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It’s been more than three months since the March-April economic rescue package, called the Cares Act, expired at the end of July. Since then both political parties, Republican and Democrat, have played a ‘hot potato’ bargaining game: i.e. “here’s my offer, the ball’s in your court…Here’s mine, now it’s your turn”. This week the game continues, showing no indication of ending.
Last March’s ‘CARES ACT’ was not a fiscal stimulus. It was instead about ‘mitigation’–meaning the various measures contained in that $2.3 trillion package (actually nearly $3T when the additional $650 billion in business-investor tax cuts are added to the Act) were designed only to put a floor under the collapsing US economy–not to generate a sustained economic recovery. Even the politicians voting for it publicly acknowledged at the time that it was not a stimulus bill, but rather a set of measures designed to buy time–no more than 10-12 weeks at most–until a more serious economic recovery Act could be implemented.
The real fiscal stimulus bill was to follow, designed to pick the economy up off the floor and generate a sustained recovery as the economy reopened. The reopening began in May and gained a little momentum over the summer. But not enough to generate a sustained recovery by itself that was expected by late summer.
In a typical Great Recession trajectory, the reopening over the summer resulted in a roughly two-thirds recovery of lost economic activity by end of July. It was thought by politicians and mainstream economists that, when the reopening crested at two-thirds in July, a subsequent real stimulus bill would follow. The two forces–reopening and fiscal stimulus–would together generate a sustained recovery.
But it just didn’t happen that way. Nor is it to date.
The Democrats in the US House of Representatives presented their version of a fiscal stimulus bill–called the HEROES ACT-in late May. But the Trump administration and the McConnell led Republican majority in the US Senate balked at joining in passing a stimulus bill.
McConnell & friends looked around and it appeared big business and corporations and banks were doing just fine by June–even if small business and working households were not. A few exceptions to big business doing well were the airlines, hotels and some leisure and hospitality industries. But banks and other big corporations were fat with cash. The Federal Reserve had already pumped nearly $3 trillion in virtually free money into the banks. And big corporations had raised trillions of dollars more by selling corporate bonds at record historical levels, at cheapest rates, also made possible by the Federal Reserve. Trillions more were hoarded by borrowing down their credit lines with banks, saving on facilities operations, and temporarily suspending dividends and stock buybacks.
McConnell, Trump and their business constituencies didn’t need more stimulus. Indeed, they didn’t even need the Cares Act even. That Act, passed in March, included among its provisions no less than $1.1 trillion in loans for medium and large businesses, along with $650B in tax cuts for the same. But as of this past August, less than $150 billion of that $1.1 trillion had actually been borrowed by big businesses and spent into the economy, and it appears little of the tax cuts resulted in production increases or hiring as well.
So in June, McConnell and the Republican Senate simply dug in their heels for two months and simply ignored the Democrat House stimulus proposal in the form of their late May passed $3.4 trillion HEROES ACT bill.
In July McConnell eventually put forth his proposal, called the ‘HEALS Act’. It totaled $1.5 trillion, but was loaded withambiguous and onerous language like exempting all businesses from any and all legal claims for negligence for failing to provide safety and health conditions for their workers.
By end of July the only real provisions of the Cares Act that provided any semblance of economic stimulus ran out. That was the $500 billion in extra unemployment assistance to workers, the $1200 checks, and the $670 billion in grants and loans (mostly grants) to small businesses. The unemployment, checks and grants amounted to government spending of only $1.2 trillion of the Cares Act’s $3 or so trillion. That $1.2 trillion was, and remains, the only actual spending to hit the economy, since the $1.1 trillion in loans to large-medium corporations has never been actually ‘taken up’ and spent into the economy by business. Ditto for the $650 billion in business tax cuts in the Cares Act. So only a little more than a third of the Cares Act resulted in any economic spending.
That $1.2 trillion, moreover, amounts to barely 5.5% of US GDP. In GDP percentage terms, that’s roughly the size of the 2009 stimulus of $787 billion spent during the previous Great Recession of 2008-09. That $787 billion proved insufficient at the time to generate a prompt recovery from that recession. It took six years just to get back to the level of jobs in 2007 before that recession, for example. But today’s 2020 Great Recession 2.0 is four times deeper in terms of economic contraction compared to 2008-09. And it’s still only an effective 5.5% spending package as contained in the March Cares Act.
