We welcome expressions, support, and collaboration from like-minded organizations

 

 

ECONOMIC POLICIES, ANALYSIS, AND RESOURCES

The Economic and Trade Policy Domain tracks and reports on policies that deal with budget, taxation, and finance issues. The domain tracks policies emanating from the White House, Congress, the Department of Commerce and the Department of Treasury.

Latest Economic and Trade Policy Posts

2 New Congressional Bills Seek to Address Racial Inequalities in US Agriculture

Brief #1—Agriculture
By Katherine Cart
Farmland is lucrative. Acreage denotes wealth and provides multi-generational investment returns. Racial inequity and farm policy, in this country, have long been indivisible; discrimination in agrarian land ownership and by the USDA has made a farce of an already flimsy bid for equality, for financial freedom and freedom to farm and ranch American land with the nonpartisan support of government. The Covid-19 pandemic has both exacerbated and highlighted the racism within the USDA’s treatment of farmers. Two bills, the Emergency Relief for Farmers of Color Act and the Justice for Black Farmers Act seek to begin the remediation of racial disparity in US agriculture.

read more

The Minimum Wage of  $7.25 Has Not Been Raised Since 2009

Brief #110—Economics
By Rosalind Gottfried
The debate regarding the efficacy of a $15 minimum wage is heating up since Biden included it in his Corona virus stimulus package.  The bill would have a gradual phasing in of the wage over the next four years.  Currently, it would be $9.50 and go to $11, then $12.50, then $14 annually until it reaches $15 in 2025.  Future increases would be tied the median wage rate, thereby assuring the consistent value of the minimum wage. 

The consequences of the increase are debated and the research demonstrates some mixed outcomes but overwhelmingly it supports the increase.  Most show it does not actually decrease jobs. One study shows no impact on jobs in 138 state and local areas, over five years and another shows no impact in thirty years. One analysis of 60 studies of wages and jobs shows no net loss of jobs.  Increased wages actually are more likely to increase jobs due to the enhanced purchasing power of the lowest income groups.  More money would be spent in local businesses and services, increasing revenue and creating jobs. 

read more

New Efforts Seek to Reduce Growing Rates of Child Poverty

Brief #109—Economics
By Rosalind Gottfried
President Biden seeks to raise the child tax credit to $3600 for children under 6 and to$3000 for school age children under 18.  This is up from the current level of $2000 per child.  As part of the stimulus, this change would become effective in July and last for one year though many Democrats would like to see the change made permanent.   The credit would be available to individuals making $75,000 or less and couples making $150,000 or less.  It would be based on income data from 2019 or 2020.  To increase the effectiveness of the tax break, families could receive monthly payments of between $250 and $350 to meet their routine bills.  Researchers at Columbia University estimate that this measure could reduce the child poverty rate by close to 50%.  The proposal gained support with the weak jobs report released last week.  The cost of the program would increase the federal deficit by 120 billion dollars.

read more

Which Companies are Profiting from the Pandemic?

Brief #108—Economics
By Rosalind Gottfried
With the roll out of COVID 19 vaccinations, and the Biden administration’s pledges to speed their dissemination, it might be imagined that the drug companies are reaping enormous profits.  This would be, in large part, an incorrect presumption.  Because many of the pharmaceutical companies took money to develop the vaccine, there are limits on how much they can charge for the product.  Pfizer, one of the first to bring a successful vaccine to market, did not take government funds for research and development of the vaccine; they did join Operation Warp Speed, at a cost of $1.95 billion to the government to provide the first batch of 100million free to the public.  They will charge the government $39.99 per two dose protocol.  While the vaccine costs $15 per person to produce, there are also shipping, administration, and distribution costs.  They are expected to sell $14bn orth of vaccine in the first year. 

read more

Biden’s Economic Executive Orders

Brief #107—Economic Policy
By Rosalind Gottfried
In addition to his $1.9 trillion stimulus plan, now being debated in Congress, President Biden has signed  a number of Executive Orders  affecting the  well-being of struggling Americans.

These included a request that the Department of Education further suspend student loan payments to alleviate the burden on debt carrying graduates.  He also requested the suspension of evictions and foreclosures on 44 million rental units across the country.

read more

State and Local Jurisdictions Need Federal Aid to Be Viable

Brief #106—Economics
By Rosalind Gottfried
State and local government budgets provide the bread and butter of fiscal life and, because of the pandemic costs, require a federal infusion of aid to accomplish maintenance of essential services.  State and local governments provide major funding for infrastructure, services, and education.  They outspend the federal government on goods and services and account for 15% of the GDP.  They contribute more than 90% of the moneys for education and 80% of transportation spending.  State Medicaid costs have been on the rise, especially in Republican states that did not take advantage of federal extensions of benefits to states. State and local entities employ more people than domestic manufacturing and and  have lost 1.3 million jobs since March, representing the smallest workforce since 2001.  These are budgetary elements which impact the availability of goods and services which contribute to quality of life, such as police, fire, and waste services. 

read more

Biden’s Plan for an Ailing Country

Brief #104—Economic
By Rosalind Gottfried
President elect Joe Biden’s 1.9 trillion dollar stimulus plan provides a comprehensive assault on what ails America and reinstates some of the controversial elements rejected by Republicans in the $900 billion December plan.  Most notable is a reinstatement of 350 billion dollars to bolster state and local budgets suffering shortfalls largely attributable to the pandemic crisis.  It also includes 400 billion dollars of pandemic aid to vaccinate Americans and open schools.  Biden set a goal to vaccinate 100 million Americans in his first 100 days in office. 

read more
2 New Congressional Bills Seek to Address Racial Inequalities in US Agriculture

2 New Congressional Bills Seek to Address Racial Inequalities in US Agriculture

Agricultural Policy

 

Brief # 1

 

2 New Congressional Bills Seek to Address Racial Inequalities in US Agriculture

 

By Katherine Cart

 

February 22, 2021

 

POLICY

 

Racial inequity and farm policy, in this country, have long been indivisible; discrimination in agrarian land ownership and by the USDA has made a farce of an already flimsy bid for equality, for financial freedom and freedom to farm and ranch American land with the nonpartisan support of government. The COVID-19 pandemic has both exacerbated and highlighted the racism within the USDA’s treatment of farmers. Two recently introduced bills promise definitive, sweeping change: the Justice for Black Farmers Act was reintroduced by Senator Cory Booker (D-NJ); the Emergency Relief for Farmers of Color Act was introduced by Senator Reverend Raphael Warnock (D-GA). The sentiments of these bills are reflected in the $1.9 trillion American Rescue Plan Act of 2021, the full text of which was released by the budget committee for review on February 19. The passing of these bills would mark an inflection point in the intersection of civil rights and agrarian economy.

