Democrats are allowing jobless aid to expire just as an eviction ban lapses, which risks leaving 10 million unemployed feeling ‘neglected’ during the Delta surge

A large red coronavirus shape looming behind the US Capital building on a black background.
The Delta variant is stymieing the economic recovery, but Congress isn’t extending pandemic aid.

  • The economy is rebounding, but millions of Americans are still out of work.
  • The Delta variant threatens to set back the pace of the recovery as jobless aid programs and an eviction freeze end.
  • “It’s like a double hit,” economist Claudia Sahm said. “This is the ending that fits the crisis.”
  • See more stories on Insider’s business page.

The American economy is growing, but it’s splitting between flourishing workers and those falling on difficult times.

Indeed, it has recovered from devastating depths it reached last year. Earlier this year, President Joe Biden touted the summer as a time for Americans to declare independence from a pandemic that’s held a fierce grip over their lives. Easing restrictions was also supposed to mean a return to normalcy and with it a resurgent economy.

But it hasn’t panned out like that since. Millions of Americans remain out of work and unable to land a job even in a rebounding labor market. The rise of the Delta variant is stymieing the speed of the recovery, reflected in a disappointing August jobs report and early signs of Americans pulling back on air travel and spending at restaurants.

On Thursday, Biden outlined steps to mandate swaths of the private and federal workforces to get a COVID-19 shot. He also said in a statement “the Biden plan is working” as weekly unemployment claims tumbled to a new pandemic low.

Resistance from moderate Democrats has doomed any renewal of the federal unemployment programs that expired on Labor Day, along with an eviction moratorium the Supreme Court struck down last month. At least 7.5 million people lost all their federal jobless aid, per an estimate from the left-leaning Century Foundation. Congress and the Biden administration aren’t stepping in to provide new aid as virus infections top 150,000 a day and hospitalizations soar. Experts warn it may set the stage for a slower recovery.

“There are enough people in the Biden administration now who should remember this mistake when they were in office under Obama,” William Spriggs, a professor at Howard University and economist for the AFL-CIO, said in an interview. “This tendency to want to declare economic victory and take a victory lap is problematic – in part because you’re gonna slow the recovery.”

Claudia Sahm, a former Federal Reserve economist, said jobless people had been “jerked around” in the pandemic with arbitrary deadlines causing the government to pull the plug on their benefits. “It’s like a double hit,” she told Insider. “The whole thing has been so tough on the unemployed. This is the ending that fits the crisis.”

The White House declined to comment on the record. White House press secretary Jen Psaki has pointed to the child tax credit as an alternative source of federal aid, and administration officials say states can renew federal unemployment programs on their own. None have done so.

‘They did it exactly backwards’

The latest jobs report showed the economy recouping 235,000 jobs, a sharp slowdown from the month before when over a million jobs were added. Nick Bunker, an economist at Indeed, noted that leisure and hospitality industry, a sector that had experienced strong growth prior to Delta.

“This has Delta variant written all over it,” he wrote on Twitter. The renewed spread of the virus threatens to dent the recovery of the service sector and continuing to sideline workers through school closures or lack of childcare.

“We’re heading into winter in the midst of an enormous uncontrolled surge of COVID,” Julia Raifman, an associate professor at Boston University, told Insider. “All the people who lost their work in travel and leisure early on in the pandemic are again at risk of not finding work.”

Conservatives have assailed the Biden administration’s economic response to the pandemic, blaming generous federal benefits from direct payments and jobless benefits in the Democratic stimulus law for a shortage of workers.

“They did it exactly backwards,” Casey Mulligan, a former Trump administration economist, said in an interview. “If that’s the concern, I’d say take your hand away from the money shovel so you don’t destabilize things.”

For many unemployed Americans, however, a steady flow of government cash helped them put food on the table, keep up with rent or medical bills and stay housed during a deadly pandemic. In addition, early research indicates the end of federal unemployment benefits didn’t lead to a major surge in hiring in GOP states that ended programs this summer.

‘I thought the one party in control was for the people’

Aaron Davison, 28, was furloughed from his job as a turnstile attendant at Universal Studios in Orlando, Florida, early last year. Davison had relied on the enhanced unemployment payments to cover the cost of the hotel room where he’s lived in with his parents for over a year, along with a GoFundMe he set up. That money is starting to dry up.

He’s applied only to remote jobs because he doesn’t want to infect his 64-year-old mother Emily, who has multiple sclerosis and diabetes. She’s had five hospital visits in the past year, straining their finances as medical bills mount and they struggle to pay them without health insurance.

Aaron Davison and family
Aaron Davison alongside his parents.

