Another Republican President, Another Recession.

Back in July the White House’s Council of Economic Advisers posted a thoughtful article to its blog titled, “Historical Parallels to Today’s Inflationary Episode.” The article looked at six surges in inflation since World War II and argued persuasively that current events don’t look anything like the 1970s. Instead, the closest parallel to 2021’s inflation is the first of these surges, the price spike from 1946 to 1948.

Wednesday’s consumer price report was ugly; inflation is running considerably hotter than many people, myself included, expected. But nothing about it contradicted C.E.A.’s analysis — on the contrary, the similarity to early postwar inflation looks stronger than ever. What we’re experiencing now is a lot more like 1947 than like 1979.

And here’s what you need to know about that 1946-48 inflation spike: It was a one-time event, not the start of a protracted wage-price spiral. And the biggest mistake policymakers made in response to that inflation surge was failing to appreciate its transitory nature: They were still fighting inflation even as inflation was ceasing to be a problem, and in so doing helped bring on the recession of 1948-49.

About Wednesday’s price report: It looked very much like the classic story of inflation resulting from an overheated economy, in which too much money is chasing too few goods. Earlier this year the rise in prices had a narrow base, being driven largely by food, energy, used cars and services like air travel that were rebounding from the pandemic.
That’s less true now: It looks as if demand is outstripping supply across much of the economy.

One caveat to this story is that overall demand in the United States actually doesn’t look all that high; real gross domestic product, which is equal to real spending on U.S.-produced goods and services, is still about 2 percent below what we would have expected the economy’s capacity to be if the pandemic hadn’t happened. But demand has been skewed, with consumers buying fewer services but more goods than before, putting a strain on ports, trucking, warehouses and more. These supply-chain issues have been exacerbated by the global shortage of semiconductor chips, together with the Great Resignation — the reluctance of many workers to return to their old jobs. So we’re having an inflation spurt.

On the plus side, jobs have rarely been this plentiful for those who want them. And contrary to the cliché, current inflation isn’t falling most heavily on the poor: Wage increases have been especially rapid for the lowest-paid workers.

So what can 1946-48 teach us about inflation in 2021? Then as now there was a surge in consumer spending, as families rushed to buy the goods that had been unavailable in wartime. Then as now it took time for the economy to adjust to a big shift in demand — in the 1940s, the shift from military to civilian needs. Then as now the result was inflation, which in 1947 topped out at almost 20 percent. Nor was this inflation restricted to food and energy; wage growth in manufacturing, which was much more representative of the economy as a whole in 1947 than it is now, peaked at 22 percent.

But the inflation didn’t last. It didn’t end immediately: Prices kept rising rapidly for well over a year. Over the course of 1948, however, inflation plunged, and by 1949 it had turned into brief deflation.

What, then, does history teach us about the current inflation spike? One lesson is that brief episodes of overheating don’t necessarily lead to 1970s-type stagflation — 1946-48 didn’t cause long-term inflation, and neither did the other episodes that most resemble where we are now, World War I and the Korean War. And we really should have some patience: Given what happened in the 1940s, pronouncements that inflation can’t be transitory because it has persisted for a number of months are just silly.

Oh, and for what it’s worth, the bond market is in effect predicting a temporary bump in inflation, not a permanent rise. Yields on inflation-protected bonds maturing over the next couple of years are strongly negative, implying that investors expect rapid price rises in the near term. But longer-term market expectations of inflation have remained stable.

Another lesson, which is extremely relevant right now (hello, Senator Manchin), is that an inflation spurt is no reason to cancel long-term investment plans. The inflation surge of the 1940s was followed by an epic period of public investment in America’s future, which included the construction of the Interstate Highway System. That investment didn’t reignite inflation — if anything, by improving America’s logistics, it probably helped keep inflation down. The same can be said of the Biden administration’s spending proposals, which would do little to boost short-term demand and would help long-term supply.

So yes, that was an ugly inflation report, and we hope that future reports will look better. But people making knee-jerk comparisons with the 1970s and screaming about stagflation are looking at the wrong history. When you look at the right history, it tells you not to panic.

Click to expand...

WASHINGTON (AP) — Pete Buttigieg, the transportation secretary who holds the purse strings to much of President Joe Biden’s $1 trillion infrastructure package, was holding forth with reporters on its impact — the promise of more electric cars, intercity train routes, bigger airports — when a pointed question came.

How would he go about building racial equity into infrastructure?

The 39-year-old former mayor of South Bend, Indiana, and 2020 Democratic presidential candidate laid out his argument that highway design can reflect racism, noting that at least $1 billion in the bill will help reconnect cities and neighborhoods that had been racially segregated or divided by road projects.

“I’m still surprised that some people were surprised when I pointed to the fact that if a highway was built for the purpose of dividing a white and a Black neighborhood ... that obviously reflects racism,” he said.

Racial equity is an issue where Democratic priorities and Buttigieg’s future align. One of his greatest shortcomings as a White House candidate was his inability to win over Black voters. How he navigates that heading into the 2022 midterms will probably shape the fortunes of Biden’s agenda and the Democratic Party, if not his own prospects.

RELATED COVERAGE
Thousands of military families struggle with food insecurity
Sinema's shift: 'Prada socialist' to corporate donor magnet
Inside DNC chair's 'challenging' bid to avert midterm defeat
Biden bill would give local news outlets 'shot in the arm'

Republicans seeking to exploit the issue pounced on Buttigieg’s words.

“I heard some stuff, some weird stuff from the secretary of transportation trying to make this about social issues,” said Florida Gov. Ron DeSantis. “To me, a road’s a road.” Texas Sen. Ted Cruz tweeted sarcastically: “The roads are racist. We must get rid of roads.”

But Buttigieg didn’t engage and was off to his next stop, the climate summit in Scotland. There he stood for almost a dozen interviews as he promoted provisions of Biden’s bill that would build a network of electric vehicle charging stations. He also engaged with young climate activists and took photos with former President Barack Obama.

On racism in roadways, he said simply: “I don’t know who it hurts to acknowledge that harm was done and to propose doing something to fix it.”

