re acting too,” Merkel said in Berlin, according to The Associated Press. Next Wednesday (December 16) schools and non-essential shops will close, remaining shut until January 10. The decision was announced at a news conference after Merkel met with leaders of Germany’s 16 federal states on Sunday morning. “The coronavirus is out of control, so we don’t want to do things piecemeal but act decisively,” said Bavaria Premier Markus Soder, per the AP. Germany is well known for the elaborate Christmas markets that dot the country and attract tourists from around the world. For most of December, they take over public squares nationwide. Visitors usually sip mulled wine spiced with cinnamon and wander through tightly packed stalls selling holiday gifts and decorations. This year, the country had restricted foot traffic through those markets in a “lockdown lite,” while other markets weren’t set up at all. After Wednesday, all outdoor alcohol sales will be banned, according to reports. As will the sale of New Years Eve fireworks. Restaurants and bars had already been closed. “I would have wished for lighter measures. But due to Christmas shopping the number of social contacts has risen considerably,” Merkel said Sunday, according to Reuters. Coronavirus cases and COVID-19 deaths have spiked to record numbers in Germany in recent weeks, according to data collected by Johns Hopkins University. In the past month, 9,684 people died, with 573,269 new infections reported, both records.
Open schools and businesses in Germany are leading to record infections and mass death – The coronavirus pandemic has long run out of control in Germany. New record numbers are being reported daily. On Friday, the Robert Koch Institute (RKI) reported the second consecutive daily record, with almost 30,000 new infections registered in 24 hours. Also, almost 600 COVID-19 patients died again in one day. This brings the total number of deaths to 21,000, and another 10,000 could be added by the end of the year. About 4,400 coronavirus patients are fighting for their lives in intensive care units. With these explosive figures, Germany has catapulted to the top of the European infection rankings. In terms of daily infection figures, it now ranks ahead of France, Britain and Italy. In Europe, 446,000 people have died of COVID-19 so far, which is more than a quarter of the almost 1.6 million coronavirus deaths globally. Twenty million people worldwide are currently fighting the SARS-CoV-2 lung disease, and 70 million have been infected since the beginning of the pandemic. The scale of this “winter of death” confirms all warnings of the International Committee of the Fourth International (ICFI) and the World Socialist Web Site. Already in the spring, we called on workers to form rank-and-file safety committees to take protection from the pandemic into their own hands independently of the trade unions. Long before the beginning of the autumn semester, the Sozialistische Gleichheitspartei (Socialist Equality Party, SGP), the WSWS and the IYSSE youth and student organization called on students, teachers, educators and parents to take action for their own protection and that of their children. “By returning to face-to-face teaching amidst rising infection rates, governments of all stripes are putting the health and lives of countless teachers, students and parents at risk,” we wrote in our August 14 statement titled “Stop school openings! Prepare for a general strike!” We predicted: “The mass deaths of teachers, parents and even students will be condoned in order to force workers back to work and secure the profits of the rich.” This warning has been tragically confirmed. On Thursday, Lothar H. Wieler, the head of the Robert Koch Institute called the spread of the coronavirus infection throughout the population “alarming.” There are now about twice as many outbreaks in nursing homes and homes for the elderly as in the spring. The measures officially ordered so far are wholly unsufficient, he said. The number of deaths would continue to rise in the coming weeks, Wieler confirmed, and more and more intensive care units will reach their limits. This was confirmed two days ago when the University Hospital of Augsburg halted all admissions for non-urgent treatment. The hospital was at full capacity with 163 COVID-19 patients, 33 of them in intensive care, the medical director of the hospital, Michael Beyer, told the Bavarian Broadcasting Corporation (BR). A doctor from the University Hospital pointed out that now, considerably more young patients were having to fight for their lives. “They are around 30, around 40, have no pre-existing conditions whatsoever and sometimes conduct this fight unsuccessfully.”
The British Empire Died on 1 September 2020 — International Political Economy Zone by Emmanuel – What marks the end of Britain’s dominance in world affairs? That question has always been tied to that on British identity in the post-WWII era. To be sure, there are some who would say the ascent of the United States relative to the United Kingdom’s fall rendered that debate moot a long time ago. (And many now question whether the US remains hegemonic, anyway.) Regardless, there have been bits of evidence to suggest how Britain still plays an outsized role in global affairs even after its numerous former territories–most notably India–became independent. Prominent among these has been London’s status as a global financial capital. Many have argued that, at least until recently, London vied with New York for this status. Brexit largely put paid to that argument–not so much that New York is outperforming London so much as London has slumped so far back of New York (even if NY is not appreciably moving ahead). For me, then, London’s loss as a global financial capital reached its apotheosis a few months ago. On 1 September 2020, a single US-listed firm, Apple, was worth more than the entire 100 corporations making up the FTSE 100 stock index: Despite COVID-19 inflicting more damage Stateside than the UK, the US benefits from having many more “winners” in the pandemic era: technology companies offering the tools people living and working from home rely on nowadays. By contrast, British companies are in old school industries that have been losers during the pandemic. Think of the likes in energy, financial services, or even worse still, tobacco: But the [FTSE 100] index has also missed out on the technology boom seen in the US and elsewhere during the coronavirus pandemic. Businesses in tech and e-commerce, from Apple and Amazon to online retailers, have benefited from consumers turning to digital services for entertainment and shopping while stuck at home during lockdown. The FTSE 100 is light on technology businesses and heavily populated by companies badly affected by the pandemic in sectors including property, aviation, hospitality and bricks-and-mortar retail. Years of British stock underperformance have dispelled the argument the UK is economically better off outside the European Union. Yet, the beating UK stocks have received post-Brexit vote has been such that people are beginning to look at them as promising dirt-cheap investments [1. 2]. The larger point remains: any “empire” worthy of the name would be able to command higher valuations befitting the regard others show it instead of being bargain basement buys. Insofar as UK plc has been deemed nearly worthless as evidenced by the discount placed on British companies, 1 September marked an important milestone showing just how far Blighty’s standing has fallen in global league tables. The British Empire died on 1 September 2020, indeed.
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