The Davison family recently renewed their hotel stay until October 11, but they may have no choice but to move into their compact SUV after that if Aaron can’t find work.

Davison said he feels policymakers have ignored jobless people like him as they pivot to other priorities. Democrats are prioritizing the passage of a $3.5 trillion social spending plan this month, full of provisions they hope will transform the economy and help them safeguard their wafer-thin House and Senate majorities ahead of the 2022 midterms.

“Now there’s just a push for climate change and other agenda topics, and the unemployed people are neglected,” Aaron told Insider. “I thought the one party in control was for the people. I guess I’m wrong because they very well could not be in control in 2022. I think 10 million unemployed Americans will remember they were neglected.”

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America’s post-pandemic rebound could blow the 2009 economic recovery out of the water

obama biden first 100 days
President Joe Biden and former President Barack Obama at the Invictus Games Toronto 2017.

  • The US post-pandemic rebound could be much faster than the 2009 recession.
  • One expert said the economy may even end up stronger, which “is crazy to think about.”
  • Still, experts caution that even a blitz of emergency spending could leave people behind.
  • See more stories on Insider’s business page.

Last week, President Joe Biden alluded to Ronald Reagan’s famous “Morning in America” remark, saying “the sun is coming out.” And the economic data supports that. It’s a lot like morning in America, 2020s style.

After enduring a year of shutdowns, the country may now be on course for one of its fastest growth periods since the 1980s. The economy regained 850,000 jobs in June, a sharp increase after disappointing gains in May and April. Unemployment claims are falling steadily as well. Should job growth maintain the June trend, payrolls would fully rebound by February, exactly 24 months after the pre-pandemic peak. By comparison, it took 76 months for the US to recoup all jobs lost during the Great Recession.

The recovery from the Great Recession was, by several measures, the most sluggish in US history. The policy response to the coronavirus, including $6 trillion of emergency spending, has not only been more effective, but appears to be crafted with the mistakes of 2009 in mind.

“I’m incredibly encouraged when it’s compared to the Great Recession,” Mike Konczal, director of macroeconomic analysis at the left-leaning Roosevelt Institute, told Insider. “Responding at the speed and level of crisis as we did with fiscal and monetary support … means that our economy may not only recover so fast, but it may be stronger than it would have been without it, which is crazy to think about.”

The chart below shows the rate of job losses and gains after the Great Recession compared to the coronavirus recession.

Withdrawing federal support in 2012 caused “a lot of scarring” in the labor market, and lawmakers learned from it, Claudia Sahm, a former Fed economist and senior fellow at the Jain Family Institute, said.

“I think of March of 2021 being this pivotal moment like the end of 2012 was,” Sahm said. “This time, Congress did the right thing, in terms of pushing more money out.”

A new playbook for economic revival

The sheer size of the pandemic-era relief bills dwarfs those seen during the Great Recession. The Obama administration was wary of passing a $1 trillion package in 2009, as officials feared the price tag would erode support from Republicans and even moderate Democrats.

The scope is also drastically different. Instead of allocating funds to tax credits and federal spending programs, recent stimulus sent money directly to households through checks and enhanced unemployment insurance. The use of direct cash relief was the most encouraging aspect of pandemic-era support, Sahm said.

“This time we didn’t monkey around with [tax credits],” she told Insider, adding stimulus checks helped Americans pay down debt, build financial buffers, and maintain spending.

To be sure, the two recessions boast some critical differences. The COVID-19 recovery hinged on thwarting the virus’s spread. The financial crisis was far more systemic in nature, and it took more than a year for the recovery to even begin.

“Everything about this crisis has been much faster than during the Great Recession,” Sahm said. “The bottom fell out, then we hit the bottom, and then we started moving up.”

Other experts argued that last year’s response deserves a larger share of the credit. “I think fiscal policy in 2020 was really important and what we’ve seen so far this year has been unneeded and created some real risks in the economy,” Douglas Holtz-Eakin, former head of the Congressional Budget Office and GOP aide to George W. Bush, said in an interview.

Most signals point to a healthy recovery

Holtz-Eakin is among the conservative economists arguing that Biden’s stimulus has caused a stronger rise in inflation than expected. Indeed, popular gauges of price growth rose at the fastest pace since 2008 in May as rebounding demand ran up against dire supply shortages.

For now, the Federal Reserve and the Congressional Budget Office both expect inflation to weaken as shortages are addressed. And early signs point to price growth cooling into the summer.

Other signals are similarly encouraging. Wages are rising for workers in the leisure and hospitality sector, and Americans surveyed in a recent Gallup poll say they’re the happiest they’ve ever been as vaccinations become more widespread and restrictions ease up.

