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
By Rosalind Gottfried
The economic conditions preceding the pandemic, aggravated by the likelihood of extended unemployment, could bring the poverty level to 25% or higher, especially for nonwhites. By some projections, from a Columbia University study, the unemployment rate could reach 30% resulting in 15.4% falling into poverty.
By Rosalind Gottfried
It is hard to address the policy regarding the food chain since the biggest issue is the lack of policy. On Friday, April 11, 2020 KQED (the public radio station in San Francisco) reported that there is a cruel irony in the fact that food banks are facing large increases in demand they are unable to meet while, at the same time, farmers are letting crops rot due to lack of buyers, transport, and workers. Some farmers are just not harvesting their crops because the restaurants, schools and other sources they typically serve are closed.
COVID-19, Corona virus, recession, economic stimulus, recovery The Two Trillion Dollar Economic Relief Plan
By Rosalind Gottfried
When the partisan bickering resolved, the country was left with a relief package that reflected some of the Democrats’ modifications on an earlier Republican-backed proposal. The bill, passed on Friday March 27th, includes help for taxpayers, small businesses, industry, student loan payments and a few other contingencies. Basically, single taxpayers making up to $75K will get a one-time payment of $1200 while married couples will get relief if they earn less than $150K.
By Rosalind Gottfried
In the past week a potential economic slowdown has escalated to predictions of a recession with one article describing the economy as “all gone to hell.” With many people adopting a social distancing approach and public events being canceled, repercussions have been felt across many industries and activities whereas previously it was hoped that these would be limited to industries directly impacted by the public health contagion.
By Will a Pandemic Lead to a Recession?
Green jobs are the future in spite of heavy layoffs during this period of labor market contraction. Clean energy lost well over a half a million jobs since the virus hit the economy. This figure corresponds to 17% of industry jobs. In the state of California, where the loss was the most dramatic, 105,000 workers lost their jobs. Three years of job growth were eradicated in a month. These were in the areas of solar roof installation; wind turbine technicians; factory work building electric cars; and work in Energy Star appliances and high efficiency air conditioning. The Bureau of Labor Statistics projects solar installers and wind turbine technicians to be the fastest g rowing jobs in the next two years. Clean energy, with a workforce of 3.4 million, represents three times the workers of the fossil fuel industry. In spite of this disparity, as part of his response to the pandemic, Trump pledged to bolster the oil and gas industry by providing funds to insure future jobs. He made no similar announcement regarding clean air or renewable energy; he completely ignored the issue of climate control.
In contrast, there have been a wide range of economists, environmental advocates and policy makers who promote clean energy job as the essential economic sector of the future, both in response to employment and to the impending climate crisis. California governor Newsom convened a Business and Jobs Recovery task force and twenty states jumped on board urging clean air job creation. One in three jobs in construction utilizes non-fossil fuel electricity while fossil fuel related construction jobs represent only 13% of jobs. The New Green Deal, a program initiated by representative Alexandria Ocasio-Cortez and Senator Ed Markey, supports federal jobs which support the transition to clean energy by promoting renewable energy projects; clean up at coal mines; increased mass transit construction; and other projects lowering the emissions of toxins.
The New Green Deal can emulate the Works Progress Administration which put so many people to work in the depression in government funded jobs. FDR failed to renew that program because his advisors said that if he did so he would be unlikely to ever rescind it. But in today’s pandemic economy the importance of public jobs is highlighted. These jobs should be government work on green projects and other needed infrastructure work. They should pay a living wage and have benefits and health insurance (unless healthcare gets separated from employment). In the meantime, many policy experts are touting the Universal Basic Income (or guaranteed income) to help sustain citizens, and the economy, until employment can be revived. Not only is this beneficial to the economic sustenance of the society, it also speaks to the mental health of citizens. Unemployment has been shown to be correlated to suicide. Suicide is on the rise and, in some areas the so-called “deaths of despair” outnumber deaths from the virus.