A much more aggressive stimulus bill was desperately needed as a follow up as the Cares Act spending ran out at the end of July. The May HEROES ACT was an attempt to provide that follow up actual stimulus but, as noted, McConnell, Trump and Republicans weren’t interested. Their banker and big business constituencies were doing quite well by early-summer. No doubt Trump-McConnell further believed the reopening of the economy, as Covid 19 disappeared, would prove sufficient to lead to a sustained economic recovery.
Of course, history has already proven them wrong.
By late July many sectors of the US economy began to weaken again. And a second, worse wave of Covid 19 hit the economy in July-August, just as the weak Cares Act spending ran out at the end of July. Unemployment claims began to slowly rise again through August and into September. Small businesses began to closure, many permanently now, in greater numbers. Large corporations began to announce mass layoffs, more permanent than just furloughs now. Evictions of renters by the millions began to occur. Low income homeowners began to miss mortgage payments. And the much predicted V-shape recovery began to look increasingly like a ‘W-shape’.
But instead of seeing the trend, Trump and McConnell doubled down and refused to negotiate seriously with the Democrat House on its HEROES Act proposal. In early August, House Speaker Pelosi, thinking the Trump administration might bargain in good faith, reduced her proposal from the HEROES Act $3.4 trillion cost to $1.2 trillion. Instead of following up, however, the Trump negotiators, led by Trump’s Staff Secretary, Mark Meadows, abruptly broke off all negotiations–without making a counter offer. What he did leave though was a bad taste in the mouths of Pelosi and Shumer, who now could not trust the Trump team should further negotiations resume. Nor could they trust McConnell and his Republican Senate, who followed Trump and withdrew their prior HEALS ACT $1.5T and refused to consider anything more than $650 billion if brought to the Senate by the Trump-Pelosi negotiators in the future.
Trump had set up Pelosi and then ‘sandbagged’ her, in bargaining parlance. Within 24 hours Trump publicly announced four executive orders as his personal fiscal stimulus offer. But the EOs were no stimulus in fact. Just a diversion of already existing government funds and payroll tax cuts that would have to be repaid in 2021.
Both sides maneuvered in the press thereafter, as the US economy weakened further throughout September and into October–and as the Covid 19 infection rates surged once again. The Virus was not cooperating with economic recovery. And there was no stimulus to assist in that either. Meanwhile, millions more were becoming unemployed–at least 30 to 35 million remained jobless as of mid October. Food deprivation worsened and food lines began emerging again. Rent evictions were now escalating as well. Hundreds of thousands more small businesses were closing their doors, with predictions by the National Federation of Independent Business that millions would fail in coming months–even as bankers, big corporations, and stock and financial markets attained record levels.
Trump then shot himself in the foot by declaring there would be no further negotiations on a stimulus until after the November 3 election. McConnell said that was fine since 20% of his Republicans were against any further stimulus out of concern of its negative impact on the US deficit, which by October hit a record $3.1 trillion for the 2020 fiscal year–the largest in modern history.
Trump’s walking away from any further negotiations hurt his political chances, since not only were workers, renters, and small businesses being ‘thrown under the bus’, but the announcement had serious negative effects on stock market values. Now big corporations were worried too. So Trump back-tracked and made another bargaining offer.
Which brings us to events of the last 10 days. Trump offered Pelosi-Shumer an $!.8 trillion counter offer–complete with loophole language permitting him to renege on items of his choice. But it was an offer he couldn’t deliver, since McConnell in the Senate quickly added he wouldn’t even bring the $1.8T up for a Senate vote because he couldn’t get it passed within his own Republican ranks.
What the $1.8T did achieve was to get the corporate wing of the Democrat party, including its mainstream media arms–MSNBC, CNN, etc.–to raise the pressure on Pelosi to accept Trump’s phony $1.8T offer that he couldn’t deliver. What Trump wanted, and still wants, is just an announcement of a ‘deal’ that he can take credit for as he campaigns across the country before the election. What big business wants is the same, an announcement, not necessarily a deal. Stock prices and especially tech sector stocks have begun seriously wavering on news of no stimulus negotiations. An announcement would quell that issue and ensure stock prices remain strong through the election. Even some ‘left’ Democrats like Rho Khanna and Andrew Yang–both from silicon valley–chimed in and demanded Pelosi accept the Trump offer.
