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 the new coronavirus relief bill and stimulus checks, 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 more 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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Fed’s aid program for midsize businesses spent only 3% of its total – The Federal Reserve’s Main Street Lending Program, which was designed to provide emergency support to midsize U.S. companies during the pandemic, lent out a total $17.5 billion – or just 3% of its potential capacity – according to data released Tuesday by the central bank. The program was maligned from the start: slow to get off the ground, it only opened to borrowers in July. In the six months through December, when the Fed bent to a Treasury Department mandate to close it, it showed the challenges in setting up a program to aid this sector of the economy – companies larger than the typical small businesses that qualify for Paycheck Protection Program lending but not large enough to access capital markets. The program didn’t come close to the $600 billion that it could have lent out in part because the banks that acted as intermediaries didn’t feel adequately compensated to take on the riskiest borrowers. For healthier companies, the banks often just made regular loans so that they could reap the full benefits of the transaction. In the Main Street Program, the Fed bought 95% of the banks’ loans for a total of $16.59 billion. It was backstopped by $75 billion appropriated by Congress in the CARES Act. It closed on Jan. 8 after then-Treasury Secretary Steven Mnuchin instructed the Fed to wind it down. Fed Chair Jerome Powell had initially disagreed with Mnuchin’s interpretation of the expiration date in the law, but the Fed ultimately acquiesced to Treasury’s request. Janet Yellen, who took over as President Biden’s Treasury secretary last month, has said that the program wasn’t successful at getting credit to small and midsize companies and that the administration will try to help that sector more effectively.
Fed Chair Powell: ‘Patiently accommodative’ because of bleak jobs picture – Federal Reserve Chairman Jerome Powell on Wednesday painted a dour picture on the state of U.S. employment, saying continued aggressive policy support is needed to fix the myriad issues still facing workers. Addressing the issue will require a “patiently accommodative monetary policy that embraces the lessons of the past” regarding the benefits that low interest rates bring to the labor market, the central bank chief told the Economic Club of New York. Even though the economy has reclaimed more than 12 million jobs since the early days of the Covid pandemic, Powell said the U.S. is “a long way” from where it needs to be in terms of employment. “Fully realizing the benefits of a strong labor market will take continued support from both near-term policy and longer-run investments so that all those seeking jobs have the skills and opportunities that will enable them to contribute to, and share in, the benefits of prosperity,” he said in prepared remarks. The pace of job creation has slowed considerably. Though the unemployment rate has fallen from its 2020 high of 14.8% to 6.3%, nonfarm payrolls rose by just 49,000 in January and fell by 227,000 in December. More than 10 million workers are still without jobs – 4.4 million higher than before the pandemic a year ago. Powell further said the headline unemployment rate has “dramatically understated” the true damage, including the biggest 12-month drop in labor force participation since at least 1948. Without misclassification errors that have plagued the Labor Department since the pandemic began in March, the unemployment rate would be closer to 10%, Powell added. He also noted that the impact has been particularly burdensome on lower earners, with employment among the bottom quartile falling by 17% during the coronavirus crisis, while the top tier has seen a decline of just 4%. “Despite the surprising speed of recovery early on, we are still very far from a strong labor market whose benefits are broadly shared,” Powell said. To address the disparities, the Fed six months ago adjusted its approach to full employment to make it a “broad and inclusive” goal and said it will not start raising interest rates until that objective is met. Central to the approach is a willingness to allow inflation to run a bit hotter than the Fed’s standard 2% goal for price stability. Powell noted that in the latter years of the record expansion that ended a year ago, wage and employment gains began to be distributed more evenly while the unemployment rate fell, without the threat of high inflation. When the jobless rate fell in the past, the Fed would hike rates as a way to head off inflation, but will not do so now.www.
Powell: Fed ‘will not tighten’ policy until low-income workers recover – Federal Reserve Chairman Jerome Powell said Wednesday that the central bank will not raise interest rates or pull back on its aggressive asset purchase program at the first signs of a strong labor market. Powell told the Economic Club of New York that the central bank needs to “patiently” keep monetary policy accommodative by allowing a hot labor market to pull in low- and moderate-income workers that were displaced during the COVID-19 pandemic. “At present, we are a long way from such a labor market,” Powell said. Pointing to the January jobs report, Powell noted that there are nearly 10 million people still out of work compared to pre-pandemic levels. The Fed chair reiterated that the central bank’s new framework prioritizes a reduction in “shortfalls” from maximum employment. “This means that we will not tighten monetary policy solely in response to a strong labor market,” Powell clarified. Since the crisis began, the Fed slashed interest rates to zero and ratcheted up its aggressive quantitative easing program (which is purchasing U.S. Treasuries and agency mortgage-backed securities at a $120-billion-per-month rate). Powell has said that economic conditions are far from warranting a rate hike, and added that a tapering of its asset purchases is not presently on the table. “We’re not thinking about shrinking the balance sheet, to be clear,” Powell said. The central bank last year regretted that it had raised rates too early out of the last crisis, learning that keeping monetary policy easier for a longer period of time has the effect of pulling low-income and moderate-income workers back into jobs. The Fed found that it could get a hot labor market with an unemployment rate as low as 3.5% without runaway inflation. On Wednesday, Powell said the dynamics of the U.S. economy show that it can sustain a robust job market without unwanted inflation.
Seven High Frequency Indicators for the Economy – These indicators are mostly for travel and entertainment. The TSA is providing daily travel numbers. This data shows the seven day average of daily total traveler throughput from the TSA for 2019-2020 (Blue) and 2020-2021 (Red). This data is as of February 7th. The seven day average is down 64.0% from last year (36.0% of last year). 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 February 7, 2021. Note that this data is for “only the restaurants that have chosen to reopen in a given market”. Since some restaurants have not reopened, the actual year-over-year decline is worse than shown. Dining picked up during the holidays. Note that dining is generally lower in the northern states – Illinois, Pennsylvania, and New York. Note that California dining picked up now after the orders to close was lifted. This data shows domestic box office for each week (red) and the maximum and minimum for the years 2016 through 2019. Blue is 2020 and Red is 2021. The data is from BoxOfficeMojo through February 4th. Movie ticket sales were at $13 million last week (compared to usually around $150 million per week at this time of year). This graph shows the seasonal pattern for the hotel occupancy rate using the four week average. This data is through January 30th. Hotel occupancy is currently down 29.6% year-over-year. This graph, based on weekly data from the U.S. Energy Information Administration (EIA), shows gasoline supplied compared to the same week of 2019. At one point, gasoline supplied was off almost 50% YoY. Red is for 2021. As of January 29th, gasoline supplied was off about 14.4% (about 85.6% of the same week in 2019). 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 data is through February 6th for the United States and several selected cities. The graph is the running 7 day average to remove the impact of weekends. According to the Apple data directions requests, public transit in the 7 day average for the US is at 47% of the January 2020 level. It is at 39% in Chicago, and 53% in Houston – and mostly moving sideways, and moving up a little recently. Here is some interesting data on New York subway usage. This graph is from Todd W Schneider.This data is through Friday, February 5th. Schneider has graphs for each borough, and links to all the data sources.
CBO projects $1.2 trillion average deficits through 2031 – Deficits are projected to average $1.2 trillion over the next decade, exceeding $1 trillion in all but two years, according to new projections from the Congressional Budget Office. Until last year, the deficit only exceeded $1 trillion in the four-year period following the Great Recession. “At 10.3 percent of gross domestic product (GDP), the deficit in 2021 would be the second largest since 1945, exceeded only by the 14.9 percent shortfall recorded last year,” the report said. According to the projections, deficits would dip below $1 trillion in 2023 and 2024, at $963 billion and $905 billion, respectively, as emergency COVID measures peter out and the economy rebounds, but then start growing dramatically again, reaching $1.9 trillion by 2031. By that year, the accumulated debt will reach $35.3 trillion, 107 percent of GDP, larger than its peak in 1945. It exceeded 100 percent of GDP for the first time since World War II last year. The report is sure to fuel the debate around President Biden’s proposed $1.9 trillion COVID-19 relief bill. Republicans have argued that the proposal is too big and should be more narrowly targeted. The CBO projections included December’s $900 billion relief bill, but not the larger proposal currently being debated in Congress. Deficits soared in recent years, coming in just shy of $1 trillion in 2019. The COVID-19 pandemic and the emergency response pushed the deficit to a record-shattering $3.1 trillion in 2020, over double its 2012 record. Democrats argue that the debt situation would be worse if the government doesn’t spend massive amounts on stimulus, unemployment insurance and other priorities to boost the economy and ensure a strong recovery. The deficit projections were $345 billion lower through 2030 than in CBO’s September projections, in part because economic projections improved. This year, the deficit is on track to reach $2.3 trillion, but that figure is expected to rise if Congress approves a $1.9 trillion COVID-19 relief bill and takes further action on a roughly $2 trillion infrastructure plan later in the year, as President Biden has proposed. Biden has also proposed tax increases on the wealthy and companies to cover some of the costs. The CBO report found that revenues are already projected to grow as a percentage of GDP over the decade, but part of that has to do with tax cuts expiring, an eventuality Congress is likely to change. The projections show that spending on mandatory programs remains among the biggest concerns on the spending side. Social Security spending is expected to rise about 80 percent by 2031, as are health programs including Medicare and Medicaid. Discretionary spending, which covers defense, education, non-mandatory health programs, foreign policy, transportation and other domestic priorities, are on a much more constrained trajectory. Ad Choices COVID-19 Drives Upsurge In ESG Consideration
Fed’s Powell adds urgency to Biden’s call for strong stimulus – Federal Reserve Chair Jerome Powell said the U.S. job market remains a long way from a full recovery and called on both lawmakers and the private sector to support workers. “We are still very far from a strong labor market whose benefits are broadly shared,” Powell said Wednesday in a speech to the Economic Club of New York, noting that employment last month was nearly 10 million below February 2020 levels. “Achieving and sustaining maximum employment will require more than supportive monetary policy.” Powell’s remarks echo the urgency voiced by President Joe Biden for his $1.9 trillion in additional pandemic aid, a package that is moving ahead in Congress despite Republican opposition. In doing so, he also delivered a nuanced rebuttal to the minority of Democrats, as exemplified by former Treasury Secretary Lawrence Summers, who view that relief proposal as too large. “The Fed is in full risk-management mode,” said Diane Swonk, chief economist at Grant Thornton LLP. “The reality is setting in that the virus will be managed instead of eradicated. That leaves a lot of uncertainty about the pace of reopening and what the world will look like on the other side of the pandemic.” Repeating that monetary policy would remain very supportive of the economy, the Fed chair cited a need for continued fiscal policy support. Returning to maximum employment “will require a society-wide commitment, with contributions from across government and the private sector,” Powell said. “The potential benefits of investing in our nation’s workforce are immense.”
Biden Goes Party Line on $1.9 Trillion – WSJ — When George W. Bush took office in 2001 with a Senate divided 50-50, he negotiated his first tax cut with Democrats that passed with 58 votes, including 11 Democrats. Democrats won tax-rebate checks and a delay in the tax-rate cuts for their efforts. This made the bill worse as economic policy, but Mr. Bush made the concessions rather than jam his bill through with only GOP votes. That isn’t how President Biden is playing the politics of his $1.9 trillion spending bill in the current 50-50 Senate. Last week he made a show of listening at the White House to 10 GOP Senators who made an initial counteroffer of $618 billion. Mr. Biden and Democrats on Capitol Hill then ignored the GOP and rammed a budget resolution for the $1.9 trillion through the Senate and House on a partisan vote. So much for bipartisanship. The truth is that the Democrats refused even to negotiate. Instead they moved to pass the bill through a process known as budget reconciliation that skirts the 60-vote filibuster rule and requires only 50 votes plus Vice President Kamala Harris to pass. And that’s how it passed the Senate in the wee hours Friday morning, 51-50. It later passed the House, 219-209, with no Republicans in support. It’s true the GOP used reconciliation twice in 2017 on health care and tax reform. But Democrats refused to negotiate on either one. The Resistance dictated that Democrats oppose all things Donald Trump. They didn’t even try to mitigate the reduction in the state-and-local tax deduction that most affected blue states like California. This time Mr. Biden has a specific GOP proposal he won’t even consider. The Senate debate last week included a multitude of revealing amendments about the partisan Democratic strategy. Our favorite is the switcheroo by Senators Jon Tester (Montana) and Joe Manchin (W.Va.) on the Keystone XL pipeline. First they voted for a GOP amendment opposing Mr. Biden’s plan to shut down the pipeline that would provide thousands of high-paying energy jobs. But they later voted for a Democratic amendment at the end of the debate that passed 51-50 and erased that Keystone amendment. This is an instant Beltway swamp classic. That same Democratic clean-up exercise also erased two other amendments that had passed with bipartisan support. One barred Covid-19 relief checks from going to undocumented aliens, and the second would have barred Mr. Biden from banning fracking for oil and gas. Since Mr. Biden has promised not to ban such drilling, why would Democrats want to erase an amendment codifying the policy? Answer: Because a majority of Senate Democrats don’t want to say this in public, lest they run afoul of anti-fossil-fuel donors like billionaire Tom Steyer and the Sierra Club. Progressives dictate what Democrats do even if their proposals can’t muster a Senate majority.Republicans can still plead for a policy trinket here or there, but they have little leverage thanks to Donald Trump’s destructive meddling in the Georgia Senate races. The partisan process shows Democrats are determined to pass nearly all of what Mr. Biden has proposed whether they have GOP votes or not. Any change from the $1.9 trillion will now depend on what Democrats like Mr. Manchin or swing-district House Members are willing to insist on.
Biden $15 minimum wage plan would cut 1.4 million jobs in 2025: CBO (Reuters) – U.S. President Joe Biden’s proposal to raise the minimum wage to $15 per hour by June 2025 would reduce employment by 1.4 million jobs that year and increase the U.S. budget deficit by $54 billion over the 10 years from 2021 to 2031, the Congressional Budget Office said on Monday. In its cost assessment of Biden’s “Raise the Wage Act of 2021,” the non-partisan legislative budget referee agency said that the minimum wage increase also would lift 900,000 Americans out of poverty in 2025. The CBO said the wage increase proposal would increase, on net the cumulative pay of affected people by $333 billion over the 2021-2031 period but noted that this represented an increased labor cost for firms employing them.”That net increase would result from higher pay ($509 billion) for people who were employed at higher hourly wages under the bill, offset by lower pay ($175 billion) because of reduced employment under the bill,” CBO said in its assessment. The CBO said the increase to the budget deficit would come as federal spending rose due to higher prices for goods and services as a result of the wage increase. The changes also would lead to increased spending on some programs, such as unemployment compensation and reduced outlays on others, such as nutrition aid. Federal revenue on net would rise, it said. Republicans in Congress have argued against the increase as an undue burden on businesses that would reduce employment.White House Press Secretary Jen Psaki told reporters on Monday that the Senate’s parliamentarian had yet to make a decision whether or not the proposal could be included in Biden’s $1.9 trillion coronavirus relief package, which is “still working its way through the process in Congress.” Biden said in an interview with the CBS Evening News released on Friday that he did not expect the $15 minimum wage proposal to be included in the COVID-19 package due to Senate rules governing budget procedures.
CBO analysis confirms that a $15 minimum wage raises earnings of low-wage workers, reduces inequality, and has significant and direct fiscal effects: Large progressive redistribution of income caused by higher minimum wage leads to significant and cross-cutting fiscal effects – Today’s analysis from the Congressional Budget Office (CBO) highlights a number of things that policymakers should keep in mind as they consider minimum wage legislation in the upcoming Congress. First, the benefits of passing a significant increase in the federal minimum wage – like the Raise the Wage Act of 2021 – are enormous. Today’s CBO analysis indicates that raising the federal minimum wage to $15 by 2025 would benefit 27 million workers and would lead to a 10-year increase in wages of $333 billion for the low-wage workforce – the same workforce that has borne the brunt of the COVID-19 economic shock and worked in essential jobs that have kept the economy going. In short, given which parts of the workforce have economically suffered the most from the pandemic, it seems more than appropriate to include a minimum wage increase in any relief and rescue package. Second, the federal minimum wage is a powerful policy instrument to redistribute income and bargaining power towards low-wage workers, and as a result it has very large gross fiscal effects on both federal revenue and federal spending.In our analysis released last week, we highlighted a number of large gross changes to both spending and revenue that were likely to result from the large increase in earnings for low-wage workers if the minimum wage was significantly increased.1 In particular, we estimated that by raising earnings of low-wage workers, a $15 minimum wage by 2025 would significantly reduce spending on Supplemental Nutrition Assistance Program and the Earned Income and Child Tax Credits.2 CBO’s analysis today also estimates outlays would fall for these public assistance programs, as they predict the higher minimum wage would lift nearly 1 million people out of poverty.CBO also estimates gross changes on the spending and the tax side of the federal budget from both the earnings increase of low-wage workers and assumptions regarding how this earnings increase is “financed.” They find large gross changes that net out to a small increase in budget deficits. These differences in emphasis and bottom-line numbers between independent analyses like ours and the CBO numbers today should not distract from the agreed-upon finding by all analyses of this issue: The effects of a significant increase in the federal minimum wage on the federal budget are large.There are essentially two main analytical differences between our findings and the CBO’s: CBO models significant job loss due to the minimum wage increase while we do not; and CBO models how the minimum wage increases are “financed” and assumes that a substantial part of this financing occurs through price increases that are mostly paid by those with high incomes and reductions in profits on the part of firms that employ low-wage labor. We believe that the CBO’s assumptions on the scale of job loss are just wrong and inappropriately inflated relative to what cutting-edge economics literature would indicate. The median employment effect of the minimum wage across studies of low-wage workers is essentially zero, according to a 2019 review of the evidence.3 Another recent review found that the median employment effect on workers directly affected by the minimum wage is less than half the size of what CBO assumed in its 2019 analysis.4 CBO’s exaggerated job loss assumptions account for 80% of the total increase in mandatory outlays.5
Retiring GOP senator calls for income cap of $50,000 for stimulus payments – Ohio Sen. Rob Portman (R) said Sunday that Republicans will push the Biden administration to target direct payments to Americans making less than $50,000 per year in the upcoming COVID-19 stimulus package. Speaking with Dana Bash on CNN’s “State of the Union,” the retiring senator called on Democrats not to push the White House’s COVID-19 framework through Congress via the budget reconciliation process, which would allow a simple majority vote for passage, and to work with Republicans on a smaller stimulus package. “My hope is the president will meet with us,” Portman said, adding that Republicans have had little success in their attempts to meet with the Biden administration to present their priorities for the next stimulus package. “This one, nobody was consulted, including the Democrats on our bipartisan group that compiled the previous legislation, and, frankly, we haven’t gotten much of a response yet until today,” he added. Bash then asked how much Republicans would be willing to spend on a COVID-19 stimulus package, noting that a letter released Sunday by Sen. Susan Collins’s (R-Maine) office and signed by Portman did not put an exact dollar amount on the GOP proposal. “It’ll be less than $1.9 [trillion] because a lot of what the administration has released has nothing to do with COVID-19,” Portman responded. “Let’s target it. We really want to help those who need it the most,” he continued, adding that Democrats should not “poison the well” by pushing the plan through without Republican votes. “It’s not in the interest in the Democratic Party to do that,” he said. Congressional Democrats and Republicans came together in December and pushed through a smaller stimulus package that included an extension of federal unemployment benefits and direct payments of $600 to individual American adults.
‘Unbelievable,’ Says Sanders, That Some Dems Want to Further Limit Eligibility for Covid-19 Relief Checks – Sen. Bernie Sanders took to Twitter Saturday night to call out Democrats in Congress who are considering a proposal to exclude millions of Americans from receiving $1,400 Covid-19 relief checks with narrower eligibility restrictions than the previous coronavirus pandemic packages passed under former President Donald Trump. As the new chair of the Senate Budget Committee, Sanders (I-Vt.) is playing a key role in congressional Democrats’ efforts to enact President Joe Biden’s $1.9 trillion American Rescue Plan. Amid reporting this week about lawmakers potentially further restricting direct relief, Sanders has repeatedly and forcefully spoken out against that. “Unbelievable,” Sanders tweeted Saturday. “There are some Dems who want to lower the income eligibility for direct payments from $75,000 to $50,000 for individuals, and $150,000 to $100,000 for couples. In other words, working-class people who got checks from Trump would not get them from Biden. Brilliant!”Sanders followed up with a post reiterating his position: “I strongly oppose lowering income eligibility for direct payments from $75,000 to $50,000 for individuals and $150,000 to $100,000 for couples. In these difficult times, ALL working-class people deserve the full $1,400. Last I heard, someone making $55,000 a year is not ‘rich.'” Rep. Alexandria Ocasio-Cortez (D-N.Y.) concurred, declaring that “it would be outrageous if we ran on giving more relief and ended up doing the opposite.” “In conclusion,” Ocasio-Cortez added, “$50k is wack and we shouldn’t do wack things.” Sen. Ron Wyden (D-Ore.), the new chair of the Senate Finance Committee, told the Washington Post‘s Jeff Stein, “I understand the desire to ensure those most in need receive checks, but families who received the first two checks will be counting on a third check to pay the bills.”