Though most signs are good, experts are still urging caution given the huge hit absorbed by low-income workers, many of whom are Black and Hispanic.

“We should also remember that the road to recovery is long, even at this optimistic, faster timeline, it’s still gonna be until the end of next year to get to pre-pandemic levels and there’s gonna be a lot of people who are worse off,” Konczal said.

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Mitch McConnell gives ‘maybe 50-50’ odds of bipartisan infrastructure deal as Democrats say they won’t drop climate initiatives

GettyImages mitch mcconnell
Senate Minority Leader Mitch McConnell.

  • McConnell took a dour view on the likelihood of a bipartisan Senate group succeeding with an infrastructure bill.
  • He told a conservative radio host that its odds were “maybe 50-50.”
  • Pelosi signaled she’s unwilling to strike a deal with Republicans if it meant substantially cutting the package.
  • See more stories on Insider’s business page.

Senate Minority Leader Mitch McConnell provided a downbeat view on the latest roughly $1 trillion infrastructure framework negotiated by a faction of centrist senators from both parties.

The plan would provide just over $1 trillion in new infrastructure spending focused on roads, bridges, ports, and highways.

“Maybe 50-50,” the Kentucky Republican said in a Monday interview with conservative radio host Hugh Hewitt. “Look, both sides would like to get an infrastructure bill.”

McConnell reiterated the by now familiar “red lines” for Senate Republicans: no modifications to the 2017 Republican tax law that would result in tax increases, and that any package should be paid for.

He suggested repurposing stimulus aid to states provided under President Joe Biden’s $1.9 trillion coronavirus relief law to cover the cost. That’s already been shot down by the White House in previous negotiations with Senate Republicans.

“States and localities are literally awash in extra money. A lot of that is still in the pipeline,” McConnell said. “Why don’t we repurpose that, earmark it for infrastructure, which both localities would prefer to spend it on anyway?”

The bipartisan group encompasses 10 lawmakers from both parties and includes Republican Sens. Mitt Romney of Utah, Rob Portman of Ohio, Bill Cassidy of Louisiana, Lisa Murkowski of Alaska, and Susan Collins of Maine.

On the Democratic side, it includes Sens. Joe Manchin of West Virginia, Kyrsten Sinema of Arizona, Jeanne Shaheen of New Hampshire, Mark Warner of Virginia, and Jon Tester of Montana.

The framework is unlikely to contain the aggressive climate measures that many Democrats favor, which is a nonstarter among a growing group of Democratic senators. House Speaker Nancy Pelosi also appears to be against dropping climate initiatives if it means passing a watered-down bill with the GOP.

“I have no intention of abandoning the rest of my vision,” Pelosi told CNN’s “State of the Union” on Sunday, adding the proposed measures “could have been talked about 50 years ago.”

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Top House Democrat unveils plan to establish universal paid family and medical leave programs

Richard Neal
Rep. Richard Neal, D-Mass., speaks at a news conference on Capitol Hill in Washington, Friday, July 24, 2020, on the extension of federal unemployment benefits.

  • Top House Democrat Richard Neal introduced a plan for universal paid sick and medical leave on Tuesday.
  • The typical worker would get around two-thirds of their past wages replaced.
  • Progressives are urging Biden to prioritize paid leave programs as part of his latest economic plan.
  • See more stories on Insider’s business page.

Rep. Richard Neal of Massachusetts, chair of the House Ways and Means Committee, introduced a plan for universal paid sick and medical leave on Tuesday.

The proposal would set up 12 weeks of paid family and medical leave for every worker in the US, calculating benefits based on average monthly earnings. The typical worker would get two-thirds of their wages replaced, though it covers up 85% of a worker’s earnings below $1,257. Higher-paid workers are set at lower wage replacement rates.

“For our economy to fully recover from this pandemic, we must finally acknowledge that workers have families, and caregiving responsibilities are real,” Neal said in a statement to Insider. “By acting on this plan, we will rebuild our society to be better and stronger than ever before.”

It would take effect at the start of 2023, an apparent recognition of the difficulties of setting up a robust paid leave initiative. Benefits would be distributed through employers, the Treasury Department, and state paid leave programs. It also makes permanent a monthly check program for parents, a top Democratic priority.

Currently, the US stands alone among developed nations for not federally mandating a paid sick leave program. Such a measure was scrapped as part of President Joe Biden’s stimulus. A vast collection of progressive groups as well as 17 state treasurers are now urging Biden, along with Congress, to approve comprehensive leave programs.

The pandemic underscored the lack of affordable childcare as rising costs collided with the shuttering of daycare centers, disproportionately impacting women and compelling many to quit their jobs.