His department later announced it would grant extra discretionary aid to help as many as 20 U.S. communities remove portions of interstates, redesign rural main streets and repurpose former rail lines. That could help places from Syracuse, New York, where many residents back a plan to tear down portions and build a walkable grid, to racially divided areas in New Orleans and St. Paul, Minnesota.

As Biden prepares to sign the infrastructure bill on Monday, eyes are turning to the man still best known as “Mayor Pete,” a newcomer whose promise of “generational change” and real-world sensibility of fixing potholes launched him to the top of the early Democratic primary contests during the 2020 campaign.

Quickly endorsing Biden after abandoning the race, Buttigieg now stands to become one of the more powerful brokers in Washington, handling the largest infusion of cash into the transportation sector since the 1950s creation of the interstate highway system.

“Armed with that much money and significant latitude in how to spend it, Buttigieg is poised to be the most influential secretary of transportation ever,” said Jeff Davis, a senior fellow at the Eno Center for Transportation. The department was founded in 1967.

In all, about $120 billion of the $550 billion in new transportation spending in the bill would come in the form of competitive grants that give Buttigieg discretion in how the money is used.

A separate social spending bill pending in the House would pour billions more dollars into the Transportation Department, which already expects to see its annual budget surge by over 50% to $140 billion.

“It’s a whole lot of money,” says Ray LaHood, a former Republican congressman from Illinois and transportation secretary under Obama, who in comparison presided over the release of $48 billion in transportation money in the 2009 Recovery Act. Since then, LaHood said, major federal investments in transportation have been stagnant, creating pent-up demand for road, bridge and Amtrak projects that can quickly launch.

It’s both a boon and challenge to Buttigieg, who revealed in August that he was going to become a dad with husband Chasten. He took several weeks of paternity leave to care for the twins, returning in October as Republicans criticized him for leaving his post. More recently, he juggled time keeping watch over his infant son, who was ill for three weeks and hospitalized for a respiratory illness, while he worked to address national supply chain problems.

“When somebody welcomes a new child into their family, and goes on leave to take care of that child that’s not a vacation, it’s work,” he said last month. “I’m not going to apologize.”

Starting this week, Buttigieg will join other Cabinet members to pitch the plan around the country.

“Look, a lot of this sells itself because communities never needed to be persuaded that their bridge needed to be fixed or that their airport needed an upgrade or that their ports needed investment,” Buttigieg said. “They’ve been trying to get Washington to catch up to them.”

Anthony Foxx, who was Obama’s transportation secretary from 2013 to 2017, said a big challenge will be the massive operational details in the department, where Buttigieg is supported by veteran hands. Many programs are new, requiring clear guidelines to states and localities on what they are eligible for and how the money is to be awarded. “They will be managing multiple plans with very high dollar figures, creating pressure on administrative staff,” Foxx said.

On Friday, Biden said he would name a person outside the administration to be a watchdog on the disbursement of the money.

Once many programs are in place, after six to nine months, Foxx said, “that’s when the magic happens on what to fund and what may not cut the mustard.” The winners would come in the form of hundreds of grant announcements for medium-sized road projects that could accelerate into spring 2023 with the first awards for multibillion dollar bridges, intercity rail and New York’s Gateway tunnel.

As a mayor, Buttigieg was attuned to calls to fix roads and potholes. He relished talking about state-of-the-art sewer system. Now that message will be national with the stakes far greater.

“The currency of politics is exposure, and he’s getting a lot of exposure,” said Larry Grisalano, who was Buttigieg’s advertising consultant.

At the White House, staff warmly refer to him as “Secretary Mayor Pete,” and Biden has compared Buttigieg to his late son Beau. The White House celebrated Chasten’s birthday with cupcakes. “You’re the best, man,” Biden said after Buttigieg spoke at the White House over the summer.

Yet in a city laden with ambition, Buttigieg’s potential to move farther onto the national stage can make him a target.

Nina Smith, Buttigieg’s former traveling campaign press secretary, said as Biden’s top lieutenant on the bill, Buttigieg has the opportunity to lead an effort to “eradicate past injustices.” Buttigieg during the 2020 campaign was never able to win over large shares of Black voters.

“That’s an added responsibility that I think he’s very much aware of and making a central part of the work,” said Smith, a Democratic political consultant.

Click to expand...

Who knew that infrastructure was a wedge issue?

Ever since the House passed the bipartisan bill to do lots of building and rebuilding around the country, Republicans have been at each other’s throats.

Some Republicans said it was great to vote for roads, bridges and broadband. But most in the party — encouraged by Mr. Infrastructure Week himself, Donald Trump — said that voting for roads, bridges and broadband made you a traitor for helping President Biden, and maybe even a socialist.

There are two lessons here.

First, those who regularly pretend that polarization affects both parties equally need to reckon with a GOP so committed to obstruction that a majority of its House members and senators insist that party loyalty demands opposing new highways in their own districts or states.

The more important lesson relates to the importance of controlling the terms of the political debate.

Ever since this month’s elections in Virginia and New Jersey signaled real trouble for their party, Democrats have been tearing themselves apart over the controversies Republicans want them to talk about. Note to Democrats: This is the reason they’re called wedge issues.

You can’t turn on your phone or computer without running across searing, inner-directed polemics about how one kind of Democrat is pursuing approaches destined to doom all Democrats on issues such as critical race theory and questions around education more generally.

As someone who writes about such questions for a living, I have no reason to discourage their exploration or pretend they don’t matter. The problem for Biden and his party is that the centrality of these topics is a mark of political failure. Taking your opponent’s bait and playing on your opposition’s turf is the surest path to defeat. To succeed in politics, you need to make your opponent respond to you.

This is what Democrats did by moving the infrastructure bill to Biden’s desk. The GOP’s internal bloodletting quickly followed. Approving Biden’s Build Back Better initiatives could have the same effect.

Wouldn’t it be useful — for the country, not just Democrats — to discuss the benefits of a federal program to contain the costs of child care to 7 percent of a family’s income? Shouldn’t we welcome similar attention to reducing the cost of prescription drugs, expanding access to health insurance or extending a child tax credit that offers substantial benefits to families raising the next generation?