Dave Ramsey on stimulus checks: ‘If $600 or $1,400 changes your life, you were pretty much screwed already’ Dave Ramsey, known for his financial advice, went on Fox News and criticized the idea of another round of stimulus checks for the country during the coronavirus pandemic. “I don’t believe in a stimulus check because if $600 or $1,400 changes your life, you were pretty much screwed already. You got other issues going on,” Ramsey said in the interview. Fox News guest Dave Ramsey: “I don’t believe in a stimulus check because if $600 or $1400 changes your life you were pretty much screwed already. You got other issues going on.” pic.twitter.com/6r1kTCxt8E Congress has been debating another round of stimulus checks as many are still out of jobs and struggling due to the pandemic. Ramsey said there are other issues in a person’s life, like career or debt problems, if a stimulus check is that impactful to a person. “That’s not talking down to folks. I’ve been bankrupt. I’ve been broke. I work with people every day who are hurting. I love people. I want people to be lifted up, but this is, again, it is just political rhetoric,” Ramsey said. Ramsey also discussed during the interview how he doesn’t believe that student loan forgiveness will help stimulate the economy and will only benefit those who would have been able to afford to pay off their debts.
Study: $1,400 stimulus checks would help 22.6 million pay bills through mid-July – President Biden’s proposed $1,400 coronavirus relief checks would allow 22.6 million Americans to pay their bills for at least four and a half months, according to a study from data and research company Morning Consult. The analysis comes as debates continue over the size and number of stimulus checks to be included in the next round of COVID-19 aid. To evaluate the stimulus’s impact, Morning Consult analyzed data on household finances, determining that a new stimulus targeted at low-income adults would help to prevent worsened financial hardship, more than just digging people out of trouble. According to the study, roughly 30.2 million Americans were unable to pay their bills in January. Out of those, 75 percent missed their bills by less than $300 – a 7 percent improvement from the month prior. Morning Consult said this shows that while previous stimulus checks didn’t solve the recipients’ financial problems, it made their overall debt less. The cost on the U.S. economy will ultimately be less if the government can help people stay out of debt rather than have to help them recover from it, Morning Consult said. Stimulus checks sent out on March 1 would allow Americans to pay their bills through mid-July without falling deeper into debt trying to make the payments or tapping into their savings. “The cost of sending significantly larger stimulus checks to everyone far outweighs the benefits of helping relatively few additional Americans,” Morning Consult wrote, adding that for maximum economic benefit, the new stimulus should focus on those who need it most.
House Dems’ COVID-19 aid bill includes $1,400 checks – House Democrats on Monday released key portions of their coronavirus relief package, including a section that would provide $1,400 checks to most Americans. As with previous rounds of direct payments, single taxpayers with annual income up to $75,000 and married couples that make up to $150,000 would qualify for the full payment amounts. However, the payment amounts above those thresholds would phase out at a faster rate than the payments from the first two rounds. Single filers with income above $100,000 and married couples with income above $200,000 would not be eligible for any payments. The release of bill text came after policymakers and economists debated what the income eligibility requirements should be for the payments. Republicans and some centrist Democrats argued that the payments should be more targeted to lower-income households because those households are most in need of relief and most likely to spend the money quickly. But progressives argued that the income requirements shouldn’t be tightened so people who lost substantial amounts of income during the pandemic could quickly receive their payments. Eligible households would be able to receive payments of up to $1,400 per person, including for adult dependents, who were left out of the previous rounds. The bill directs the Treasury Department to issue payments to people based on their 2019 or 2020 tax returns, and it allows the department to make payments to non-filers based on information available to it. The direct payments are one of many portions of the package released by the House Ways and Means Committee. The package is based off a $1.9 trillion plan that President Biden proposed in January. The Joint Committee on Taxation estimates that the new round of checks would cost $422 billion. The legislation would also extend federal unemployment programs, which are currently set to expire in March, through the end of August and increase the federal boost to unemployment benefits from $300 per week to $400 per week. Biden had proposed extending the programs through September. Additionally, the package includes a one-year expansion of the child tax credit, making the credit fully refundable and increasing the credit amount to $3,600 for children under the age of 6 and $3,000 for other children. It directs Treasury to issue advance payments of the credit, ideally on a monthly basis, starting in July. The package also includes one-year expansions of the earned income tax credit and the child and dependent care tax credit.
House Dems’ COVID-19 relief bill includes 2-year boost to ObamaCare subsidies – House Democrats’ coronavirus relief legislation released Monday would increase the Affordable Care Act’s financial assistance for two years, providing greater help for enrollees’ to afford their premiums. The measure, one provision in a sweeping COVID-19 relief package, would increase ObamaCare subsidies so that enrollees would have to pay no more than 8.5 percent of their income in health insurance premiums, down from a maximum cap of about 10 percent of income currently. Also for the first time, middle class people making over 400 percent of the poverty level (about $100,000 for a family of four), would qualify for assistance. Those people are currently ineligible for any help, and are therefore left with high costs if they have to buy health insurance on their own because they do not get it through a job. Increasing ObamaCare’s financial assistance to make premiums more affordable has been a major Democratic goal for years, viewed as an improvement to the original ACA, but has been blocked by Republicans who oppose spending more money on a health care law they oppose. While House Democrats’ ObamaCare expansion bill passed last year would have made the increased assistance permanent, the measure released Monday would make it temporary, just for 2021 and 2022. The coronavirus relief bill would also subsidize COBRA coverage, which allows people who lose their jobs to stay on their previous employer’s health coverage. The measure would subsidize 85 percent of the cost of the coverage. “The increased ACA premium subsidies under the House COVID relief plan, along with a new outreach campaign, could supercharge the upcoming reopened enrollment period and help to reverse recent increases in the number of people uninsured,” Larry Levitt, a health policy expert at the Kaiser Family Foundation, wrote on Twitter. He added that the increased subsidies “only last for two years, so this is not a permanent solution.” “And, many people will still find premiums and deductibles unaffordable, likely leaving tens of millions uninsured,” he wrote. When asked why the proposed subsidy increase is temporary, a spokesman for House Ways and Means Committee Chairman Richard Neal (D-Mass.) said: “This package is a COVID package that is intended to give families the relief they need now,” but added that the measure is “something we would consider making permanent down the road.” One possible explanation is that the rules for the fast-track procedure Democrats are using does not allow the budget deficit to increase after 10 years, limiting the cost. . “I think it’s mostly because they want to pretend it’s COVID relief, which would be hard to do if made permanent,” he wrote in an email.
More relief funds are needed for vaccination, nutrition services to help older Americans – The president’s proposal would be greatly improved if Congress added two provisions, both of which would significantly help this vulnerable population. The first provision is to provide $200 million in dedicated funding to the national aging services network through Older Americans Act supportive services to allow community-based programs to support vaccine dissemination. This network serves millions of seniors each day with key social and human services, such as Meals on Wheels, case management and transportation, largely funded through the federal Older Americans Act. This same older adult population is anxious to be vaccinated. For example, in San Antonio, two senior centers operated by the WellMed Charitable Foundation were designated as vaccination sites; and Meals on Wheels San Antonio partnered with several local agencies to deliver in-home vaccinations. The WellMed centers alone received over 7.9 million calls from older adults seeking vaccines during the first week they opened and Meals on Wheels San Antonio was able to identify over 1,000 homebound clients ready to immediately receive the vaccines. This increased funding is vigorously supported by a cross-section of national aging organizations, including NANASP, Meals on Wheels America, the National Association of Area Agencies on Aging (n4a), and ADvancing States. A second, equally urgent need is to keep emergency funding flowing into the Older Americans Act nutrition programs, including local Meals on Wheels. These programs have undergone wholescale conversions, adapting their senior centers to “grab and go” drive-through meal sites, while the demand for meals not only from existing but also from an entirely new population of seniors continuing to shelter-at-home has skyrocketed.These operational shifts have resulted in increased food, transportation, safety and personnel costs that have outpaced the level of emergency funding provided. In fact, based on a recent survey, 91 percent of Meals on Wheels America members report serving more home-delivered meals than before the pandemic, with the average program serving 59 percent more meals in November 2020 compared to March 1, 2020. Virtually all programs surveyed have seen the cost of providing services increase, including food, labor and safety supplies, and 29 percent say they would need to double their home-delivered nutrition budgets to meet the existing need in their communities. Anecdotally, some programs have doubled or tripled their meal services. To address this significant and sustained need, we need an additional $750 million in emergency funding for the Older Americans Act nutrition programs to ensure that these life-saving services are sustained. Losing these programs would be devastating, especially at a time when we are seeing dramatic increases in food insecurity and loneliness.The amount of funding we are requesting here represents only 0.04% of the estimated $1.9 trillion in the original Biden proposal. However, the return on this investment is clear: more older adults can be vaccinated and receive vital daily nutrition services and social connection, both of which keep older adults healthy and out of costly, overburdened hospitals and nursing homes. We hope to see this modest adjustment made in the final spending package. Our seniors are depending on it.
Biden Stimulus To Shower State And Local Govts With $350 Billion In Aid, Make Changes To Medicaid –State and local governments are set to receive $350 billion in funding as part of the next stimulus bill, according to draft stimulus legislation released Tuesday night by House Democrats.The funding – which took a backseat during the Trump administration amid GOP criticism that it was nothing more than a bailout for poorly run Democratic strongholds – is slated for committee action on Friday in the House Oversight and Reform Committee after Chair Carolyn Maloney (D-NY) introduced it. The bill would bypass the traditional appropriations process which is not eligible for budget reconciliation, according to Bloomberg.States would receive $195 billion and that money would partly be distributed based on a the share of unemployed workers. The District of Columbia would get the same share as states, unlike in last year’s relief bill. Local governments would receive $130 billion, partly based on population, with a carve-out for smaller communities. Territories would receive $4.5 billion and tribes $20 billion.The bill also would spend $570 million to pay for 600 hours of paid leave for federal and postal workers to use for Covid quarantine or to care for infected loved ones. -Bloomberg“Democrats’ plan to bail out locked-down, poorly managed liberal states is unfair to American taxpayers and is ripe for waste, fraud, and abuse,” said the committee’s top Republican, James Comer of Kentucky.Meanwhile, the House Energy and Commerce Committee has drafted a proposal which would make big changes to Medicaid – offering states more money to expand public health insurance options for the poor, as well as granting them the ability to claw back funds for prices increases on certain drugs. Released late Tuesday night, the plan would end Medicaid drug rebate caps for certain medications, currently set at 100% of a drug’s average manufacturer price. After the cap is reached, drug makers can reach their prices. By eliminating the caps, drugmakers could be prompted to leave the Medicaid program or curtail research, according to a 2019 warning by a congressional advisory committee.What’s more, states would be allowed to restart Medicaid benefits for people in prison up to 30 days prior to their release – a provision intended to support those who need addiction treatments and other services. The plan has $14.2 billion for vaccines-related activities. Community health centers also would receive $7.5 billion and $6 billion goes to tribal health centers. The legislation has $7.5 billion for the expansion of internet access. Chairman Frank Pallone’s draft would also provide $46 billion for Covid-19 testing, tracing, monitoring and mitigation. The committee has planned a Thursday vote on the provisions. – Bloomberg
GOP attacks Dems’ $1.9 trillion COVID-19 relief bill from all angles – (AP) – Republicans are attacking the Democrats’ $1.9 trillion COVID-19 relief package as too costly, economically damaging and overtly partisan, an all-angles attempt to derail new President Joe Biden’s top priority as it starts moving through a Congress his party controls only narrowly. Four House committees worked Thursday on their pieces of sweeping legislation that would send $1,400 payments to many Americans. It would also provide hundreds of billions for state and local governments and to boost vaccination efforts, raise tax credits for children and increase unemployment benefits. Democratic leaders hope for House passage later this month, with Senate approval and a bill on Biden’s desk by mid-March. “This is the moment,” said Ways and Means Committee Chairman Richard Neal, D-Mass., citing the pandemic’s human and economic toll. As committees worked, Republicans proposed amendments spotlighting what they see as the legislation’s soft spots. Their themes were clear: Democrats are overspending, hurting workers and employers’ job markets, being too generous to some immigrants, inviting fraud and rewarding political allies – allegations that Democrats dismiss as ludicrous. The proposals signaled that Biden’s plan faces solid Republican opposition in a House and Senate where Democrats have few votes to spare, while forcing Democrats to take positions that could tee up GOP campaign ads for the 2022 elections. There were amendments to reduce the $400 extra in weekly jobless benefits Democrats want to provide through August and exempt the smallest businesses from Democrats’ plans to gradually raise the minimum wage to $15 hourly from $7.25. Others would limit emergency grants for undergraduates to U.S. citizens and bar federal subsidies for some job-based health insurance to people without Social Security numbers, effectively targeting many immigrants. Other GOP proposals would put strings on emergency funds to help schools reopen safely, requiring that schools offer in-person classes or give the money to parents for education savings accounts if they remain closed. Still others would make sure assistance for renters, homeowners and the airline industry didn’t extend long after the pandemic ends, and divide $26 billion for urban transportation systems between cities and rural areas, which many Republicans represent. “I don’t know if the White House knows this, but you’re supposed to be creating jobs, not killing them,” said Texas Rep. Kevin Brady, the top Republican on the Ways and Means panel. He said while his party has backed over $3 trillion in earlier pandemic relief bills, “whatever this rushed, partisan, special interest ‘stimulus’ package does, it comes with no bipartisan discussion, no opportunity for finding common ground.”
Biden hopes infrastructure can bridge partisan divide (AP) – President Joe Biden is hoping that launching an effort to build roads and bridges can help to unite Democrats and Republicans in a time of sharp partisan divisions. Biden met with lawmakers from both parties at the White House to discuss infrastructure on Thursday, even as the Senate is holding impeachment proceedings against former President Donald Trump where partisan divisions are on full display. “I’ve been around long enough,” Biden said, “that infrastructure wasn’t a Republican or a Democratic issue.” The president specifically mentioned the potential for improvement projects in the states of the senators attending the meeting, signaling that lawmakers might be willing to cooperate in order to make their voters’ lives better. Biden highlighted the need for repairs to “a lot of bridges in West Virginia.” Republican Sen. Shelley Moore Capito of West Virginia, the ranking member of the Environment and Public Works Committee, was among those in attendance. The president also referenced Route 9 in his home state of Delaware, which he shares with Democratic Sen. Tom Carper, the committee chairman, who was also in the Oval Office meeting Thursday and had discussed these issues with Biden last week. “The American people desperately want us to bring our roads, trains and bridges out of the last century and into the future,” Carper said after Thursday’s meeting.Carper pledged to work on a transportation bill that will focus on reducing greenhouse gas emissions by cars and trucks and boosting electric cars. “I’m glad it’s at the top of the administration’s agenda.” The current authorization bill for surface transportation expires in September, so “there is no time to waste,” Carper said, adding that he expects bipartisan support for the reauthorization bill in the Senate. Also at the meeting were Vice President Kamala Harris, Transportation Secretary Pete Buttigieg virtually, Republican Sen. Jim Inhofe of Oklahoma and Democratic Sen. Ben Cardin of Maryland. Inhofe later told reporters that the meeting with Biden was “very good, very good. “One reason is that I’ve known the president forever, and we’ve worked on highway bills before,” Inhofe said. “The main thing that I want to be careful on is when you’re working on infrastructure that’s high dollar stuff.”
House panel advances portion of relief package that includes $1,400 checks – The House Ways and Means Committee on Thursday advanced a key portion of Democrats’ coronavirus relief package that includes stimulus payments of up to $1,400 per person and an expansion of the child tax credit.The committee approved the tax-related portion of the relief package by a party-line vote of 24-18. It now heads to the House Budget Committee, which will combine the portions of the relief package that are approved by a wide array of House panels.House Democrats started unveiling their relief package on Monday and have been spending the week moving the measure through relevant committees. The relief package is based on a $1.9 trillion proposal that President Biden floated last month. The tax-focused portion of the bill that the Ways and Means Committee advanced Thursday contains some of the provisions in the bill that have received the most attention from lawmakers and members of the public. The measure proposes direct payments of up to $1,400 per person, including adult dependents such as college students and elderly parents, who were not eligible for the first two rounds of payments. Ahead of the bill’s release, lawmakers had debated what the eligibility requirements should be for the $1,400 payments. The bill includes the same income limits for receiving full payment amounts as the first two rounds of payments, but changes how the payment amounts would phase out above those thresholds in an effort to prevent high-income households from getting the payments. Individuals with income of up to $75,000 and married couples with income of up to $150,000 would be eligible for the full payment amounts. The amounts would then be reduced above those thresholds, and individuals with income above $100,000 and couples with income above $200,000 would not be eligible for payments. Another provision in the measure would expand the child tax credit for 2021. It would increase the credit amount from $2,000 to $3,600 for children under age 6 and $3,000 for older children. The credit would also become fully refundable, allowing the lowest-income households to receive the full payment amounts. And it would direct the Treasury Department to issue advance payments of the credit, ideally on a monthly basis. The tax section of the coronavirus relief package also includes temporary expansions of the earned income tax credit and the child and dependent care tax credit, extensions of tax credits for paid sick leave and paid family leave, and an increase of ObamaCare’s premium tax credits for 2021 and 2022. Democrats said the bill would provide needed assistance to families that have been struggling during the pandemic.
The economic stimulus debate: Is Biden’s plan too big? – Axios –Fear of inflation has emerged as the single biggest reason for Democrats and Republicans to oppose the latest round of stimulus. For the time being, however, most economists expect that inflation will remain subdued, even if the full package is enacted. Former Treasury secretary and semi-professional Democratic Party picnic skunk Larry Summers sparked a wonkish firestorm last week with an op-ed declaring that the package is too big. In doing so, he successfully managed to set the macroeconomic terms of the stimulus debate.The risk, as Summers sees it: That more money will be spent domestically than the American economy has capacity to absorb. When that happens, prices can end up rising, in a process known as demand-pull inflation, as consumers compete with their dollars for a finite set of resources. The losers from inflation are savers and anybody living on a fixed (non-inflation-adjusted) income. The winners are generally fixed-rate debtors, which includes most Americans with mortgages.: The broad economic consensus, both within and outside the Biden administration, is that the magnitude of the current crisis necessitates a very large response, and that $1.9 trillion is not too big.Most economists, however, agree that in principle there is such a thing as too much government spending, even if we’re not yet at risk of reaching that point. “Could fiscal policy push things too far? Sure,” says Stony Brook economist Stephanie Kelton.”Do I think the proposed $1.9 trillion puts us at risk of demand-pull inflation? No. But at least we are centering inflation risk and not talking about running out of money. The terms of the debate have shifted.” Fear of runaway inflation could be overblown, especially in an economy where weak or nonexistent unions have little power to negotiate above-inflation wage deals.The official position from Fed chair Jay Powell, speaking at an event on Wednesday, is that “there could be upward pressure on prices” as the economy reopens, but that any such pressure is likely to be “neither large nor sustained.” Besides, if inflation ticks up, says Treasury Secretary Janet Yellen, “we have the tools to deal with that risk.” As a former chair of the Federal Reserve, she is better placed than almost anybody to make that claim – it is the Fed that’s charged with raising interest rates when inflation risks going too high. Rising inflation is not always a bad thing. In moderation, it’s exactly what the Fed wants. A separate worry is that another round of stimulus checks could serve to push an already-frothy stock market even higher. If the stock market bubble were to burst, that might cause a significant loss of wealth.
Biden Holds First Phone Call With Xi, Both Sides Offer Vastly Different Accounts Of What Was Said – Nearly a month after his inauguration and more than three months since the presidential election, Joe Biden held his first call with Xi Jinping since entering the White House, just days after his secretary of state warned Beijing that Washington would hold China accountable for its “abuses”. In a Wednesday night tweet, Biden said that he spoke today with President Xi “to offer good wishes to the Chinese people for Lunar New Year.” He also shared concerns “about Beijing’s economic practices, human rights abuses, and coercion of Taiwan” and told him that Biden “will work with China when it benefits the American people.” The White house also chimed in saying that “President Biden underscored his fundamental concerns about Beijing’s coercive and unfair economic practices, crackdown in Hong Kong, human rights abuses in Xinjiang, and increasingly assertive actions in the region, including toward Taiwan. President Biden committed to pursuing practical, results-oriented engagements when it advances the interests of the American people and those of our allies.” “The two leaders also exchanged views on countering the COVID-19 pandemic, and the shared challenges of global health security, climate change, and preventing weapons proliferation. President Biden committed to pursuing practical, results-oriented engagements when it advances the interests of the American people and those of our allies” the White House said. The call, however, had vastly different content when retold from China’s side. According to an account of the conversation reported by Chinese state television, Xi said that “cooperation was the only choice and that the two countries need to properly manage disputes in a constructive manner.” Xi also told Biden that “confrontation between China and the United States would be a disaster and the two sides should re-establish the means to avoid misjudgments.” Xi also said Beijing and Washington should re-establish various mechanisms for dialogue in order to understand each others’ intentions and avoid misunderstandings, the report said. Finally, and most bizarrely, Xi told Biden that he hopes the United States will cautiously handle matters related to Taiwan, Hong Kong and Xinjiang that deal with matters of China’s sovereignty and territorial integrity. Quite the opposite of what Biden reportedly told Xi…
US will not accept World Health Organization findings out of Wuhan without independently verifying – The United States will not accept World Health Organization (WHO) findings coming out of its coronavirus investigation in Wuhan, China without independently verifying the findings using its own intelligence and conferring with allies, a State Department official said Tuesday. Spokesman Ned Price added that a full and complete accounting by the WHO and China detailing how the pandemic started and spread is essential given the stakes and the disease’s devastating global impact. “Clearly, the Chinese, at least heretofore, has not offered the requisite transparency that we need and that, just as importantly, the international community needs so that we can prevent these sorts of pandemics from ever happening again,” he told reporters during a daily briefing. “We will work with our partners, and also draw on information collected and analysed by our own intelligence community … rather than rush to conclusions that may be motivated by anything other than science,” he said. In Beijing, Chinese Foreign Ministry spokesman Wang Wenbin said the probe in Wuhan is just part of the investigation, and reiterated the call for the US to let WHO experts to launch an investigation in the nation. “We hope that the US, like China, will adopt an open and transparent attitude and invite WHO experts to carry out research and studies in the US,” Wang said in a press conference on Wednesday. Members of a WHO mission made up of Chinese and foreign scientists told reporters Tuesday in Wuhan at the end of a four-week investigation that the virus most likely appeared in humans after jumping from an animal.