The bills recognize that discrimination is not explicit, that equity within US agriculture is not exclusive – a sentiment whose drum has been beaten until it should break, for there are those that will not hear. The passage of the bills would increase funding within the USDA for technical assistance and programs such as Conservation Stewardship and Rural Energy for America, benefitting all marginalized farmers and ranchers, and, one should note, boosting more ecologically conscious farming practices. The Justice for Black Farmers Act would also strengthen the antitrust measure of the Packer and Stockyards Act of 1921 – a boon to the wellbeing of the employees, ranchers and consumers of mega meat-packing conglomerates.

 

However stale the recitation of the impacts of the pandemic on small business may now be, the financial reality is no less grave. The Emergency Relief for Farmers of Color Act, as described in the American Rescue Plan of 2021, would subsidize marginalized farmers and ranchers, mitigating the most acute financial effects of the pandemic. In the first round of pandemic aid, the smallest 10% of farms and ranches – those who spend more to make less, proportionally, and are more likely to be owned by a person of color – received each, on average, $300. “COVID-19 has exacerbated the challenges facing New Mexico’s farmers and ranchers. Yet, Hispanic, Native American, and Black farmers in New Mexico did not receive their fair share of COVID-19 relief under the last administration,” said Senator Ben Ray Luján, “this legislation is an important step toward addressing this historic injustice, and it provides farmers and ranchers of color with the targeted relief needed to survive the pandemic and thrive in the years to come.”

 

In an effort to slow the proportional decline of Black-owned farms, the Justice for Black Farmers Act would create a Farm Conservation Corps sponsored by the USDA. Young adult participants from socially disadvantaged communities would gain experience on local farms and ranches, and be paid through the USDA, at no cost to farmers grossing less than $250,000 per annum. Successful participants would be given priority for new land grants of up to 160 acres. Both bills also provide increased funding for 1890s land grant universities and other HBCUs, fortifying the theoretical and technical skill of young farmers. The bills also seek to provide greater access to legal aid and education for farmers of color, with the intent to lessen the impact of heirs’ property on Black-ownership of farming acreage. The modalities of the bills are attractive in their targeted upshots; they address systematic problems with systematic solutions. Leah Penniman, Co-Executive Director and Farm Manager of Soul Fire Farm, describes Justice for Black Farmers as, “the opportunity to correct decades of discrimination, preserve agricultural lands, and equip the next generation of farmers who will feed the nation.”

 

ANALYSIS

 

 

These bills are not fundamentally radical. They acknowledge the constitutionality of fair and equal treatment. Support of their rhetoric has bipartisan support. USDA Chief of Staff Katherine Ferguson stated that the USDA was “pleased to see the introduction of the Emergency Relief for Farmers of Color,” and that the bill would “bring much needed economic assistance during the pandemic and begin to advance equity for farmers of color.” The likelihood of the Emergency Relief for Farmers of Color Act being passed as part of the American Rescue Plan is high; the 2021 budget resolution, according to a recent House Committee report, “laid the groundwork for bold action by providing the option of using the budget reconciliation.” The bill will be voted on by the House Budget Committee on February 22. The agricultural component of the plan is largely uncontroversial and not in threat of elimination. Senate Majority Leader Schumer predicts President Biden will sign the plan before March 14. Justice for Black Farmers was introduced to the Senate on February 8 and will be addressed following the resolution of the American Rescue Plan.

 

Engagement Resources

Building Local Food Economies:

Maintaining and strengthening local economies through diversification of food and food suppliers. https://cefs.ncsu.edu/food-system-initiatives/local-food-economies/a-government-guide-on-building-local-food-economies/

 

Farm Aid:

Works with local, regional and national organizations to promote fair farm policies and grassroots organizing campaigns designed to defend and bolster family farm-centered agriculture. https://www.farmaid.org/

 

National Black Farmers Association:

Encourages the participation of small and disadvantaged farmers in gaining access to resources of state and federal programs administered by the United States Department of Agriculture. https://www.blackfarmers.org/

 

 

 

Learn More: 

“Booker, Warren, Gillibrand, Smith, Warnock, and Leahy Announce Comprehensive Bill to Address the History of Discrimination in Federal Agricultural Policy.” Cory Booker United States Senator for New Jersey (9 February, 2021), retrieved February 18 from: https://www.booker.senate.gov/news/press/booker-warren-gillibrand-smith-warnock-and-leahy-announce-comprehensive-bill-to-address-the-history-of-discrimination-in-federal-agricultural-policy

 

“Emergency Relief for Farmers of Color Act 2021.”  117th Congress (2021), retrieved February 18 from: https://www.warnock.senate.gov/wp-content/uploads/2021/02/Emergency-Relief-for-Farmers-of-Color-Act-of-2021.pdf

 

Presser, Lizzie. “Their Family Bought Land One Generation After Slavery. The Reels Brothers Spent Eight Years in Jail for Refusing to Leave it.” ProPublica (15 July, 2019), retrieved February 18 from: https://features.propublica.org/black-land-loss/heirs-property-rights-why-black-families-lose-land-south/

 

Statement by Katherine Ferguson, USDA Chief of Staff, on the Emergency Relief for Farmers of Color Act (2021, February 9) retrieved February 18 from: https://www.usda.gov/media/press-releases/2021/02/09/statement-katharine-ferguson-usda-chief-staff-emergency-relief

Ramgopal, Kit, and Lehren, Andrew W. “Small farmers left behind in Trump administration’s COVID-19 relief package.” NBC News (9 August, 2020), retrieved February 20 from: https://www.nbcnews.com/business/economy/small-farmers-left-behind-trump-administration-s-covid-19-relief-n1236158

The Minimum Wage of  $7.25 Has Not Been Raised Since 2009

The Minimum Wage of  $7.25 Has Not Been Raised Since 2009

Brief #110 Economic Policy

The Minimum Wage of  $7.25 Has Not Been Raised Since 2009

Rosalind Gottfried    

February 15, 2021  

Policy

The debate regarding the efficacy of a $15 minimum wage is heating up since Biden included it in his Corona virus stimulus package.  The bill would have a gradual phasing in of the wage over the next four years.  Currently, it would be $9.50 and go to $11, then $12.50, then $14 annually until it reaches $15 in 2025.  Future increases would be tied the median wage rate, thereby assuring the consistent value of the minimum wage.

