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Unsanitized-080720
The public is fixing to get out their pitchforks.
First Response
If talks between Democrats and the White House on a coronavirus relief package weren’t already in a dire state, today’s better-than-expected jobs report throws a further wedge into them. Superficially, 1.8 million people gained work in July, with the unemployment rate falling to 10.2 percent. But that is still down 11.3 million jobs year-over-year, with only about 40 percent of the jobs recovered since the beginning of the pandemic. The report benefited from a seasonal adjustment to education hiring that made it look like 245,000 state and local education jobs were gained in July (I explained that seasonal adjustment here), but even that’s bad news, because the seasonal adjustment was expected to bring at least 500,000 phantom jobs. It means education cuts are much more extreme than expected.
Because it beat expectations, you’re likely to hear crowing from the White House. (Never mind that this again shows the lack of a “disincentive to work” from enhanced unemployment.) But it’s still a worse report than May or June, reflecting a deceleration of workers returning after April lockdowns. Add the 8.4 million involuntary part-time workers (here’s a good report on involuntary part-time suggesting that number is higher) and you have nearly 20 million Americans in a difficult situation, and the $600/week that was sustaining them pretty well has run out.
Talks aimed at restoring that broke off Thursday night and both sides proclaimed themselves “very far apart,” with finger-pointing galore. The White House has reportedly upped its offer on a skinny bill from a very short-term $600/week extension to $400/week until December 15. There’s also apparently $150 billion for state fiscal aid, way down from the nearly $1 trillion Democrats have asked for. That an eviction moratorium would round out the skinny bill.
Democrats have rejected this. They are, however, insisting on “meeting in the middle,” which Chuck Schumer and Nancy Pelosi said five different times in their media availability on Thursday. That could just be talk to make them look more responsible in a negotiation that looks on the verge of collapse. But it does set a narrower range of outcomes. The poles are now (a) nothing, and Trump tries to do the eviction moratorium by executive order and reprogram appropriated but unused CARES Act funds to extend unemployment benefits, or (b) “the middle.”
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I suspect Trump is warming to (a), because it would put Democrats in the position of suing the president to block $600/week from getting to unemployed people. Of course, the executive order would be the skinniest of skinny supports, and you’d see mass layoffs at the state and local level as a result. And the unused funds, about $80 billion as I understand it, would only last a little over a month.
Meanwhile the stock market has been up all week, pricing in a deal being struck when it’s unclear whether the two sides are even talking to one another. I guess the market can’t go down when you always think the deal is on the way. And with the Federal Reserve bazooka still in… reserve, asset prices are generally safe. And so you have this unbelievable disparity, with vulnerable out-of-work people scrambling with scraps of savings and credit cards and food banks while investors calmly check their stock reports and register gains.
This is how you get legislation like the bill Sen. Bernie Sanders (I-VT) released yesterday, a 60 percent wealth tax on billionaire gains since the pandemic, to be used for reimbursement of all health costs for people for the next year. This is based on a series of reports from the Institute for Policy Studies showing massive gains flowing to billionaires (largely from stock increases) since the crisis hit.
The tax would be hell to administer and would surely draw a legal challenge. Also Mitch McConnell’s Senate majority won’t be passing it and Donald Trump won’t be signing it. But the point here is that this is a pitchfork in the shape of a bill. The thing you can’t account for with all the corporate bond-buying promises and asset inflation is social unrest. Societies with such a yawning gap between rich and poor don’t just muddle through without mass anger. We saw it in a racial context in June. We will see far more of it if the unemployed are left to fend for themselves and the rich stay rich.
Stamp Inflation
Nancy Pelosi and Chuck Schumer followed up on their meeting with Postmaster General Louis DeJoy by putting in writing their allegation that DeJoy admitted to slowing down the mail, through “reductions of overtime availability, restrictions on extra mail transportation trips, testing of new sorting and delivery policies at hundreds of Post Offices, and the reduction of the number and use of processing equipment at mail processing plants.”
We knew this was happening but didn’t have all the brazen specifics of the slowdown—testing new policies right now has nothing to do with a fiscal crisis and everything to do with degradation. More members of Congress are demanding a reversal to these orders, including rural Republicans, whose constituents rely on consistent mail service. There’s also the point that delaying the mail deliberately is a criminal offense, though I don’t see Bill Barr sending anyone over to cuff the Postmaster General anytime soon.
I do think we’ll see a reversal soon, because on top of everything, it’s a terrible position for an incumbent to make the most citizen-facing government agency in daily life demonstrably worse. But I want to point to something that only the (paywalled) Capitol Forum has pointed out. The Postal Service has informed states that they’ll need to pay first-class 55-cent postage to mail ballots to voters, rather than the normal 20-cent bulk rate. That nearly triples the per-ballot cost at a time when tens of millions more will be delivered. The rate change would have to go through the Postal Regulatory Commission and, undoubtedly, litigation. But the time frame for that is incredibly short, as ballots go out very soon.
A side benefit of this money grab is that states and cities may decide they don’t have the money to mail absentee ballots, and will make them harder to get. Which is exactly the worst-case scenario everyone fears.
Days Without a Bailout Oversight Chair
134. You can watch the commission’s hearing on the Main Street Lending Program here.
Housekeeping Note
No Unsanitized tomorrow. See you again on Monday.
Today I Learned
- Monopolized news: here’s a great podcast I was on talking about the book with the Institute for Local Self-Reliance. I really enjoyed this one. (ILSR)
- Andrew Cuomo begging the rich to come back from the Hamptons to New York City doesn’t seem worth a governor’s time. (The Hill)
- Great interview with economic historian Adam Tooze. (New York Magazine)
- Looming bad times for bond investors? (Financial Times)
- Trump executive order would reshore supply chains for essential drug ingredients, creating a domestic market. (Politico)
- The liability shield is one of the most radical pieces of legislation ever filed. (Washington Monthly)
- Sen. Warren on preventing private equity from scooping up cheap housing again. (Washington Post)