White House cites ‘deep concerns’ about WHO COVID report, demands early data from China (Reuters) – The White House on Saturday called on China to make available data from the earliest days of the COVID-19 outbreak, saying it has “deep concerns” about the way the findings of the World Health Organization’s COVID-19 report were communicated. White House national security adviser Jake Sullivan said in a statement that it is imperative that the report be independent and free from “alteration by the Chinese government”, echoing concerns raised by the administration of former President Donald Trump, who also moved to quit the WHO over the issue. WHO Director-General Tedros Adhanom Ghebreyesus on Friday said all hypotheses are still open about the origins of COVID-19, after Washington said it wanted to review data from a WHO-led mission to China, where the virus first emerged. A WHO-led mission, which spent four weeks in China looking into the origins of the COVID-19 outbreak, said this week that it was not looking further into the question of whether the virus escaped from a lab, which it considered highly unlikely. The Trump administration said it suspected the virus may have escaped from a Chinese lab, which Beijing strongly denies. Sullivan noted that U.S. President Joe Biden had quickly reversed the decision to disengage from the WHO, but said it was imperative to protect the organization’s credibility. “Re-engaging the WHO also means holding it to the highest standards,” Sullivan said. “We have deep concerns about the way in which the early findings of the COVID-19 investigation were communicated and questions about the process used to reach them.”
Buttigieg: Officials consider negative COVID-19 test requirement on domestic flights -Transportation Secretary Pete Buttigieg said that officials are considering a requirement that passengers provide a negative COVID-19 test ahead of domestic flights, according to an interview published on Sunday. One of President Biden’s first confirmed Cabinet members told “Axios on HBO” that the Centers for Disease Control and Prevention (CDC) is engaged in “an active conversation” on whether to implement the requirement. “What I can tell you is it’s going to be guided by data, by science, by medicine and by the input of the people who are actually gonna have to carry this out,” he said. “But here’s the thing: The safer we can make air travel in terms of perception as well as reality, the more people are gonna be ready to get back in the air.” Buttigieg’s comments on a potential testing madnate comes after the CDC instituted a requirement for travelers on international flights to the U.S. to test negative for the virus that has infected more than 27 million and killed more than 464,000 in the U.S. alone, according to Johns Hopkins University data. The testing rules for international flights came as U.S. officials expressed concern about the COVID-19 variants found in the U.K. and South Africa that are more contagious than the original strain. Both variants have been found in multiple states in the U.S., with 690 cases of the U.K. strain across 33 states and six cases of the South African strain across three states, according to CDC data. On Monday, CDC Director Rochelle Walensky responded to a question about testing at airports by saying more tests could help reduce the spread, particularly from infected people who are not showing symptoms.
Biden Mulls Domestic Travel Restrictions Despite Improving COVID Backdrop – Despite headlines discussing COVID ‘plateaus‘ and ‘dramatic declines‘ in the United States, the Biden administration is mulling whether to impose domestic travel restrictions over concerns that “coronavirus mutations are threatening to reverse hard-fought progress on the pandemic,” according to the Miami Herald. Outbreaks of the new variants – including a highly contagious one first identified in the United Kingdom, as well as others from South Africa and Brazil that scientists worry can evade existing vaccines – have lent urgency to a review of potential travel restrictions within the United States, one federal official said.Discussions in the administration over potential travel restrictions do not target a specific state but focus on how to prevent the spread of variants that appear to be surging in a number of states, including Florida and California. –Miami Herald“There are active conversations about what could help mitigate spread here, but we have to follow the data and what’s going to work. We did this with South Africa, we did this with Brazil, because we got clear guidance,” said one White House official. “But we’re having conversations about anything that would help mitigate spread,” the official added regarding the discussions aimed at targeting the spread of the UK mutation in places like Florida – where over a third of all UK variant cases in the US have been identified.Two federal officials made clear that no policy announcements are imminent, and that any travel restrictions would be undertaken in coordination with state and local governments.”No decisions have been made, but we certainly are having conversations across government,” said the White House official, adding “This is a war and we’re at battle with the virus. War is messy and unpredictable, and all options are on the table.”The potential action comes after Biden directed the CDC, the Department of Homeland Security and the Department of Transportation to “promptly” create a list of recommendations on “how their respective agencies may impose additional public health measures for domestic travel.”Meanwhile, Transportation Secretary Pete Buttigieg, the second gay man in US history to hold a cabinet position, has been examining whether to require COVID-19 testing for domestic flights – a suggestion that has drawn criticism from airline execs as “a horrible idea.”
AOC And Schumer Want Taxpayer Funding For COVID-19 Funerals — US residents whose family members died with or of covid will be eligible to receive $7,000 for funeral and related expenses, New York senator Chuck Schumer (D) and Representative Alexandria Ocasio-Cortez (D) announced. During a briefing in Queens on Monday, February 8, the duo announced that $267 million of the federally funded funeral benefits would go to low-income families in New York alone. The package, Schumer added, is part of a $2 billion disaster funds program run by the Federal Emergency Management Agency (FEMA) that will provide benefits to families nationwide.In her speech, Ocasio-Cortez explained that families “are having to pay for the storage of the bodies of their own loved ones” in addition to covering the funeral and burial expenses.“This is wrong,” she added.The announcement was received warmly on social media, so it wasn’t a surprise to see few people questioning the duo’s intentions.But if the goal is to help those impacted by the pandemic, why did neither Democrat bring up plans to provide aid to the families who lost loved ones to various state governments’ responses to the coronavirus?
Biden Cancels Emergency Border Wall Funding As DHS Prepares To Admit 25,000 Migrants Waiting In Mexico –The Biden administration on Thursday canceled President Trump’s 2019 emergency declaration directing nearly $25 billion to fund the construction of new and replacement fending at the US-Mexico border. “I have determined that the declaration of a national emergency at our southern border was unwarranted,” wrote Biden in a letter to Speaker Nancy Pelosi (D-CA). “I have also announced that it shall be the policy of my administration that no more American taxpayer dollars be diverted to construct a border wall, and that I am directing a careful review of all resources appropriated or redirected to that end.” The proclamation is a final step from Biden after issuing an executive order on day one questioning the validity of Trump’s national emergency and ordering a pause on all border wall construction. Trump issued the national emergency at the border in early 2019 after repeatedly butting heads with lawmakers over funding for the project. The emergency declaration loosened the limits on taxpayer funding, paving the way for Trump to divert funds originally intended for other agencies. ––The Hill Biden’s proclamation follows a Supreme Court decision to cancel an upcoming hearing on the legality of the border wall at the request of the new administration. “The President has directed the Executive Branch to undertake an assessment of ‘the legality of the funding and contracting methods used to construct the wall,'” the Biden administration wrote earlier this month. GOP members of the House Oversight and Reform Committee asked Homeland Security Secretary Alejandro Mayorkas earlier this month to turn over all documents related to Biden’s decision to pause construction. “This potentially dangerous action not only harms our national security and thwarts the will of Congress, but also leaves American citizens living near the southwest border vulnerable to activities involving cartels and smugglers,” said Rep. James Comer (R-KY), ranking minority member of the committee.
Biden rolls out asylum system to replace Trump’s ‘remain in Mexico’ policy – The Biden administration on Friday rolled out its plans for addressing tens of thousands of migrants camped out at the southern border as it seeks to replace the Trump administration’s “remain in Mexico” policy. Former President Trump’s policy, implemented in 2019, blocked migrants at the Mexican border from entering the U.S. to apply for asylum, leaving what the Biden administration estimates is now around 25,000 people awaiting their fate in Mexico. In what the administration deemed as phase one of their plan, the U.S. will begin processing as many as 300 people per day at three different undisclosed ports of entry starting Feb. 19. “This is an important part of President Biden’s commitment to restoring humane and orderly processing at the border. And that means we need to start asylum proceedings and allow people access to asylum proceedings in the United States for people who have been too long kept in Mexico and been unable to pursue their cases,” a senior administration official said on a call with reporters. The U.S. will begin by processing those who have already enrolled in Trump’s Migrant Protection Protocols (MPP) program who must then coordinate with a forthcoming international organization who will help coordinate housing and test migrants for COVID-19. Only those with a negative test will be permitted to enter. Administration officials said they would “start small” in an effort to ensure the system is working and that migrants can “be processed in a timely fashion with due regard for public health in the middle of a pandemic.” But the plan was accompanied by strict warnings that people should not head to the border, while those enrolled in MPP should await more specific instructions. “We are beginning this move in 30 days of the inauguration to demonstrate our commitment to a legal pathway to migration,” an administration official said, noting that the Biden team began to formulate the plan during the transition. “But that does not change the status at the border and people should not assume that now they can come to the border and be part of this process,” the official said. Organizing the process will require an incredible amount of outreach, both to communicate who is eligible and to ensure they register with the international organization. “To some extent we are relying on people to come to us,” an official said.
Wyden to wield new power on health care, taxes with committee gavel – Sen. Ron Wyden (D-Ore.), the new chairman of the Senate Finance Committee, is poised to be a key player on some of the most hot-button issues over the next two years with Democratic control of both the White House and Congress. The Oregon Democrat last week took the reins of a committee that has jurisdiction over major components of the next coronavirus relief package, as well as other top priorities for Democrats. The panel oversees policy areas that impact a wide swath of the economy, including taxes, health care and trade. Some of Wyden’s top agenda items include extending and enhancing unemployment benefits, increasing taxes on the wealthy and addressing rising health care and prescription drug costs. “We got to fix the broken tax code, lower health care costs starting with prescriptions, move towards a carbon-free future and rebuild our infrastructure, and the Finance Committee is the center of all of these issues,” he said on a recent call with reporters. Wyden, 71, is a longtime member of Congress and a fixture on the Finance Committee. He was first elected to the Senate in 1996, after more than a decade in the House, and served as Finance Committee chairman in 2014 before spending the six subsequent years as ranking member. This time around, though, he’s taking control of the committee for at least a two-year period amid a pandemic and an economic downturn. To address those duel challenges, President Biden has proposed a $1.9 trillion relief package, and congressional Democrats are about to start advancing legislation based on his proposal. The Senate Finance Committee is expected to be heavily involved in the effort. Wyden has recently placed particular emphasis on enhancing and extending federal unemployment programs, and he’s made his position known to the White House as well. The coronavirus relief package that lawmakers enacted in December provides a $300 per week boost to unemployment benefits through mid-March. Biden has proposed increasing that amount to $400 per week and extending it through September.
IMF Wants To Use “Digital Footprint Of Customers’ Online Activities” To Assess Creditworthiness – In a recent post, “What is Really New In Fintech,” on the IMF blog (International Monetary Fund), authors suggest “rapid technological change” in the financial industry. Many social media and other online platforms are now creating and accepting payments. This revolutionary change in the banking world could change the face of finance forever. As a result of this rapid change, the authors bring up the following questions:
- What are the transformative aspects of recent financial innovation that can uproot finance as we know it?
- Which new policy challenges will the transformation of finance bring?
To answer these questions, the authors wrote: Recent IMF and ECB staff research distinguishes two areas of financial innovation. One is information: new tools to collect and analyse data on customers, for example for determining creditworthiness. Another is communication: new approaches to customer relationships and the distribution of financial products. We argue that each dimension contains some transformative components. The authors mention the importance and functionality of “determining creditworthiness.” The method they want to use to do so can be found in the section labeled “New Types Of Information,” where they write (emphasis ours):The most transformative information innovation is the increase in use of new types of data coming from the digital footprint of customers’ various online activities – mainly for creditworthiness analysis.Credit scoring using so-called hard information (income, employment time, assets, and debts) is nothing new. Typically, the more data is available, the more accurate is the assessment. But this method has two problems. First, hard information tends to be “procyclical”: it boosts credit expansion in good times but exacerbates contraction during downturns.The second and most complex problem is that certain kinds of people, like new entrepreneurs, innovators, and many informal workers, might not have enough hard data available. Even a well-paid expatriate moving to the United States can be caught in the conundrum of not getting a credit card for lack of credit record, and not having a credit record for lack of credit cards.Fintech resolves the dilemma by tapping various nonfinancial data: the type of browser and hardware used to access the internet, the history of online searches, and purchases. Recent research documents that, once powered by artificial intelligence and machine learning, these alternative data sources are often superior than traditional credit assessment methods, and can advance financial inclusion, by, for example, enabling more credit to informal workers and households, and firms in rural areas.The type of browser used could potentially indicate a different ranking for browsers that heavily track users, like Chrome, vs. browsers that emphasize privacy, like Brave. So what does this all mean for our financial future?It means the IMF authors suggest the global banking network begin using a history of online searches and purchases to determine “creditworthiness.” In other words, do you read CNN and purchase sports memorabilia? You’re approved! Do you read The Organic Prepper and buy “conspiracy” or “prepping” material? We’re sorry, you can not be approved at this time based on your credit score.
Janet Yellen’s Slush Fund to Meddle in Markets Got a $490 Billion Haircut — Pam Martens -Remember all the hubbub in the fall of last year when then U.S. Treasury Secretary Steve Mnuchin demanded in a November 19 letter that the Fed return all of the money from the CARES Act that it had not used for emergency lending programs. Mnuchin’s stated reason for the demand was because he was going to turn the unused funds over to the general fund of the Treasury so that Congress could reappropriate it for other purposes.At the time, Mnuchin made it sound like the Fed had been sitting on the bulk of the $454 billion that the CARES Act had allotted to be used as loss-absorbing capital for the Fed’s emergency lending programs. In reality, Mnuchin had never turned over the bulk of the CARES Act money to the Fed, but had parked it instead in a Treasury slush fund known as the Exchange Stabilization Fund (ESF). It should be noted that there was not one word in the CARES Act legislation that authorized Mnuchin to put the money in the ESF. (See Research Arm of Congress Confirms that Mnuchin Never Released Bulk of CARES Act Money Earmarked for Fed’s Emergency Loans.)The size of the ESF is decidedly important for this reason: under current law (31 U.S.C. ff5302) the decisions on how to spend the billions in this slush fund belong to the Treasury Secretary and “are final and may not be reviewed by another officer or employee of the Government.” The law also provides that the Treasury Secretary “with the approval of the President, may deal in gold, foreign exchange, and other instruments of credit and securities the Secretary considers necessary.”Since publicly traded stocks are “securities,” that language would appear to give the U.S. Treasury Secretary the power to intervene in propping up the stock market without the ability of “another officer or employee of Government,” say, like, the Government Accountability Office, having the ability to review or conduct an audit of what’s going on in that regard. Quarterly statements from the ESF are provided to the public, but they simply show where things stand on the last day of the quarter. A lot can go on with the money in the ESF in the prior three months.The control of the ESF now passes to U.S. Treasury Secretary Janet Yellen, who will have $489.96 billion less than Mnuchin to play with in the slush fund – thanks to Mnuchin’s efforts. Here’s how we did the math:
SBA rolls out fixes for PPP error codes – The Small Business Administration has announced a series of steps to address a nagging problem with error codes that Paycheck Protection Program lenders claim are needlessly delaying the approval of thousands of loans. In perhaps its biggest step to remedy an issue that has dogged the program for weeks, the SBA said on Wednesday that it would permit lenders to certify borrowers whose loans are impacted by validation errors to hasten their receipt of funds. The agency also said it would allow lenders to upload supporting documents for loans hit by the error messages. Relief can’t come soon enough for many PPP lenders. Error codes emerged as a leading bone of contention for shortly after lending resumed on Jan. 12. In the weeks immediately following the program’s relaunch, the codes interrupted the processing of as many as 30% of the loans submitted for approval. The American Institute of CPAs had urged the SBA earlier this month to address the issue. The codes are tied to validation checks the SBA created to combat fraud and stem the origination of improper loans. There were no such protections in place when the PPP was first launched in April. “I think the intentions from SBA were very good, and it is catching a lot of probably questionable activity for the industry overall, but there are a lot of validation errors that are simply wrong, for lack of a better word,” said Rick Kraemer, chief financial services officer at the $40.7 billion-asset Valley National Bancorp in New York. “The industry has expressed some frustration,” Kraemer added. Though the percentage of loans being flagged with error codes has decreased recently, Kraemer said the problem was still big enough to cloud the PPP’s funding picture. Between “what has been approved versus what has been applied for, there’s a pretty dramatic delta,”
Florida man pleads guilty to using PPP loans to purchase Lamborghini – A Florida man on Wednesday pleaded guilty to charges in connection with fraudulently obtaining nearly $4 million in Paycheck Protection Program (PPP) loans, some of which were used to buy a Lamborghini sports car. The plea comes after David Hines, 29, of Miami, was charged in July with one count of bank fraud, one count of making false statements to a financial institution and one count of engaging in transactions in unlawful proceeds. The Department of Justice (DOJ) announced in a press release Wednesday that Hines, as part of his plea deal, “admitted that he fraudulently sought millions of dollars in PPP loans through applications to an insured financial institution on behalf of different companies,” through which he improperly obtained $3.9 million in loans intended for businesses to supplement workforce income and other expenses amid the coronavirus pandemic. Hines admitted that he did not make the payroll payments he reported on loan applications and, instead, used the money from the federal government for personal expenses. The man also acknowledged that within days of receiving the funds, he used about $318,000 to purchase a 2020 Lamborghini Huracan sports car for himself, according to the DOJ. North Carolina man charged with threatening to assassinate Biden At the time of his arrest, authorities seized the Lamborghini, as well as $3.4 million Hines had in his bank accounts. As part of the deal, Hines pleaded guilty to one count of wire fraud, with sentencing scheduled for April 14. The DOJ added Wednesday that since the Coronavirus Aid, Relief, and Economic Security (CARES) Act was passed in March 2020, fraud attorneys have prosecuted more than 100 defendants in more than 70 criminal cases, seizing more than $60 million in cash that had been fraudulently obtained through PPP funds, as well as real estate properties and other items improperly purchased with the loans.
Most PPP loans going to repeat customers – The lion’s share of Paycheck Protection Program loans is going to previous borrowers, providing more evidence that sectors that have been hard-hit by the coronavirus pandemic are still struggling to regain their footing. More than $93 billion of the roughly $101 billion of PPP funds approved by the Small Business Administration since the program reopened on Jan. 12 have involved second draws. The SBA data punctuates the challenges many industries still face. Loans to borrowers in the hospitality and food service sectors have accounted for nearly a fifth of PPP loans approved this year, while construction comprises about 14%. While willing to handle requests from first- and second-draw borrowers, many bankers said their lenders are largely receiving applications from small businesses that already have PPP loans. “The businesses that seem to need the stimulus are the ones most impacted by the COVID pandemic, mainly entertainment, hospitality, food services,” . “Those seem to be the industries where we’re seeing the most demand during PPP2.” About 86% of the roughly 28,000 loans TD Bank has handled in the last month have involved second draws, Giamo said. Second-draw loans have comprised about 93% of the applications at Valley National Bancorp in New York, At Axiom Bank in Maitland, Fla., second draws have outnumbered new requests by a 10-to-1 margin, Another factor behind the dominance of second-draw loans involves the number of lenders focusing on each type of borrower. More than 5,000 lenders have submitted second-draw loans, compared to about 4,700 for first draws, based on data released by the SBA. While the application process is labor-intensive regardless of the type of borrower, second-draw loans, which have averaged $100,000 so far this year, are four times bigger than first draws, based on SBA data. To be sure, some lenders are devoting more resources into finding new PPP borrowers by placing a greater emphasis on first-draw loans. The view is that doing so will create long-term relationships with more borrowers.
PPP boosts banks’ interest in other SBA loan programs – Emergency lending programs have cut into the volume of traditional Small Business Administration loans, but they have also led more bankers to make bigger long-term commitments to the agency’s flagship offerings. Volume in the SBA’s 7(a) program is down 11% in the 2021 fiscal year from a year earlier, at $6.4 billion. The agency’s fiscal year began on Oct. 1. Lenders largely point to the prevalence of the Main Street Lending Program, which ended on Jan. 8, and the Jan. 11 return of the Paycheck Protection Program for the lower 7(a) volume. For many bankers, it has been daunting to devote resources to both traditional and emergency loan efforts. But many lenders are laying the groundwork for more 7(a) and 504 lending by hiring staff, entering new markets and boosting digital capabilities. Many of those investments wouldn’t have happened, or at least would have been delayed, if there had been no PPP. PPP “really opened our eyes as to how big the opportunity is to attract more business banking customers,” said Ted Sheppe, executive vice president for business development at Axiom Bank in Maitland, Fla. “We think we can compete with bigger banks for the relationships.” The $654 million-asset Axiom plans to hire two SBA business development officers this year, a decision that was spurred by its experience with PPP. “We are going to grow our SBA capabilities,” Sheppe said. Other banks are laying the groundwork for more SBA lending.