The consequences of the increase are debated and the research demonstrates some mixed outcomes but overwhelmingly it supports the increase.  Most show it does not actually decrease jobs. One study shows no impact on jobs in 138 state and local areas, over five years and another shows no impact in thirty years. One analysis of 60 studies of wages and jobs shows no net loss of jobs.  Increased wages actually are more likely to increase jobs due to the enhanced purchasing power of the lowest income groups.  More money would be spent in local businesses and services, increasing revenue and creating jobs.

In contrast, the Congressional Budget Office estimates a loss of 1.4 million jobs over five  years, though other experts contest this asserting if job losses occurred they would be much less.  For small businesses, temporary reprieves from the higher wage could be granted in times of economic constriction like recessions and/or subsidies could be made available to help defray costs.  The benefits of the rising wage would accrue to 95% of people affected by it. Proponents risk/cost analysis weigh these potential losses against data showing that up to 40 million people would be lifted out of poverty (conservative estimates are closer to 32 million or 21% of the workforce). Women and people of color, who generally comprise a larger portion of low wage workers, would benefit most. Sixty percent of the gains would be to women workers.  One third of all African Americans workers and one quarter of Hispanics workers would have increased incomes. One half of workers 25-54 and ten percent of youths also would benefit.  Those making slightly above the minimum age would also gain an increase in wages. Twenty percent of the entire workforce would see income gains.

The history of the minimum wage dates to 1968 and had its origin in President Johnson’s War on Poverty.  Since then the minimum wage has lost 31% of its buying power.  The current federal minimum wage of $7.25 dates back to 2009 and represents the longest stagnation of the wage since its inception.  For the wage to remain equivalent in value to the earlier years of the wage, the hourly figure would be over $20. These data give support to the contention that the inequality between low and high wages workers has dramatically increased since the 1980s, indicating serious consequences for the lower wage workers standard of living and their lifelong outcomes.

Some people argue that the higher minimum wage is not necessary outside of high cost areas concentrated in the coastal areas but research shows this is a fallacy and the need extends to the Midwest, South, and Southwest.  The annual income $31,200 is a figure estimated to be the minimum to take a single person out of poverty.  To take a person out of poverty in high cost areas an hourly wage would need to be in the upper twenties. Currently, one quarter of Americans struggle to make ends meet while a whopping 40% could not cover an emergency bill of $400, as found in  amuch cited study.

Analysis

The probability of passing the legislation is tenuous at best.  To pass the bill in Congress would require bipartisan support unlikely to be gained in the Senate.  Utilizing the Budget Reconciliation Act would require agreement among all the Democratic senators though two seem to be on the fence.  Recent attention has been focused on the increasing gap in low and high wage earners.

This gaping income inequity among workers has occurred in a time of record breaking job creation, prior to the pandemic, and record breaking levels of corporate profits.  Workers and their families should be able to live a life secure that they can handle an emergency such as a medical expense, a family crisis, a household or car repair without risking hunger or homelessness, situations which are all too common today.  MIT researchers assert that a family of four, with two working parents, needs an hourly wage of $22.52 to get out of poverty.

Many people debate the short term pros and cons of a wage hike but there is ample evidence that the net outcome is beneficial for both individuals/families and the society.  Experts who study poverty would point to the long term expenses related to poverty which often do not figure into the debate about increasing wages.  Poverty is highly correlated to all types of lifelong measures of well-being which have budgetary consequences.  Poverty increases the number of residential changes affecting schooling, family stability, and access to sufficient neighborhood resources such as quality of education, recreation, safety, and livability.  The health of people in poverty shows higher levels of diabetes; coronary, stroke, and vascular diseases; depression and other psychiatric syndromes; and obesity. Lower levels of educational attainment in impoverished children result in greater unemployment; lower wages; and erratic work histories, all of which increase societal costs. Low educational attainment and joblessness are also factors increasing the prevalence of incarceration.

Supporting low wage workers would also potentially go a long way in reducing the boiling point of the political animosity currently plaguing the country. Even in the state of Florida, where 51% of voters supported President Trump, 60% of the population supports increasing the minimum wage.

Given the recent public discussion of income inequality and lack of access to resources in society, the evidence supporting a rise in the minimum wages is compelling, especially with regard to the long term costs of failing to do so. The recent pandemic has highlighted the deficiencies of the safety net in the US, including such things as lack of affordable healthcare; high prescription costs; the ability to help care for sick, young, and old; the cost of basic internet access; costs of higher education; and more.  The essential question reverts to an old one regarding what kind of society we want to be.