- https://www.sunrisemovement.org/green-new-deal Site provides links to support the Green New Deal
The economic outlook is bleak for new workers and for millennials who entered the labor force after the 2008 economic crisis. The employment rate for 20-24 year olds is down 25% from March to April and down 16% for 20-29 year olds. For workers without degrees, and for minority workers, the outlook is more pronounced. A report released just prior to the onslaught of the virus showed that young college graduates had unemployment rates greater than those for the general population but less than that suffered by those without a degree. It further showed that 41% of recent college graduates worked in jobs not requiring a college degree. Data from the 2008 economic crisis suggest that job losses and bouts of unemployment have a lasting impact on career trajectories and lifelong income. There is evidence that job insecurity and competition make people “risk averse,” and less likely to change jobs which may provide a promotion or more opportunities in the future. People who have come of age, between the ages of 18-25, in periods of economic downturn are more likely to believe in luck rather than effort as a significant element of success. Loss of income and poor job security are linked to a disinclination to marry or to have children. Millennials have suffered two unusually severe periods of economic crisis and its full impact on their adulthood is yet to be seen though, as a group, they are less well off at the same age when compared to Gen Xers and baby boomers..
New job seekers, particularly those from affluent families and with college degrees, can choose to sit out the labor market for a “gap year.” Pursuing an interest or hobby is not likely to reflect poorly on their potential and the labor market may be more favorable in the next year. Workers without the luxury of sitting out in their parents’ home and/or doing something other than unpaid work face debt, unpaid bills, and poor prospects. Workers who lose jobs and/or take jobs that are not the desired type will face long term fallout.
One obvious help would be for the government to ensure that workers are not laid off but for many that ship has sailed. Preserving employment would lead to bills being paid and debt being attended to. Even a pay cut, coupled with student loan deferments, would leave new and young workers in a better position. Other policies should focus on helping retail, leisure, and hospitality industries where young people are likely to be disproportionately employed. One fear is that older people, past retirement age, who own shuttered businesses, may decide not to reopen adversely affecting the prospects of young workers. Politically, for some young workers who formerly aligned with the Republican Party and other moderates, there is some evidence that they are swinging progressive. Young people are strong supporters of Bernie and also of Alexandria Ocasio-Cortez and are impacting the platform of the Democrats. If the trend continues, it can mean a new political landscape.
The dramatic surge in unemployment in the April BLS (Bureau of Labor Statistics) data comes with little surprise. The current rate of 14.7% is the worst since the 1933 high of 25%. Initial layoffs in areas of hospitality, leisure, transportation, and retail were followed by reverberations in supporting fields and in white collar occupations. April saw the loss of 20.5 million jobs bringing the total to nearly 33.5 million jobs lost in the past seven weeks. The current rate of unemployment is widely thought to be an underestimate due to its omission of discouraged workers—those no longer looking for work, estimated at 6.4 million—and those who were not counted for other reasons. A person is not counted if s/he is working part time (estimated at 11 million up from 4 million before the pandemic) or working reduced hours and/or at reduced pay. Additionally there is a category of workers who are not included in unemployment data and are not on sick leave or vacation but are absent for atypical reasons not specified. This number is currently at 9 million though it normally averages about 1.5 million.
Not surprisingly, the repercussions have hit groups differentially with the hard hits among women, at 16.2% unemployment representing 11.9 million lost jobs compared to 10.4 million for men. Male unemployment stands at 13.5%. In contrast, the 2008 recession hit harder in construction and related occupations which had a disproportionate impact on men. The pandemic has also reversed the gains made in recent decades among minority workers. Minority workers, African Americans and Latinos, have been hard hit with rates of unemployment at 16.7% and 18.9% respectively. White unemployment is 14.2%. Fears of these groups ability to regain the improved levels of employment are realistic since low wage workers are the ones who most often suffer the most dramatically when the economy contracts.