Biggest U.S. banks keep lending less and less of their money – The biggest U.S. banks reduced the portion of their collective balance sheets they’re dedicating to loans to a new low, extending a trend that’s seen the largest lenders put less and less of their firepower behind everyday borrowers. Total loans at the 25 biggest U.S. banks make up less than 46% of their combined assets, down from 54% this time last year, according to weekly Federal Reserve data made public on Friday. At 45.8%, the share of total assets devoted to loans is the lowest figure in nearly 36 years of weekly data. The figures provide a fresh reality check for an industry that’s been playing up its support for businesses and households as the COVID-19 pandemic ravages the economy. While the total amount that banks have loaned out has stagnated, the nation’s biggest lenders have rapidly expanded other parts of their businesses, such as their holdings of Treasuries and government-backed mortgage securities. Loans fell just over 1% from last year to $5.5 trillion, a figure that includes new loans ultimately backed by the Small Business Administration. At the same time, big-bank balance sheets expanded by more than 17% to $12 trillion after the Fed flooded the system with cash in hopes that firms would keep credit flowing to the U.S. economy. Banks have kept some of those funds as cash and used much of the rest to purchase securities guaranteed by the federal government. Lending has faced scrutiny during the pandemic as banks retrench, and small businesses and households find it harder to obtain reasonably priced credit. Large, publicly traded corporations have largely relied on bond markets to provide needed credit. Loans began accounting for less than half of big banks’ books for the first time last May, and in the 35 weeks since then lending has fallen to a fresh low 21 times.
Fed details stress-test scenarios for 2021 – The Federal Reserve has unveiled the 2021 stress-testing scenarios that it will use to evaluate the safety and soundness of 19 of the largest U.S. banks. The harshest scenario banks will be tested against this cycle includes elevated stress in the commercial real estate and corporate debt markets along with an intense global recession. In that severely adverse scenario, banks would have to account for a rise in the U.S. unemployment rate by 4 percentage points to 10.75%. “The banking sector has provided critical support to the economic recovery,” says Federal Reserve Vice Chair for Supervision Randal Quarles, and “this stress test will give the public additional information on its resilience.”BloombergThat hypothetical – which is much worse than current baseline projections for the path of the U.S. economy as it looks to recover from the shock of the coronavirus pandemic – will help guarantee that the largest banks are able to continue lending throughout a recession in order to provide critical support to the economy, the Fed said in a release Friday. “The banking sector has provided critical support to the economic recovery over the past year,” Fed Vice Chair for Supervision Randal Quarles said in the release. “Although uncertainty remains, this stress test will give the public additional information on its resilience.” The Fed conducts two separate stress tests every year on bank holding companies. Most regional banks with assets of $100 billion to $250 billion face stress tests every other year, and they’re exempted from the 2021 cycle. However, those banks can choose to opt into this year’s test as long as they do so by April 5. The first test is the Dodd-Frank Act Stress Test, which examines a bank’s balance-sheet performance under the scenarios using a standard capital management plan. The second is the Comprehensive Capital Analysis and Review, which uses the bank’s own capital management plan to better assess how the bank might actually perform under the same conditions. Each test examines a bank’s performance over nine future consecutive quarters. The baseline scenario for the 2021 cycle is in line with current economic projections that forecast a gradual decline in unemployment, stable inflation and a steady expansion in international economic activity. Both the baseline and the severely adverse scenario contain 28 variables, including interest rates, stock market prices and gross domestic product. Banks subject to stress tests in this cycle that have large trading operations also will be tested against a global market shock as well as a default of their largest counterparty. Banks are required to submit their capital plans to the Fed by April 6. The central bank will announce the results of both stress tests by June 30.
New Fed Stress Test Toughens Stock & Economy Crash Scenario, Eases Jobless Extreme –Having confirmed in December that all banks comfortably passed their stress tests (allowing them all to buy back stocks and up dividends), The Fed has decided to raise the bar (albeit modestly) for its Adverse Scenario in the next round of stress tests.The top 19 US banks will have to prove they can withstand a 55% collapse in stock markets in this year’s stress tests, regulators said on Friday, outlining the parameters for an exercise that decides how much banks can pay out to their shareholders. “The banking sector has provided critical support to the economic recovery over the past year. Although uncertainty remains, this stress test will give the public additional information on its resilience,” Vice Chair for Supervision Randal K. Quarles said.Additionally, The Fed said that banks with large trading operations will be tested against a global market shock component that stresses their trading, private equity, and other fair value positions. Additionally, banks with substantial trading or processing operations will be tested against the default of their largest counterparty.But while the new adverse scenario increases the equity stress (from 50% drop to 55%) and worsens the economic impact (from 3% GDP decline to 4%), it softens the employment stress by decreasing the peak unemployment from 12.5% to 10.75% (note that the current rate is 6.3% but Fed Chair Powell recently said it was more like 10% due to labor force participation disruptions).“The scenarios are not forecasts and the severely adverse scenario is significantly more severe than most current baseline projections for the path of the US economy under the stress,” the Fed said. Full Stress Test details below:
Acting CFPB head calls out industry for slow complaint response times – The new interim leader of the Consumer Financial Protection Bureau pledged to take action against firms that are slow to respond to customer complaints during the pandemic. Consumers submitted 42,774 complaints to the CFPB portal in April 2020 as COVID-19 was spreading, the highest monthly tally ever. The CFPB received 187,547 complaints from Jan. 1, 2020 to May 31. But in a blog post, acting CFPB Director Dave Uejio expressed concern that financial institutions have dragged their feet in addressing complaints, and said the agency was working on an upcoming report highlighting response issues. The bureau typically requires a financial company to respond to the consumer within 15 days of a complaint. The bureau will specifically analyze disparities in how companies address complaints from minorities, he said Wednesday. “Some companies have been lax in meeting their obligation to respond to complaints,” Uejio wrote. “Consumer advocates have found disparities in some companies’ responses to Black, Brown, and Indigenous communities. This is unacceptable.” Uejio warned that companies doing a poor job of responding to consumers will be identified in its annual consumer response report that typically gets released in the first quarter. Uejio has wasted no time focusing on two areas in the early days of the Biden administration: consumers’ financial hardships resulting from the coronavirus and racial equity issues. The CFPB is also updating its web site and expanding its social media presence to reach more consumers, Uejio said.
Installment lenders under scrutiny as delinquencies soar – Australia and the U.K. are building a case for regulation of buy now/pay later offerings, out of concern that the product’s popularity is creating greater risk for consumers and mainstream lenders.A report from the Australian Parliament found buy now/pay later funding is now present in more than 20% of consumer insolvencies, compared to credit-card debt insolvencies at about 3%.BNPL has expanded rapidly over the past year as an alternative to credit cards, particularly for younger consumers looking to finance large purchases during the pandemic. In some markets, such as the U.S., BNPL grew at a triple-digit rate for several individual months in 2020. The market could expand as much as 15 times over the next four years, reaching $1 trillion in yearly spending globally, according to Bank of America.BNPL has several forms, with some using a consumer’s existing credit and bank relationships to split purchases. The installment option – generally a purchase divided over four months on a new line of credit – is drawing attention in Australia and the U.K. The Australian report references a “halo effect” that could result in consumers not only building more debt, but also choosing BNPL over other financing options because of the perceived ease and speed of obtaining credit. The Australian report will likely lead to some form of regulation on BNPL firms, such as a provision that requires lenders to ensure borrowers can repay. There will also likely be curbs on the practice in the U.K.”There is a place for buy now/pay later, but this is the time to examine it,” said Brian Riley, director of the credit advisory service at Mercator Advisory Group, who says the static installment version of BNPL is not bank-grade lending. “There’s some problems starting to bubble up. I’m not suggesting killing it but putting some structure to it.” BNPL poses credit and reputational risks. In most cases the credit vetting does not include ability-to-repay modeling, according to Riley. The relative lack of regulation for BNPL creates risks for other credit instruments. The Australian report quotes Paul Homes from Queensland Legal Aid, saying the defaults tied to BNPL may be “artificially low” because BNPL is not regulated as credit and does not have hardship provisions enabling consumers to restructure debt. Because of that, a consumer who has several credit lines will likely pay the BNPL loan first and seek hardship protection from the other products, creating added economic pressure. Research from the U.K.’s Financial Conduct Authority led by former interim FCA chair Christopher Woolard found BNPL products expanded about 400% in the U.K., passing $3 billion in transaction volume. Additionally, more than 10% of consumers using BNPL were in arrears at the end of 2020. Wollard added BNPL products should be subject to financial regulation as a “matter of urgency.” Woolard also encouraged regulatory support for more point of sale finance alternatives and the introduction of mainstream lenders. Sweden has already passed a regulation that requires merchants to present payment options that do not create debt at the point of sale, and California has fined BNPL lenders and required licensing. “This suggests there’s a lot of lending to people who can’t afford it and a [client roster] that’s unreliable,” Riley said.
E-commerce scammers branch out – When consumers turned to online shopping as pandemic lockdowns took hold, fraudsters tagged along in a big way. Scammers did their most damage in the fourth quarter of 2020, delivering increases in credential stuffing, account takeover and gift card fraud, all of which are likely to be top attack vectors in 2021, according to fraud prevention provider and researcher Arkose Labs. There were 2.1 billion attacks in the fourth quarter for an average attack rate of 30%, a slight boost over the 25% Arkose Labs’ network reported in the third quarter. For 2020, Arkose Labs cited 4.9 billion total attacks detected and 14.8 billion transactions moving through its network for a 23% attack rate. The fraud from Black Friday until the end of the year not only increased, but took hold in industries not typically associated with holiday shopping such as social media, online dating and financial services, Arkose stated in its first quarter 2021 report. “2021 remains full of unknowns, however what’s certain is the frequency and severity of fraud will never return to pre-pandemic levels,” said Vanita Pandey, vice president of marketing and strategy at Arkose Labs. “With digital channels serving as an invaluable lifeline for much of the world, the Arkose Labs network saw four times as many transactions compared to the year prior.” The increased activity created “an ideal breeding ground for attacks” as fraudsters worked to blend in with trusted users, which rendered typical models of good versus bad user behavior obsolete, Pandey added. The Arkose Labs fraud abuse report is based on actual user sessions and attack patterns analyzed through the company’s fraud and abuse prevention platform from October through December of 2020. The sessions analyzed in real time included payments from financial services, e-commerce, travel, social media, gaming and entertainment. Electronic gift card fraud was rampant during the holiday season, delivering quick money to fraudsters while also making it difficult to track the criminals. Fraudsters used botnets to brute force attacks on gift card websites by testing thousands of card number and PIN combinations per minute. Bots and sweatshops were also used continually to check card balances and redeem them. Credential stuffing attacks more than doubled in the fourth quarter compared to the third, and increased by nearly 90% compared to the first quarter of 2020, the report noted.
FHFA will allow borrowers to prolong forbearance plans – The Federal Housing Finance Agency is allowing borrowers with loans backed by Fannie Mae and Freddie Mac to request an additional three months of forbearance, the agency said Tuesday. The Coronavirus Aid, Relief and Economic Security Act passed by Congress last year allowed borrowers with a federally backed mortgage to request up to 12 months of forbearance – divided into two 180-day increments – if they experienced financial hardship because of COVID-19. But as of Feb. 28, borrowers who are in forbearance plans will be permitted to request an additional three-month extension, covering up to 15 months of mortgage payments overall for borrowers with Fannie and Freddie-supported loans, the FHFA said. The agency also announced Tuesday that it is extending its moratorium on single-family home foreclosures and real estate owned evictions until March 31 in an effort “to keep families in their home during the pandemic,” FHFA Director Mark Calabria said in a news release. Meanwhile, President Biden is pushing Congress to allow borrowers to request forbearance on federally backed loans through Sept. 30 in his administration’s sweeping stimulus package. That proposal also calls for the national foreclosure and eviction moratorium on federally backed properties to be extended until the end of September.
MBA Survey: “Share of Mortgage Loans in Forbearance Declines to 5.35%” – Note: This is as of January 31st. From the MBA: Share of Mortgage Loans in Forbearance Declines to 5.35%The Mortgage Bankers Association’s (MBA) latest Forbearance and Call Volume Survey revealed that the total number of loans now in forbearance decreased by 3 basis points from 5.38% of servicers’ portfolio volume in the prior week to 5.35% as of January 31, 2021. According to MBA’s estimate, 2.7 million homeowners are in forbearance plans … .. “The share of loans in forbearance decreased at the end of January across all investor categories. Almost 14 percent of homeowners in forbearance were reported as current on their payments at the end of last month, but the share has declined nearly every month from 28 percent in May,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “While new forbearance requests increased slightly at the end of January, the rate of exits picked up somewhat but remained much lower than in recent months. We are anticipating a sharp increase in exits in March and April as borrowers hit the 12-month expiration of their forbearance plans.” “The proportion of long-term unemployed also remains troubling, with 4 million people who have been actively looking for work for 27 weeks or more. These are the homeowners who are likely to still be in forbearance and need additional support until the job market recovers to a greater extent.”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, then trended down – and has mostly moved sideways recently.The MBA notes: “Total weekly forbearance requests as a percent of servicing portfolio volume (#) increased relative to the prior week: from 0.06% to 0.07%.”
Black Knight: Number of Homeowners in COVID-19-Related Forbearance Plans Decreased –Note: Both Black Knight and the MBA (Mortgage Bankers Association) are putting out weekly estimates of mortgages in forbearance.This data is as of February 9th.From Black Knight: Forbearance Volumes Fall Below 2.7m For First Time Since April 2020 The latest weekly snapshot of our daily McDash Flash Forbearance Tracker shows the number of homeowners in active forbearance fell by 48,000 this week. As was the case last week, the decline was driven by January month-end forbearance plan expirations….As of Feb. 9, 2.67 million (5% of) homeowners remain in forbearance, marking the first time forbearance volumes have fallen below the 2.7 million threshold since early April. Despite this good news, improvement remains muted, with average monthly declines of less than 2% since early December.Also worth noting is the FHFA’s big announcement this week: borrowers in Fannie Mae/Freddie Mac forbearance plans may be eligible for an extension of up to three months, for a potential grand total of 15 months. This will have material impacts on the 907,000 homeowners currently in GSE forbearance plans, about 30% of whom were set to reach their 12-month expirations at the end of March.Should Ginnie Mae follow suit and also extend FHA/VA forbearance limits to 15 months, at the current rate of improvement there would still be some 2.5 million homeowners in forbearance at the end of June when the first round of plans hit their new 15-month expirations.The number of loans in forbearance has moved mostly sideways for the last few months.
MBA: “Mortgage Delinquencies Decrease in the Fourth Quarter of 2020” From the MBA: Mortgage Delinquencies Decrease in the Fourth Quarter of 2020 The delinquency rate for mortgage loans on one-to-four-unit residential properties decreased to a seasonally adjusted rate of 6.73 percent of all loans outstanding at the end of the fourth quarter of 2020, according to the Mortgage Bankers Association’s (MBA) latest National Delinquency Survey.For the purposes of the survey, MBA asks servicers to report loans in forbearance as delinquent if the payment was not made based on the original terms of the mortgage. The delinquency rate was down 92 basis points from the third quarter of 2020 and up 296 basis points from one year ago. The percentage of loans on which foreclosure actions were started in the fourth quarter remained unchanged from the last two quarters at a survey low of 0.03 percent.”For the second consecutive quarter, homeowners’ ability to make their mortgage payments improved,” said Marina Walsh, CMB, MBA’s Vice President of Industry Analysis. “The 92-basis-point drop in the delinquency rate in the fourth quarter was the biggest quarterly decline in the history of MBA’s survey dating back to 1979. Total mortgage delinquencies across the three loan types – conventional, FHA, and VA – and across the major stages of delinquency – 30-day, 60-day, and 90-day – declined from last year’s third quarter.”.This graph shows the percent of loans delinquent by days past due. Overall delinquencies decreased in Q4.The decrease was in all the buckets. From the MBA: Compared to last quarter, the seasonally adjusted mortgage delinquency rate decreased for all loans outstanding. By stage, the 30-day delinquency rate decreased 8 basis points to 1.78 percent, the lowest rate since the survey began in 1979. The 60-day delinquency rate decreased 25 basis points to 0.77 percent, and the 90-day delinquency bucket decreased 60 basis points to 4.18 percent.The delinquency rate includes loans that are at least one payment past due but does not include loans in the process of foreclosure. The percentage of loans in the foreclosure process at the end of the fourth quarter was 0.56 percent, down 3 basis points from the third quarter of 2020 and 22 basis points from one year ago. This is the lowest foreclosure inventory rate since the second quarter of 1982. This sharp increase last year in the 90-day bucket was due to loans in forbearance (included as delinquent, but not reported to the credit bureaus). The percent of loans in the foreclosure process declined further, and was at the lowest level since 1982.
NMHC: Rent Payment Tracker Shows Households Paying Rent Decreased 1.9% YoY in Early February -From the NMHC: NMHC Rent Payment Tracker Finds 79.2 Percent of Apartment Households Paid Rent as of February 6: The National Multifamily Housing Council (NMHC)’s Rent Payment Tracker found 79.2 percent of apartment households made a full or partial rent payment by February 6 in its survey of 11.6 million units of professionally managed apartment units across the country. This is a 1.9 percentage point, or 216,479 household decrease from the share who paid rent through February 6, 2020 and compares to 76.6 percent that had paid by January 6, 2021. These data encompass a wide variety of market-rate rental properties across the United States, which can vary by size, type and average rental price.”As we approach almost a full year of navigating the pandemic and the resulting financial distress, we remain encouraged by the COVID relief package passed at the end of 2020 that included critical support for apartment residents and the nation’s rental housing industry such as $25 billion in rental assistance, extended unemployment benefits and direct payments,” This graph from the NMHC Rent Payment Tracker shows the percent of household making full or partial rent payments by the 6th of the month compared to the same month the prior year.This is mostly for large, professionally managed properties. The second graph shows full month payments through January compared to the same month the prior year. This shows a decline in rent payments year-over-year, and somewhat more of a decline over the last several months.
These People Rushed to Buy Homes During Covid. Now They Regret It. – WSJ – Stella Guan spent months searching for a home to buy, getting outbid again and again in the white-hot real-estate market of the Los Angeles suburbs. Finally, her offer on a “beautiful” Santa Clarita house was accepted in August, she said. The graphic designer, 30, paid roughly $600,000 for the house. But after sleeping there for only a few nights, she had an unfortunate realization. “I was like ‘uh-oh, I hate this house,’ ” she recalled. “I hate this house so much.” Looking back on it, she said, “I should have seen all of the warning signs, but the pandemic housing fever got the better of me.” A house, unlike expensive jewelry or clothing, can’t be returned if the buyer is unhappy with it, so a cardinal rule of home buying is that you shouldn’t rush into a purchase. But in 2020, millions of Americans did just that.Fleeing small apartments, buying vacation homes or simply looking for a change of scenery amid the crushing boredom of lockdowns, people scrambled to buy houses amid the pandemic, spurring bidding wars and supercharging real-estate markets across the country. Now, many are discovering the pitfalls of these hasty purchases, ranging from buyers’ remorse and financial strain to damage caused by unexpected problems.This spring especially, “people were so panicked,” said Priscilla Holloway, a Douglas Elliman agent in the Hamptons, a popular spot for New Yorkers seeking refuge from the pandemic. “Buying a home is a huge commitment. You have to be thorough. But people were getting all crazy, and they weren’t as thorough as they usually are.”Many home buyers were apartment dwellers looking for larger spaces to shelter in. “It was a land grab for houses,” said Cheryl Eisen, CEO of the interior-design and property-marketing firm Interior Marketing Group. “People wanted out of apartments.”At the same time, inventory dropped as many homeowners hesitated to list their properties in the pandemic. The result is that much of the country saw a price spike and bidding wars, brokers said, leaving buyers with little to choose from. In these conditions, many are tempted to waive inspections or skip other due diligence they would normally perform before buying a home.Ms. Holloway said she helped a family move this summer after discovering that the Hamptons house they had just bought had an infestation of wasps nests in the backyard. The family didn’t find the wasps until after closing because they had waived the inspection in the midst of a bidding war, said Ms. Holloway, who wasn’t representing them at the time. Deciding the property was unsafe for their young children, they immediately put the Westhampton Beach home on the market. Ms. Holloway and a colleague helped them find another house to buy.Over the past two years, the insurance company Chubb has seen large, non-weather-related losses increase in frequency and severity, according to Fran O’Brien, division president of Chubb North America Personal Risk Services. She attributed these losses in part to hasty home purchases: Buyers moving from a small city apartment to a large home in a rural areamay not be well versed in how to prevent the pipes from freezing, for example.”People are moving to places that they don’t know a lot about,” Ms. O’Brien said. “They’re thinking, ‘this looks like a nice place to live’ for amenities it may have. They don’t understand what risk there could be with that home.”
US home prices rose 15 percent in fourth quarter – The median sale price of a single-family home rose 14.9 percent to $315,900 in the year since the fourth quarter of 2020 as the coronavirus pandemic fueled a record-breaking housing market boom, according to data released Thursday by the National Association of Realtors (NAR). Every metro area tracked by NAR saw home prices rise over the past year, and 88 percent of metro areas saw double-digit price increases, said NAR chief economist Lawrence Yun. “The fourth quarter of 2020 presented circumstances ripe for home price increases,” Yun said. Home prices have skyrocketed since spring thanks to a combination of floor-low interest rates, the widespread adoption of teleworking and a housing shortage exacerbated by the pandemic. Office and school closures have prompted a surge of demand for larger homes among those who can afford them, and interest rate cuts by the Federal Reserve helped drive down mortgage costs. Purchases in popular vacation areas also shot up amid the rise of teleworking. At the same time, COVID-19-related restrictions and uncertainty slowed home construction, which has lagged behind demand for years. “Mortgage rates reached record lows, thereby driving up the demand,” Yun said. “At the same time, inventory levels also reached record lows, leading to grim inventory conditions of insufficient supply in the fourth quarter.” The sharp rise in home sales has been a boon for homeowners and those able to afford a housing upgrade. But the steep increase in prices could pose severe challenges for those who may need or want to purchase a home but lack the financial capacity to pull it off. Millions of Americans who have relied on federal foreclosure protections and forbearance plans to avoid homelessness may also find it harder to secure a mortgage with lending standards tightening amid falling rates. “The average, working family is struggling to contend with home prices that are rising much faster than income,” Yun said. “This sidelines a consumer from becoming an actual buyer, causing them to miss out on accumulating wealth from homeownership.”