So what happens next, this week? Trump’s negotiator, Treasury Secretary Mnuchin and Pelosi have begun to talk yet again. Trump wants to announce a deal before the next presidential debate with Joe Biden this Thursday, only 72 hrs away. So it’s likely he’ll instruct Mnuchin to increase his offer to $2T or even to Pelosi’s $2.2T. He’s got nothing to lose, and he knows McConnell’s ‘hard cop’ is there backing him up to stop (or at least change the terms of any tentative deal) for him. Trump gains a campaign message. McConnell blocks any deal. And Pelosi and the Democrats get nothing once again except more negotiations, now with McConnell. It’s a clever ‘double-teaming’ of the Democrats by the Republicans, once again!
This writer has been following the day to day swings of the stimulus negotiations since last June. The brief history above provides an outline of that negotiations trajectory. For readers further interested, appended below are my day to day tweets describing the ‘On Again, Off Again’ negotiations, with some of the data and stats . (The tweets are in reverse chronological order, with the latest October 19 back to July 7, 2020.) Check out my blog, jackrasmus.com, for other articles written on the subject in recent months as well.
A Running Commentary on Stimulus Package Negotiations
October 19 to July 1, 2020
#STIMULUS Pelosi Sunday says a deal must be done in 48 hrs in order to have implemented by Nov. 3. McConnell says Republican Senate will vote on a $500B package ON WEDNESDAY (after 48 hrs.) That sounds like a maneuver to ensure no vote on whatever deal Pelosi-Mnuchin reach before
#STIMULUS Announcing a stimulus ‘deal’ does not=deal. McConnell’s Senate will reopen any announced deal & demand changes. Only chance for real deal is after Nov. 3 & only if appears McConnell loses control of Senate. Repub. Senators who lose their seats no longer fearful of Trump
#STIMULUS Watch Trump’s man, Mnuchin, to offer Pelosi a package of $2T to see if she bites. If not, he’ll go to $2.2T. Pelosi says language in Trump offer needs clarifying (‘may’ vs. ‘shall’, etc.) Some kind of announcement ‘in principle’ likely before Thursday night debate.
#STIMULUS Prediction: Trump will go beyond his $1.8T ‘offer’ last week (knowing McConnell would never approve it) & declare he’ll accept Pelosi’s $2.2T (knowing again McConnell’s Republican Senate will never approve it). All Trump wants to say is he closed the deal in next debate
#STIMULUS CNN & Corp mainstream media keep up their attack on Pelosi for not agreeing to Trump’s phony $1.8T offer that everyone knows McConnell’s Senate won’t approve. Trump will take credit and Pelosi still gets nothing. But CNN & media know stock prices will surge in meantime
#STIMULUS As I predicted yesterday, McConnell today says he won’t support Trump’s $1.8T stimulus offer. Says Senate will today propose a $500B deal (probably all bus. bailout). So Pelosi was right not to fall for Trump’s phony offer he can’t deliver but will take credit fo
#STIMULUS btw, why isn’t there more discussion why there’s $350B unspent funds from last March Cares Act, incl. $135B unspent PPP? With millions small bus. closing why isn’t that $350B being spent now? It’s already authorized. Why is it even part of future stimulus proposals
#STIMULUS Update: Trump says he’ll lobby Republican Senate to get stimulus passed–admitting his $1.8T offer is just talk & he can’t deliver; Republican Senate won’t agree. No way Trump-Pelosi deal even half $1.8T passes Senate by Nov. 3. McConnell to propose $350B unspent funds
#STIMULUS Trump reportedly today said will go higher than last offer of $1.8T. But Trump will say anything at this point, knowing that whatever the offer that the Republican Senate will never approve it. Rand Paul faction shot down $1.5T, then $1.0T, and even $650B already.
#STIMULUS Mainstream media offering no explanation or even discussion why $135B authorized by Congress for small bus. in March Cares Act has not been spent. Why has Trump admin. not spent that? Where’s the other $253B unspent funds coming from? Why is that not also spent?