Learn More

https://www.epi.org/publication/why-america-needs-a-15-minimum-wage/

https://www.cnbc.com/2021/01/26/democrats-reintroduce-15-minimum-wage-bill-with-unified-control-of-congress.html

https://www.cnn.com/2021/01/26/politics/congress-15-dollar-minimum-wage-increase-democrats/index.html

https://www.washingtonpost.com/us-policy/2021/01/28/biden-minimum-wage-stimulus/

https://www.bloomberg.com/opinion/articles/2021-01-21/don-t-fear-the-15-minimum-wage

New Efforts Seek to Reduce Growing Rates of Child Poverty

New Efforts Seek to Reduce Growing Rates of Child Poverty

Brief #109

New Efforts Seek to Reduce Growing Rates of Child Poverty

Rosalind Gottfried    

February 8, 2021  

Policy

President Biden seeks to raise the child tax credit to $3600 for children under 6 and to$3000 for school age children under 18.  This is up from the current level of $2000 per child.  As part of the stimulus, this change would become effective in July and last for one year though many Democrats would like to see the change made permanent.   The credit would be available to individuals making $75,000 or less and couples making $150,000 or less.  It would be based on income data from 2019 or 2020.  To increase the effectiveness of the tax break, families could receive monthly payments of between $250 and $350 to meet their routine bills.  Researchers at Columbia University estimate that this measure could reduce the child poverty rate by close to 50%.  The proposal gained support with the weak jobs report released last week.  The cost of the program would increase the federal deficit by 120 billion dollars.

On February 8th the American Family Act was re-introduced in Congress; it would maintain these increases and extend them to individuals making up to $150,000 and couples making up to $200,000.  In order to maintain the value of this increase, future credits would be tied to the rate of inflation.  Mitt Romney has introduced a competing bill which would provide a tax credit of $3000 for school age children and $4200 for children under 6 but the net gain would be undermined by the elimination of the TANF program (Temporary Assistance for Needy Families, often referred to as “welfare”); the end of the State and Local Tax deduction (SALT); the loss of the head of household designation; and cuts to the Child and Dependent Care Tax Credit.

Analysis

The losses of family income and resources, from the pandemic, have increased food insecurity in families with children from 14-28% and roughly 20% of these families are behind in rent.  Treasury Secretary Janet Yellin has promoted the child tax credit as one mechanism to help the economy, especially given the tepid rate of the jobs recovery.  She cautions that failure to act quickly and large will result in a long and slow economic recovery like the one seen in response the to 2008 recession.  Though there would be a cost to the fiscal budget, the ultimate cost of child poverty will be far greater in hunger and housing loss as well as in the future well-being of children who will suffer setbacks in education, health, and work.

Learn  More References

https://www.cnbc.com/2021/02/09/democrats-include-3000-dollar-child-tax-credit-in-covid-relief.html

https://www.nytimes.com/2021/02/07/us/politics/child-tax-credit-stimulus.html

Which Companies are Profiting from the Pandemic?

Which Companies are Profiting from the Pandemic?

Which Companies are Profiting from the Pandemic?

Rosalind Gottfried    

February 3, 2021

Policy

With the roll out of COVID 19 vaccinations, and the Biden administration’s pledges to speed their dissemination, it might be imagined that the drug companies are reaping enormous profits.  This would be, in large part, an incorrect presumption.  Because many of the pharmaceutical companies took money to develop the vaccine, there are limits on how much they can charge for the product.  Pfizer, one of the first to bring a successful vaccine to market, did not take government funds for research and development of the vaccine; they did join Operation Warp Speed, at a cost of $1.95 billion to the government to provide the first batch of 100million free to the public.  They will charge the government $39.99 per two dose protocol.  While the vaccine costs $15 per person to produce, there are also shipping, administration, and distribution costs.  They are expected to sell $14bn orth of vaccine in the first year.

Multiple factors will contribute to modest profits from the vaccine.  Competition from other companies will limit the price any one company can charge. Moderna and Merck plan to sell vaccines for profit but AstraZeneca says they will sell 300 million doses at no profit and Johnson and  Johnson has asserted that it will not profit during the emergency pandemic.

The pandemic fat cats are the online retailers and services.   E commerce nearly doubled in May 2020.  Amazon spending was up 60% in May-July compared to the same time the previous year.  E commerce increased 38% and Wal-Mart 6% during the same months.  Before the pandemic, Amazon accounted for 4% of retail sales and that figure increased to 15% by 2020.  Economists project a potential rise to a 25% share by 2025.  Amazon is valued at 1.5 trillion dollars, an increase of a half trillion in 2019.  Predictions suggest that 100,000 brick and mortar stores will close by 2025.

Amazon charges their third party merchants a fee to be on the site and takes a percentage of the price of each item sold.  Average sellers fees typically range from 6-15% of the product but can be significantly higher in some cases.  Additionally, they charge to advertise; a company is compelled to place ads because research shows that their sales will fall if they are not in the top of lists for an item.  Amazon is ranked third in advertising revenue behind Google and Facebook.  In fact, around 50% of consumers go straight to Amazon when doing a product search.

In addition to the charges to third party merchants, Amazon has been known to change policies with little, or no, warning and also provide little clarity.  For example, in March 2019 Amazon allowed only household essentials, medical supplies, and high demand items in their warehouses though they failed to clarify these terms, particularly the latter one.  Merchants complained that the items in their stock deemed acceptable appeared arbitrary and also that when the constraints were lifted many items were lost, unpacked, incorrectly counted, and delivered unpredictably.  This could cause merchant ratings to drop and that not only reduces business but runs the risk of having the merchant dropped from the site.

Amazon is facing an  anti-trust suit  from a consumer law firm that alleges price-fixing of their e-books.It is anticipated that a government anti-trust suit against the company is coming soon. In addition the Federal Trade Commission has ordered Amazon to pay $61 million in stolen pay.

Some accusations have been made that Amazon uses data showing high demand products to develop a private competing brand.  Amazon has denied these accusations but they were mentioned in the House anti-trust hearings last spring.  Though the practices are difficult, most merchants cannot afford to stay in business if they are eliminated from the Amazon site.  Amazon merchant practices were brought into question in the Judiciary hearings as was their propensity to acquire companies which would compete with them or could promote their activity.  For example, Amazon bought Zoox, a company working on self-driving cars, for 1.2 billion dollars; these cars could eventually be used to deliver the Amazon purchases.

Apple is another company that has made huge profits in the Covid-19 era.  Similarly, revenue for Microsoft was 40 billion dollars and 28 billion for Facebook in the last quarter of 2020.  Apple had sales of 111.4 billion dollars in the past three months of 2020.  Part of this was due to the new Iphone 12 and to the holiday season.  Their profit was up by 29 % for the same period from the previous year in spite of some temporary store closures during the shelter at home periods.  Apple shares soared by 84% in 2020.