A Third Of All US Homeowners Own Property Worth Double The Underlying Mortgage –In the midst of a virus pandemic, with millions of Americans out of work facing housing and food insecurities, the Federal Reserve has managed to keep interest rates near zero, unleashing a real estate boom, the likes of which hasn’t been seen in years. The central-planning mega brains at the Marriner Eccles building in Washington, D.C., have managed to boost home prices almost everywhere. The latest S&P CoreLogic Case-Shiller index of property values is accelerating at the fastest pace since May 2014. Although the full history of the pandemic’s impact on the housing market is yet to be determined, housing data from ATTOM Data Solutions for 4Q20 shows low-interest rates boosted the number of equity-rich properties. ATTOM showed at least 30% of U.S. homeowners were equity rich, which means their property was worth twice as much as their mortgage. Last quarter’s equity-rich properties were about 30.2%, or about one in three, of the 59 million mortgaged U.S. homes. The figure was up from 28.3% in the third quarter, 27.5% in the second quarter, and 26.7% in the fourth quarter of 2019.Despite the virus pandemic crushing the working-poor and devastating tens of millions of American households, the central planners in the Eccles building decided to inflate the housing market with low-interest rates. The federal government also played its part by initiating forbearance programs to keep homeowners from panic selling properties they could no longer afford.
Here Comes A Blockbuster Retail Sales Report: BofA Card Data Shows Surge In Spending –Earlier today we reported that at least when it comes to spending at restaurants, the stimulus effect was wearing off. But while that may have been true in January, in February things appear to be picking up.According to the latest data based on aggregated BAC credit and debit card data, spending jumped by a brisk 9.7% Y/Y for the 7 days ending Feb 6th, which means that since the beginning of the year, total card spending is running at an average 5.6% Y/Y pace, up notably from the Dec average of 2.5% yoy as a new round of stimulus checks is being spent. A look at spending by geography, there was a particularly large gain in card spending in California with total card spending of 9.5% yoy for the 7-days ending Feb 6th, up from -1.1% yoy the week prior.The gain was driven in part by brick &mortar (B&M) retail and restaurant spending, which likely reflect the easing of COVID-related restrictions in the state. While spending in California jumped, the Northeast was hit by a major snowstorm on Feb 1st, resulting in a noticeable pullback in spending in NY, NJ, and PA – total card spending contracted yoy on Feb 1st when the rest of country saw little change in trend. There was also meaningful strength in apparel and furniture spending in CA. As a result of the strength in CA, card spending in all of the major 20 MSAs is now positive yoy Additionally, there was a meaningful improvement in higher-income spending, which could reflect greater engagement in leisure spending. Looking at the components, retail sales ex-autos increased 4.6% mom SA, offsetting the last three months of declines on a mom basis. The gain was driven by discretionary spending – department stores, furniture and clothing – which we found to be supported by stimulus payments. On the other side, there was a meaningful drop in card spending on airlines, showing a weakening in airline bookings following the holidays.
Consumer Price Index: January Headline & Core at 1.4% -The Bureau of Labor Statistics released the January Consumer Price Index data this morning. The year-over-year non-seasonally adjusted Headline CPI came in at 1.40%, up from 1.36% the previous month. Year-over-year Core CPI (ex Food and Energy) came in at 1.41%, down from 1.62% the previous month and below the Fed’s 2% PCE target.Here is the introduction from the BLS summary, which leads with the seasonally adjusted monthly data:The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3 percent in January on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 1.4 percent before seasonal adjustment.The gasoline index continued to increase, rising 7.4 percent in January and accounting for most of the seasonally adjusted increase in the all items index. Although the indexes for electricity and natural gas declined, the energy index rose 3.5 percent over the month. The food index rose slightly in January, increasing 0.1 percent as an advance in the index for food away from home more than offset a decline in the index for food at home.The index for all items less food and energy was unchanged in January. The indexes for apparel, medical care, shelter, and motor vehicle insurance all increased over the month. The indexes for recreation, used cars and trucks, airline fares, and new vehicles all declined in January.The all items index rose 1.4 percent for the 12 months ending January, the same increase as for the period ending in December. The index for all items less food and energy also rose 1.4 percent over the last 12 months, a smaller increase than the 1.6-percent rise for the 12 months ending December. The food index rose 3.8 percent over the last 12 months. In contrast to these increases, and despite rising in recent months, the energy index declined 3.6 percent over the last year. Read moreInvesting.com was looking for a 0.3% MoM change in seasonally adjusted Headline CPI and a 0.2% in Core CPI. Year-over-year forecasts were 1.5% for Headline and 1.5% for Core. The first chart is an overlay of Headline CPI and Core CPI (the latter excludes Food and Energy) since the turn of the century. The highlighted two percent level is the Federal Reserve’s Core inflation target for the CPI’s cousin index, the BEA’s Personal Consumption Expenditures (PCE) price index.
BLS: CPI increased 0.3% in January, Core CPI Unchanged – From the BLS: The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3 percent in January on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 1.4 percent before seasonal adjustment. The gasoline index continued to increase, rising 7.4 percent in January and accounting for most of the seasonally adjusted increase in the all items index. Although the indexes for electricity and natural gas declined, the energy index rose 3.5 percent over the month. The food index rose slightly in January, increasing 0.1 percent as an advance in the index for food away from home more than offset a decline in the index for food at home. The index for all items less food and energy was unchanged in January. The indexes for apparel, medical care, shelter, and motor vehicle insurance all increased over the month. The indexes for recreation, used cars and trucks, airline fares, and new vehicles all declined in January The all items index rose 1.4 percent for the 12 months ending January, the same increase as for the period ending in December. The index for all items less food and energy also rose 1.4 percent over the last 12 months, a smaller increase than the 1.6-percent rise for the 12 months ending December. Inflation was below expectations in January. I’ll post a graph later today after the Cleveland Fed releases the median and trimmed-mean CPI.
Las Vegas Visitor Authority: No Convention Attendance, Visitor Traffic Down 64% YoY in December: December 2020 Las Vegas Visitor Statistics: With resumption of broader COVID-related restrictions across the country and the absence of traditional seasonal special events such as NFR, Las Vegas visitation came in at approximately 1.2M in December, down – 17.6% MoM and -64.0% YoY. With the combined impacts of the pandemic in the course of the year, Las Vegas hosted just over 19M visitors in 2020, down -55% from 2019.Total occupancy dropped to 30.9% from 39.3% in Nov and 85.1% during last year’s robust December. Weekend occupancy for the month came in at 45.4% and midweek occupancy was 25%.Mbr . Average daily rates among open properties reached $100 (up 6.5% from Nov but down -20% YoY) while RevPAR came in at approx. $31, down -71% vs. Dec 2019. Here is the data from the Las Vegas Convention and Visitors Authority.The blue and red bars are monthly visitor traffic (left scale) for 2019 and 2020. The dashed blue and orange lines are convention attendance (right scale). Convention traffic in December was down 100% compared to December 2019. And visitor traffic was down 64% YoY. The casinos started to reopen on June 4th (it appears about 96% of rooms have now opened). On an annual basis, visitor traffic was down 55% compared to 2019, and convention attendance was down 74%.
Busiest U.S. seaport in California starts giving COVID-19 vaccinations (Reuters) – About 800 longshoremen from the ports of Los Angeles and Long Beach on Friday got the first COVID-19 vaccinations for dockworkers at the United States’ busiest seaport complex, which has been hard hit by pandemic-related workforce disruptions and surging imports. The shots were a welcome relief for the International Longshore and Warehouse Union (ILWU) members who snapped up the appointments in about 20 minutes. The inoculations offer “peace of mind” to longshoremen Patty Castillo, 46, and Adrian Esqueda, 48, who said co-workers and family members have contracted COVID-19 – and some have died of it. “We have a fortress against the disease,” said Esqueda, as he sat in a truck with Castillo, his wife, during the observation period required after receiving the vaccination. Many dockworkers have jobs that require interacting with dozens of different people every day, ILWU members said.
Port Of Long Beach Has Best January On Record — The Port of Long Beach began 2021 the same way it ended 2020 – by setting records. The port reported last week it just had its best January on record, moving 764,006 twenty-foot equivalent units (TEUs), a 21.9% jump from the same month last year. It was the first time the nation’s second-busiest seaport handled more than 700,000 TEUs in the month of January, surpassing the previous record set in January 2018 by a whopping 106,176 TEUs. During his State of the Port address on Thursday, Executive Director Mario Cordero announced that 2020 had been Long Beach’s best year, with 8,113,315 TEUs handled,. The port attributed the strong January to the ongoing rise in American consumers’ online spending. Imports were up 17.5% year-over-year to 364,255 TEUs. Exports were up too, an increase of 7% year-over-year to 116,254 TEUs. As it has in recent months, the number of empty containers heading back to Asia sticks out in West Coast ports’ reports. Empties were up 34.6% year-over-year in January to 270,221 TEUs – more than double the number of loaded containers for export. The Port of Long Beach is not forecasting a slowdown. The port said that although activity typically slows in February during celebrations in Asia for Lunar New Year, “projections show that this month could be busier than usual as unscheduled container ship calls continue to make up for voyages that were canceled at the start of the COVID-19 pandemic in early 2020.”
New Video Shows Massive California Container Ship Traffic Jam – Newly released U.S. Coast Guard video offers visceral proof of just how extreme the congestion has become at the ports of Los Angeles and Long Beach. The new view from above reveals a vast armada of container ships scattered at anchor across California’s San Pedro Bay. As the Coast Guard footage paints the picture, the latest data from the Port of Los Angeles and from the Marine Exchange of Southern California tells the story behind those images. The data confirms that there has been no real let-up in the historic container-ship traffic jam off California’s coast. As of Thursday, there were 25 container ships at berth in Los Angeles and Long Beach. Thirty-two container ships were at anchorage. That’s roughly the same level that has been at anchor since the beginning of this year. (The record of 40 container ships at anchor was hit on Feb. 1). The Port of Los Angeles, via its platform, The Signal, recently began disclosing the number of days at anchor for specific container ships. The numbers confirm that some vessels are spending almost as much time at anchor as it takes to traverse the Pacific Ocean. As of Thursday, the Ever Envoy, with a capacity of 6,332 twenty-foot equivalent units (TEUs), had been at anchor for 11 days. Other ships that had just gone to berth had been waiting just as long: As of Tuesday , the 9,400-TEU MSC Romane had been at anchor for 12 days. The 11,356-TEU CMA CGM Andromeda, 8,452-TEU Ever Liven and 4,888-TEU NYK Nebula for 11 days. The Signal indicated that the average time at anchor for ships calling in Los Angeles was 8 days as of Thursday, up from 6.9 days on Tuesday. The Signal has provided information on ship waiting times since Jan. 27. Waiting time has remained at an average of around one week since then.
U.S. trade deficit hits record high in 2020: The Biden administration must prioritize rebuilding domestic manufacturing – The U.S. Census Bureau reported recently that the U.S. goods trade deficit reached a record of $915.8 billion in 2020, an increase of $51.5 billion (6.0%). The broader goods and services deficit reached $678.7 billion in 2020, an increase of $101.9 billion (17.7%). The U.S. goods trade deficit in 2020 was the largest on record, and the goods and services deficit was the largest since 2008. The rapid growth of U.S. trade deficits reflects the combined effects of the COVID-19 crisis, which caused U.S. exports to fall by more ($217.7 billion) than imports ($166.2 billion), and by the persistent failure of U.S. trade and exchange rate policies over the past two decades. The single most important cause of large and growing trade deficits is persistent overvaluation of the U.S. dollar, which makes imports artificially cheap and U.S. exports less competitive. The U.S. goods trade deficit is increasingly dominated by trade in manufactured products, as shown in the figure below. The manufacturing trade deficit reached record highs of $897.7 billion – 98% of the total U.S. goods trade deficit – and 4.3% of U.S. GDP in 2020. Primarily due to these rapidly growing manufacturing trade deficits, the U.S. lost nearly 5 million manufacturing jobs and 91,000 manufacturing plants between 1997 and 2018 alone, and an additional 582,000 manufacturing jobs in 2020.Growing trade deficits with China are the largest single cause of growing manufacturing trade deficits and jobs losses. Between 2001, when China entered the World Trade Organization (WTO), and 2018, growingU.S. – China trade deficits eliminated 3.7 million total U.S. jobs, including 2.8 million jobs lost in manufacturing alone. Although the U.S. trade deficit with China fell by $34.4 million (10.0%) in 2020, China’s total trade surplus with the world increased 27% in 2020 to $535 billion, driven by surging exports of medical supplies and electronic goods. U.S. trade deficits with Hong Kong, Korea, Malaysia, Indonesia, Singapore, Taiwan, and Australia, as well as Mexico and Switzerland all increased significantly in 2020. There is growing evidence that China is evading U.S. trade restrictions by shipping products through other countries (e.g. tariff circumvention). Growing U.S. trade deficits over the past two decades, which reached record levels in 2020, have decimated U.S. manufacturing. The United States can rebuild domestic manufacturing by rebalancing U.S. trade, and by implementing the Biden administration proposal for a $2 trillion, 4-year program for rebuilding U.S. infrastructure and investing in clean energy and energy efficiency improvements.
One Year After the Collapse of the Airline Business Began: What’s the Status Now? – Wolf Richter – United, the US airline with the most flights to China, started suspending some flights between the US and Shanghai, Beijing, and Hong Kong in the first week of February 2020 due to a “significant decline in demand,” it said at the time as the then new coronavirus was spreading. “We will continue to monitor the situation as it develops and will adjust our schedule as needed,” it said. This was followed by flight suspensions and travel bans across the globe. By April, the airline passenger business had collapsed. So where are we now? Over the past seven days, not quite 707,000 passengers per day on average passed TSA checkpoints at US airports, a measure of how many passengers in the US are flying somewhere. This was down by 61.6% from the same period in 2019, the last full year of the Good Times. At the end of January, the drop from 2019 was over 65%. Amid all the ups and downs, there still hasn’t been much improvement in terms of airline passenger traffic in the US since last September: Business travel for all kinds of meetings and conferences – the most lucrative end for airlines – has remained very sparse. And the seasonality of business travel has largely faded from the chart.And the seasonality of leisure travel has been upended by travel restrictions for foreign vacation destinations and reluctance by many people to get anywhere the inside of an airport just to have fun for a week somewhere else. .In the chart below, the bold red line shows the seven-day moving average of the number of air travelers who passed through TSA checkpoints daily from March 1, 2020, through February 7, 2021. The thin red line indicates the daily number of screenings..: For the fourth quarter, revenues of the six largest US airlines combined – American, Delta, United, Southwest, Alaska, and JetBlue, with Spirit not having reported yet – plunged by 65.9% from a year earlier. For the year 2020, revenues plunged by 62.7%. For the fourth quarter, those six airlines combined reported a net loss of $6.6 billion; for the year 2020, they reported a net loss of $34.1 billion. The airlines have piled up mountains of cash from a series of government bailouts, most of them grants, and from the craziest financial markets of all times, created by the Fed, that allowed the airlines to sell more shares and tons of debt.The airlines have pledged their frequent flyer programs as collateral which allowed Delta, for example, to borrow another $9 billion. They have sold old aircraft, including to Amazon for freighter conversions. They have engaged in sale-lease-backs of their aircraft to raise cash. Even if business eventually goes back to “normal” – whatever that may mean and however many years this may still take, amid growing industry suspicions that the lucrative business travel segment may never go back to the old normal – those huge mountains of debt will stay.
Two American cruise lines requiring COVID-19 vaccinations before boarding – – Two American cruise lines will require proof of coronavirus vaccinations before passengers are allowed to board beginning in July. The requirements, set forth by American Queen Steamboat Company and Victory Cruise Lines, are part of guidelines called “SafeCruise” the companies have established to keep passengers and staff safe during their trips. “Vaccination requirements for both our guests and crew is the most prudent next step to ensure that we are providing the safest cruising experience possible,” John Waggoner, CEO and founder of American Queen Steamboat Company told Conde Nast Traveler. Both companies’ guidelines stipulate that passengers and crew must be vaccinated against the coronavirus starting July 1 in order to travel. The industry took a hit as a result of the pandemic, as the Centers for Disease Control and Prevention (CDC) docked the cruises from March to October last year. Both companies will be resuming cruises starting in April, instituting coronavirus precautions such as masks and temperature checks, though the vaccine mandate will begin in July. The companies said they are not concerned about the requirement, as many of their customers are older and eligible for the vaccine. The crew is also eligible for the vaccine under the CDC’s Phase 1c priority system since they are employees of a transportation company, both companies said, Conde Nast Traveler reported.
Small Business Optimism Decreased in January – Most of this survey is noise, but sometimes there is some information. From the National Federation of Independent Business (NFIB): January [2021] Report: The NFIB Small Business Optimism Index declined in January to 95.0, down 0.9 from December and three points below the 47-year average of 98. … “As Congress debates another stimulus package, small employers welcome any additional relief that will provide a powerful fiscal boost as their expectations for the future are uncertain,” said NFIB Chief Economist Bill Dunkelberg. “The COVID-19 pandemic continues to dictate how small businesses operate and owners are worried about future business conditions and sales.” … NFIB’s monthly jobs report showed job growth continued in January. Firms increased employment by 0.36 workers per firm on average over the past few months, up from 0.30 in December, a strong 2-month performance. However, the hiring remains uneven geographically and by industry. This graph shows the small business optimism index since 1986.
Weekly Initial Unemployment Claims at 793,000 – The DOL reported: In the week ending February 6, the advance figure for seasonally adjusted initial claims was 793,000, a decrease of 19,000 from the previous week’s revised level. The previous week’s level was revised up by 33,000 from 779,000 to 812,000. The 4-week moving average was 823,000, a decrease of 33,500 from the previous week’s revised average. The previous week’s average was revised up by 8,250 from 848,250 to 856,500. This does not include the 334,524 initial claims for Pandemic Unemployment Assistance (PUA) that was down from 368,977 the previous week.The following graph shows the 4-week moving average of weekly claims since 1971.The four-week average of weekly unemployment claims increased to 848,250. The previous week was revised up. The second graph shows seasonally adjust continued claims since 1967 (lags initial by one week). At the worst of the Great Recession, continued claims peaked at 6.635 million, but then steadily declined.Regular state continued claims decreased to 4,545,000 (SA) from 4,690,000 (SA) the previous week and will likely stay at a high level until the crisis abates.Note: There are an additional 8,715,306 receiving Pandemic Unemployment Assistance (PUA) that increased from 7,218,801 the previous week (there are questions about these numbers). This is a special program for business owners, self-employed, independent contractors or gig workers not receiving other unemployment insurance. And an additional 4,777,842 receiving Pandemic Emergency Unemployment Compensation (PEUC) up from 3,604,894. Weekly claims were higher than the consensus forecast, and the previous week was revised up sharply.
BLS: Job Openings “Little Changed” at 6.6 Million in December – From the BLS: Job Openings and Labor Turnover Summary The number of job openings was little changed at 6.6 million on the last business day of December, the U.S. Bureau of Labor Statistics reported today. Hires decreased to 5.5 million while total separations were little changed at 5.5 million. Within separations, the quits rate and layoffs and discharges rate were little changed at 2.3 percent and 1.3 percent, respectively. The following graph shows job openings (yellow line), hires (dark blue), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS.This series started in December 2000. Note: The difference between JOLTS hires and separations is similar to the CES (payroll survey) net jobs headline numbers. This report is for December, the most recent employment report was for January. Note that hires (dark blue) and total separations (red and light blue columns stacked) are usually pretty close each month. This is a measure of labor market turnover. When the blue line is above the two stacked columns, the economy is adding net jobs – when it is below the columns, the economy is losing jobs.The huge spikes in layoffs and discharges in March and April 2020 are labeled, but off the chart to better show the usual data.Jobs openings increased in December to 6.646 million from 6.572 million in November.The number of job openings (yellow) were up 1.4% year-over-year. Note that job openings were declining a year ago prior to the pandemic.Quits were down 6.9% year-over-year. These are voluntary separations. (see light blue columns at bottom of graph for trend for “quits”).