The alleged silver lining is that 78.3% of those affected report anticipating being temporarily out of a job and being rehired as the repercussions of the corona virus recede. Is this optimism justified? It is anyone’s guess but it is unlikely that all of these workers will have a business or job to go back to. As the closing down of the economy persists, in spite of pockets of progress in some areas to resume “normal” business, there is reason to believe that the new “normal” will look different from the presumed norm. Some small businesses will likely close for good while others are likely to open with diminished volume and workers. Larger businesses, many of which are seeing white collar layoffs, stand a good chance of contracting in the future. It is safe to say that no one can accurately predict what the future holds though some economists are estimating that the current unemployment rate, if it was to be most accurately accountable, is really at about 20%, moving closer to the 25% seen in the height of the depression in 1933. It is also a good bet to say that local, state and federal budgets will constrict from a combination of spending to support the unemployed and Covid-19 related expenses coupled with a loss of revenue from reductions in income and spending. One dramatic example can be seen in the state of California, considered the fifth largest economy in the world. Governor Newsom had anticipated a surplus of 5.6 billion for the state budget of 2020-2021 and now the state budget office estimates predict a 54.3 billion deficit, with 3/4s of that impacting the new budget year starting in July. It is hard to say how the various levels of the government will respond to these deficits amid projections of protracted negative economic repercussions of the virus. The best hope for a safe return for economic normalcy hinges on a vaccination which is likely at least a year or more in the future, at best.
The economic conditions preceding the pandemic, aggravated by the likelihood of extended unemployment, could bring the poverty level to 25% or higher, especially for nonwhites. By some projections, from a Columbia University study, the unemployment rate could reach 30% resulting in 15.4% falling into poverty. This is posited as a worst case scenario and the researchers also offer lesser figures dependent on a smaller unemployment rate. In either case, children and people of color are bound to be disproportionately represented in the unemployment figures and in poverty data.
The structure of the American economy has promoted poverty for the less skilled workforce where jobs have been plagued by erratic hours and absent or minimal benefits such as paid sick days, healthcare, and retirement. Many businesses have been reducing work schedules to save money when business is slower. Decreased hours impact a worker’s income and preclude the worker from gaining additional jobs due to scheduling unpredictability. Additionally, “real” wages for lower paid workers have been stagnant while corporate profits have proliferated. Studies show that wages, controlling for inflation and benefits are down 5.4%, or about $3000. Add the high cost of healthcare, daycare, and education and it is apparent that the working class has not shared in the “robust” economy touted by the media and some politicians. Businesses have opted for maximizing profits, rewarding CEOs and shareholders while practicing frugality with respect to labor.
Currently, the poverty rate is the highest it has been in the 50 years of record keeping. The large number of children at risk is particularly worrisome as even small, limited time deprivations can lead to long term dysfunction in the brain. These deficits can be persistently manifested into adulthood. Such circumstances have been shown to result in less earnings, poor health, and higher rates of incarceration.
The CARES Act, a 2 trillion dollar stimulus program recently passed by Congress ,is bringing relief to individuals and businesses, but has run into problems. The one time payments to individuals are of limited import and the Small Business program has already run out of funds (though it looks likely that Congress will authorize additional funding), and has been awarding funds to companies like Ruth Crist’s Steak House which are not small businesses..
The safety net, in the US, has been under attack since the welfare reform of 1996, the most recent cuts (before the pandemic) being in unemployment insurance and federal food programs (SNAP). Last year according to Feeding America, 40 million individuals were served by food banks. Current demands on food banks foretell a much greater number currently. Many Americans cannot afford the premiums for health insurance and are ineligible for Medicaid (earn too much or are in states that chose not to participate in the ACA federal extension). Some of these individuals will now be able to apply for Medicaid as they are unemployed and others will just join the uninsured.
Since 2011 economists have been using the Supplemental Poverty Measure to determine poverty rates. It is more reliable than the traditional federal poverty level formula since it includes cash, noncash benefits, taxes, and income refunds (EITC) as well as the local cost of living in establishing poverty rates. Published poverty rates generally are obsolete, since they are only figured annually (as opposed to unemployment which comes out monthly). Columbia researchers studying poverty are hoping to produce a new estimate in May to reflect emergent poverty rates since the pandemic. In the past month 22 million jobs were lost with 5.2 million of these in the past week. Joseph Stiglitz, Columbia professor and Nobel Prize winning economist, has said that the US possesses no effective safety net. Contrary to popular beliefs many individuals receiving public health subsidies and cash assistance are working so it is not a leap to imagine the selling of these programs with a huge boost in unemployment.