With their sweeping attacks on Biden’s plan as “socialism,” conservatives make plain that they would prefer to avoid debating such specifics. They would rather hide behind a scare word because they know that among rank-and-file conservative voters, many a mom and dad could use the help Biden’s proposals would deliver.

But such families won’t even know what’s on offer if supporters of Build Back Better don’t (1) get it through both houses; and (2) put the same energy into explaining and defending it that conservatives have invested in making “critical race theory” three of the most popular words in political commentary.

The same logic applies to the battle for democracy itself. Democratic politicians should be ashamed that while Trump has turned his “Stop the Steal” lies into a mobilizing battle cry for Republican base voters, Democrats have been unable to do the same with their defense of the right to vote. Turnout in GOP areas in Virginia and New Jersey was off the charts. Democrats couldn’t match it.

Why is this?

One reason is that Republican senators have used the filibuster to stymie the Freedom to Vote Act and the John Lewis Voting Rights Advancement Act. In the face of such gridlock, Democratic loyalists are justified in asking their party’s leaders: Where are you when it comes to defending fair elections — and our rights?

Making these bills law is thus both the right thing to do and a political imperative. The good news is that middle-of-the-road senators are working on changes in the filibuster rules that they hope Sen. Joe Manchin III (D-W.Va.) can support. The bad news is that the longer action is delayed, the more dispirited supporters of voting rights are certain to become, and the more damage Trump’s deceptive narrative will do.

No doubt, the media typically gravitates toward eye-catching cultural issues that don’t involve the detailed explanations that, say, a tax credit or a health-care expansion require. And Democrats’ narrow majorities, coupled with the Senate’s arcane rules, make passing anything — not just voting rights — excruciatingly difficult.

But alibis and excuses don’t win arguments (or elections), and if the bad news for Democrats in The Post-ABC News poll published Sunday doesn’t get their attention, I don’t know what will.

The party, starting with the president when he signs the infrastructure bill on Monday, can use the power it has now to change the nation’s political conversation. Or it can resign itself to defeat at the hands of a GOP in which a majority is not even willing to fix the damned roads.

Click to expand...

Donald Trump on Wednesday urged Republicans to use the debt ceiling to hold the country hostage in an attempt to block President Joe Biden's "Build Back Better" agenda.

Trump failed to get Republicans to block the Bipartisan Infrastructure Framework, which was half of Biden's infrastructure package. As the reconciliation bill — the second half of Biden's infrastructure agenda — nears a vote, Trump emailed a statement urging Republicans to keep Biden from securing a victory.

"When the Broken Old Crow, Mitch McConnell, agreed to a two-month extension, he allowed the Democrats to get their act together and pass the $1.2 Trillion 'Non-Infrastructure' Green New Deal Bill," Trump said while complaining about the bill.

"This was all allowed by Mitch McConnell's incompetence and now I understand that a couple Republican Senators may get on board so that they can have yet another and even bigger victory, for the Democrats, while at the same time ensuring massive Inflation and the destruction of our Country as we know it," Trump complained. "This is what happens when you allow a guy who lost an Election to take over the Office of the President. He obviously had no mandate, but they're changing our Country and everything it stands for."

WATCH: Nicolle Wallace rattles off all the times Trump swore he would pass 'VERY BIG & BOLD' infrastructure

"Mitch McConnell couldn't stop the first Bill so 19 Senators, including himself, joined in. That's what he does—if you can't beat them, join them. If he wasn't so stupid and didn't give the two-month extension, he could have stopped it all," Trump said. "Now he and his RINO friends will allow a much bigger and far worse Bill to pass, ruining our Country while giving the Democrats a great political lift, all at the same time."

Trump put all the blame at McConnell's feet.

"This is the Broken Old Crow's fault. He could have won it all using the Debt Ceiling—they were ready to fold. Now the Democrats have a big victory and the wind at their back. McConnell is a fool and he damn well better stop their 'Dream of Communism Bill' and keep his Senators in line, or he should resign now, something he should have done a long time ago. Use the Debt Ceiling like it should have been used, you Old Broken Crow, to do so would hurt our Country far less than this horrible Bill. Any Republican in the House or Senate who votes for this Bill will never ever get a Trump Endorsement," Trump threatened.

In October, Trump also urged Republicans to use the debt ceiling as leverage.

READ MORE: Trump bitterly attacks 'Old Crow' Mitch McConnell for passing Biden's infrastructure bill

"Republican Senators, do not vote for this terrible deal being pushed by folding Mitch McConnell. Stand strong for our Country. The American people are with you!" Trump urged before the vote.

But McConnell and ten other Senate Republicans joined with Democrats to pass a debt ceiling extension.

Trump also had a similar message in August.

"Joe Biden's infrastructure bill is a disgrace. If Mitch McConnell was smart, which we've seen no evidence of, he would use the debt ceiling card to negotiate a good infrastructure package," Trump wrote. "Joe Biden's infrastructure bill will be used against the Republican Party in the upcoming elections in 2022 and 2024. It will be very hard for me to endorse anyone foolish enough to vote in favor of this deal."

That vote was even more lopsided, with 18 Republicans joining McConnell to pass the bill.

READ MORE: Pro-infrastructure Republicans are facing a barrage of abuse from furious Trump supporters

Click to expand...

The government sharply underestimated job gains for most of 2021, including four months this summer in which it missed more job growth than at any other time on record.

In the most recent four months with revisions, June through September, the Bureau of Labor Statistics (BLS) reported it underestimated job growth by a cumulative 626,000 jobs — that’s the largest underestimate of any other comparable period, going back to 1979. If those revisions were themselves a jobs report, they’d be an absolute blockbuster.

In an average month before the pandemic, estimates would be revised by a little over 30,000 jobs, or just 0.02 percent of all the jobs in the United States. The recent revisions to the jobs reports have been much larger.