December JOLTS report shows renewed stalled jobs market due to out of control pandemic – This morning’s JOLTS report for December confirmed a jobs market recovery that has paused due to the increasing effects of the out of control pandemic. Most importantly, hires declined sharply – down by over 5% in a single month! While the JOLTS data is a deep dive into the dynamics of the labor market, since it only dates from 2001, there are only 2 previous recoveries with which to compare the present. Nevertheless it is worthwhile to make the comparison. In the two past recoveries: first, layoffs declined second, hiring rose third, job openings rose and voluntary quits increased, close to simultaneously Let’s examine each of those in turn. In each case. What appears below is that, although there has been some variation, the year 2020 through December has recapitulated the pattern from the last two early recoveries: the first two data series to turn – layoffs and hires – have indeed turned, while the last two – job openings and voluntary quits – have appeared to bottom but have had a much less dramatic rise. With increased pandemic restrictions and consumer caution, several renewed negative readings in November, but not enough to significantly change the trend. This first graph compares layoffs and discharges (blue) with the 4 week average of initial jobless claims (red) prior to this recession, for reasons of scale since March and April would be “off the charts”: You can see that, by the end of the recessions, layoffs were already declining, and continued to decline steeply over the next 3-8 months before reaching a “normal” expansion level. The turning point coincides exactly with the much less volatile, but more slowly declining, level of initial jobless claims. The same had been the case this year up through October. Layoffs and discharges already declined to their “normal” level in May, while initial jobless claims peaked one to two months later, and continued to decline (slowly) into autumn. Then, in November, layoffs and discharges increased and remained elevated in December. Initial claims followed suit with a one month delay: Next, here is the entire historical relationship between hires (red) and job openings (blue) through 2020: In the past two recoveries, actual hires started to increase one to two months before job openings. Both made troughs in April, but hires initially rebounded more sharply ever since May compared with job openings. Since July openings have stagnated, while hires actually declined significantly in December to their worst level since the April lockdowns:
A stalled recovery: Hires fall in the Job Openings and Labor Turnover Survey – EPI Blog – Last week, the Bureau of Labor Statistics (BLS) reported that, as of the middle of January, the economy was still 9.9 million jobs below where it was in February 2020. This translates into a 12.1 million job shortfall when using a reasonable counterfactual of job growth if the recession hadn’t occurred. Today’s BLS Job Openings and Labor Turnover Survey (JOLTS) reports little change in December, a clear sign that the recovery is not charging ahead. In fact, hiring and job openings are below where they were before the recession hit, which makes it impossible to recover anytime soon when we have such a massive hole to fill in the labor market.In December, job openings were little changed while hires softened considerably, falling from 5.9 million to 5.5 million. In particular, hiring decreased in leisure and hospitality – in both accommodation and food services and in arts, entertainment, and recreation. Hiring also declined in transportation, warehousing, and utilities.One of the most striking indicators from today’s report is the job seekers ratio – the ratio of unemployed workers (averaged for mid-December and mid-January) to job openings (at the end of December). On average, there were 10.4 million unemployed workers compared with only 6.6 million job openings. This translates into a job seekers ratio of about 1.6 unemployed workers to every job opening. Put another way, for every 16 workers who were officially counted as unemployed, there were only available jobs for 10 of them. That means, no matter what they did, there were no jobs for 3.8 million unemployed workers. And this misses the fact that many more weren’t counted among the unemployed: The economic pain remains widespread with 25.5 million workers hurt by the coronavirus downturn.On the whole, the U.S. economy is seeing a significantly slower hiring pace than we experienced in May or June. In December, hiring was below where it was before the recession, a big problem given that we have only recovered just over half of the job losses from this spring. And job openings are now substantially below where they were before the recession began (6.6 million at the end of December, compared to 7.1 million on average in the year prior to the recession). With hiring and job openings at these levels, the economy is facing a long, slow recovery without additional action from Congress. Policymakers need to act now at the scale of the problem to address the continuing economic crisis.
Why Opening Restaurants Is Exactly What the Coronavirus Wants Us to Do – ProPublica – Announcing that indoor dining would reopen at 25% capacity in New York City on Valentine’s Day, and wedding receptions could also resume with up to 150 people a month after, Cuomo suggested: “You propose on Valentine’s Day and then you can have the wedding ceremony March 15, up to 150 people. People will actually come to your wedding because you can tell them, with the testing, it will be safe…” Cuomo isn’t alone in taking measures to loosen pandemic-related restrictions. Michigan Gov. Gretchen Whitmer allowed indoor dining to resume at 25% capacity starting Feb. 1. Idaho Gov. Brad Little increased limits on indoor gatherings from 10 to 50 people. Massachusetts Gov. Charlie Baker is raising business capacity from 25% to 40%, including at restaurants and gyms. California Gov. Gavin Newsom lifted stay-at-home orders on Jan. 25. To justify their reopening decisions, governors point to falling case counts. “We make decisions based on facts,” Cuomo said. “New York City numbers are down.” But epidemiologists and public health experts say a crucial factor is missing from these calculations: the threat of new viral variants. One coronavirus variant, which originated in the United Kingdom and is now spreading in the U.S., is believed to be 50% more transmissible. The more cases there are, the faster new variants can spread. Because the baseline of case counts in the U.S. is already so high – we’re still averaging about 130,000 new cases a day – and because the spread of the virus grows exponentially, cases could easily climb past the 300,000-per-day peak we reached in early January if we underestimate the variants, experts said. Furthermore, study after study has identified indoor spaces – particularly restaurants, where consistent masking is not possible – as some of the highest-risk locations for transmission to occur. Even with distanced tables,case studies have shown that droplets can travel long distances within dining establishments, sometimes helped along by air conditioning. We’re just in the opening stage of the new variants’ arrival in the United States. Experts say we could speed viruses’ spread by providing them with superspreading playgrounds or slow them down by starving them of opportunities to replicate.”We’re standing at an inflection point,” “we finally have the chance right now to bring this back under control, but if we ease up now, we may end up wasting all the effort we put in.” Dr. Luciana Borio, an infectious disease physician who was a member of the Biden-Harris transition team’s COVID-19 advisory board, put it more bluntly at a congressional hearing on Feb. 3. “Our worst days could be ahead of us,” she said. I interviewed 10 scientists for this story and was surprised by the vehemence of some of their language. “Are you sure it could be that bad?” I asked, over and over. They unanimously said they expected B.1.1.7, the variant first discovered in the U.K., to eventually become the dominant version of coronavirus in the U.S. The Centers for Disease Control and Prevention has estimated that B.1.1.7 will become dominant in March, using a model that presumes it’s 50% more transmissible than the original “wildtype” coronavirus. Experts are particularly concerned because we don’t have a handle on exactly how far B.1.1.7 has spread. Our current surveillance system sequences less than 1% of cases to see whether they are a variant.
DeSantis defends maskless crowds after Buccaneers win amid COVID-19 concerns – Florida Gov. Ron DeSantis (R) attacked the media for what he said was a double standard with how large marches for social justice were covered as opposed to celebrations in Tampa following the Buccaneers’ Super Bowl win. “The media is worried about that, obviously,” DeSantis said Wednesday of scenes of massive celebrations across Tampa that showed hundreds of fans maskless while crowded together in streets and bars on Sunday night. “You don’t care as much if it’s a ‘peaceful protest’ … and then it’s fine,” DeSantis continued. “You don’t care as much if they’re celebrating a Biden election. You only care about it if it’s people you don’t like. I’m a Bucs fan. I’m damn proud of what they did on Sunday night.” Local health officials and Tampa’s mayor said she was greatly concerned after seeing the celebrations on Sunday night. “It is a little frustrating because we have worked so hard,” Mayor Jane Castor (D) said the next day. “At this point in dealing with COVID-19, there is a level of frustration when you see that.” DeSantis also found himself at the center of a controversy this week stemming from a photo taken of him at the game on Sunday night that shows him sitting in an indoor executive suite without a mask, seated less than six feet from the person next to him. DeSantis first addressed the controversy over the photo earlier in the week. “Someone said, ‘Hey, you were at the Super Bowl without a mask,'” he said Monday. “But how the hell am I going to be able to drink a beer with a mask on? Come on. I had to watch the Bucs win.”
Grocery store worker slapped after asking customer to wear mask, video shows – Colorado police are seeking the public’s help in identifying a woman seen in security footage earlier this month slapping a grocery store worker in the face after the employee asked the shopper to wear a face mask. According to Denver’s Fox-affiliated station, KDVR, the incident, which occurred on Feb. 3, happened after a worker told a customer at a King Soopers grocery store to put on a mask, after which the customer called the employee a vulgar name and slapped her. The employee told police that the suspect is “a regular at the store,” and had repeatedly been asked by employees to wear a mask to adhere to coronavirus safety guidelines. KDVR reported that the suspect allegedly claimed a medical exemption for why she was not wearing a mask, after which the employee attempted to offer the customer other options to purchase her groceries. After the suspect slapped the employee, the shopper reportedly ran away and has not since returned to the store. While the employee told police the slap did not hurt, she is pushing for harassment charges to be brought against the shopper. The Parker Police Department on Wednesday shared security footage of the incident on Facebook and Twitter, along with contact information for people to use should they have any information regarding the incident or the suspect.
As schools are forced open, Iowa removes all COVID-19 regulations – A new public health declaration went into effect on Superbowl Sunday in Iowa, lifting all statewide mask mandates and restrictions on gatherings, including at bars and restaurants. On Friday, Iowa Republican Governor Kim Reynolds gave a press conference that did not explain the reasoning behind easing the state’s restrictions. The order comes exactly one week before Iowa’s public K-12 schools will be forced to offer 100 percent in-person learning. Since March there have been more than 324,000 confirmed cases and over 5,100 deaths from COVID-19 in the state. While daily infections and deaths have declined from their peak in mid-November 2020, a seven-day average of 743 Iowans are confirmed COVID-19 positive and 30 are dying every day. Iowa’s mask mandates and regulations were only ever partial. At their most stringent, as of December 2020, face coverings were required only when around people for 15 minutes and where social distancing was not possible, indoor gatherings were limited to no more than 15 people and outdoor gatherings were limited to 30. Large cities like Des Moines and Iowa City have, so far, maintained their public gathering restrictions and mask mandates, but infections rates will climb as community spread increases due to the malicious negligence of the ruling class with the homicidal campaign to reopen schools and the economy. Reynolds, a shameless Trump apologist, has recklessly pursued herd immunity in Iowa, resulting in one of the highest death rates in the country of 1,619 deaths per million in population. The state ranks 47th in vaccine distribution, with roughly 7 percent of Iowans having received the first of two vaccine injections. Iowa will see thousands more needless deaths as a result of well-documented increases in community spread via public school openings. The pandemic’s impact is expected to be compounded by the UK COVID-19 variant B.1.1.7 strain which was discovered last week in Johnson and Bremer counties. The UK variant is much more contagious and may be more deadly; it is expected to be dominant variant in the US by March.
Pandemic child abuse panic underscores need for CPS reform – Stories warning of a coming surge in child abuse have been a staple of local news reporting throughout the COVID-19 pandemic. For months, experts quoted in these reports issued dire predictions that severe instances of child abuse were poised to skyrocket due, in part, to the widespread move toward virtual schooling. The logic of these warnings followed a similar pattern: More children learning from home combined with increased parental stress caused by the economic downturn created a perfect storm where abuse at the hands of parents and caregivers would go undetected by teachers.On the surface, these warnings weren’t entirely unreasonable. After all, we know that periods of high parental stress can increase the risk of abuse or neglect, and school officials are consistently among the top sources of child maltreatment reports. A decrease in the number of calls to child abuse hotlines in 2020 compared with 2019 seemed to add credibility to the concerns. But as the pandemic wore on, the predicted spike in abuse never materialized. In a conversation with the Associated Press earlier this month, top officials with the U.S. Department of Health and Human Services revealed that they’ve seen no credible evidence supporting the dire warnings. This is good news and underscores the need for comprehensive child protective services reform.Reforming the system requires us to first understand why the predictions of a coming abuse epidemic were wrong. Proponents of the predictions frequently cited the drop in the number of reports to child abuse hotlines in the wake of pandemic-related shutdowns as evidence that severe cases of abuse were being missed. However, hotline calls tell us very little about the prevalence and severity of child maltreatment.Each year, the federal Children’s Bureau issues a report to Congressanalyzing data on child abuse and neglect from all 50 states. This report includes a breakdown of the number of child maltreatment referrals received by state child welfare agencies and the outcome of those reports. Approximately 4.3 million reports alleging child abuse or neglect involving 7.8 million children are received every year. In 2019, 45.5 percent – nearly 2 million reports – were “screened out,” meaning that child protective services immediately determined that they were unsubstantiated. The allegations investigated by CPS involved close to 3.5 million children, 80 percent of whom were found to be nonvictims. Going back to the original pool of 7.8 million children subject of a hotline call, only 656,000 – just 8 percent – were determined to have been victims of maltreatment. These figures have held consistent for at least the past decade.
Government Fail: “We’ve Turned Teens Into Lockdown Lab Rats” –The verdict is clear: the imposition of lockdowns and social distancing, along with delays in getting children and adolescents back into schools – has been fatal for society, creating a slow motion mental health explosion that could last for decades. To anyone actually paying attention, warnings and concerns have been raised for months by many different people and advocacy groups, but rather than considering the spectre of permanent arrested development, governments have such dismissed concerns as a low priority in relation to ‘stopping the spread of the virus.’ Instead, virtue-signalling individuals in government, along with teachers unions, have retreated into the irrational world hypochondria and paranoia and leaving the youth hanging out to dry in the process – despite the fact that near zero risk of young people ever becoming ill from COVID-19. Similarly, most teachers are similarly in a low risk of ever becoming seriously ill from coronavirus.Last summer, an open letter was sent to UK Education Secretary Gavin Williamson, outlining the damage done by the government China-inspired reactionary ‘mitigation’ measures, and called for a return to ‘normal life.’ The letter was signed by more than 100 specialists in psychology, mental health and neuroscience, and published in The Sunday Times, stating:“As experts working across disciplines, we are united as we urge you to reconsider your decision and to release children and young people from lockdown.”Allow them to play together and continue their education by returning to preschool, school, college and university, and enjoy extra-curricular activities including sport and music as normally, and as soon, as possible.” Seven months later, the situation has deteriorated even further. The psychological impact is no longer a potential harm, it’s now manifest.
Philadelphia educators to defy district, maintain all-virtual schooling Monday – Thousands of Philadelphia public school teachers are set to defy their district’s order to return to classrooms Monday. They will instead work virtually. This week marks the third attempt by the school district of Philadelphia to reopen school buildings in the midst of the pandemic. The district has been remote-only since last March. District officials demanded that approximately 2,000 kindergarten through second-grade teachers prepare classrooms beginning February 8 so that students could return on February 22. Nine thousand students are scheduled to enter buildings first, with further grades phased in later. Following the policies of Democratic Mayor Jim Kenney, Democratic Governor Tom Wolf and the Biden administration, the district is issuing threats, lies and trying to browbeat teachers into acquiescing to its demands. “If you are expected to be in your building on Monday and choose not to do so, you will be subject to disciplinary action,” announced Chief Talent Officer Larisa Shambaugh. In a letter to principals sent Friday, Superintendent William Hite reiterated the threat. Under tremendous pressure from educators, parents and students, the Philadelphia Federation of Teachers (PFT) has sanctioned the one-day action. After pronouncing that in-school learning is best and claiming that a neutral party walk-through over the weekend would ensure safe schools, PFT President Jerry Jordan has now backtracked and urged teachers to defy the district. Behind the district’s vindictiveness and the collusion of the union is their mutual fear that the teachers will link up their struggle with teachers in Chicago and those across the country who are mobilizing against the homicidal return to face-to-face instruction.
Michigan educators call for unity with Chicago educators in fight to close schools – The Michigan Educators Rank-and-File Safety Committee expresses its full support for the Chicago teachers’ struggle against the dangerous and indeed criminal drive to resume in-person instruction in Chicago Public Schools (CPS). Their determined fight to save lives and resist the “herd immunity” policies pursued by the entire political establishment is the spearhead of a growing movement of educators and all workers throughout the US and globally. The back-to-school drive is the central domestic policy of the new Biden administration and the Democratic Party. Just as much as the Republicans, it is a party of the corporate and financial elite. The capitalist press is engaged in a propaganda campaign – led by the New York Times and the Wall Street Journal – falsely claiming that schools are safe. In fact, the overwhelming body of scientific evidenceproves that schools are major vectors for the spread of the disease. The COVID-19 pandemic has already killed nearly half a million people in the US alone and is expanding daily. New and more infectious variants are spreading largely undetected throughout the country. Studies globally that have shown that closing schools is among the most significant measures to reduce infections and deaths from the virus. Since schools in the United States reopened in the fall, the death toll in the US has more than doubled and is rapidly heading to half a million people. Instead of upholding the demands and protecting the lives of rank-and-file members, the Chicago Teachers Union (CTU) is making every effort, in collaboration with Chicago’s Democratic Mayor Lori Lightfoot, to reopen schools during the pandemic before community-wide inoculation against COVID-19, policy that will inevitably result in a massive increase in deaths among teachers, students, their families and the wider community. We have faced the same sort of miserable compromise here in Detroit, where the Detroit Federation of Teachers (DFT) and Detroit’s Democratic Mayor Mike Duggan agreed to reopen “Learning Centers” and schools at 25 percent in the fall. This was a slap in the face to teachers, who at an August membership meeting voted 91 percent for a “safety strike” and to go completely virtual. It has proven disastrous for educators, students, parents and the entire working class, forcing Democratic Governor Gretchen Whitmer to shut down schools again in November. In Michigan, as of Tuesday, the state had 566,630 confirmed cases and 14,797 deaths since March.
U.S. educators wrangle over school re-opening (Reuters) – Educators in major cities including Chicago and Philadelphia on Monday called for strong COVID-19 safety protocols in their classrooms as those and other districts pushed to re-open schools that have been closed for nearly a year. Across the nation, school reopenings have become a red-hot topic. District officials, teachers, parents and health professionals have been debating when and how to safely re-open schools for millions of students who have been taking classes remotely for 11 months since the pandemic closed schools last spring. In Chicago, the powerful Chicago Teachers Union was considering the school district’s proposed COVID-19 safety plan that would allow schools to begin re-opening this week. In Philadelphia, educators won an agreement to allow a mediator to decide when in-person learning could safely resume. If approved, the agreement with Chicago Public Schools, the third largest U.S. district, would avert a threatened lock out by the district, or strike by teachers who demanded stronger safety protocols to prevent the spread of the virus in classrooms. A deal would allow for some 67,000 students to gradually return into school buildings over the next month, starting with pre-kindergarten and special education pupils later this week. The union’s leadership is expected to decide on Monday night whether to send its 28,000 rank and file members the district’s safety plan to for a vote on Tuesday.
Chicago district, teachers reach tentative deal to return to in-person instruction in phases – Chicago Public Schools (CPS) and the Chicago Teachers Union (CTU) reached a tentative deal to return to in-person instruction in phases, the district announced on Sunday. After months of tense negotiations and threats of a strike, CTU leaders signed an agreement that would reopen the third-largest district in the country. The union leaders will present the deal to its members who will review the plan for approval. “Late last night we received a tentative framework from Chicago Public Schools for the resumption of in-person learning,” the union confirmed in a statement. Under the proposal, pre-K and some special education staff and students will return to schools on Thursday. Kindergarten through fifth grade staff will follow on Feb. 22 before their students return on March 1. Sixth through eighth grade teachers are expected to come back on March 1, with their students joining on March 8. Chicago Mayor Lori Lightfoot (D) labeled the agreement “an important milestone” for the city and its residents to ensure safety and “that everyone’s lived experiences are respected and heard.” “This has been a lengthy and challenging negotiation, and we know it has weighed heavily on everyone in our school community,” CPS CEO Janice Jackson said in a statement. “Our agreement is a victory for the students and families who need more than remote learning can provide, and it guarantees staff the protections and resources needed to safely return to the classroom.” Within the agreement, the district committed to working with Walgreens and the Chicago Department of Public Health to vaccinate pre-K and special education staff who have a medically vulnerable household member starting this week. Staff who agree to the sped-up vaccination process have to agree to return to school two weeks after getting the first dose. CPS will start its own vaccination sites later this month, solely for CPS staff, aiming to give shots to 1,500 people per week. The district also established new rules for pausing and restarting in-person learning.
Chicago Teachers Union endorses a bargain with death, agrees to in-person classes – Chicago Public Schools (CPS), Democratic Mayor Lori Lightfoot and the leadership of the Chicago Teachers Union (CTU) came to an agreement Sunday on a deadly plan to reopen schools in the third largest district in the US at the height of the pandemic. After Lightfoot and CPS CEO Janice Jackson announced the tentative agreement (TA), the CTU held an all-membership meeting at which only top bureaucrats were allowed to speak in an effort to browbeat resistant educators and push through the sellout deal. The union is scheduled to hold a House of Delegates vote on the deal Monday. If approved, it would then send the TA to the full membership for a vote. There is enormous opposition among rank-and-file educators to this bargain with death, which would resume in-person learning for tens of thousands of students and staff by March 8, with the first group returning February 11. The Chicago Educators Rank-and-File Safety Committee is spearheading the fight to organize this opposition in order to defeat the sellout deal and orient educators towards uniting with workers in every industry to prepare for a nationwide general strike. In a statement published last Thursday, the committee warned that the CTU would reach a rotten deal and stressed, “There’s nothing to negotiate. Reopening schools during the pandemic is not negotiable! Lives and health are not negotiable!” What is unfolding in this city is the latest and among the most damning exposures of the unions and their pseudo-left supporters. The present leadership of the CTU emerged out of the Caucus of Rank-and-File Educators (CORE) and has controlled the union for the past decade. Based on a “social justice” platform centered on the promotion of identity politics and the subordination of educators to the Democratic Party, the CTU betrayed the powerful teachers strikes of 2012 and 2019, accepting school closures, mass layoffs and the expansion of charter schools. They are now the linchpin of the Biden administration’s homicidal campaign to reopen the majority of K-8 schools across the US by the end of March.