A recent report from the National Women’s Law Center and the Center on Poverty and Social Policy at Columbia University said 2.3 million women dropped out of the workforce due to the crisis, compared to 1.8 million men.

Neal’s measure comes as Biden prepares to unveil the second part of his infrastructure plan, largely directed at ratcheting up government spending on families as a product of childcare and education initiatives. The Washington Post reported it will contain $225 billion for child care funding and $200 billion to establish universal Pre-K.

The latest proposal will be funded with tax increases on the wealthiest Americans, including a new capital gains tax on the top 0.3%.

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Republican leader Kevin McCarthy says voters overwhelmingly support Biden’s stimulus bill because they don’t understand it

US House Minority Leader Rep. Kevin McCarthy
US House Minority Leader Rep. Kevin McCarthy speaks during his weekly news conference December 5, 2019 on Capitol Hill in Washington, DC.

  • McCarthy said voters support Biden’s $1.9 trillion stimulus because they don’t know what’s in it.
  • “This isn’t a relief bill, it’s pretty much a payoff for Pelosi’s political allies,” he said.
  • Recent polling shows 75% of registered voters are in favor of the stimulus package.
  • See more stories on Insider’s business page.

House Minority Leader Kevin McCarthy told Punchbowl News on Thursday that Americans overwhelmingly support President Joe Biden’s $1.9 trillion stimulus package because they don’t understand what’s in the American Rescue Plan.

He also falsely claimed in his interview with Jake Sherman of Punchbowl News that former President Barack Obama’s $800 billion economic stimulus legislation, which went into effect in 2009, had similarly high approval ratings. Neither Biden’s nor Obama’s relief packages found any support among GOP lawmakers, but Biden’s COVID-19 stimulus package has attracted significantly higher public approval than Obama’s did.

A spokesperson for McCarthy didn’t immediately respond to Insider’s request for comment.

“This isn’t a relief bill, it’s pretty much a payoff for Pelosi’s political allies, and it will be the American people paying the bill,” McCarthy said in a statement on Thursday.

Even as GOP politicians have attacked the American Rescue Plan as too costly, a majority – 54% – of Republican voters support the law, which Biden signed into law on Thursday afternoon.

Polling by Politico and Morning Consult earlier this month found that 75% of registered voters support the stimulus package, and 59% of Republicans at least somewhat support it.

And Pew Research Center polling this week found that 70% of Americans favor the stimulus, while just 28% oppose it. Pew also found that Republican support for the stimulus increased significantly as the respondent’s income decreased. While 63% of low-income Republicans and Republican-leaning respondents support the relief, just 37% of middle-income Republicans and 25% of high-income Republicans said the same.

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A simple regulation would save American car buyers $5 billion and help boost the US economy

Car Dealership
New Chevys for sale fill the lot at Raymond Chevrolet in Antioch, Illinois, July 17, 2014.

  • One of the most significant purchases for any household is their car.
  • While car prices are transparent and easily negotiable, financing deals are not. Dealers typically mark up financing offers to earn additional revenue. 
  • Lawmakers need to ban mark ups on auto financing and save consumers hundreds of dollars. 
  • Jonathan Gruber, Ph.D, is a professor of Economics at MIT.
  • Tobias Salz is an Assistant Professor at the MIT Economics Department and a Faculty Research Fellow at the NBER.
  • This is an opinion column. The thoughts expressed are those of the authors. 
  • Visit the Business section of Insider for more stories.

The COVID-19 pandemic has had a devastating impact on the US economy. Since early March, the country has lost 9,839,000 jobs. The unemployment rate peaked in April at 14.8%, the highest rate since the Great Depression, and as of January remains at 6.3%, the highest level since March 2014. 

Congress has so far been unable to agree on a new package of financial relief, while unemployment insurance extensions are due to run out at the beginning of March. Americans need financial relief from wherever they can get it. Fortunately, there is a relatively simple way to provide significant financial relief to consumers on one of their most important expenditures: car purchases.

One of the most significant purchases for any household is their car. Cars are necessary for both work and pleasure, yet the cost of a car is very high relative to the income or assets of most families. The average new car purchase amounts to around half of average after-tax income. As a result, 85% of new car purchases in the US are bought with loans. 

This is a significant financial obligation, with car payments amounting to around 6.5% of the income of the typical household that finances their car. As a result, lowering the costs of car purchases for American families would provide significant financial relief.

Car dealers mark up financing deals

It is common knowledge among Americans that the price of their car can be negotiated at the dealer.  What is less known, however, is that the financing costs of their purchase can also be negotiated. 