The missing jobs surfaced through revisions to the widely watched non-farm payrolls number that BLS releases each month. The data is considered preliminary until it has been revised twice. The fixes are typically minor, but recent revisions have been big enough to turn a substantial slump into a surprising surge.

These waves of revisions in the same direction tend to happen at turning points in the labor market. BLS relies on highly technical models to adjust for seasonal patterns, business closures and other factors, to catch new trends in the labor market and make revisions quickly.

It’s happened before during this pandemic. Revisions in the already calamitous months of March and April 2020 found the economy had lost 922,000 more jobs than initially reported. Also, earlier in the pandemic, BLS drew criticism for a misclassification error in a different survey, which BLS economists said greatly understated the unemployment rate. Due to the way certain survey questions were interpreted, millions of workers who said they had a job but couldn’t work due to coronavirus shutdowns were marked as absent rather than as temporarily unemployed.

A ‘misclassification error’ made the May unemployment rate look better than it is. Here’s what happened.

This time, the payrolls data has been obfuscated as businesses have been slow to respond to government surveys amid the chaos of the pandemic — part of a larger pattern in which the deadly virus has wreaked havoc on federal statistics.

Angie Clinton, the BLS section chief who oversees the payroll number crunching, said there have been more large revisions since the start of the coronavirus pandemic, but that revisions are a sign of the system working as intended.

“We’re just improving the estimate using everything we know up through the month we’re releasing, really,” Clinton said. “I mean, it sounds counterintuitive to most people because revisions — they think, ‘Oh, they got it wrong the first time.’ But no, we got it right, based on what the sample told us. But going forward we receive more sample, some corrected records, and recalculate seasonal factors, which together may indicate a different story.”

The revisions have recast the narrative of a summer slowdown. In August, when economists expected a strong follow-up to the 943,000 jobs the economy added in July, the BLS announced the U.S. added only 235,000 jobs. Headlines dubbed it a “colossal miss” as job growth took a “giant step back.” Two months later, revisions based on additional data showed August jobs grew by 483,000, more than double the anemic original reading. It was the biggest positive revision in almost four decades.



President Biden may have even paid a political price for the lackluster jobs numbers. From April to June, polls found that most Americans (51 percent) approved of Biden’s handling of the economy, according to an average of polls from Fox, NBC, Quinnipiac and The Post. But as bad economic numbers came out and the national political climate turned south, those numbers fell steadily — in October, just 39 percent approved of Biden’s handling of the economy, while 57 percent disapproved.

“Naysayers and detractors from Biden’s agenda are going to exploit any ‘bad’ economic indicator they can as evidence for why Biden has it wrong on the economy or why Biden’s Build Back Better proposal gets it wrong on the economy, and in that sense underestimates of the jobs numbers are not helpful,” said Lindsay Owens, executive director of the left-leaning Groundwork Collaborative.

However, Biden’s falling economic-approval numbers during that period could also be attributed to other issues, such as rising inflation and the controversial and abrupt Afghanistan withdrawal, which have dragged Biden’s approval down across the board, Owens said. In that environment, a few slow jobs reports may not been the primary driver of public opinion, Owens said.

Each month’s revisions simply reflect economists’ new best estimate, based on additional data. For example, when businesses report a surprisingly good month, such as this October, the seasonal adjustment algorithms look back on previous months with the benefit of hindsight. A good October likely didn’t come out of nowhere: the August and September estimates probably missed some growth. So, some of the jump in October is assumed to have occurred earlier, and a portion of the October gains are reallocated back to previous months.



These best-guess first estimates are often refined as responses straggle in from more of the 697,000 establishments surveyed each month, including major employers, government agencies and a rotating cast of small businesses. The businesses are asked how many people they employ, how much those people are paid excluding bonuses, and how many hours those are paid for.

In a typical recent month, about a quarter of the responses have come in late. When businesses don’t respond, economists and their models must account for all the reasons a business might not return a survey, including the possibility that it may have suddenly closed up shop. They must also account for newly formed businesses that won’t be on their survey rolls quite yet.

Jane Oates, the president of the employment-focused nonprofit WorkingNation and a Labor Department official in the aftermath of the Great Recession, said the coronavirus crisis and subsequent worker shortage put many employers under amazing stress. One plausible explanation for the Labor Department’s chronic underestimates is that the employers who were hiring the most were too busy to respond to the survey, so initial responses missed the fastest-hiring firms.

“Back in the Great Recession, there were many employers who were impacted but now every employer is impacted. Everybody is scrambling for talent. And I bet there’s just a higher percentage of them missing the deadline,” Oates said.

Before the pandemic, about 60 percent of contacted businesses responded to the survey, BLS data show.
By May 2021, the most recent month for which data is available, that had declined to 49 percent. Those low response rates may have played a role in the unusually high revisions seen during the past two years.

Rather than showing that BLS has failed, the revisions are a tribute to the agency’s commitment to getting the numbers right, said Cornell University economist Erica Groshen, who served as BLS commissioner from 2013 to 2017.

“They take their responsibilities very seriously,” Groshen said. “They’re very transparent about their methodology and they’re always trying to improve that.”

BLS is a professional civil-service agency. The only political appointee, the commissioner, has no access to numbers before they are finalized. The economists and statisticians entrusted with the jobs numbers work with almost fanatic secrecy, Groshen said.

When staffers worked in the offices, before the pandemic, security was so tight that, if window washers appeared outside their windows, staff would get up and close the blinds. Staff had to empty their own trash from their locked-down offices — outside workers, even cleaners, aren’t allowed to enter the inner sanctum of statistics.

Click to expand...

https://www.afge.org/article/trump-political-appointees-seek-to-politicize-federal-employees-pay.-unions-say-not-so-fast/

Click to expand...

doublejj said:

California analyst predicts $31 billion budget surplus

SACRAMENTO, Calif. (AP) — California is on track to have so much money that state officials will likely have to give even more of it back to taxpayers to meet constitutional limits on state spending, according to a new forecast from the state's independent Legislative Analyst's Office.