NYC Middle School Students Set To Return To Classrooms: Live Updates – One day after the Chicago teachers union won concessions from the city, NYC Mayor Bill de Blasio announced that on Feb. 25, the city’s public middle schools will reopen 250K of about a million public- school students. There are about 196K Middle School students in NYC. Still, No date has been set for high school students to return. Still, city officials intend to increase Covid-19 testing to permit the additional schools to open. “We’re going to get the high schools back,” de Blasio said Monday at a virus briefing. “High schools are a little bit more complicated.” Looking ahead to the fall semester, De Blasio expects to have more than 5MM residents vaccinated by the end of June, with schools set to reopen at full capacity. Though now that the Pandora’s box of “remote instruction” has been opened, will be part of the curriculum, said Schools Chancellor Richard Carranza. “This whole notion of remote learning, that’s going to stay with us way beyond the pandemic,” he said. The city’s health-care authorized to r will prioritize vaccine appointments for school personnel Feb. 12 to Feb. 21, which is the midwinter recess, Barbot said. Teachers and other school staff will report for work Feb. 24. NYC’s was the only major US school system to open its buildings for in-person classes in September. The city offered a hybrid schedule with a mix of remote and in-person learning.
Back To School: Chicago Teachers Union Approves Deal To Resume In-Person Classes – The Chicago Teachers Union has finally come to an arrangement with the nation’s third-largest school district to resume in-person classes for students up to the eighth grade, ending a months-long impasse between public officials and teachers who are petrified of catching COVID-19. The union vote – for which 13,681 out of roughly 25,000 members voted ‘yes’ and 6,585 voted ‘no’ – has diffused an impending lockout or strike after negotiations intensified in recent weeks – with teachers demanding a safer environment and more vaccinations, along with metrics to guide school closures if COVID-19 infections spike, according to theAssociated Press. The union said 13,681 members voted to approve the agreement and 6,585 voted against it. In a statement,the union described the agreement as the “absolute limit to which CPS was willing to go at the bargaining table to guarantee a minimum number of guardrails for any semblance of safety in schools.” Union President Jesse Sharkey also criticized the agreement in an email to members that was released by the union. –Associated Press “This plan is not what any of us deserve. Not us. Not our students. Not their families,” read the email from Sharkey, adding. “The fact that CPS could not delay reopening a few short weeks to ramp up vaccinations and preparations in schools is a disgrace.” On Thursday, the first wave of students in pre-K and special education are expected to return to classrooms, while K-8 will return in the coming weeks for ‘limited classroom instruction.’ No plans have been made for high school students to return, whose learning will continue online.
Democrats push for reopening of Detroit schools as auto companies cite worker shortage – Detroit Public Schools Community District (DPSCD) superintendent Nikolai Vitti and the Detroit School Board took a major step toward restarting in-person education, announcing plans last week to reopen Learning Centers February 24. In an email to staff, and a robocall to families, Vitti announced that Detroit Public Schools will reopen Learning Centers at all schools throughout the district on that date. Learning Centers provide supervision on site by school staff. The reopening of Learning Centers is a wedge designed to get schools opened and teachers back into the buildings. Michigan Democratic Governor Gretchen Whitmer, in line with the demands of the Biden administration, has pledged to get all schools in the state operating with a face-to-face option by March. Statewide, more schools now have some form of in-person learning since the New Year holiday and Governor Whitmer has already allowed the resumption of indoor contact sports. Support workers, who make up a large portion of the total Detroit school staff, were told to report back to work on February 22 following the mid-winter break. This includes principals, assistant principals, deans, clerical staff, para-educators, school service assistants, noon hour aides and others. The announcement of the reopening came the same day that in-person dining at Michigan restaurants resumed after more than two months.Last fall teachers in Detroit voted 91 percent not to resume in-person instruction. The Detroit Federation of Teachers (DFT) then assisted DPSCD in pushing some teachers back into the buildings with a promise of a $750 per quarter bonus. The small number of teachers who agreed to go back manned the Learning Centers and schools for the small fraction of students whose parents opted for in-person instruction. Teachers who worked online elected to increase their workload rather than risk infection or death. Those teaching online have student loads that can be as large as 80 students, compared to teachers doing in-person instruction who have as few as 11 students. Nevertheless, as cases skyrocketed, all DPSCD classes had to be moved back to online instruction in mid-November. The same happened in other districts across Michigan that had opened either for all in person instruction or sought to lower classroom density by offering a hybrid form of education. The DPSCD website alleges its policies are motivated by sympathy for families. It states, “The reopening of Learning Centers will provide direct support to DPSCD families who need schools to be open in some capacity so their children can benefit from supervised in person support.” In reality, a major driving force behind the school reopenings are the demands of the auto companies, which complained as early as October of a 10-15 percent absentee rate due to COVID-related illnesses and parents staying home to care for children.
Media promotes the unsafe reopening of Ann Arbor schools and the University of Michigan – In the midst of a county-issued stay-at-home recommendation for students at the University of Michigan (UMich) – the second of its kind since the fall – as well as the recent state-mandated shutdown of the school’s Athletics Department, multiple local publications and corporate advocacy groups are aggressively pushing for the resumption of in-person learning as well as non-essential educational services in the Ann Arbor area. The purpose of the Washtenaw County Health Department’s (WCHD) recommendation, which was issued on January 27, was to “slow the spread of COVID-19, including the more easily transmitted B.1.1.7. variant.” As of Friday, 28 cases of the more contagious B.1.1.7 variant were identified in Washtenaw County and nearby Wayne County. The origin of the spread was traced to individuals associated with the university’s athletic department. An MLive.com report from Sunday confirms that the variant has now also been found in surrounding Kent County, Michigan. The University of Michigan campus has been the setting of a bitter struggle of students and university workers against the administration over the unsafe reopening of the campus. In September, 2020, graduate student instructors led a 9-day strike against the university’s reopening plans that drew widespread support across the campus and the region. The strike also won sympathy from workers in the region and inspired similar actions throughout the country.The strike movement was ultimately isolated and snuffed out by the leadership of the Graduate Employees Organization (GEO) union and the American Federation of Teachers (AFT), its parent organization. Cowering in the face of legal threats by the administration, the rammed through a pitiful deal which barely met a mere fraction of the demands that participants demanded.The university was forced by opposition that continued through the fall to implement mitigation measures, such as reducing on-campus residential capacity as well as mandatory weekly testing. However, months after the strike, the administration’s main priority remains the resumption of revenue-generating activity at the expense of the safety of the community.
State and local government, mass media mount all-out blitz to reopen Los Angeles schools – As Chicago teachers fight against that city’s homicidal school reopening plan, the Los Angeles city government has mounted an all-out campaign to reopen schools in the nation’s second largest school district. The campaign is in line with the school reopening plans of California Governor Gavin Newsom and with the Biden administration’s plans to open schools across the country within his first 100 days in office. On Thursday, LA City Council President pro tempore Joe Buscaino announced he would introduce a motion at next Tuesday’s council meeting that would direct L.A. City Attorney Mike Feuer to file a lawsuit against the district to compel to it to reopen as soon as possible. The move was supported by a Saturday opinion piece written by the Los Angeles Timeseditorial board entitled, “Start reopening California schools. Now.” The article wrote, “In the absence of a demonstrated threat, there is no scientifically sound reason to assert, as Los Angeles Unified Supt. Austin Beutner does, that vaccination of all teachers and staff must be a prerequisite to bringing students back to the classrooms. Many teacher unions are demanding full vaccination before reopening, on top of other measures that health officials say are unnecessary.”Beutner, a former investment banker and state department asset in the Clinton administration, responded to the lawsuit threat, calling it a “political stunt.” Beutner in fact agreed, however, with the need to reopen, only that the district couldn’t do so immediately, while various limited coronavirus containment measures were in place at the state level. Said Beutner, “We are ready to reopen and want nothing more than to welcome children back to classrooms safely but we cannot break state law to do so.”The move by the LA City Council follows a similar lawsuit recently filed by the San Francisco City Council against its own district. The San Francisco suit was the first of its kind in the state of California. City attorney Dennis Herrera, supported by Democratic Mayor London Breed, filed the suit on the grounds that the district had failed to “offer classroom-based instruction whenever possible.” Breed herself argued that the supposed suffering of ethnic minority children caused by remote learning should be answered by putting those same children and their families’ lives at risk by returning to full in-person instruction. “Our kids are suffering, and the inequities that existed before this pandemic have become more severe,” she said. “We have been a national leader in our response to COVID. Let’s be a national leader in getting our kids back to school.”
San Francisco sues schools over record number of suicidal students – The city of San Francisco says the number of suicidal children hit record highs as public schools remain closed due to the coronavirus pandemic. Last week, the city took an unprecedented step and sued its own school district over the continued closures that have kept San Francisco’s more than 54,000 public school students out of the classroom since March 2020. City Attorney Dennis Herrera argued in the lawsuit that reopening was safe and the San Francisco Unified School District was hurting students’ mental health by keeping the facilities closed. The lawsuit also said school officials have yet to deliver a detailed plan for reopening, which is required by law. In a motion filed in San Francisco Superior Court Thursday, Herrera provided testimony from hospitals and parents on the mental health effects the closures are allegedly having on children, according to The Associated Press (AP). The lawsuit claims UCSF Benioff Children’s Hospital has seen a 66 percent increase in the number of suicidal children who visited emergency rooms and a 75 percent increase in children who required hospitalization for mental health issues, AP reports. UCSF Children’s Emergency Department at Mission Bay also saw record high numbers of suicidal children last month, according to the legal filing. The city also cites testimony from parents. One mother said her 15-year-old daughter often cries in the middle of the day out of frustration, and she recently found her “curled up in a fetal position, crying, next to her laptop at 11 a.m.,” according to the AP. Another parent said her 7-year-old son has had “uncontrollable meltdowns,” and her 10-year-old daughter is experiencing “depression and anger.” She said she believes her daughter’s mental health will continue to suffer until schools are reopened. San Francisco schools have been allowed by law to reopen since September. But teachers’ unions have said they will not return to in-person learning until they receive vaccinations and the district has yet to finalize a deal for reopening. “We wholeheartedly agree that students are better served with in-person learning,” Laura Dudnick, the school district’s spokeswoman, told AP. “We are eager for the city to make vaccines available to our staff.” On Friday, the Centers for Disease Control and Prevention (CDC) released guidance on safely reopening schools, noting that while COVID-19 vaccination of teachers should be prioritized, it should not be considered a condition to reopening classrooms.
San Francisco district and unions agree on school reopening plan after city lawsuit – On Saturday, the United Educators of San Francisco (UESF), a collection of several unions representing all school employees, reached a tentative agreement with the San Francisco Unified School District (SFUSD) with a phased reopening plan to force 52,000 students and teachers back into schools for in-person learning.Under the new framework, which has yet to be voted on by teachers and school workers, schools will begin to return when the county enters the “red zone” of California’s latest “Blueprint for a Safer Economy” reopening plan. The “red zone” signifies a test positivity rate of 5 to 8 percent and up to 7 daily new cases per 100,000 people.According to the tentative agreement, reopening is contingent on staff members having “had the opportunity (eligibility and access) to be vaccinated at the recommended dosage.” However, teachers and staff do not have to receive vaccines before reopening if the county reaches the “orange zone,” with a test positivity rate of 2 to 4.9 percent. Currently, San Francisco County is in the highest “purple zone” with a positivity rate higher than 8 percent.The agreement endorses the idea that it can be “safe” to reopen schools before the COVID-19 pandemic is properly contained, a conception that relies on skewed data, pseudo-science and the false promise of providing all necessary resources to schools. Susan Solomon, the president of UESF, stated, “This agreement sets the stage to safely reopen schools in San Francisco. Now we need city and state officials to step up and make vaccines available to school staff now, while UESF continues to focus on finalizing agreements around classroom instruction, schedules, and continuing to improve remote learning for the students and families who choose not to return even with these standards in place.”
San Francisco files emergency order to reopen public schools – San Francisco on Thursday filed an emergency court order calling for public schools within the city to reopen for in-person instruction despite surging coronavirus cases.In the order, the city criticized the school district for keeping schools closed during the coronavirus pandemic. It alleged that the closures violated students’ constitutional rights and called the move “unconscionable and unlawful.”The emergency order comes just a week after the city filed a lawsuit against the school district.”The Board of Education and the school district have had more than 10 months to roll out a concrete plan to get these kids back in school. So far they have earned an F. Having a plan to make a plan doesn’t cut it,” City Attorney Dennis Herrera said at the time, according to CNN.Many officials as well as teachers unions have pushed back on reopening schools, citing health and safety concerns.Earlier this week, a teachers union agreed that it would support resuming in-person teaching in the event that the city meets reopening criteria or vaccinates all school staff. San Francisco Mayor London Breed (D) said that under those requirements it is unlikely that schools will reopen this year, CNN reported.”We wholeheartedly agree that students are better served with in-person learning,” the school district said in a statement to CNN. “This is a frivolous lawsuit and is taking resources away from the reopening process. We have called on the City to make vaccines available and to support staff and student surveillance testing. These calls have not been answered but are exactly what we need to move this process forward.”The issue is set to go to court on March 22. San Francisco County has seen nearly 32,695 coronavirus cases and 351 deaths since the beginning of the pandemic. Almost 134,921 vaccines have been administered, according to the L.A. Times.
CDC calls for schools to reopen with precautions – The Centers for Disease Control and Prevention (CDC) on Friday released long-awaited guidance on safely reopening schools, emphasizing the importance of having schools open as long as proper coronavirus safety precautions are followed. The guidance states it is “critical for schools to open as safely and as soon as possible,” given the benefits of in-person learning.The top recommendations for doing so safely are universal wearing of masks by students, staff and teachers as well as distancing so that people are six feet apart. COVID-19 vaccination of teachers should be prioritized, the agency said, but “should not be considered a condition” of reopening schools. The CDC says schools can adjust whether they are fully in-person or hybrid learning depending on the level of spread in the surrounding community and mitigation measures in place. Schools are encouraged to use “podding” to separate students into smaller groups to help make contract tracing easier. The Biden administration has faced heavy scrutiny over its position on school reopening in recent weeks, with Republicans accusing it of bowing to teachers unions in not backing statements from the CDC director about the ability of schools to reopen. Some teachers unions, for example, have called for vaccinations before returning to the classroom, which the CDC says is not necessary. CDC Director Rochelle Walensky said Friday that there had been no “political meddling” in her agency’s recommendations, though she added she had shared some pieces with the White House to let them know what the CDC was planning. “The science has demonstrated that schools can reopen safely prior to all teachers being vaccinated,” Walensky said. American Federation of Teachers President Randi Weingarten released a largely positive statement in response to the guidance. “Today, the CDC met fear of the pandemic with facts and evidence,” she said. “For the first time since the start of this pandemic, we have a rigorous road map, based on science, that our members can use to fight for a safe reopening.” Still, Weingarten also added that “securing the funding to get this done” is needed to “make this guidance real,” and called for passing Biden’s $1.9 trillion relief package, which includes more money for schools.
Biden Administration Says Schools Have Reopened If They Are Open One Day a Week – After President Biden made an ambitious promise to help reopen a majority of K-8 schools in his first 100 days, the White House said this week the pledge means opening more than 50% of schools for in-person teaching at least one day a week. The comments drew criticism from Republicans and some parents, amid growing debate over how to define opening schools. The fresh tension comes as many districts around the country remain in virtual mode amid the winter jump in Covid-19 cases and deaths, the spread of new coronavirus strains, the slow vaccination rollout and clashes between state authorities and teachers’ unions. White House Press Secretary Jen Psaki said Tuesday that the goal was “at least one day a week in the majority of schools, by day 100.” On Wednesday she stressed that this was “not the ceiling, that is the bar we’re trying to leap over and exceed.” “Certainly, we are not planning to celebrate at 100 days if we reach that goal. That is our own effort to set our own markings, set a bold and ambitious agenda for how we’re going to measure ourselves and progress,” she said. “But we certainly hope to build from that, even at 100 days.” Several congressional Republicans criticized that goal on Wednesday. “The Biden Administration’s stated goal of reopening 50% of classrooms for one day a week is unacceptable. Our students deserve more,” House Minority Leader Kevin McCarthy (R., Calif.) said on Twitter. Mr. Biden has made school reopening a top priority, but the federal government has little influence over the operation of local school districts, which falls chiefly to local and state governments. He has included $130 billion in funds for K-12 schools in the $1.9 trillion Covid-19 relief plan that he has proposed to Congress and that Republicans oppose. The money would go to school districts to pay for reducing class sizes to accommodate social distancing, improving ventilation, hiring more janitors and providing more personal protective equipment.
The Teachers Unions Roll Over Biden – WSJ –President Biden made an early pandemic show by promising that a majority of American schools would reopen in his first 100 days in office. But on Tuesday we learned that this depends on the meaning of the word “reopen.” “His goal that he set is to have the majority of schools, so more than 50 percent, open by day 100 of his presidency and that means some teaching in classrooms,” White House press secretary Jen Psaki said Tuesday. “So at least one day a week.”One day out of five? We doubt that’s how working parents define open. Ms. Psaki is trying to make a virtue out of a humiliating political embarrassment. Mr. Biden figured that his support for the teachers union agenda, along with more money, would get the unions to reopen the schools. Instead he’s discovering what America’s parents have learned in the last year: Unions run the schools, and no one – not parents, not school districts, not mayors, and not even a new Democratic President – will tell them what to do. So it’s one day a week, pal. Get used to it. This really is one of the great scandals of the pandemic. At first unions demanded that cases drop in their cities before schools open. Now cases are falling almost everywhere. So unions are insisting that teachers must be vaccinated before returning.Take Chicago, where elementary and middle schools were supposed to reopen last week – until the union called a de facto strike. On Wednesday the Chicago Teachers Union ratified an agreement to return to schools in March. But teachers, who will be prioritized for vaccines, won’t have to return to classrooms if they have an underlying medical condition or live with someone who does.Most teachers may be able to apply for an exemption. According to the Centers for Disease Control and Prevention, 40% of people in Cook County have a chronic condition. The agreement also requires in-person instruction to be “paused” for 14 days if a single child in a school tests positive for Covid. All of this means most kids will be stuck learning remotely for the rest of the school year.Or look at San Francisco, where the teachers union and district agreed over the weekend to reopen schools once all teachers are vaccinated. Mayor London Breed said Tuesday this means schools won’t reopen this year. “We have to do better. We have to think about these children,” she said. Maybe next year.Incredibly, San Francisco’s school board and union hadn’t even considered a plan to reopen schools for nearly 11 months. Last week the city finally sued the school board to force it to come up with a reopening plan.”Various public schools in Marin, San Mateo, Santa Clara and Napa counties have all figured it out,” City Attorney Dennis Herrera said. “Private and parochial schools in San Francisco have figured it out. In-person instruction needs to be the Board of Education’s singular focus – not renaming schools that are empty, or changing admission policies when teachers aren’t in classrooms.” Hear, hear. On Tuesday Mr. Herrera accused the district of violating students’ rights under the state constitution and discriminating on the basis of wealth. Legal merits aside, he’s right that school closures are disproportionately harming low-income kids who are losing a year of learning they will never make up.
In the Absence of COVID Safety Plans, Teachers Are Resigning and Retiring Early – This should have been Cheryl Dubberly’s 40th year as a music teacher, but in August 2020, she resigned from her position with the Duval County Board of Education in Jacksonville, Florida.”It was dreadful to think about continuing,” Dubberly told Truthout. “I would not have been able to stay safe because I was responsible for teaching music to the entire school – 500 to 600 kids.” The job, she says, required her to go from classroom to classroom even though the Centers for Disease Control and Prevention warned that singing with others can spread COVID-19.”The job was not worth my life,” she says. Like Dubberly, Christine Vehar, also a music teacher, left her position in the metro Atlanta area this fall. She had taught for just three and a half years. “When the schools closed in March, I had a great remote teaching experience,” she says. “The students were very engaged and despite some initial disorganization, it worked well, and I ended up loving teaching from home.” But when Vehar’s district decided to move to a hybrid schedule in October – holding in-person classes from 7:15 am to 2:15 pm four days a week, with Wednesdays as a remote teaching and learning day – she resigned.The reason was fear of catching and spreading the virus.”My mom is 63, and she lives with me,” Vehar told Truthout. “She is a three-time cancer survivor and an amputee with a compromised immune system, so there was absolutely no way for me to give her the care she deserves and continue to teach in-person.” A fall 2020 survey conducted by the National Education Association (NEA) confirms that neither Dubberly nor Vehar are unusual. “Teachers with less than 10 years in are leaving the profession,” NEA President Becky Pringle told Truthout. “And 40 percent of mid-range teachers – those with 21 to 30 years of teaching experience, the people who are mentors and leaders in many schools – have indicated that they are likely to resign or retire early. This is really disturbing.” Michele Fleiss, a technology teacher in a Brooklyn, New York, elementary and middle school, has taught for 23 years and is in this demographic. “I can get my pension once I’ve put in 25 years and reach age 55,” she says. “I have less than two years to go, and while COVID is not the only reason I want to leave the profession, it is a factor.” Her fury toward the City Board of Education is palpable. Staff, she says, are treated disrespectfully – not told whether they’ll be working remotely or in person until the last minute. “A few weeks ago, we got called at 8:30 at night and were told that the next day we’d be teaching remotely. We then had to start making calls and emailing the families about the change. We were also expected to immediately pivot our lesson plans from in-person to online instruction,”
Campus police deployed to UC Berkeley dormitories as administration blames COVID-19 outbreak on students – Campus police officers have been deployed to patrol the student dormitories at the University of California, Berkeley as a severe outbreak of COVID-19 that has spiked since the beginning of the year impacts students, faculty and staff. In an email to students living in dormitories, campus administrators warned that students faced suspension from the University for not complying with campus directives regarding COVID-19. The email then added, “We don’t wish for residents to be alarmed by this increased UCPD (University of California Police Department) presence, but we must ensure the health of our community.” The campus housing page clarifies that UCPD and a third-party security force have been deployed to enforce a self-sequester mandate that bans all UC dormitory students, regardless of whether they have tested positive, from leaving their rooms except “to obtain medical care, including mental health care, in case of emergency, to comply with your testing requirements, to use the bathroom, or to obtain food from nearby outdoor Cal Dining kiosk.” Over the last two weeks, there has been a surge of new cases at UC Berkeley. While cases were below 50 a week in the fall, they now exceed 150 per week. By mobilizing the police and threatening students with expulsion for violating protocols, the campus is doing everything it can to avoid and obscure the fact that university administrators are responsible for the spread of the virus, not the students. While most college classes are being held online, the school has encouraged students to return to the dormitories, which serve as a lucrative source of cash for the university. UC Berkeley’s budget has been significantly impacted by cuts over the last ten years, and the school is currently facing a $340 million budget deficit. UC Berkeley is desperate to keep students in its business-minded dormitory and dining programs, while it pretends that the mass communal living units could ever be remotely safe from the virus during the pandemic. In addition to threatening students with expulsion and deploying police, UC Berkeley has also implemented quarantines for non-sick students that have forced them to live alongside the ill.