Dealers serve as middlemen on auto loans, with lenders providing terms to the dealers, and dealers then providing offers to potential purchasers. But dealers don’t just pass along those financing terms, they are allowed to “mark them up”. 

If dealers are able to charge a higher interest rate on a loan than what was originally suggested by the lender, they receive a payment from that lender. Dealers therefore benefit if car buyers pay higher interest rates. Dealer profits from financing and insurance have steadily grown and now account for the majority of their overall profits

Why does this matter? Because while car prices are “transparent” to the consumer and readily negotiated, financing terms are not. As a result, consumers end up paying much more for their financing than they need to. The average revenues from this “kickback” on financing new car purchases is around $750 per car. Multiplied by the number of financed new car purchases per year, this amounts to more than $8 billion in annual discretionary markup revenues.

It doesn’t have to be this way 

Auto dealers can play an important role helping consumers find the proper financing. But that won’t happen so long as their financial incentives are set to benefit lenders and not consumers. Rather than playing a fiduciary role in helping consumers find the best deal for them, dealers are doing the opposite.

Congress needs to change the incentives by no longer allowing dealers to “mark up” the financing of auto loans. Regulators in other countries already have moved in this direction. The Financial Conduct Authority in the UK has announced that commissions that are linked to the customer’s price of credit are banned starting 2021. It’s time for the US to follow suit.

Auto dealers may argue that this will just lead to higher car prices – and they are right. Some of the gains that dealers make through marking up financing allows them to cut better deals on price. But the extra price reduction doesn’t make up for the higher financing markup. 

When consumers negotiate over car price, they are relatively savvy, and can strike a good bargain. But when comparing financing terms, consumers face a much less transparent and confusing array of choices, and so it is harder to shop effectively. 

Based on our research, consumers would save between $300 and $500 on each new car purchase without dealer markups. That is roughly $5 billion in financial relief to US consumers that we can provide with a simple regulatory change.

Consumers face a bewildering array of choices in their everyday lives. An important innovation in recent decades is the rise of middlemen that can help organize these choices and allow consumers to shop more effectively. But the benefits of these middlemen can be offset if there are financial incentives against offering a neutral playing field for consumers to find the option best-suited for them.

Choosing how to finance a car is a perfect example – and an easy one to fix. Lawmakers need to ban markups on auto financing to make car purchases less burdensome for consumers – at exactly the time when US consumers could use the relief.

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President Biden, don’t let the benefits of the huge federal stimulus leak down the drain

joe biden
Democratic presidential nominee Joe Biden

  • The Biden administration plans to push forward massive fiscal stimulus bills.
  • But there is a danger that some of the economic benefit from these bills could “leak” out of the US economy.
  • In order to prevent this “leakage” and capture the most economic benefit, the stimulus should be designed intelligently.
  • Dan Alpert is an adjunct professor at Cornell Law School and a founding managing partner of the New York investment bank Westwood Capital LLC.
  • This is an opinion column. The thoughts expressed are those of the author.
  • Visit the Business section of Insider for more stories.

Today and tomorrow, thanks to my very accommodating editors at Business Insider, I present you with two columns approaching the same subject from two different – but very much related – angles. Enjoy!

The Biden administration plans to greatly increase the federal government’s role in the US economy to help the US economy recover from the COVID-19 pandemic and make up for the country’s lackluster economic performance for much of this century. The increased government involvement is to come in the form of a substantial increase in federal spending.

While both the COVID recovery and long-term spending programs will involve the government incurring substantial fiscal deficits, this column will not address the issue of deficit spending versus fiscal austerity – the consensus on that issue has already left the station. What I will address is the impact of the spending itself on the US economy. 

Looking at this spending, there is a risk that a significant portion of both the spending under President Biden’s American Rescue Plan, currently before Congress, as well as the administrations expected plans for a large-scale, infrastructure revitalization plan, may slip through the fingers of the US economy in terms of longer term economic impact. 

The possibility that the increased spending could lead to less growth than the Biden administration hopes (or, as I will discuss tomorrow, accelerating inflation) comes down to where that fiscal stimulus is actually spent. 

The growing “leakage” of fiscal stimulus

Conventional economic thinking would hold that increased government transfers to households – that is stimulus from the federal government like the recent checks – or spending on infrastructure and other public goods would result in increased demand for, in this case, American goods and services. That would generally be expected to boost economic growth and put upward pressure on prices, productive capacity (demand for capital) and, eventually, workers’ wages.  

But what if, as has been the case for the last quarter century to an increasing degree, those goods – and even some services – are procured from abroad? Simply put, the intended beneficial impacts on the economy resulting from such government spending would be muted.