#STIMULUS Mainstream media (CNN), tech corps & friends (Yang, Khanna, etc. & corp. Dems worried about stock prices) continue today (10-14)to gang up on Pelosi to force her to capitulate to Trump’s offer-i.e. same as McConnell’s last July. If Pelosi bites watch Trump renege
#STIMULUS A short history. July:McConnell offers $1.5T. Aug: Pelosi reduces -$1T to $2.2T. Trump breaks off negotiations. Sept:Trump offers $650B(incl. $350B unspent PPP/loans). Oct:Trump offers $1.88T(incl. $350B unspent)=No Repub net change since July despite Pelosi -$1T
#STIMULUS Some Democrats pressing Pelosi to take Trump $1.88T proposal. Yang, Sanders’ Rho Khanna, etc. But it’s same Repub July $1.5T offer+Trump’s unspent March PPP funds. Pelosi sandbagged by Trump in August; Trump will take credit and do it again. Some Dems are so dumb
#STIMULUS Mnuchin latest proposal=$1.88T. But $400B is unspent PPP & other funds from March CARES Act. So really just $1.5T, same as Republican ‘Heals Act’ proposal of last July when negotiations began. Not really counteroffer. It’s called ‘moving the money around’ in bargaining
#STIMULUS Just announced: Trump tells Mnuchin Ok for a larger $1.8T stimulus. (up from $1.5T). Pelosi at $2.2T. But don’t hold your breath. Key now: will McConnell take on Rand Paul Republican faction in Senate (who opposed $1T) to push through a likely $2T compromise stimulus?
#STIMULUS Trump reverses course again tonight, for 5th time in one week. Says he’ll now consider a stimulus deal >$1.6T Treasury Secretary Mnuchin left on the table last week in negotiations with Pelosi before Trump abruptly scuttled a deal saying no stimulus until after Nov 3.
#STIMULUS Trump says he’s again for comprehensive stimulus deal. That’s 4 flip-flops in < a week. Must be getting a lot of nasty calls from CEOs of airlines, US Chambers of Commerce, & the Business Roundtable. Can anyone trust what he says? Schizophrenia parading as negotiating!
#STIMULUS Check out my latest blog piece on events yesterday on current US fiscal stimulus negotiations, “Trump Scuttles A Fiscal Stimulus–Again!” at my blog, jackrasmus.com
#STIMULUS Just out! Trump tells Mnuchin to break off negotiations (again, as in August). Trump says no further negotiations and no stimulus until after the Nov. 3 election. So watch 4Q US econ to slow sharply again (and short your stocks while you’re at it)
#STIMULUS With a token fiscal stimulus package now all but dead in Congress (politicians scurrying home), looks like nothing until Dec., maybe Feb. US econ needs govt stimulus 40% of GDP=$4T (only $1.3T actually spent so far). Read my blog piece at
#STIMULUS Mnuchin reportedly said past hour that “IF” there’s an agreement it will include income checks. Mnuchin trying to keep markets from imploding if investors think no deal forthcoming. Many other major items still not agreed: benefit checks, state-local govt, etc.
#STIMULUS Pelosi-Mnuchin meet again today to try next stimulus. If agree, no more than $1.5T(Airlines bailout, small bus., checks, $400/wk extra benefits)=another mitigation not fiscal stimulus. With >$1T in bus. loans from March still unclaimed, $1.5T no real net stimulus
#Stimulus Talk of Pelosi-Mnuchin new stimulus talks, for a watered down package. Will Trump-Meadows let Mnuchin-Pelosi take back control of the bargaining agenda, after Trump grabbed it with his EOs? Or is Pelosi being ‘set up’ again for another Trump tactical move before Nov. 3?
#PPPprogram McConnell today says no new stimulus likely in 2020. Meanwhile, US small bus. collapsing: Natl Federation Small Bus. survey shows 21% plan to close in next 6 mos. That’s 21% now still open, on top of 20% already permanently or temporarily closed (Homebase survey).
#PPPLoans With the program closed down August 8, why is $134B of total available small business loans still not loaned out? If small bus. don’t want it, why not use it to provide 2 more months of $600/wk. unemployment benefits? If they do want & need it, why is it not loaned out?
#PPPLoans Hard hit restaurants, bars, hotels got only 8% of $525B loan money. Roughly $42B divided among more than 1 million restaurants, bars, & hotels-motels in the USA!