The state's annual “Fiscal Outlook,” released Wednesday, predicts a $31 billion surplus for the 2022 budget year that begins July 1. The analyst's office says state is on pace to have so much money that it could exceed a constitutional limit on state spending by $26 billion over three years. That could require Gov. Gavin Newsom and state lawmakers to either cut taxes, spend more money on infrastructure or — perhaps the most popular choice in an election year — give rebates to taxpayers and spend more on public schools.

California analyst predicts $31 billion budget surplus

SACRAMENTO, Calif. (AP) — California is on track to have so much money that state...

www.sfgate.com

and this is during the global pandemic.....Newsom for President!
View attachment 5030905

Click to expand...

hanimmal said:

https://www.washingtonpost.com/business/2021/10/28/biden-spending-plan-what-is-in-it/
View attachment 5031793

House Democrats on Friday morning passed a more than $2 trillion bill to overhaul the country’s health care, climate, education and tax laws, moving beyond months of disputes between liberals and moderates that have stalled President Biden’s economic agenda.

The legislation builds off a framework that Biden unveiled to party lawmakers and includes new spending to enhance child care, provide free prekindergarten, combat climate change and advance a slew of tax benefits that chiefly aid low-income Americans.

But the bill omits many of Democrats’ top priorities, a reflection of the party’s difficult work to scale back a package once valued at $3.5 trillion. It now moves to the Senate, where it may face further cuts.

What follows is a guide to the legislation, one of the most significant overhauls of domestic policy in generations.

View attachment 5031794

Click to expand...

When the House passed the Build Back Better social policy bill on Friday morning, every Republican voted against a nearly $1.5 trillion tax hike on the rich and corporations.

Yet Republicans are planning to seize on this vote to proclaim Democrats are the party of plutocrats.

Yes, you read that correctly. House Democrats just passed the second half of President Biden’s agenda — the BBB social policy bill — with all House Republicans voting against it. And the package contains the largest high-end tax increase in more than a decade.

But somehow, Republicans are already telegraphing that they will focus on a single provision in the bill to argue that Democrats are the party that … cuts taxes for the rich.

While Republicans will launch all kinds of absurd attacks, this one is of particular interest: It captures something essential about the true ideological differences between the two parties and about the peculiar coalitional problems Democrats now face.

Republicans are seizing on the provision that lifts the cap on state and local tax deductions (SALT) to insist Democrats are delivering the rich a huge tax cut. The proposal would lift the cap on deductions from $10,000 to $80,000 through 2030.

Top Republicans are declaring this shows Democrats are “out of touch,” are selling out “working families,” are “shoveling money to the rich” and are rewarding “liberal elites,” particularly in wealthy coastal enclaves.

Okay, then. Here is a partial list of what Republicans just voted against:

• A surtax on incomes over $10 million
• A corporate minimum tax that would prevent profitable corporations from gaming down their tax bills, sometimes to zero
• A curb on multinational corporations avoiding huge amounts of taxes by shielding income through all manner of profit-shifting chicanery abroad
• Beefed-up IRS enforcement to crack down on wealthy tax cheats

These provisions would raise taxes on the wealthy and corporations by a total of at least $1.4 trillion, according to the Joint Committee on Taxation. They would help correct for vast inequalities in our tax code and curb ways elites have long gamed it to enrich themselves.

Every House Republican voted against all of it. Given that Republicans also passed a 2017 tax cut that lavished enormous benefits on corporations and the rich, the idea that Republicans will highlight the SALT provision to cast Democrats as the party of plutocrats is beyond ludicrous.

“Republicans oppose a $1.4 trillion tax increase on corporations and high-income taxpayers,” Steven Rosenthal, a senior fellow at the Tax Policy Center, told me. “They justify this by highlighting the modest relief for state and local taxes paid by some high-income taxpayers, which is minor by comparison.”

“Making the Republican stance all the more ridiculous,” Rosenthal continued, Republicans in 2017 “cut taxes by nearly $2 trillion, largely for corporations and the rich.”

To be clear, it’s a problem that Democrats lifted the SALT cap, in numerous ways. First, it is a regressive tax cut that will indeed disproportionately benefit the very well-off.

But Democrats can fix this when the Senate takes up BBB. One idea pushed by progressive senators and think tanks is to make the deduction available only to incomes below $400,000.

Second, this does highlight a real coalitional problem Democrats face. The SALT cap hits households with higher incomes who pay large amounts in state and local taxes, and these tend to be in blue states with higher taxes and more public services.

So by lifting the cap, Democrats are appealing in part to wealthier suburbanites in coastal states who want to use already-high state taxes they pay to relieve their federal tax burden. That’s why this is necessary to get House moderates in places such as New York, New Jersey and California to support BBB.

So the Democratic reliance on those voters does risk pushing the Democratic agenda in a more regressive direction. And it’s why Republicans are attacking this as a giveaway to liberal and coastal elites.

But this also points to a deeper absurdity in the GOP attack, one that concerns the history here.

The SALT cap was originally included in the 2017 tax law by Republicans. They wanted to raise revenue to make their enormous tax cut for the rich and corporations look a little less fiscally unreasonable.

Chye-Ching Huang, a tax expert at New York University, points out that this really means Republicans essentially raised taxes on higher-income individuals in those states to offset a huge tax cut on even wealthier individuals.

“The 2017 tax law capping the SALT deduction was used to pay for tax cuts that were overall even more tilted to the wealthiest filers,” Huang told me.

In short, Republicans are comfortable attacking tax cuts for higher-end individuals, but only when it mainly targets blue state and coastal taxpayers, even though Republicans cut taxes on high-income individuals by far more. They’re posing as anti-elite by singling out this one provision, while voting against undoing the enormous tax cut for the rich that they themselves implemented.

Making this even more ridiculous, overall BBB raises taxes on the wealthy to fund investments in fighting climate change, curbing child poverty, expanding health care access on multiple fronts, and a whole host of other social supports.

And Republicans want to attack Democrats as plutocrats? No one should pretend there’s a shred of legitimacy to this nonsense.

Click to expand...

Helen Muradyan, a second-year resident physician, stopped working last month.