It is not rocket science to figure out what can help the workers. Other countries offer a substantive safety net with sustained wages and healthcare, even during unemployment, and many offer low or free higher education. The American economy must move away from focusing on a quick grab for short term corporate profits and sustain long term health by making livable wages and conditions for its workers. The pandemic has shown, if anything, how essential the labor of our low paid service and agricultural workers is. Policies which worked only for the wealthy may not be sustainable in the “new post pandemic economy”. If corporations persist in short term gains for their shareholders, while workers suffer unemployment and ill health, the current levels of government support will not be sufficient and ultimately costs for disease, malnutrition, crime, and other related consequences will drain the government budgets. A best case scenario resulting from the pandemic would be a rethinking and restructuring of economic policies to adequately support a decent quality of life for our workers. Any Democratic candidate seems more likely to move in that direction than the current administration.
Photo by Jonathan Kho
It is hard to address the policy regarding the food chain since the biggest issue is the lack of policy. On Friday, April 11, 2020 KQED (the public radio station in San Francisco) reported that there is a cruel irony in the fact that food banks are facing large increases in demand they are unable to meet while, at the same time, farmers are letting crops rot due to lack of buyers, transport, and workers. Some farmers are just not harvesting their crops because the restaurants, schools and other sources they typically serve are closed. These crops could be utilized by food banks and grocery stores though they are not packaged in a way which serves these sites. Similarly, milk and dairy production demand is down in typical sites, like schools and pizza places, causing farmers to dump milk.
Also, immigrant workers are not coming to work in the fields so farmers are not able to get work done even when they have the potential to sell their products. Workers in food processing are becoming infected with the virus causing production slowdowns and plant closings. Given these pervasive impediments, the complexity of keeping the food supply adequate becomes apparent. Farmers are just abandoning crops, from tomatoes, to fruits, and dairy products which could go to the unemployed, hospitals and other institutions requiring meals for workers and for clients as well as food banks. Some farmers have been able to redirect portions of their crops to food banks but are being paid at a much lower rate, making it hard for them to break even and plant the next crop.
Mandates to “shelter in place” do not apply to essential workers but social distancing does. Food processing and packaging plants are frequently unable to meet social distancing standards and have not been providing adequate protective gear, or other favorable working conditions. In many plants, workers share lockers, break/food rooms, and space on the floor. Several companies have reported deaths and some plants and factories have closed or slowed production. Vice President Pence has vowed to “work tirelessly” to ensure worker safety but the trends show otherwise. While some plants have closed others have experienced worker protests regarding conditions. In response, some companies such as Cargill, Tyson, and JBS have instituted precautions ranging from taking temperatures before a worker goes on the floor, to providing protective gear, deep cleaning, and social distancing measures. Nevertheless, plants in Pennsylvania, Iowa, and other states have been shuttered.
It does not take much imagination to see that policies need to be instituted to make sure that workers have protections; farmers get subsidized to hire workers; essential transportation be maintained; and aid be provided to farmers to plant their next crops even if they do not have the money to buy provisions and hire workers. These things would take government leadership and a cogent policy of additional relief through easily accessed programs, grants and loans to buy the services needed. Food plants must get help in providing protective gear and hygiene, as well as moderated production allowing for fewer workers who can be spaced with social distancing parameters in mind. The action should be swift and comprehensive but Congress and the White House, yet again, seem stalled.
- https://www.nelp.org/resources-to-support-workers-during-the-coronavirus-pandemic/ National Employment Law Project provides information, data, and sources of aid.
COVID-19, Corona virus, recession, economic stimulus, recovery The Two Trillion Dollar Economic Relief Plan
When the partisan bickering resolved, the country was left with a relief package that reflected some of the Democrats’ modifications on an earlier Republican-backed proposal. The bill, passed on Friday March 27th, includes help for taxpayers, small businesses, industry, student loan payments and a few other contingencies. Basically, single taxpayers making up to $75K will get a one-time payment of $1200 while married couples will get relief if they earn less than $150K. Parents will receive $500 for children under the age of 16. People who exceed these levels by a small margin will be eligible for a pro-rated amount. Details on payments can be found here: https://www.nytimes.com/article/coronavirus-stimulus-package-questions-answers.html.