Analysis

The U.S. House Judiciary Committee antitrust subcommittee’s report, on competition in Digital markets suggests that policies regarding these online enterprises may soon be subject to anti-trust and business practice legislation restricting their operations.  Google, Amazon, and to a lesser extent, Facebook were prominent in the report’s narrative.  However, so far it has been difficult to restrict the practices and marketing of these entities.

It has been suggested that the taxation of global digital companies should be harnessed to pay for the pandemic and related expenses.  The state of California has seen a coalition promote a bill to increase the corporate tax from 8.84 % to 9.6 %, that would produce 2 billion dollars a year to go for housing the homeless.  Critics suggest that this legislation would produce a flight of businesses from the state which some analysts believe is already under way.  The Bill, however, would increase the taxes on any company earning over 5 million dollars of profit in the state, regardless of where they are located.  Governor Newsom declined to support an increased tax on the wealthy, which was another strategy promoted by some to alleviate the lack of services and revenue in the state.

Learn More Resources

https://time.com/5870826/amazon-coronavirus-jeff-bezos-congress/

https://www.theguardian.com/technology/2021/jan/27/apple-profits-latest-quarter-surge-pandemic

https://www.accountingtoday.com/opinion/paying-for-the-pandemic-are-increased-taxes-the-answer

https://apnews.com/article/los-angeles-san-francisco-legislation-coronavirus-pandemic-california-0133e0538912a106614da56aff7ea20c

https://www.marketplace.org/2020/11/12/how-much-could-pfizer-make-from-a-covid-19-vaccine/

https://www.geekwire.com/2020/analysis-read-antitrust-case-amazon-key-takeaways/

https://sellercentral.amazon.com/gp/help/external/200336920

Resources

https://www.mediate.com/articles/awiener2.cfm Information regarding online dispute regulations

Biden’s Economic Executive Orders

Biden’s Economic Executive Orders

Economic Policy Brief #107

Biden’s Economic Executive Orders

Rosalind Gottfried        

February 1, 2021

Policy

In addition to his $1.9 trillion stimulus plan, now being debated in Congress, President Biden has signed  a number of Executive Orders  affecting the  well-being of struggling Americans.

These included a request that the Department of Education further suspend student loan payments to alleviate the burden on debt carrying graduates.  He also requested the suspension of evictions and foreclosures on 44 million rental units across the country.

.  A group of Covid-19 related Executive Orders included  creating a Covid-19 response coordinator position; invoking the Defense Production Act to fill supply shortfalls; providing for FEMA reimbursement for National Guard costs; establishing a pandemic testing board and expanding testing; bolstering access to treatment and care for the virus; improve collection and analysis of pandemic related data; mounting a more effective vaccinating campaign; providing guidance for the safe re-opening of schools; establishing an OSHA guide for worker safety; establishing a covid-19 Health Equity Task Force; and tightening Buy American rules for government COVID-related  procurements.  Addition Executive Orders called for  an end to the Justice department’s utilization of private prisons and restored the collective bargaining rights of federal workers.

Analysis

Biden has made use of Executive Orders to pass what can be done through this mechanism. However Executive Orders do not allow for the funding of new programs; that is the responsibility of Congress to approve. So the President is now  pushing for a $1.9 trillion coronavirus relief program and Senate Majority leader Chuck Schumer has pledged to start the process of  Budget Reconciliation that would allow for the Bill to pass with a split 50-50 vote with Vice President Kamala Harris breaking the tie and casting the deciding vote..  House leadership is also moving to pass the Bill through a budget reconciliation process.

Learn More References

https://www.marketwatch.com/story/all-of-president-bidens-key-executive-orders-in-one-chart-2021-01-21

https://fortune.com/2021/01/26/stimulus-check-3-update-3rd-checks-payments-irs-1400-who-gets-qualifies/

https://www.cnbc.com/2021/01/27/covid-stimulus-update-democrats-prepare-budget-reconciliation.html

State and Local Jurisdictions Need Federal Aid to Be Viable

State and Local Jurisdictions Need Federal Aid to Be Viable

Economic Policy

Brief #106

State and Local Jurisdictions Need Federal Aid to Be Viable

Rosalind Gottfried        

January 25, 2021

Policy

State and local government budgets provide the bread and butter of fiscal life and, because of the pandemic costs, require a federal infusion of aid to accomplish maintenance of essential servicesState and local governments provide major funding for infrastructure, services, and education.  They outspend the federal government on goods and services and account for 15% of the GDP.  They contribute more than 90% of the moneys for education and 80% of transportation spending.  State Medicaid costs have been on the rise, especially in Republican states that did not take advantage of federal extensions of benefits to states. State and local entities employ more people than domestic manufacturing and and  have lost 1.3 million jobs since March, representing the smallest workforce since 2001.  These are budgetary elements which impact the availability of goods and services which contribute to quality of life, such as police, fire, and waste services.

Fiscal shortfalls are projected at 172-308 billion dollars through July 2022 and are expected to reach 450 billion dollars in three years.  This is after considering the utilization of state rainy day funds ranging from 72-119 billion dollars (estimates vary by sources).  The situation has been deteriorating with the lengthening pandemic shut downs and is more severe in localities that have not fully recovered from the Great Recession.

Revenue has been reduced as a result of the pandemic related unemployment, shuttered businesses, and healthcare expenses.  Tax revenues from March to October were down by 4.1% from the previous year, with corporate tax down 6.7%; sales tax down 3.8%; and personal income tax down 2.7%.  Some states fared better than others due to high income workers earning at home and to stock market earnings.  In the second quarter of 2020, State and local spending was down 6%, the biggest drop since 1952.  In the third quarter, spending dropped by an additional 4%.

 

Analysis

Generally, the two approaches to budget constraints are to cut spending and/or increase revenues.  In the Great recession both strategies were utilized.  In today’s pandemic neither of these scenarios seems feasible since there is still high unemployment and measures to help low and middle income people hold onto more fluidity are antithetical to raising taxes.