#PPPLoans Govt PPP closed out with 5.2m loans. 5.2m=only 16% of 30m small businesses got loans! $525B loaned. (1st $350B Ave.=$206k. Total Ave.=$101k). Last April study said 10m small bus. (not 5.2m) would need $180k and total cost needed=$1.8T. No wonder millions will now clos
#Bailout PPP small bus. loan prgm now ended. 5.2m loans worth $525B from available $660B pot. Federal Reserve’s companion MSLP small business lending facility provided <$1B to date. So why are corp bankruptcies spiking nonetheless & non-corp small businesses failing even faster?
#Stimulus Why are McConnell & Trump in no hurry to pass another stimulus? Cuz their big corp. constituents don’t need it yet. They’re sitting on $1.6T ($1T in corp govt loans & $650B in tax cuts) since last March they haven’t even claimed yet. It’s there if & when they need it.
#Stimulus Pelosi says no to Trump-McConnell plan for a ‘skinny’ minimum fiscal stimulus. Fed July 29 minutes reveal concern if no new stimulus by Congress as $600 jobless benefits expire, jobless rise, & state-local govts fiscal stress grows by Sept.–all of which now occurring
#Stimulus First rule of negotiating contracts is never make a counter-offer when your opponent reduces their initial offer. Signals weakness. Opponent then continue to probe to seek further concessions. Short stimulus in Sept. will mean Dems share responsibility for econ failure
#Stimulus Pelosi-Shumer will justify restarting negotiations at only $.5T, saying it’s only short term. After Nov. 3 they’ll negotiate another bill. But Congress won’t change until Jan. 20, presuming they win both houses. Six months from now US econ recovery will be a shambles
#Stimulus here’s the fundamental fact re. the status of econ stimulus negotiations between Trump & Dems: Dems reduced their proposals by $1T, to $2T. Repubs responded reducing theirs from $1T to est. $.5T today. Now Dems will start from a $.5T base as negotiations resume >Sept. 8
#Stimulus Rumors growing Pelosi & Dems moving toward deal worth only $500B-$1T. That’s even less than Republicans’ initial $1T proposal. If so, then they ‘blinked’ and will have capitulated to Trump’s breaking off negotiations tactic last week. $500B ensures deeper recession.
#Stimulus Pelosi offers to cut Dem $3T package ‘by half’. Does that mean, having already cut $1T, Dems signaling will cut $.5T more? Trump/Repubs preparing a 2nd offer. Will require Dems accept small bill if they want $25B for Post Office. If Dems bite on that, no more stimulus
#Stimulus NBER Economists’ report yesterday end of $600 unemployment benefit reduces jobless benefit to ave. $257/wk. Trump’s proposed $300 (from prior $600) cuts consumer spending 12% to 28%. If Trump can unilaterally cut payroll taxes (w/o Congress) why not capital gains too?
#Stimulus Chase bank says Trump’s 4 Exec Orders provide less than $100B economic stimulus. Govt’s $300 unemployment benefit only if state kicks in another $100. But many states’ unemployment funds exhausted & won’t. Oxford Economics says 4 EOs equal only 0.2% of GDP “negligible”.
#Stimulus Trump announced today he’s signing executive order to extend jobless benefits. He broke off negotiations with Dems friday to make it look like now he’s the only one getting benefits for unemployed & not Dems–i.e. a typical ‘Art of the Deal’ bad faith bargaining tactic
#Stimuluspackage Trump’s breaking negotiations means he doesn’t want a deal with Dems where he shares a compromise. So he’ll now deepen the constitutional-political crisis and ‘legislate’ again by executive action since he got away with it before (shifting Pentagon $ to his wall)
#stimuluspackage Today, friday, August 7 negotiations on economic stimulus collapsed. Trump’s man, Mark Meadows, rejects Dems’s compromise offer reducing their proposals by $1T. Trump’s tactic is typical of his negotiations: break off discussions & walk away,then see what happens
#Stimulus US business 2nd qtr deposited $2.2T in US commercial banks (+more offshore). Wealthy US households also hoarding March bailout. Savings rate, usually 8% of income, rose to 25%. $3T March bailout did not get into economy, except $1.2T PPP, unemployment benefits & checks
#Stimulus McConnell’s strategy has been to ‘go slow’ on new stimulus, saying $1T of Cares Act still not spent. True. That’s $1T in allocated loans to medium & large corps that hasn’t been borrowed. Why not? Cuz they’re sitting on $3T cash hoard and don’t need or want the loans
#Stimulus US Airlines got $50B in Cares Act ($25b grant, $25B loan). Want another round of $25m grant. US majors threatening 50,000 layoffs if don’t get it. $75B total. That’s equal to covering rent payments of households now on moratorium (12.3m) 10 more mos (cost: $7.3B/mo.).