Not because her skills aren’t needed. To the contrary: The Southern California community hospital and health clinic that employed Muradyan struggle to find staff even during normal times. The pandemic worsened their staffing shortages.

“At one point we were operating at 150 percent of capacity,” Muradyan told me. “We worked day, night. We worked without breaks or anything, without seeing our loved ones, without seeing our family.”

But Muradyan, an immigrant from Armenia, had to stop working — because the U.S. government couldn’t be bothered to process her application to renew her work permit. Eventually, her existing work permit expired, and her employers had to terminate her.

Many factors contribute to our nationwide labor shortages, which are, in turn, driving supply-chain problems and inflation. Most of those issues — lack of child care, early retirements, fear of getting ill, burnout — would be difficult for employers or policymakers to resolve even if wages rise. But there’s one underappreciated factor contributing to labor shortfalls that the Biden administration could alleviate almost immediately: the “missing” immigrant workers.

Immigration inflows slowed sharply during the Trump administration and then collapsed under the combination of Trump-era policies and pandemic-driven closures. The number of visas issued by the State Department’s Foreign Service posts, for example, fell by more than 60 percent between fiscal years 2016 and 2020. There are millions fewer immigrants here today than would have been the case if pre-Trump trends in immigration had continued.

But the labor force is also losing immigrants already here legally, whose work permits are expiring because the Biden administration hasn’t gotten its act together.



For immigrants in the country lawfully, renewing an existing work permit was once relatively straightforward. When Muradyan applied for a renewal in 2019, she recalls the process took two to three months. That’s close to the average processing time such applications required in recent years.





Cases such as Rios’s or Muradyan’s shouldn’t take long to adjudicate: On average, USCIS employees spend only 12 minutes before rendering a decision on each employment authorization application, according to a 2019 agency estimate.

But the queue to get any specific application reviewed is long — and growing. As of June 30, nearly 1.4 million employment authorization applications were pending. That’s double the size of the backlog that existed right before covid-19 reached the United States. It’s triple the number from the quarter just before Donald Trump took office.

Multiple factors have expanded the backlog: Pre-pandemic, Trump officials had deliberately slowed down processing of nearly all immigration-related applications. The red tape and other obstacles they added increased costs not just for applicants but also USCIS. The agency had a budget crisis last year and ultimately froze the hiring of new employees and laid off contractors.

Covid safety measures then further slowed processing.

The Biden administration has reversed many Trump-era policies but the agency remains understaffed. And shrinking the work-permit backlog does not appear to be a Biden administration priority, even as it touts a “whole-of-government” approach to unblocking supply chains and reducing inflationary pressures.

When asked what role the constricted immigrant labor force might play in today’s economic bottlenecks, White House officials often change the subject. When I asked USCIS what it is doing to shorten wait times for employment documents, the agency said it was “committed to using all available policy and operational improvements to reduce both the number of pending cases and overall processing times,” and cited several changes it has made to expedite processing. (Some of those were the result of a recent settlement in a different class-action case.)

The problem, says Cato Institute research fellow David Bier, is that the administration has "done a lot of the reversing of the bad stuff that Trump did to slow things down even more, but not enough to go above and beyond that necessary to get rid of the backlogs and added delays that the Trump policies originally created.”

So what could USCIS do, while it rebuilds it staff?

Eliminating some redundancies from the process is a good start. The agency could also automatically extend more existing work permits while applicants wait for their renewals to be processed. Some categories of noncitizens already get this courtesy, but even those grace periods are too short. Asylum seekers, for instance, have their existing work permits auto-extended for up to 180 days while the renewal application awaits processing. But as Muradyan’s case and others show, that’s not enough time to avoid a lapse in employment.

“It doesn’t make sense, that if someone really wants to work, they can’t go back to work because of these delays,” she said. “It’s like they just don’t care.”

Click to expand...

WASHINGTON (AP) — President Joe Biden on Tuesday ordered 50 million barrels of oil released from America’s strategic reserve to help bring down energy costs, in coordination with other major energy consuming nations, including China, India and the United Kingdom.

The move is aimed at global energy markets, but also at U.S. voters who are coping with higher inflation and rising prices ahead of Thanksgiving and winter holiday travel. Gasoline prices are at about $3.40 a gallon, more than 50% higher than a year ago, according to the American Automobile Association.

Administration officials said that reports of a possible release and consultations with other countries ahead of the announcement had caused oil prices to drop nearly 10% in anticipation of the news. The government will begin to move barrels into the market in mid to late December.

But the actions are unlikely to immediately bring down gas prices significantly as families begin traveling for the holidays. Administration officials noted that gasoline usually responds at a lag to changes in oil prices, and they suggested this is one of several steps in ultimately bringing down costs.

There was no discernable impact on the price for a benchmark barrel of U.S. crude right after the announcement. Prices have been up and down all month, and were up less than 1% so far in this holiday shortened week.

The actions by the U.S. and others risk counter moves by Gulf nations, especially Saudi Arabia, and by Russia. Saudi Arabia and other Gulf countries have made clear they intend to control supply to keep prices high for the time being.

As word spread in recent days of a coming joint release from U.S. and other countries’ reserves, there were warnings from OPEC interests that those countries may respond in turn, reneging on promises to increase supplies in coming months.

Biden has scrambled to reshape much of his economic agenda around the issue of inflation, saying that his recently passed $1 trillion infrastructure package will reduce price pressures by making it more efficient and cheaper to transport goods.

Republican lawmakers have hammered the administration for inflation hitting a 31-year high in October. The consumer price index soared 6.2% from a year ago — the biggest 12-month jump since 1990.

Senate Republican Leader Mitch McConnell tore into the White House in a floor speech last week, saying the victims of higher prices were middle class Americans.

“The three biggest drivers of the staggering 6.2% inflation rate we logged last month were housing, transportation, and food,” the Kentucky senator said. “Those aren’t luxuries, they’re essentials, and they take up a much bigger share of families’ budgets from the middle class on down.”