The reason is that many of the positive results expected from higher levels of government spending (assuming no increase in rates of taxation) – or, in the case of the present pandemic crisis, replacement of lost income to households – comes in the form of the fiscal multiplier that such spending or replacement is expected to produce. 

Fiscal multipliers result when the demand from the recipients of the federal cash produces demand for more plants and equipment to increase supply – together with expansion in support industries servicing new production capacity, which then produces more jobs, yielding higher aggregate domestic incomes, and yet more consumer demand, and so forth.

For instance, if the federal government gives out a contract to build a new bridge, the construction firm then goes out and buys steel to build the bridge, and both the contractor and steel producer hire more workers, who receive paychecks that they go out and spend at restaurants who then hire more cooks and waiters, who then go out and spend… and so on. This, in theory, grows domestic demand and eventually boosts the US economy.   

The converse is easier to think about from the standpoint of fiscal spending to replace lost household incomes as a result of the pandemic. If, say, a stimulus check is used by a family to purchase a Peloton bike made in Taiwan, as opposed to buying a membership to work with a trainer at the pandemic-closed local gym, there is almost no multiplier effect as most of the benefits of that purchase flow abroad. 

Let’s call this phenomenon of household relief or stimulus money heading out of the US “leakage.” Over the past 20 years such leakage has tripled while the size of the US economy has barely doubled. This is what it looks like (note that while falling during the pandemic lockdowns, we are back to record levels with regard to goods imports):

image1 (3)

And if one were to remove petroleum imports from the above,, the impact on all other goods is even more extreme.

Moving from the household to the sphere of government and business, let’s say that over the next five years the US government – directly and through private contractors – increases spending on infrastructure by $1 trillion per year. Studies have long shown that such spending can literally pay for itself via economic growth, but only when that spending stays in the US economy.. 

There can also be “leakage” here as contractors turn to imported goods – whether that’s raw materials or construction equipment – to build that infrastructure. Then the economic growth that should result from these infrastructure projects is also muted.

Furthermore, preventing this “leakage” could aid the revitalization of the US manufacturing economy. American manufacturers on the receiving end of fiscal spending on infrastructure would build larger and more advanced facilities to fulfill order demand. That scaled up investment would give US manufacturers the ability to be more price competitive, and reduce domestic demand for foreign imports as well as fueling export demand. 

There are enormous benefits to intelligently executed fiscal spending, but the same is not true for fiscal deficits in general, as we saw clearly during the Trump years. Cutting business taxes and taxes on the wealthy certainly produced large deficits in 2018 and 2019, but they did not result in the increased levels of domestic capital investment or any other multiplier effects.

Whatever spending occurred by the private sector was generally to upgrade communications and IT equipment, to buy intangibles (patents, copyrights, etc.) and to fund share buybacks. The reason? The tax cuts did not actually increase household or business demand for domestic goods or services, so there was no corresponding investment in job creating goods production..

Tariffs to protect domestic industries were equally ineffective given (a) pushback from US multinationals and the major domestic distribution channels (see Amazon, Walmart, etc.); and (b) problems experienced by downstream manufacturers that experienced price increases in, for example, steel and aluminum, resulting in their end production being non-competitive.

Therefore, intelligent fiscal (deficit) spending must go hand in hand with aggressive and viable actions to stop “leakage” abroad, including:

  • An even more loophole-proofed Buy American plan than the good first step put forth by the Biden administration last month. We need to elevate domestic content requirements, that is the percentage of a good that must be made in America in order for contractors receiving stimulus to buy it. We also need to close loopholes, including those permitting imports on the basis of their “supporting” American jobs by virtue of their lower prices enabling consumers to spend more on US services.
  • We need to withdraw from, or heavily pare back our commitments under, the Agreement on Government Procurement which bars the US from showing preferences to domestic manufacturers and contractors in many non-defense infrastructure sectors.
  • A strong dollar makes US manufactured goods less competitive. The US must reconsider its relatively hands-off policy on foreign currency exchange intervention by other nations and, when necessary, develop robust intervention initiatives to insure that the dollar does not again strengthen from present levels.
  • Finally, the Biden administration’s infrastructure program should be large enough, and of a duration not less than 10 years, to ensure US manufacturers continue to receive orders for years to come , giving them the certainty they need to invest in new factories or facilities in the US.

Multinational companies (here and abroad) and the distribution and retail companies in the US that benefit from the status quo will squawk, as will some of America’s trading partners. But if you listen to them, Mr. President, much of your good work in using government spending to Build Back Better will go down the drain.

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Biden says the $15 minimum wage hike likely won’t be part of the COVID-19 relief package

Joe Biden
President Joe Biden.