State and local budgets have two aspects.  The first is the operating budget which pays out for salaries, services, and maintenance needs such as minor infrastructure repairs and is funded by annual revenues.  The second is the Capital Budget which invests in major projects and is largely funded by long term mechanisms such as bonds.  Local budgets can be supported by chapter 9 bankruptcy laws not available to the states.  States, by law must operate with balanced budgets (except in Vermont).   As states work through their revenue shortfalls and accrued rainy day funds they are facing deep cuts in services which they can ill afford.  The federal government must step in if the quality life is not to sink more dramatically that is has in the past ten months, especially in the areas of education and health care.

In the CARES act of the early pandemic, state and localities received an infusion of 150 billion dollars, and the persisting conditions are promising to create ever larger budgetary gaps.  Biden’s current stimulus plan includes an infusion of 350 billion dollars for states and localities and 400 billion in pandemic relief which includes money to schools.  It would seem there is not time like the present to pass this plan.

Learn More

https://www.cnn.com/2020/12/19/politics/state-local-government-congress-relief/index.html

https://www.cfr.org/backgrounder/how-covid-19-harming-state-and-city-budgets

https://fortune.com/longform/state-budget-deficits-covid-economy-predictions-outlook/

Biden’s Plan for an Ailing Country

Biden’s Plan for an Ailing Country

Brief #104

Biden’s Plan for an Ailing Country

Rosalind Gottfried        

January 17, 2021

Policy

President elect Joe Biden’s 1.9 trillion dollar stimulus plan provides a comprehensive assault on what ails America and reinstates some of the controversial elements rejected by Republicans in the $900 billion December plan.  Most notable is a reinstatement of 350 billion dollars to bolster state and local budgets suffering shortfalls largely attributable to the pandemic crisis.  It also includes 400 billion dollars of pandemic aid to vaccinate Americans and open schools.  Biden set a goal to vaccinate 100 million Americans in his first 100 days in office.

To address the needs of individuals and families, Biden is providing $1400 dollars in direct payments to individuals; up to $8000 in childcare tax credits; federal subsidies of $400 weekly for unemployment benefits through September; sustained pandemic relief payments to freelance and other workers not normally eligible for unemployment benefits; emergency paid leave; and rental aid.  Grants to small businesses will also aid in sustaining the well-being of families.

Other provisions include raising the minimum wage to $15 per hour; increased funding for Community Health Centers and funding to mitigate the spread of the pandemic in prisons and jails.  Additional programs to address the exponentially increasing crisis of hunger, particularly among children, are also addressed.  Biden plans a broader set of programs to be proposed in February starting with raising taxes on corporations and the wealthy.

Analysis

Of course, all this hinges upon passage of the bills in Congress where the Democrats have a narrow lead in the House and are tied with Republicans in the Senate.   Biden’s plan is 50% greater than the program passed in 2009 by the Obama administration in response to the great recession.  That plan was narrowly passed among sharp dissension.  Biden’s plan enjoys some support absent in the Obama era, such as from entities like the Chamber of Commerce.  The pathway to success is tenuous at best.  The Democratic leadership expects major Congressional resistance and is unlikely to get the 60 Senate votes needed to avoid a filibuster.  The Democrats are hoping to invoke the budget reconciliation process to bypass the filibuster, a strategy Trump utilized to pass his 2017 tax cuts. In the February program Biden hopes to address job creation; infrastructure projects; clean energy programs, and more.

The stimulus will be funded by borrowing and the Biden administration suggests that this is not alarming because inflation and the interest rates are low.  He is likely to argue that the top 1% richest Americans gained 1.5 trillion dollars in assets since the pandemic.  Financial institutions are flush; JP Morgan posted profits of 12.1 billion dollars in the last quarter and BlackRock showed increases of 19%.   The administration will refer to these trends to reassure policy makers and representatives that the country can cover an increased debt.  The Democrats are planning major overhauls to the Fannie Mae and Freddie Mac mortgage programs which would build capital reserves and may ultimately lead to privatization of these government supported entities. Additionally there is pent up demand for goods and services and from personal savings that have accrued to some parts of the population during the pandemic shutdown which should bolster the budgets in the recovery.

In the coming weeks President elect Biden is expected to propose additional  programs to address multiple crises in the country frequently cited in the news.  These include economic recovery; virus containment; racial injustice; inequality; a financially and politically disaffected working and middle class; climate change; and myriad other issues reflected in new levels of partisan bickering. USRESIST NEWS will provide our readers with information and analysis of Biden administration policies as they are rolled out.

 

Learn More

https://www.nytimes.com/2021/01/14/business/economy/biden-stimulus-plan.html?action=click&module=RelatedLinks&pgtype=Article

https://www.npr.org/2021/01/14/956940196/-1-400-checks-and-help-for-the-jobless-whats-in-bidens-plan-to-rescue-the-econom

https://www.nytimes.com/2021/01/15/business/dealbook/biden-economy-deficit.html

Engagement Resources

https://joebiden.com/the-biden-emergency-action-plan-to-save-the-economy/

Biden’s program website

Income Inequality in California Points to Economic Shifts Nationwide

Income Inequality in California Points to Economic Shifts Nationwide

Economic Policy

Brief # 103

Income Inequality in California Points to Economic Shifts Nationwide

By Linda F. Hersey

December 29, 2020

As California goes, so goes the nation.

Whether it is culture, policy or innovation, the nation’s most populous state has long been a frontier for change and a reliable predictor of trends for the rest of the U.S. and around the globe.

That is among the reasons why the widening income gap between the state’s wealthiest and poorest citizens, coupled with an outmigration of the middle and working class, increasingly concerns economists and policy makers.

California may command the nation’s largest economy – indeed, among the largest in the world — but it also has among the highest poverty rates in the U.S. California’s poverty rate is 19 percent while the poverty rate for the nation is 14 percent.

Economists warn there is no easy fix. Income inequality in California, they argue, points to significant changes well under way across the economy, as high-tech automation deletes the need for human labor in manufacturing and other traditional jobs.