Payments should take about three weeks. College students who are dependents will not receive any benefits.
Unemployment benefits have been boosted in various ways and the one week waiting period has been suspended. Unemployment benefits are determined by states and maximum payments vary with Alabama providing $275 PER WEEK , CA $450, and NJ $713, indicating state differentials. Benefits can last 26 weeks. The federal relief program incoudes additional payments of $600 per week and extends the state and federal payments for 13 extra weeks. As of this bill, the additional $600 is available through July 31st. Part-time and self-employed people, normally ineligible for unemployment benefits, will now receive aid based on previous income and pro-rated accordingly. People unemployed due to illness self-quarantine or caring for the ill (rather than job loss) will also become eligible. Additionally, those who stay home to care for children or the elderly will also be eligible.
Relief for payments on student loans also is included in the bill. Payments have been waived for two months, including payments, interests, and fees and no penalties will be accrued. This pertains to federal government loan programs. People can borrow two times the usual amount from 401(k) and retirement accounts, for 180 days, without penalties if these are necessary for coronavirus related emergencies. Large cash donations to public charitable organizations can be deducted from 2020 taxes at 100%. There are no protections for utilities and internet service in the federal program though some localities and companies have made emergency provisions. The bill provides for a national eviction moratorium for 120 days for renters in buildings secured with federal loan programs.
The bill includes $377 billion for payments to cover worker layoffs and to help businesses stay open. Small businesses are eligible for eight weeks of cash flow assistance through 100% federal guaranteed loans for wages. If payroll payments are maintained, then the portion of the loan used for those and for mortgage, rent, and utilities will be forgiven. This is retroactive from February 15, 2020. Other moneys are available for institutions supporting small businesses. Summary of details: https://www.rubio.senate.gov/public/_cache/files/28e8263e-e7d4-4da7-a67b-077c54ba4220/9F7B494B2E355791B24536DC2162CF16.final-one-pager-keeping-american-workers-paid-and-employed-act-.pdf.
The relief package also includes $500 billion for aid to US industries such as airlines and to cities and states. Hospitals will receive $100 billion to support their needs. The oil industry and the cruise industries were not included in the bill.
Additional details regarding what’s it he bill may be found here: https://www.politico.com/news/2020/03/25/whats-in-stimulus-package-coronavirus-149282
In spite of being the largest federal relief program in history, the current program likely will be insufficient to the need. Three million people filed for unemployment nationwide last week and one million in CA alone in the past few weeks. Some states experienced multiple crashes of their unemployment websites. Average unemployment payments will be around $936 and some conservatives have complained that the sum in in excess of some low paid workers actual income. Pelosi has reportedly suggested that there will be more programs in the future. The Democrats sacrificed a request for a 15% increase in food supplements, through the SNAP program, to arrive at bipartisan support for the bill. Pelosi also seeks free testing and medical treatment for everyone affected by the virus. There will likely be a need to extend family and medical leave and protections for workers’ safety and health. Many experts suggest that more direct payments will be needed and that the current ones will be too late to help some people already evicted or in default. Additionally, the most vulnerable are excluded from the program including domestic workers, other cash workers, undocumented workers, and the homeless.
The program, with its aid to workers, small businesses, and unemployment is a step in the right direction but many feel it needs to go further.
In the past week a potential economic slowdown has escalated to predictions of a recession with one article describing the economy as “all gone to hell.” With many people adopting a social distancing approach and public events being canceled, repercussions have been felt across many industries and activities whereas previously it was hoped that these would be limited to industries directly impacted by the public health contagion. Many employees have been asked to work from home and these employees’ isolation has caused a drop in restaurant business, coffee and alcohol purchases at bars, and transportation cuts. Canceled events from theater, to sports, to graduations, to parades to Disneyland have correlative losses in areas of food travel, lodging, and transportation. The limiting of the effects of the virus to delayed shipments from China has proven to be an optimistic call that did not pan out.