  • President Joe Biden says a $15 minimum wage hike is not likely to be in the COVID-19 relief bill.
  • Biden said he would be open to negotiating an incremental wage increase separately.
  • “Look, no one should work 40 hours a week and live below the poverty wage,” Biden said.
  • Visit the Business section of Insider for more stories.

President Joe Biden said he does not believe a measure to raise the minimum wage to $15 will ultimately be included in the COVID-19 stimulus package.

During a CBS interview clip released on Friday, Biden said although he included the minimum wage raise in his $1.9 trillion relief bill, he does not think it will happen due to “the rules of the United States Senate.”

“My guess is it will not be in there,” the president said. “But I do think that we should have a minimum wage stand by itself, $15 an hour.”

Read more: Democrats are moving ahead with Joe Biden’s $1.9 trillion COVID stimulus – with or without Republicans. Here are the 4 main sticking points that could blow things up.

Biden said he would like a separate negotiation to take place on minimum wage, and to implement the hike incrementally. The federal minimum wage is currently $7.25.

“Look, no one should work 40 hours a week and live below the poverty wage. And if you’re making less than $15 an hour, you’re living below the poverty wage,” Biden said.

The president and congressional Democrats sought to gradually raise the federal minimum wage to $15 an hour by 2025 as part of the coronavirus stimulus bill. However, congressional Republicans, and some Democrats, have fought against it.

As Senate Democrats position themselves to pass a relief package without any GOP support, an amendment passed in the chamber late Thursday calls into question whether the wage increase will be included in the bill.

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Biden’s proposed stimulus package includes paid leave and childcare support. These policies need to be permanent.

Mother child reading book baby reading
With no national paid leave program in place, one in four mothers must find childcare for their infants at two weeks old, because they have no choice but to return to work.

  • More than 80% of Republicans and Democrats support a national paid leave policy. 
  • Biden’s economic relief package mandates paid leave and childcare subsidies, but the temporary fix needs to be permanent. 
  • Both paid leave and childcare infrastructure is critical to recover from the recession and support low-income families. 
  • Katie Bethell is the Founder and Executive Director of Paid Leave for the US (PL+US).
  • Becka Klauber Richter is President and Co-founder of Helpr, a backup childcare company. 
  • This is an opinion column. The thoughts expressed are those of the authors. 
  • Visit Business Insider’s homepage for more stories.

On her first day back at work after her maternity leave, Meghan McCain, a Republican, called on the government to institute a national paid maternity leave policy for all new mothers. After experiencing an emergency C-section and postpartum health issues that left her physically unable to bathe or eat without help, she noted that she now understood just how critical maternity leave is to the wellbeing of our children and the wellbeing of women in this country. 

A conservative herself, she pointed out the hypocrisy of a Republican party that touts itself as the party of family values, while denying mothers even a few weeks of critical time needed to heal, bond, and care for their children at the beginning of their lives. 

McCain is a new arrival to the camp for a national paid leave program, but many of her fellow Republicans are not. For years, polls have consistently shown broad bipartisan support for paid leave, with more than 80% of Republican and Democrats favoring a national policy. But McCain’s recognition of the need for paid leave is just one part of the story; childcare infrastructure is just as essential.

Fortunately, President Joe Biden’s recently announced economic relief package mandates paid leave and childcare subsidies, but the bill is only temporary – A permanent policy needs to be in place.  

There is a critical link between paid leave and childcare infrastructure

With no national paid leave program in place, one in four mothers must find childcare for their infants at two weeks old, because they have no choice but to return to work. Most of these parents fall in lower income brackets or are Black or Latino. Rather than stay home to care for their infant and receive a stipend to cover their rent and bills, these women must not only go out to work with bodies still healing from childbirth, they must also spend money they may not have on childcare costs – which are exorbitant at the best of times – and even more so for infant care. 

That is, if a parent can even find a spot for their infant. The critical shortage of childcare in our country looks even worse if you are seeking care for an infant. Data from the American Center for Progress showed that in a sampling of 19 states and the District of Columbia, there are more than four children under age 3 for every licensed childcare spot available. This equates to enough childcare for only 23% of infants and toddlers.

More than 80% of the counties examined in the study would be classified as infant and toddler childcare deserts. Where this leaves us is with parents who have to quit their jobs to care for newborns, or parents who have no choice but to resort to patchwork solutions.

We need paid leave and childcare to recover from the recession 

Recent studies show that if we don’t address this need for paid leave and childcare, our economy will have difficulty recovering from this pandemic. Only half of the childcare jobs that were lost earlier in the pandemic have returned, and that translates into millions of spots in daycares around the country gone. 