The Strategic Petroleum Reserve is an emergency stockpile to preserve access to oil in case of natural disasters, national security issues and other events. Maintained by the Energy Department, the reserves are stored in caverns created in salt domes along the Texas and Louisiana Gulf Coasts. There are roughly 605 million barrels of sweet and sour petroleum in the reserve.

“As we come out of an unprecedented global economic shutdown, oil supply has not kept up with demand, forcing working families and businesses to pay the price,” Energy Secretary Jennifer Granholm said in a statement. “This action underscores the president’s commitment to using the tools available to bring down costs for working families and to continue our economic recovery.”

The Biden administration has argued that the reserve is the right tool to help ease the supply problem. Americans used an average of 20.7 million barrels a day during September, according to the Energy Information Administration. That means that the release nearly equals about two-and-a-half days of additional supply.

The pandemic made energy markets — like everything else — haywire on multiple fronts. As the closures began in April, 2020, demand collapsed and oil futures prices turned negative. Energy traders did not want to get stuck with crude that they could not store. But as the economy recovered, prices jumped to a seven-year high in October.

U.S. production has not recovered. Energy Information Administration figures indicate that domestic production is averaging roughly 11 million barrels daily, down from 12.8 million before the pandemic started.

Republicans have also seized on Biden’s efforts to minimize drilling and support renewable energy as a reason for the decreased production, though there are multiple market dynamics at play as fossil fuel prices are higher around the world.

“President Biden’s policies are hiking inflation and energy prices for the American people. Tapping the Strategic Petroleum Reserve will not fix the problem,” said Sen. John Barrasso, R-Wyoming. “We are experiencing higher prices because the administration and Democrats in Congress are waging a war on American energy.”

Meanwhile, Biden and administration officials insist that tapping more oil from the reserve is not a contradiction with the president’s long-term climate goals, because this is a short-term fix to meet a specific problem, while climate policies are a long-term answer over decades.

They argue that because they are pushing to boost renewable energy, there will eventually be less dependence in the U.S. on fossil fuels. But that’s a politically convenient argument - in simple terms, higher prices reduce usage, and significantly higher gasoline prices could force Americans into less reliance on fossil fuels.

The White House decision comes after weeks of diplomatic negotiations. Biden and China President Xi Jinping talked over steps to counter tight petroleum supplies in their virtual meeting earlier this month, when the two “discussed the importance of taking measures to address global energy supplies,” according to the White House account of the conversation.

Japan and South Korea are also participating. Administration officials say it’s the biggest coordinated release from global strategic reserves.

The U.S. Department of Energy will make the oil available from the Strategic Petroleum Reserve in two ways; 32 million barrels will be released in the next few months and will return to the reserve in the years ahead, the White House said. Another 18 million barrels will be part of a sale of oil that Congress had previously authorized.

White House Press Secretary Jen Psaki said Monday evening that the White House would also keep tabs on the oil companies, too.

“We will continue to press oil companies who have made record profits and are overseeing what we consider to be price gouging out there when there’s a supply of oil or the price of oil is coming down and the price of gas is not coming down,” Psaki said. “It does not take an economic expert to know that’s a problem.”

Click to expand...

WASHINGTON (AP) — The number of Americans applying for unemployment benefits plummeted last week to the lowest level in more than half a century, another sign that the U.S. job market is rebounding rapidly from last year’s coronavirus recession.

Jobless claims dropped by 71,000 to 199,000, the lowest since mid-November 1969. But seasonal adjustments around the Thanksgiving holiday contributed significantly to the bigger-than-expected drop. Unadjusted, claims actually ticked up by more than 18,000 to nearly 259,000.

The four-week average of claims, which smooths out weekly ups and downs, also dropped — by 21,000 to just over 252,000, the lowest since mid-March 2020 when the pandemic slammed the economy.

Since topping 900,000 in early January, the applications have fallen steadily toward and now fallen below their prepandemic level of around 220,000 a week. Claims for jobless aid are a proxy for layoffs.

Overall, 2 million Americans were collecting traditional unemployment checks the week that ended Nov. 13, down slightly from the week before.

“Overall, expect continued volatility in the headline figures, but the trend remains very slowly lower,” Contingent Macro Advisors wrote in a research note.

Until Sept. 6, the federal government had supplemented state unemployment insurance programs by paying an extra payment of $300 a week and extending benefits to gig workers and to those who were out of work for six months or more. Including the federal programs, the number of Americans receiving some form of jobless aid peaked at more than 33 million in June 2020.

The job market has staged a remarkable comeback since the spring of 2020 when the coronavirus pandemic forced businesses to close or cut hours and kept many Americans at home as a health precaution. In March and April last year, employers slashed more than 22 million jobs.

But government relief checks, super-low interest rates and the rollout of vaccines combined to give consumers the confidence and financial wherewithal to start spending again. Employers, scrambling to meet an unexpected surge in demand, have made 18 million new hires since April 2020 and are expected to add another 575,000 this month. Still, the United States remains 4 million short of the jobs it had in February 2020.

Companies now complain that they can’t find workers to fill job openings, a near-record 10.4 million in September. Workers, finding themselves with bargaining clout for the first time in decades, are becoming choosier about jobs; a record 4.4 million quit in September, a sign they have confidence in their ability to find something better.

Click to expand...

WASHINGTON (AP) — LBJ tried jawboning. Richard Nixon issued a presidential edict. The Ford administration printed buttons exhorting Americans to “Whip Inflation Now.”

Over the years, American presidents have tried, and mostly floundered, in their efforts to quell the economic and political menace of consumer inflation.

Now, President Joe Biden is giving it a shot.

Confronting a spike in gasoline and other consumer prices that’s bedeviling American households, Biden on Tuesday ordered the release of 50 million barrels of oil from the U.S strategic petroleum reserve. The move, done in coordination with several other major nations, is intended to contain energy costs. Oil markets, having anticipated the move, were unimpressed with the details: Oil prices actually rose on the news.