For Californians, these are the best of times and the worst of times, economically.  The San Francisco Bay area, for example, enjoys a net worth of close to a half-million dollars per resident.  Yet San Francisco’s historic Tenderloin neighborhood reports a poverty rate that hovers at just over 50 percent.

Fundamental Structural Shifts in the Economy

Richard Florida, who directs the Martin Prosperity Institute at the University of Toronto, argues that California is experiencing fundamental structural changes in its economy that are likely to occur in other states.

Florida told the New York Times that income inequality seen dramatically in California is a “symptom of the bifurcation of the labor market into a small share of knowledge jobs and a much larger share of low-wage service jobs.”

California, the leading incubator state for knowledge jobs, ranks among the top 10 states in economic growth, outpacing the nation as a whole.

California also is experiencing a population decline – with a net outmigration of residents to nearby western states that include Texas, Arizona and Oregon, as people who are struggling move elsewhere.

People most likely to leave California are high-school educated, low- and middle-income adults with families, while college-educated high-income earners are more likely to move to the Golden State, according to a 2018 report by the California Legislative Analyst’s Office.

The Public Policy Institute of California reports that the biggest determining factor for economic prosperity for Californians is education.

The job market in the knowledge economy rewards people with a four-year college degree or higher, while median income has dropped for adults without college degrees.

There also are racial disparities in income levels that need solutions. The Public Policy Institute of California found that only about 10 percent of the state’s top wage earners – those with incomes above the 90th percentile — are Latino and African American, though they make up more than 40 percent of the state population.

Renewed Focus on Education, Economic Development

California is a bellwether for economic transformation in the U.S. and other advanced nations around the globe. While less dramatic, income inequality is up in other states, including Alabama, Nebraska, New Hampshire, Virginia and New Mexico.

The California experience, and the lessons learned, need to be recognized and applied in economies moving rapidly into the new Knowledge Age, which favors the well-educated and technological elite.

Closing the income gap will require a combination of policy changes to reduce disparities, including more tax and safety net programs, along with a renewed focus on improving opportunities for education, economic development, housing and transportation.

Engagement Resources

Public Policy Institute of California is a nonpartisan think tank dedicated to improving and advancing the state’s public policies through independent research.

Legislative Analyst’s Office of California is a nonpartisan fiscal and public policy adviser to the state Legislature.

U.S. Census Bureau follows a directive to measure poverty in the United States. Here is a primer on how the Bureau defines and measures poverty.

Which Companies are Profiting from the Pandemic?

Congress Finally Agrees to a Tepid Stimulus and a Federal Budget

Brief #102

Congress Finally Agrees to a Tepid Stimulus and a Federal Budget

Rosalind Gottfried        

December 20, 2020

Policy

A sustained disparity in the goals of Congressional Democrats and Republicans has ended in a compromise bill which leaves many Americans still vulnerable to the effects of the corona virus economy while providing a stopgap measure to avoid the worst case scenario.  The 900 billion Stimulus bill is tied to a government spending plan which avoids a last minute government shutdown.

The stimulus includes a $600 direct payment to persons earning under $75,000.  It includes money for people using Taxpayer Identification Numbers, making undocumented immigrants eligible who were barred for participation in the March stimulus.  This figure represents a lower amount than proposed by the Democrats and more than that initially supported by the Republicans; it also had the support of President Trump.   It also provides $600 per child.  Direct infusion is necessary to help strapped citizens but insufficient for the 8 million who have fallen into poverty since June.  It also may not be enough to help the unemployed avoid some of the consequences of long term unemployment.

The plan also provides for $300 a week of federal subsidies for regular unemployed benefits.  It also extends the access of gig and freelance workers though these will expire in less than three months.  Without the new stimulus, an additional 12 million workers would have lost their benefits at the end of the year.  Both the direct cash payments, and the unemployment subsidies, are half of what was provided in the March stimulus.

The stimulus also covers $285 billion for businesses in Paycheck Protection Programs of forgivable loans; $20 billion in federal loans for small businesses, extension of aid to nonprofits, local news sources; and $15 billion for entertainment venues including independent movie theaters.  The bill provides $82 billion in aid to colleges and schools; $13 billion in nutritional supplements; funding for tracing, testing, and vaccine distribution; $7 billion for broadband access; 25 billion in rental assistance; and an extension of the moratorium on evictions which had been set to expire at the end of the year.

In reaching this agreement, the Democrats dropped demands for aid to state and local governments which face large layoffs.  They also won an extension for spending funds remaining from the March stimulus.  The Republicans dropped demands for liability protections for hospitals and businesses.  The two parties agreed on language limiting the power of the Federal Reserve to make loans and emergency funding for businesses, municipalities, and other institutions to prohibiting copycat programs passed in the March stimulus; the Republicans wanted to make a more sweeping limitation on the power of the Fed.

The government spending bill, scheduled to begin at 12:01 Tuesday (with a one day emergency provision for Monday) will see funding for twelve major federal departments, and the safety net, sustained to the end of the fiscal year (September 30, 2021).  The spending bill contains a provision to ban supplemental bills form out of network providers, forcing the providers to work with the insurance companies, as promoted by the Democrats.  The budget will also expand federal Pell grants for tuition to low income students and revoke a ban on grants to prisoners pursuing education while incarcerated.  Provisions for clean energy to counter climate change and to reduce hazardous chemicals in refrigeration and air conditioning are also in the spending plan for the first time in ten years.  These are seen as a hit on President Trump’s administration.

Analysis

In the end, the program represents a huge step down from the over 2 trillion plan the Democrats supported and the more stingy plan proposed by the Republicans.  Nancy Pelosi has called the current agreement an “initial step” and Biden sees it as a down payment on the stimulus plans he hopes to implement in his initial weeks as President.

The current program may help the most desperate situations from occurring in families with unemployed and curtailed workers but it comes too late for many workers and businesses.  Research indicates that half of the businesses that shut down in the spring failed to reopen or did so but then shuttered again.  The ultimate fate of these businesses is hard to predict.  Biden’s commitment to provide more aid is highly likely to falter with the expectation of  economic recovery anticipated by the availability of vaccination programs.