COVID-19 recovery is the time for free college – The Biden administration is pushing hard to “go big” in its COVID-19 recovery plan over some reluctance from fiscal moderates in Congress. With the daunting challenge of managing a recovery and a balky Congress, it may not seem like the right time to push another big idea like free college. Yet, if structured right, tuition-free college can be an essential part of economic recovery, be accomplished with relatively modest resources and even (as one of us has written elsewhere) win bipartisan support. A federal free-college program focused on community college and technical training for good-paying jobs will be critical to address dramatic changes in the labor market that COVID-19 has only accelerated.Even before the pandemic, the displacement of workers due to automation was reducing opportunities in many occupations. And any recession, including the current one in which workers are jobless for an extended period, means skills can atrophy or become outmoded due to changing technology. This occurs as employers use the crisis of downturns to implement changes in how they produce goods and services. Moreover, the pandemic will almost certainly cause lasting shifts in demand away from some in-person services (business travel) and toward other sectors (health care and information technology). To keep up with the demands of growing jobs, workers will thus need to be retrained. Indeed, colleagues at the Upjohn Institute have found that low-income, low-skill workers bear the brunt of COVID-19-induced job losses, jobs that in many cases are not going to return at all. As our colleague Brad Hershbein told the Associated Press, “disparities in job loss between high and low wage workers are unprecedented among U.S. recessions over the past 100-plus years.” There are good-paying jobs emerging in fields likely to expand in a COVID-19 reshaped economy – but almost all these jobs will require a postsecondary credential and training of some sort. Emerging jobs in fields like health care, technology, medical devices and communications will require workers with associate degrees or short-term certifications of the sort available at community colleges. A targeted free-college program can help make this happen.The good news is that such a program doesn’t have to bust the budget. Estimates suggest that a nationwide tuition-free community college program for adult workers would cost between $4 billion and $6 billion in new discretionary outlays over four years – a drop in the bucket relative to the trillions of dollars being spent on recovery.
Los Angeles Hospital slated for closure amid pandemic — On New Year’s Eve, the hospital giant Alecto Healthcare Services, announced that they will be closing the 200-plus-bed Olympia Medical Center Hospital in Los Angeles County on March 31, 2021 and laying off all staff. The announcement came as the majority of the state of California was reporting zero percent ICU capacity and hospitals throughout Southern California were strained to the brink as ambulances snaked around emergency rooms and health care staff were given directives to ration care. The planned closure of the hospital in the middle of a deadly pandemic – as the death toll approaches half a million victims – is a testament to the utter irrationality of the capitalist system and dire need to remove the profit motive from health care entirely. The closure of Olympia will have a devastating impact on Los Angeles County, which has been one of the major epicenters of the pandemic in the US. According to the state’s tracking system as of February 9, at least 44,997 people have died in California where cases exceed 3,428,698. In Los Angeles County alone there are 1,110,384 positive COVID-19 cases, of which 17,764 have resulted in death. The county’s ICU capacity has run dangerously low, as average daily admissions remain at approximately 400 according to County Health Director Dr. Christina Ghaly. The state’s tracking system predicts that a total of 51,950 deaths will occur in California by February 27. The closure of Olympia Medical Center will only put further strain on hospital systems and drive up the number of deaths. The announcement of the hospital closure has been met with outrage by nurses, health care workers, and the larger community as a whole, which will lose access to crucial medical services provided by Olympia. UCLA Health Services plan to convert the medical center into a neuropsychiatric center, which will leave the region without direct access to vital services such as an emergency room, medical surgical beds, intensive care unit, surgical services, hyperbaric wound care center and their internationally-recognized digestive disease institute.Adding insult to injury, the entire staff at Olympia faces layoffs at the end of next month, on top of being expected to maintain the daily care of COVID-19 patients under conditions where many health care workers are suffering from PTSD, and what one nurse described as the “endless conveyor belt of death.”
Myanmar Coup and Fast Fashion: Sanctions Would Harm Poor Textile Workers – Jerri-Lynn Scofield – The Wall Street Journal ran a piece today, Myanmar’s Garment Factories Suffer One-Two Punch of Covid and Coup, highlighting the impact imposing economic sanctions on Myanmar in response to last week’s military coup would have on workers who make clothes for fast fashion retailers.Per the Journal:A decade ago, as Myanmar was turning toward democracy from military rule, Western governments began dropping crippling sanctions – drawing fast-fashion labels to the country. Factories sprang up, employing hundreds of thousands of people making shirts and dresses for consumers in Europe and elsewhere.Last week’s military coup threatens to turn back the clock. Factory owners fear political instability will push Western clients away, and that any Western efforts to pressure the generals by restoring broad sanctions or withdrawing trade preferences would be crushing. “I am very afraid of going back to that time because I already know what the situation was like with sanctions,” says Aung Myo Hein, who opened a garment factory in Myanmar in 2013, when the European Union gave Myanmar’s garment exports duty-free access. Now, downsizing or eliminating entirely the fast fashion industry would undoubtedly benefit the planet. But going cold turkey would cause immediate misery to the many poor textile workers who would be deprived of their livelihoods. Globally, COVID-19 has caused a huge drop in fashion sales, as those working from home have slashed their spending on garments. Part of this drop comes from a lesser need for new clothes, while part is no doubt driven by economic uncertainty. Faced with such plummeting demand, many fashion companies have responded by stiffing their suppliers, as the Guardian discussed in World’s garment workers face ruin as fashion brands refuse to pay $16bn: Powerful US and European fashion companies have refused to pay overseas suppliers for more than $16bn (Pound Sterling12.3bn) of goods since the outbreak of Covid-19, with devastating implications for garment workers across the world, according to analysis of newly released import data.
Nissan lowers sales forecast as CEO acknowledges disruption caused by chip shortage – The CEO of Nissan reaffirmed the importance of electric vehicles to the carmaker’s future on Tuesday, telling CNBC that his company would be “building (on) our strengths to electrify 100% of our all-new vehicle offering from the early 2030s in key markets.” Makoto Uchida’s comments echo an announcement made by Nissan at the end of January, when the firm said the Japanese, European, U.S. and Chinese markets would be the focus of its electrification goal for new vehicles. In his interview with CNBC’s “Street Signs Europe,” Uchida also addressed the global shortage of semiconductors affecting the automotive industry, stating that it had “impacted our domestic and our overseas production.” An increased demand for gadgets and electronic devices during the coronavirus pandemic has contributed to a global squeeze on the availability of semiconductors. This has hit the car industry, which is heavily reliant on the technology, particularly hard. “We are working with our suppliers to minimize this impact,” Uchida went on to add, “and we are closely monitoring the situation and adjusting our production. We recognize the uncertainties will continue.” In the three months ending Dec. 31, Nissan’s operating profit hit 27.1 billion Japanese yen, compared to 22.7 billion yen in the same period a year earlier. For the fiscal year ending March 31, Nissan said it was now expecting a net loss of 530 billion yen, or roughly $5.1 billion. It had previously forecast a net loss of 615 billion yen.
Brazil: Sao Paulo teachers strike against deadly school reopenings – Some 180,000 teachers in Sao Paulo, Brazil began an indefinite strike Monday against the resumption of partial in-person education in the state’s public high schools. Teachers voted for the strike action by an 80 percent majority in a virtual assembly held last Friday, February 5. Teachers went into the schools on the first day of scheduled classes to speak to students and parents about the strike, and are due to stay out beginning today. At the beginning of last week, private schools in the state had already reopened for in-person classes with up to 35 percent of their of students in classrooms. But on Monday, only 5 percent of students attended classes in the public schools. The reopening of schools in Sao Paulo came after right-wing Governor Joao Doria (PSDB) decreed education an “essential service,” allowing schools to reopen in the so-called “red” and “orange” phases of the state’s supposed pandemic containment plan, dubbed “Plano Sao Paulo.” Before, schools could reopen only in the “yellow” phase, with the pandemic supposedly “under control.” Now infections are escalating. The secretary of education of Sao Paulo, Rossieli Soares, is working closely with the most significant layers of Brazil’s ruling elite to reopen the state’s schools. This includes Sao Paulo’s corporate and commercial sectors, associations of private school owners, a section of the Brazilian medical sector, the corporate media, pro-business educational think tanks and the state’s courts. On January 28, Sao Paulo Judge Simone Gomes ruled in favor of a suit brought by the teachers’ unions against the reopening of the schools. Basing her decision on the “protection of the right to life,” she barred the reopening of schools in the “orange” and “red” phases of the “Plano Sao Paulo.” One day later, the decision was reversed by the State Court of Justice. Speaking for Sao Paulo’s governor, the state secretary of education threatened Monday that “appropriate judicial measures” will be taken against the strike, and that teachers who do not return to the classroom will not be paid. The reopening of schools in Sao Paulo – Brazil’s richest and most industrial state, as well as the country’s financial center – will undoubtedly open the way for other states to do the same. Of Brazil’s 26 states, 20 have already planned to start in-person classes in the coming weeks. The strike in Sao Paulo began after teachers in Rio de Janeiro decided to strike against the reopening of state and municipal public schools on January 30. Teachers in the southern state of Paranfl are scheduled to strike on February 18, when in-person classes begin in the state.
Canadian educators denounce deadly reopening of schools amid COVID-19 pandemic – Although the COVID-19 pandemic continues to rage across the country, schools in virtually all parts of Canada will be providing in-class instruction as of next Tuesday. That is when schools in Toronto and the adjacent York and Peel Regions are to reopen – the last to do so, since many provinces were forced to implement a temporary return to online instruction and/or extend the traditional Christmas/New Year’s break. This homicidal policy has been championed by the Trudeau Liberal government in Ottawa and implemented by provincial governments of all stripes, from John Horgan’s New Democrats in British Columbia to Doug Ford’s hard-right Progressive Conservatives in Ontario and Quebec’s CAQ government. Despite continuing high-rates of infection in wide swathes of the country and the rapid spread of newly-identified more infectious COVID-19 variants, nothing has been done to provide teachers and students with adequate protection as they return to packed, poorly-ventilated classrooms The unions, meanwhile, have suppressed the widespread opposition to the back-to-school drive. They have ruled out job action to protect the health and lives of educators, students, and their families with claims that it would be “illegal.” Teachers from Ontario and Quebec who spoke to the World Socialist Web Site expressed their outrage over the reckless reopening of schools, which, if not prevented through the independent action of the working class, will sow the seeds for a “third wave” of the COVID-19 pandemic even more deadly than the first two. A secondary school teacher from Montreal vividly described the life-threatening conditions prevailing in many schools. “The reopening of schools places students and staff in dangerous conditions,” she told the WSWS. “Indeed, the groups are very large, from 30 to 35 students. In order to achieve the 2-meter distance from the teacher, the students have to be pushed back and crammed on top of each other, as most of the premises are very small. As a result, the students are often placed in bubbles of 2-3 students with a space of 20-30 cm between each bubble. “The plexiglass that arrived after a month, is now often broken. We have to beg for disinfectant. Many classrooms do not have windows … or it’s too cold to open them. “The students do not respect the bubbles. They meet outside (talking, pulling at each other, some smoking vape) and wait in the hallways during breaks and lunch. “In class, many students take off their masks to drink water during class or simply because they are teenagers. Those who want to protect themselves are glued to those who don’t want to.
‘Turkish government prepares to reopen schools as pandemic surges – Amid a global homicidal back-to-school drive, President Recep Tayyip ErdoÄŸan’s government is planning to begin in-person teaching starting February 15 in Turkey, where there are nearly 18 million students and 1 million teachers in K-12 schools. Last week, after a cabinet meeting, ErdoÄŸan said, “Considering limited internet access, we have decided to open village schools on February 15.” He added, “Preparations will begin for the 8th and 12th grades, primary and special education schools to start education from March 1.” The 8th through 12th grades already partially began in-person teaching on January 22. Education Minister Ziya Selcuk’s announced Thursday that Monday through Friday, in-person education will begin at villages and similar schools on February 15. The ministry also declared: “As of March 1, face-to-face education will be held in all public and private primary schools, as well as nursery classes and special education classes within these primary schools as two days a week; face-to-face education will begin in the 8th grade of all public and private secondary schools and Islamic divinity secondary schools.” Previously, Selcuk announced that the government had reached “a principled decision on the February 15 opening of schools,” emphasizing its determination against widespread concerns and opposition among teachers, parents and students. With the lack of widespread vaccination, the spread of very transmissible COVID-19 variants and medical experts’ warnings of another surge, this decision continues the “herd immunity” policy at the expense of thousands of workers lives.
French universities reopen despite spread of coronavirus, new variants – Last week French universities began to partially reopen to students. Following a tweet from French President Emmanuel Macron on January 21 announcing the partial reopening, new rules this term will allow each student to attend classes one day per week. Macron’s tweet was made a day after a series of small student protests led by the New Anti-capitalist Party (NPA) and student unions called for the immediate reopening of universities on January 20. The measure will throw hundreds of thousands of students back into classroom settings every day. For example, at just the University of Orleans, 4,000 students will return for in-person education each day. The risk of infection is not limited to the classroom. Students, professors and staff will increase the number of people on public transport and lead to unmasked, crowded lunches in cafeterias. Even if strict protocols are followed, the virus will inevitably spread in an educational setting. This has been shown by multiple scientific studies. However, in all likelihood there will be a repeat of the September reopening of universities and schools, where supposedly strict rules will not be followed by most universities. Lectures will again take place in poorly ventilated rooms and halls without enough space for social distancing. In current conditions the policy means a further acceleration in the spread of the virus, leading to more infections and deaths both among students and the wider population. Since the September reopening, nearly 50,000 people have died from COVID-19 in the country. The relaxation of these measures comes as dangerous variants of the virus become further entrenched in France. On Thursday, Prime Minister Jean Castex reported that 14 percent of COVID-19 cases in the country already involved the more infectious B.1.1.7 variant, first identified in the UK. In France, an average of 419 people have died every day over the past week. On Sunday, preliminary results from a study were published showing that the Oxford-AstraZeneca vaccine was significantly less effective against the South African variant. In some cases, the British variant has also developed the E484K mutation that is believed to cause the reduction in vaccine efficacy. The rollout of the AstraZeneca vaccine in France began on Saturday and is a key part of the government’s vaccination campaign, which has still reached less than 3 percent of the population. The government is using the campaign for vaccines as a justification for its refusal to impose a lockdown until the population can be vaccinated and the virus stopped.
Mario Draghi Officially Becomes Premier Of Italy, Names His Top Ministers As expected (see below), Mario Draghi has agreed to take over as Italy’s next prime minister, naming his ministers as he prepares to head a new government that will prioritize the pandemic, a struggling economy and moving ahead with European integration. The 73-year-old former ECB head will lead a new national unity government to replace Giuseppe Conte’s centre-left coalition that collapsed one month ago, leaving the country rudderless in an unprecedented crisis. Draghi will return to the presidential palace at midday on Saturday to be formally sworn in. After securing broad support from all the country’s main parties except for the far-right Brothers of Italy, Draghi met with President Sergio Mattarella late on Friday to formally accept the appointment and told the head of state he was ready to form an administration. Draghi then spoke only to list the names of his ministers, a mix of politicians and technocrats. The senior deputy governor of Bank of Italy, Daniele Franco, was named as the new economy minister, while Roberto Speranza would stay on as health minister. According to Bloomberg, “Franco, director-general at the central bank, will play a key role in administering Italy’s 209 billion-euro share ($253 billion) of the EU’s recovery package, and in introducing measures to help families and businesses cope with the recession prompted by the pandemic and lockdowns.” Luigi Di Maio would be kept as foreign minister, with the new administration set on carving out a bigger role for Italy. Bloomberg adds that Roberto Cingolani, an executive at Leonardo SpA, would head a new ministry for ecological transition. He will be responsible for managing spending on green projects under the European Union’s recovery package. Other ministers include Giancarlo Giorgetti, minister for economic development, who – as veteran senior lawmaker with the League of Matteo Salvini – has been pushing for the party to adopt a more pro-European stance. Draghi has already told lawmakers he will push for a common euro-area budget, and Italy has taken up the rotating presidency of the Group of 20 nations. Draghi will be tasked with restoring the economy in a country where more than 93,000 people with coronavirus have died since it became the first European country to face the full force of the pandemic one year ago, and the toll is still rising by the hundreds each day.
UK unemployment rises to highest level in four years – The number of workers being made redundant in the UK is rising at the fastest pace on record, as pandemic lockdown measures place increasing pressure on the economy. The Office of National Statistics (ONS) revealed last week that unemployment is at its highest level for four years, reaching 5 percent. It found that 1.7 million workers are without work. Britain’s economy has suffered the deepest recession for more than 300 years, with Bank of England chief economist Andrew Haldane saying that without state intervention the unemployment figures would have already reached five million. The government’s furlough scheme has supplemented the wages of almost 10 million workers employed by more than 1.2 million companies during various pandemic lockdowns since last March. In addition to the rapidly rising figures of those without work, millions more workers on furlough run the risk of being made redundant once the scheme is lifted at the end of March. The government’s independent economics forecaster, the Office for Budget Responsibility (OBR), expects the jobless rate to more than double from pre-pandemic levels to 7.5 percent when furlough ends – representing more than 2.6 million people out of work. Since the beginning of the pandemic, over 210,000 UK jobs have been axed and this figure does not include job losses announced by transnational corporations making redundancies but who have not yet stipulated how many jobs will be cut from their UK located operations. According to the Financial Times, “418,000 people have fallen out of work since the start of the coronavirus pandemic, taking the total number of unemployed people to 1.72m.” Jobs have been slashed across all sectors, with retail especially hard hit – with closures, mergers and acquisitions occurring as traditional retailers lose out to the online corporations. .
UK Economy Crashed 9.9% In 2020, Biggest Drop In 311 Years – Britain’s crippled economy suffered its biggest crash in economic output in 311 years after it slumped by 9.9%. Last year’s fall in output was the biggest since modern official records began after World War Two. Longer-running historical data hosted by the Bank of England suggest it was the biggest drop since 1709, when Britain suffered a “Great Frost”. The GDP fall was steeper than almost any other big economy’s, though Spain – also hard-hit by the virus – suffered an 11% decline. It also means that the market cap of AAPL is now roughly equivalent to the entire output of the UK. The good news is that the UK avoided heading back towards recession at the end of the year, with stronger than expected Q4 and December GDP prints, and looks on course for a recovery in 2021. In Q4, GDP grew 1.0%, double consensus estimates of 0.5%. This makes it likely that Britain will escape two straight quarters of contraction – the standard definition of recession in Europe – even though the economy is set to shrink in early 2021 due to the effects of a third COVID lockdown.”As and when restrictions are eased, we continue to expect a vigorous rebound in the economy,” said Dean Turner, an economist at UBS Global Wealth ManagementIn December alone, Britain’s economy grew 1.2% after a 2.3% fall in output in November when there was a partial lockdown, pointing to greater resilience to COVID restrictions than at the start of the pandemic. That left output 6.3% lower than in February before the start of the pandemic, the Office for National Statistics said.However, the Bank of England forecasts the economy will shrink by 4% in the first three months of 2021 because of the new lockdown and Brexit disruption. It thinks it will take until early 2022 before GDP regains its pre-COVID size, assuming vaccination continues at the current rapid pace, which outstrips the rest of Europe’s. Many economists think recovery will take longer.
Who Wanted Pandemic Lockdowns? –People of the future will look back at these 11 months and be very confused. How could virtually the entire world have thrown out settled practices of civil, economic, and cultural liberties for a virus that resisted every attempt to control it? This virus is not Ebola and it has come nowhere near approaching the death rates associated with H1N1 of 1918. By some measures, it’s not been as deadly as 1957-58, a virus that came and went without much public attention at all. New pathogens are part of life, and there was and is nothing particularly unusual about this one. The enduring question now and for many years to come will be: why? We all asked the question a thousand times, and it has been asked of us the same number of times. It is too early to say, and the answer will likely be similar to other epic events in history such as the Great War or the Fall of Rome. The answer to the question why is: multiple causes. I’m not prepared to weigh them yet. And yet, it seems reasonable to observe that many groups and sectors had a kind of hankering for a pandemic.They turned a widespread and mostly manageable pathogen – doctor/patient relationships and reasonable cautions on the part of the vulnerable – and converted it into the basis for a global panic that overthrew centuries of progress in law and liberty.
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