#Stimulus Reports out today McConnell-Mnuchin upped their offer on continuing the $600/wk supplemental unemployment benefits, from initial $200 to now $400/wk. But still refuse aid to state-local govts. Republican strategy: squeeze Democrat/blue states that need bailout most.
#Stimulus Wonder why Trump wants payroll tax cut but Congress Repubs/Dems don’t? Cuz bus. CARES ACT already provides deferral of bus payroll tax(to be repaid back by 2022). Current Repub/Dem HEROES Act’s Bus. Retention Tax Credit far more lucrative ($194B) & requires no repayment
#Stimuluspackage While Dems & Mnuchin negotiate, Repubs Rubio & Collins add proposals to continue small bus./PPP program thru 2020. But same folks won’t support $600/wk benefit & rent support thru same!(btw, forget calling it PPP. No enforcement of 70% of loans for wages to date)
#stimuluspackage Unable to make progress with ‘hard cop’ McConnell, Dems turn to ‘soft cop’ Mnuchin in negotiating on econ stimulus proposals. Meanwhile, back at the precinct, Trump throws bombs over the transom on payroll tax cuts & rent eviction to try to look good to his base.
#Stimulus Mnuchin doesn’t want to extend the $600 unemployment benefit for 14m jobless. Says US can’t afford the $250B cost. So why not divert & use some of the $400B in loans for big corps, or the $550B for medium corps, passed last March that neither are bothering to borrow?
#HEALsAct Mnuchin-McConnell claim $600 benefit keeps workers from returning to work is debunked by new Yale Univ. study: “We find no evidence that more generous benefits disincentivized work either at the onset of the expansion or as firms looked to return to business over time”
#HEALsAct While jobless benefits cut 2/3, business tax cut expanded 3X: Bus. worker retention tax credit before $10k/worker, now $30k/worker–i.e. for every worker bus. can deduct a cost of $30k from its tax bill at end of year.(+Current rules don’t require proof of retention)
#HEALsAct Republicans’ cutting $600/wk. Federal benefit to $200 means $40B in consumer spending cut/mo. from economy. ($600 now=$15B/wk spending). The $200 is cut further after 2 mos. by combining with state jobless benefit, with both capped at 70% of worker’s wage.
#HEALsAct The state unemployment benefits payment of 70% of wages is also capped at $500/wk. That means jobless in Calif. who get max of $450 will see a $50 state benefit rise but $400 federal benefit cut. (And how will state agencies figure out 33m benefits receivers’ 70% wage?)
#HEALsAct 1st look at Republicans stimulus proposals called the HEALsAct: Federal Govt’s $600/wk. benefits reduced to $200. State benefits limited to 70% of person’s wages. $30B more for Pentagon. $1,200 one time checks. $190B more to small bus. $100B to ‘seasonal’ bus. (hotels?
#HeroesAct Treasury Secretary Mnuchin said: “We’re not going to use taxpayer money to pay people more to stay home.” No. He’s giving taxpayer money to the Airlines & Boeing to permanently layoff 72,000 (United 36k, American 20k, Boeing 16k). And that’s only some who’ll get $1.1T
#HeroesAct Trump admin today calls for cut in $600/wk. unemployment benefits to $200. That means their ‘compromise’ cut, via McConnell’s Senate, will likely be $300. 14m jobless now getting the $600 will see their benefits cut in half! Just as the economy is stalling late July
#HeroesAct 22% households say can’t make next rent or mortgage pymt, per US Census Bureau. That’s 22% of 110m renters & 50m home owners. US monthly rent/mortgage +utility bills cost $7.3B/mo. So less than $90B will cover evictions/mortgages for a yr. House Heroes Bill covers that
#HeroesAct Sen. Rand Paul leading opposition to stimulus. Where was he when Trump’s 2018 tax cut gave $4.5T to investors-multinational corps? Or $429B more in 2019 in loopholes for pharma, big tech, banks? Or $650B in CARES Act in March, 83% of which went to wealthy 1% & corps?