The government has responded with a bill, obtained by negotiations between the Congress and the administration, providing for emergency measures to keep workers solvent but the final agreement has been criticized as a tepid attempt to provide aid which won’t reach the most needy. The agreement is centered on helping workers to get paid sick leave but in actuality it will help only 20% of workers affected and largely leaves the most vulnerable excluded from the aid. It is limited to coverage only for the coronavirus and no other potential future pandemics. The bill does not pertain to large companies with 500 or more employees though these account for 50% of workers; some large companies like Wal-Mart, Target, Gap, and Wawa have implemented voluntary programs to help employees by offering two weeks of paid leave for the virus or for quarantine. The bill also provides exemptions for companies with less than 50 employees which account for an additional 26% of workers. The bill does provide for some assistance for longer leave, under the Family and Medical Leave Act, but this also excludes large companies. In arriving at this agreement, the Trump administration has prioritized corporate profit by denying workers’ benefit and further jeopardized the public health since workers will be reluctant to stay home. Many people do not relate directly to market shifts since they have no stake in the market but the prospect of losing wages and being unable to pay for essential bills looms ominously.
A recession is predicted if the economy contracts for two consecutive quarters. So far economic indicators have not indicated downturns in such areas as unemployment claims but job postings have taken a significant cut in areas such as restaurants, catering, and aviation. There is generally a lag in real changes and the reporting of related data. Steven Mnuchin, the Treasury Secretary, suggests that the market’s ups and downs are not a concern and that no recession will occur since the economy will pick up when the response to the virus stabilizes. He also suggests that some areas of the economy are thriving such as medical supplies, groceries, health aids, and other household items are experiencing a surge in purchases.
Opinion columnists suggest that the Democrats have failed to help the most vulnerable workers and should have stuck to their original proposal providing for seven days of sick leave and a temporary ten days in a public emergency. They suggest that the Democrats folded when they should have proceeded leaving the Republicans to publicly justify blocking this broader program.
Some economists suggest that the economy is headed for big troubles unless the government steps in with quick and comprehensive support for households. Home buying, which was earlier seen as maintaining a strong trajectory in sales has plummeted due to loss of funds in the market and the belief that the prices will go down. In areas highly impacted by the virus, such as Seattle, there are widespread repercussions from workers remaining at home. One owner of a dozen Seattle restaurants has closed his stores for 2-3 months and is laying off almost all of his 800 employees.
Liberal and conservative economists diverge on how the government should respond to the crisis. Jason Furman, formerly chief of economic advisors to President Obama, supports an immediate infusion of cash of one thousand dollars to adults and 500 to minors. This is the most expedient measure to protect spending and stop expanding job losses while allowing households to cover necessities. Helping the broader economy with such a measure would be part of a stimulus and would help states defray costs by expanding Medicaid. More conservative economists suggest that these measures are unnecessary. The Congress is currently poised to provide 1000 dollars to all adults which some Senators are pressing for a two thousand dollar payment now and another 2500 dollars before the end of the year. Glen Hubbard, formerly an economic advisor to President Bush, suggests investing in long term infrastructure projects paid for with cheap government loans, an approach which that has been supported by both parties in the past. Trump has been considering a decreased payroll tax but such measures have been shown to be ineffective in stimulating the economy while lump sum payments have proven to be beneficial. What tepid responses have been made to address the expanding crisis so far have clearly not been sufficient to the most recent movements in the economy and threaten to disproportionately affect the most vulnerable segments of the population.
https://www.house.gov/representatives Provides addresses and contact information for House members so that they can be contacted with concerns regarding the impact of the coronavirus.
There will inevitably be an economic downturn as a consequence of global responses to the Corona virus but whether or not it will lead to a full blown recession in the US is unclear. Some US experts believe a recession to be inevitable, due to potential downturns in consumption; worker layoffs; the already low federal loan rate; and the lack of essential parts from overseas where factories have closed. Other economists believe that the strong economy, especially with regard to employment and the housing market, will act as a cushion against the most dramatic impact of the disease’s spread.
On Tuesday (March 3, 2020) the Federal Reserve made an “emergency” decrease in the federal loan rate of .5% after 3 drops last year. However this seems to have made little impact on markets which continue to react in extreme ways.