It was just the latest step Biden has taken to show he is doing everything he can to combat inflation as gasoline and food prices, in particular, have imposed a growing burden on American households. On Monday, he announced that he would reappoint Jerome Powell as chair of the Federal Reserve, a move meant in part to reassure financial markets that Washington is serious about containing consumer prices. Last month, he announced a deal to ease supply backlogs at the Port of Los Angeles by extending operations there to 24 hours a day, seven days a week.

Yet none of the president’s actions is considered likely to make a meaningful dent in surging prices anytime soon.

“I don’t think the president has many levers to pull to bring down the rate of inflation any time soon,” said Mark Zandi, chief economist at Moody’s Analytics. “The things he is doing are positive, and there’s no downside to them ... but they are on the margins. They’re not going to move the dial very much.”

Inflation is always a tough foe, made even more complicated by the unusual recovery from the pandemic recession, with shortages of supplies and workers and shipping bottlenecks forcing up prices.

WHAT IS HAPPENING TO CONSUMER PRICES?

The government’s consumer price index skyrocketed 6.2% in the 12 months that ended in October — the sharpest such jump since 1990.

Coming after nearly four decades of more or less stable prices, the CPI news represents a “once-in-a-generation uptick in inflation,” said Sarah Binder, a George Washington University political scientist who studies the Fed. “The problem is pretty stark because it’s something that voters notice. It’s hard to escape the impact of a spike in inflation on your daily life, whether it’s buying milk or buying gas.’’

The average price of regular gasoline has shot up to $3.40 a gallon from $2.11 a year ago, according to AAA.

Compounding the pain and heightening the pressure on Biden, inflation has been outpacing Americans’ income. Adjusted for price increases, average hourly wages were actually down 1.2% last month compared with a year earlier.

“Inflation is painful, and it’s always political,” said Diane Swonk, chief economist at the accounting and consulting firm Grant Thornton.

WHAT’S BEHIND THE PRICE SPIKE?

It’s partly the consequence of very good news. The world economy — and America’s in particular — rebounded with unexpected speed and strength from last year’s brief but intense recession. It was a result of super-low interest rates, massive government spending and, eventually, the broad rollout of vaccines that allowed more of the economy to reopen.

The swiftness of the rebound caught businesses off guard. A year and a half ago, they were bracing for the worst — laying off workers, letting shelves and warehouses go bare, reducing investment and factory output.

And energy companies did the same: They cut production of oil and gas as demand for transportation fuels plummeted. Once demand came roaring back, they were unprepared. They found themselves scrambling to call back workers and buy enough to fill customer orders. Ports and freight yards couldn’t handle the traffic. Countries competed over boatloads of overpriced liquid natural gas. Periodic COVID-19 outbreaks shut down Asian ports and factories. Global supply chains broke down.

As costs rose, many businesses found that they could pass the burden along to consumers in the form of higher prices. In the meantime, many families had banked their government relief checks and built up their savings. Some critics also blamed Biden’s $1.9 trillion emergency aid package for overheating the economy and contributing to inflation pressures.

Economists are divided over how long the inflation spike will last. Gus Faucher, chief economist at PNC Financial, predicts that inflationary pressures will ease as supply chains sort themselves out.

“I expect to see inflation slow in 2022,″ he said.

WHAT CAN PRESIDENTS DO?

The White House has limited tools for reversing higher prices. That task belongs more to the Fed, which can raise borrowing costs to cool a sizzling economy. During the 1960s and 1970s, though, presidents increasingly felt pressure to do something about inflation because it had become a serious political threat.

President Lyndon Johnson tried to persuade companies to forgo price increases and labor unions to limit wage demands — a practice known as “jawboning.” When Bethlehem Steel raised steel prices in 1965, Johnson criticized its executives as unpatriotic, and they backed down, according to Robert Samuelson’s book, “The Great Inflation and Its Aftermath.” When egg prices rose in 1966, Johnson ordered America’s surgeon general to highlight the health hazards of cholesterol in eggs, with the intent of lowering egg sales and therefore prices.

Nixon imposed wage and price controls in 1971 and 1973, which briefly stifled inflation, only to see prices soar once the controls were lifted.

Gerald Ford’s “Whip Inflation Now” program encouraged Americans to grow their own vegetables, reduce their food waste and consume less. Americans responded mostly by mocking the program. Some wore the president’s WIN buttons upside down, explaining that the resulting NIM stood for “No Immediate Miracles.”

WHAT HAS BIDEN DONE?

Biden last week signed into a law a $1 trillion public works program, which pours money into fixing roads, bridges and ports, potentially easing the supply chain backlogs that have contributed to rising prices. Untangling shipping bottlenecks would be doubly helpful: It would ease inflationary pressures and boost the economy by increasing the flow of goods to customers.

Last week, Biden sent a letter to the Federal Trade Commission asking the FTC chair to consider investigating whether higher gasoline prices were the result of “illegal conduct.” The White House is also stepping up anti-trust enforcement of the meatpacking industry, seeking to increase competition and drive down meat prices.

His decision to re-nominate Powell to lead the Fed was meant, in part, to reassure the financial markets of Washington’s resolve to prevent consumer prices from spiraling out of his control. The other likely contender for the job — Lael Brainard, a member of the Fed’s Board of Governors — was perceived as less hawkish toward inflation.

WHY DID BIDEN TAP THE STRATEGIC PETROLEUM RESERVE TUESDAY?

The idea was that by putting more oil on the market, prices would fall. That hasn’t happened. But depending on what happens in the rest of the world, there’s still a chance it could work.

America’s petroleum reserve holds about 605 million barrels of oil in underground caves in Texas and Louisiana. It was designed in the 1970s in response to the Arab oil embargo to store oil in case there was a supply disruption or emergency. But the dynamics of the global oil industry changed dramatically in recent years, and now the U.S exports more oil than it imports.

The 50 million barrels that Biden promised to release will likely be sold slowly, at a rate of about 1 million barrels per day, meaning that the new influx of oil could last about two months. Adding even a small amount of oil to the market can tip it into surplus, and potentially lower the price, said Jim Burkhard of IHS Markit.

“The immediate price reaction is not the final judgment on the effectiveness of this of the effort,” he added. “It will really be in the months ahead.”

Click to expand...