#HeroesAct Senate Repubs balking at more stimulus. Whine about deficit & $600/wk. jobless benefit paying workers more than they made. Same folks silent re. Trump’s $4.5T tax cuts for investors-corps & deficit; or Lockheed’s loans + cash subsidy from Govt despite $billions profits
#HeroesAct Preliminary Repub. proposals per McConnell today: more PPP($130B still unspent); $105B for schools; Bus. liability release for 5 yrs; some $(?) for testing & child care; no more $ for CDC; stimulus checks only to those <$40k/yr income; maybe no repay of payroll tax cut
#HeroesAct Republican proposals exclude aid to States & Cities. Estimates $969B needed. If no aid, then mass layoffs inevitable + defaults on muni bonds followed by potential contagion to other financial mkts. Most aid would go to blue states in most need=why McConnell opposed
#HeroesAct You’ve heard Trump wants a payroll tax cut in Heroes Act? But business already got that in CARES ACT as part of $650B cut (of which only 3% went to folks<$100k yr. income). But current payroll tax cut only deferred to 12-21 & must be paid back. Trump wants it permanent
#HeroesAct Question of the week: will Heroes Act up for vote this week be another weak mitigation or real stimulus? Trump/Mnuchin offer $1T. (US needs $4T stimulus). Composition of $1T also critical. Tax cuts don’t stimulate investment in deep contraction. Ditto lower int. rates
#HeroesAct Mnuchin: “It’s not the federal government’s role to bail out” states–as states’ virus costs rise & tax revenues fall. States now already laying off thousands. Big 3 states with worst infections: Calif, Tex, Flor=28% US GDP. No bailout=muni bond mkt crisis & contagion
#ppploans Mnuchin proposes immediate converting 86% of $520b PPP small business loans to grants–i.e. no need to prove before that loans were used to keep workers on payroll. Now he wants more for PPP, after precedent set no need to use for payrolls. Guess what they’ll do with it
#HEROESAct Treasury Secy Mnuchin wants more for small business ($660B so far) but cancel workers’ $600/wk. unemployment benefits. Why? Proposes to cut $600 benefits & transfer money as wage subsidies paid instead to businesses–another massive income transfer from labor to bus.
#CaresAct Govt report on the impact of the PPP program conveniently fails to report which businesses got the biggest loans. ‘Specific loan amounts were not provided for transactions above $150,000, covering 282,164 loans, or 13.5% of the total.'(Reuters) What are they covering up
#CARESAct Re. the PPP program ‘success or failure’, analysis of its effects thus far show more than third of jobs lost were in leisure & hospitality (bars, restaurants, etc.) but these companies received less than 10% of the PPP loans.
#CARESAct NFIB small bus. survey finds 22% of bus. receiving PPP loans to keep workers on payroll admitted they laid them off. That’s what they admitted. How many refused to say they laid off? Now PPP running out of money. Watch 3m service workers rehired June laid off again
#HeroesAct Pelosi calls for $2T more stimulus ($1T state & local govt bailout) + $1T more unemployment benefit extensions & income checks. Trump says $1T (more bus.-investor tax cuts + wage subsidies to business instead of unemployment benefits). Meanwhile 2nd layoff wave coming
#PPPloans U of Chicago finance study finds: “A lot of firms who got this funding (PPP) were only a little bit impacted in terms of revenues during the crisis and probably wouldn’t have changed their head count (# jobs) that much…The PPP had no substantial effect on employment”
#PPPloans 4000 banks made up to $24.6B in fees on PPP small bus. loans so far. That’s fees of $6.15 million per bank, for 4.9m loans the vast majority of which were less than $150k. Chase & BofA made $billions in fees. Then they ‘sell back’ the loans to the Fed for how much more?
#CARESAct US Govt released report today on PPP small bus. bailout program showing who got what-incl. ineligible big corps. For my analysis 2 weeks ago how the PPP & Fed bailout has been ‘gamed’ by big corps, banks & investors, listen to my radio show at alternativevisions.podbean.com