Long terms effects of the recession are disproportionately felt by the lower income workers who are more likely to be women and persons of color.  The racial income gap has widened and women are leaving the labor force in greater numbers.

Time will tell whether President-elect Biden will successfully infuse more aid into the struggling economy but if the debacle of the prolonged debate on the current stimulus is any indication, he appears unlikely to meet the challenge, especially with the Republicans touting the return of commerce that the vaccine promises.

Learn More References

https://www.nytimes.com/2020/12/20/us/politics/congress-stimulus-deal.html

https://www.nytimes.com/2020/12/20/business/economy/stimulus-bill-congress.html

https://www.cnbc.com/2020/12/20/mcconnell-says-congress-has-agreed-to-900-billion-coronavirus-stimulus-deal.html

Resistance Resources

https://www.govotega.org/

Organization to get out the vote in Georgia where two pivotal Senate seats will be elected in early January

The Crisis In American Higher Education; College Enrollment; Student Debt; Student Loan Forgiveness

The Crisis In American Higher Education; College Enrollment; Student Debt; Student Loan Forgiveness

Brief #101

The Crisis In American Higher Education; College Enrollment; Student Debt; Student Loan Forgiveness

Rosalind Gottfried        

Economics

December 21, 2020

Policy

The pandemic has exacerbated troubling trends in higher education.  College enrollment fell by 11% from 2011-2019.  The rate of decline accelerated in the past year, with undergraduate enrollment falling by 3.6% from the previous year; that is two times the previous year’s rate.  The brunt of the decline has been sustained by Community Colleges where enrollment fell by 10%.  Community Colleges, public institutions with two year college degree and certificate programs, educate the largest group of college students in the country and service a disproportionately high percentage of low income students and students of color.  They also suffer the most underfunding, in higher education, as they don’t command as much public money as four year schools and they maintain low tuition as part of their mandate.

The high school class of 2020 demonstrated a 21.7% drop in college enrollment which was unevenly spread over the graduating class.  In high poverty high schools the drop was 32.6% while the drop was only 16.4% in low poverty schools.  The fear is that the class of 2021 will have similar data.  FAFSA (the federal application for student financial aid) applications are down 14% and some colleges, including the California State University system, have extended their admissions deadlines in the hope of gaining more applications.  During the pandemic, short certificate graduate programs and Masters Programs showed some increased enrollment, along with for profit schools.  Many for profit undergraduate programs spend a lot of money on advertising and they charge high tuition and generally show low graduation and employment rates.  These colleges are thought to be siphoning some of the potential pool of community college students, partially because of their advertising and also because they have a history of easy access and online learning.

Even when the effects of the pandemic are eliminated, demographic shifts in the population point to a decreased pool of eligible college students.  The portion of students graduating from high school will peak in 2025 and then face a period of sustained decline until 2037.  In response to lowered enrollments, many institutions have experienced layoffs and furloughs among staff and faculty.  Some schools have canceled sports, certain majors, and even whole departments.  Fifty universities have suspended enrollment in their doctoral programs.

The pandemic has many students questioning the efficacy of gaining a higher education, especially among low income students.  Many students are wary of paying tuition for online learning instead of  opting to join the workforce and make money, potentially saving it for future education opportunities.  Data show, however, that the longer an individual delays college attendance, the less likely they are to ever attend.  The most vulnerable students are first generation college students and they are disproportionately from low income and/or non-white households.  These students are also vulnerable to failing to complete degree programs and still owing payments on student loans, without the benefits of jobs requiring college degrees.

Student loan debt is at a record high of 1.6 trillion dollars.  Student loan debt is second to mortgage debt.  Forty five million people hold student loans.  Forty five percent of loan holders, benefitting from student loan forbearance in place until January 31st, say they fear they will be unable to make their subsequent payments.  The median loan payment is $222 and the average (mathematical) is $393, likely accounting for the small proportion of students with over 100K in debt.  Thirty percent of students graduate without any loan debt and 23% have less than $20,000 in debt.  These figures likely represent the students from affluent families or the small portion that gain full financial aid.  These figures highlight the likelihood that the low and moderate income students are the most likely to accrue debt and they are also the ones who are most likely to struggle to make payments.  If young adults are not saddled with student debt, they could buy houses, cars, start businesses and families—all things which have been delayed or eliminated.  It is estimated that loan forgiveness would boost the GDP by 108 billion dollars per year and add 1.5 million jobs.

Analysis

President elect Joe Biden has pledged to address the issue of student debt forgiveness.  Senators Warren and Schumer support eliminating up to $50,000 in student debt and that is one consideration.  A majority of Americans favor student loan forgiveness of up to $50,000.  Another possibility is that Biden will move quickly to forgive $10,000 in federal student loans per individual, through Executive Order which is possible under the current Higher education Act.  The senators also want to eliminate the tax liability on the loan forgiveness which is currently accrued by the small portion of students who have gained forgiveness under public programs.  Americans feel that tax breaks made for the very wealthy are unfair and “regular” Americans should also get a comparable break. Those tax breaks made under the Trump administration did not improve the economy though canceling debt for the lower income groups would boost the consumer power of that group.

The Biden administration is considering multiple fixes to the crisis in higher education.  In addition to forgiving debt, the proponents of reform suggest restructuring education funding and making four year public colleges tuition free.  The federal government will have to support higher education in new programs because tuition increases already have stretched family budgets.  In 1968, the ratio of college tuition to income was 1:30; today it is 1:5.  Incomes have stagnated or increased only minimally.  Many schools increased tuition during the Great Recession to compensate for slashed state budgets and cannot sustain viability without a federal infusion of funds.  The millennials are the first generation to be worse off than their parents and the bulk of this trend is seen among the most vulnerable groups, namely low income students and students of color.  Biden can help, though there is concern that if he invokes his power of Executive Order it will be contested in the courts, possibly up to the US Supreme Court, a worrying prospect.

Learn More References

Resistance Resources

x
x

Join the Resistance---Your donation helps support the work we do to bring you news and analysis of government policies and the organizations seeking to resist them.

Pin It on Pinterest