The fallout from declining stocks, initially down by 10.5%, is debated by economics. The stock market is reflective of the interests of multinational corporations and its impact on the average consumer is not readily correlated with market activity. Major corporations such as Apple, United Airlines, Mastercard, Microsoft, Pfizer have already issued warnings regarding reduced profits. The global economy is predicted to be slowed by anywhere from one half to one and a half percent for 2020. It currently has a growth rate of 2%. Baby boomers (currently in their 50s and 60s) own over half of the stock and can have concerns over their retirement savings but there is mixed evidence regarding the impact on other demographics because so far consumption is solid and employment is steady though it may be that the relevant data is not yet available.
A recession can be avoided if the cycle leading to one is avoided. Typically, the cycle results from worker layoff which leads to decreases in income, less spending, which spills over to more layoffs. Maintenance of the economy depends on a thriving consumer class as consumption is 70% of the economy. If that remains intact the recession can be avoided though there are signals that it will not be completely avoided. Trump’s trade war with China already established downturns in some areas such as manufacturing, agriculture, and transportation. Shutdowns in China, and other sectors globally have caused an interruption in the supply of parts and goods exported by those countries. One fear is that if Trump is re-elected he would resume a more aggressive trade war, which would have a negative impact on the US economy.
To create a full blown US recession some economists believe that the impact of a pandemic on the economy will need to move beyond affecting the industries directly involved, such as tourism, air travel, and transportation and they do not believe this will be the case. At least they are somewhat optimistic that it won’t spill over. Economists think the housing market will be unaffected, or potentially positively impacted, due to the lower interest rates and the availability of more modest homes.
Since the federal reserve has little flexibility in controlling the markets, due to its already low interest rate, an alternative to bolster the economy would be for the president to create a temporary deficit financed tax cut paired with increased government spending such as Obama pushed through the Senate to address the great recession of the last decade but there is little chance that this president would move in that direction. The economists, while agreeing that there is severe global fallout from the virus, disagree as to the extent of its impact on the American economy. The “truth” seems to lie in the presence of some worrisome trends regarding reactions to the threat of the virus, the extent of which is really unknown at this time.
- https://www.who.int/emergencies/diseases/novel-coronavirus-2019 The World Health Organization is a global agency responsible for providing up to date information on world health.
Mr. Trump’s proposed budget for fiscal year 2021 makes cuts to Medicare, Medicaid, Social Security and other safety nets which initially he had pledged to leave intact. His proposals must be passed by Congress and that action is doubtful but his actions speak to his lack of commitment to support any segment of the population needing aid. His proposed Medicaid cuts amount to 1 trillion dollars over ten years and jeopardize insurance eligibility to an estimated 13 million and otherwise compromising care. He would cut the subsidies to the states, initiated in the ACA, to expand Medicaid to those making somewhat more than the poverty level. Currently the federal government pays 90% of these costs. Since the federal government supports the states with the ACA, imposing a work requirement would reduce the number of people receiving Medicaid and allow the Trump administration to justify cutting the budget. Medicaid work requirements, mandates made by states, would also save the federal government an estimated 152 million though that figure has been contested by experts who say it would be nowhere that amount. Several states initiated a work requirement and others suspended them pending a court decision on their legality. Ten states initiated work requirements. On February 13th a US Court of Appeals upheld a lower court ruling against an Arkansas and Kentucky mandate requiring 80 hours of work for 30-49 year olds. Kentucky’s newly elected Democratic governor had withdrawn its work requirement pending the court ruling. Twenty states have pending or proposed work requirements. Other states, such as Indiana, have anticipated instituting work requirements and likely will not pursue them given the recent decision. Trump supports a pending Texas law which would eliminate the ACA altogether leaving many uncovered, priced out, or ineligible due to pre-existing conditions.
Trump’s proposals for the Medicare program would have hospitals receiving the same pay rate for services that doctors’ offices receive, which is a reduced price. This leads to the fear that Medicare recipients will be denied treatment. Other proposed cuts have targeted the food assistance program known as SNAP; opioid and mental health services; protection for student loan forgiveness, cuts for disabilities; and the children’s health program known as CHIPS.
Trump’s 4.8 trillion dollar proposed budget eats away at multiple programs constituting the federal safety net putting more pressure on the states to finance programs and jeopardizing the health and healthcare of multiple millions of vulnerable individuals and families. Trump’s justification for supporting work requirements depends on his belief that work contributes to a healthier life thus denying the reality that some people who cannot work will be cast off the Medicaid rolls. Low reimbursement will exacerbate an already lean set of provider choices for those who need federal aid in seeking health care. Additionally, should a state be successful in ending the ACA countless people will return to an uninsured status. Trump’s proposed cuts of 844 billion dollars in health care are “necessary’ to compensate for his cuts in taxes by the wealthy. He couches some of his cuts in healthcare as an effort “modernize,” while calling additional cuts to federal employee benefits and health care an effort to “modify” the system. His cuts to help student loan forgiveness programs and disability eligibilities he has called “reforms”. The Democratics will not pass the bill, as is, seeing it for the cruel effort it represents to save money of the backs of the neediest. The federal budget deficit has grown under Trump, as a result of this economic and tax policies, and represents the largest figure since the last year of the recession recovery year. Tax cuts have disproportionately accrued to the top 5% of households who gained 36.5% of the tax benefits.
- https://indivisible.org/ An organization listing grass roots groups across the country seeking to defeat Trump in 2020.
During the February 7, 2020 Democratic Presidential Candidate debate multiple allusions were made to the wealth gap between African American and White households, though such a gap also applies to Latino and Indigenous populations. Between 1983 and 2013 Black median household wealth went down by 75%; Latino wealth by 50%; and Native American wealth decreased by an even greater percent though it was no longer assessed after the year 2000. White household wealth increased by 14% in the same time period. Twenty five percent of Black households had no wealth or negative wealth while the corresponding figure for White households is 10%. Educated African American families have a net worth of 200,000 dollars less than comparable White families. On the average, a two parent Black household has less wealth than a single parent White household. Asian American households maintain greater wealth than White households but it must be noted that some Asian groups tend to be highly educated and live in high income regions while many, especially the more newly immigrated, are very poor. The wealthiest Asian households reveal 168 times the wealth of the lowest Asian households while the comparable figures for white rich and poor households show a differential of 121. Economists estimate that the net worth of African American households will be zero by 2053 and Hispanic households will suffer the same decline twenty years later.
Wealth inequality is a major factor in standard of living and quality of life and it has been steadily increasing for decades. The topic is incendiary because it is based on centuries of legal and de facto discrimination. The institutionalization of race inequality, aside from the obvious repercussions of slavery, depends on discriminatory practices in employment; wages; housing markets; the banking industry; the tax structure; government programs; as well as the long term consequences of slavery. Inequality of wealth is even more significant than annual income inequality which also has been sustained at all educational and income levels and actually significantly increased between 2000 and 2018. Wealth, defined as all assets minus all debts, is a marker of intergenerational well-being and has a major impact on the ability to buy a home. Home ownership determines neighborhood which is an essential indicator of home values, education resources, recreation, and other quality of life measures. African Americans have more pressure to save due to the relative unlikelihood that their youth will inherit money to gain early homeownership. They buy homes later and in less valuable neighborhoods. African American homeowners average $12,000 in equity while the comparable white home owner averages $189,000 in equity. At the same time, they have a harder time saving due to the income inequality, the cost of loans, and systemic discrimination. It has been suggested that if the home ownership gap narrowed the income race gap would decrease by 31%.
The issues becomes essential to forming policy for all the presidential candidates; although anti-discrimination laws have been forged in real estate; employment; wages; banking; taxation; education; and government programs systemic discrimination pervades these areas. The affluent middle class of the post-World War II era was made possible by inexpensive, accessible higher education; well-paid manufacturing jobs; and government programs such as the GI Bill and the Veterans Administration which disproportionately accrued to white households. The issue of reparations, and the form and nature of these, is one that will be increasingly present in the political sphere. Some proponents of these suggest that special funds be set up to bolster community well-being through low cost housing, student, and business loans and other projects which would benefit the nonwhite communities.
- https://www.ncobraonline.org/ A national coalition of organizations devoted to gaining reparations for the descendants of slavery.