With no childcare, many essential jobs – from manufacturing to healthcare – simply cannot be done. With no paid leave, millions of parents will have to choose between a job and caring for their child. A recent analysis done by the Center for American Progress revealed that 700,000 working parents with children under the age of 5 have left the workforce. Most of them were women. 

An analysis by the National Women’s Law Center showed that in September, Black women and Latinas both saw double-digit unemployment rates, nearly double the unemployment rates for white men and white women.

Previous emergency paid leave provisions filled some of these gaps, but those have expired now. Last week, President Biden released details of the American Rescue Package which includes emergency paid leave and sick leave for all working people and expanded childcare subsidies. Beyond that, the Biden administration has signaled support for policies that support working families, including a childcare tax credit for low- and middle-income families, an infusion of capital into childcare providers, and emergency paid leave in the relief package. 

The emergency provisions should be thought of as a blueprint for what we can build towards on a permanent basis. The pandemic has laid bare just how much has been wrong for families for how long, but it was not the cause of our broken system. It merely revealed just how broken it was.

Paid leave and other policies that support working families, such as childcare subsidies, have been proven to be very beneficial to businesses as well. Employers in the state of California, where there is a state-wide paid family leave program, report that paid family leave has an overwhelmingly positive impact on productivity, profitability and employee morale. Unemployment and labor shortages too cannot be addressed without a combination of paid time off for parents and childcare. 

We need to come together to care for families

As advocates for paid leave and better childcare infrastructure, we celebrate that a prominent Republican is using her platform to turn up the pressure for paid leave, and that the incoming Biden administration already recognizes its importance. We are in a moment where we can make actual political progress on one issue many of us already agree on. On Colorado’s recent paid leave ballot initiative (which resoundingly succeeded), people across the political spectrum voted for paid leave

Biden’s emergency relief bill is a good first step. Now is the time for the Senate to pass a federal policy that not only gives infants time with their parents at the beginning of their lives, but also sets up businesses with the childcare infrastructure that will provide millions of working parents the solid foundation they need to thrive at work and at home. 

We must come together to pass policies that reflect the values we share. Whether we are Republican, Democrat, or independent voters, family is very important to us, both personally and as a nation. Paid leave may not heal our country, but it will be good for our kids and our economy.   

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Restaurants are buying less food than before the pandemic as they struggle to stay afloat

indoor  dining nyc
A waiter delivers food to a table at Bottino Restaurant in Chelsea as New York City restaurants open for limited capacity indoor dining on October 1, 2020 in New York.

  • Spending levels at 40,000 restaurants nationwide dropped significantly last year because of the coronavirus pandemic.
  • Restaurants in some states, including Wyoming and Wisconsin, had spending levels similar to those before the pandemic.
  • Restaurant operators were spending more on carryout boxes and bags as the demand for takeout and delivery increased during COVID-19.
  • Visit Business Insider’s homepage for more stories.

Restaurants nationwide spent significantly less on food and other supplies last year as the coronavirus pandemic forced many eateries to temporarily shut down and host fewer in-store customers, new data shows. 

Around 40,000 restaurants nationwide spent 24.5% less on food and other items per quarter in 2020 than than they did prior to the pandemic, according to a report by Buyers Edge Platform, a digital procurement network for foodservice that tracked and analyzed restaurant purchases. 

Restaurants spent $2,700 each week purchasing food and products from their suppliers during the start of the pandemic last spring, down from $5,220 per week in the months prior.

Spending on food and supplies was at its lowest level during the week ending March 22, falling 67.5%, as stay-home orders were enacted and restaurants temporarily closed to in-person dining, leading to mass layoffs. By the end of 2020, there had been a rebound, with restaurants spending $4,531 per week on food orders and other items.

Spending levels had dropped to around 30% by the start of 2021, as COVID-19 cases surged across the country. 

“The real challenge for operators was the uncertainty of managing labor and operating expenses,” said John Davie, CEO of Buyers Edge Platform in the report. 

Read More: 85% of independent restaurants may go out of business by the end of 2020, according to the Independent Restaurant Coalition

The report also analyzed the purchasing habits of 5,000 restaurants in ten states experiencing the highest drops in spending levels, including independent restaurants and large chains.

Buyers Edge Platform said the steepest declines were in Nevada and Hawaii, two states whose economies heavily rely on hospitality. Average weekly food orders during the pandemic dropped 65.1% in Nevada and around 59% in Hawaii.

Order levels also fell in Washington by around 41%, Vermont by 40.1%, Connecticut by 35.8%, and Colorado by 33.8%, Arizona by 32.5%, Illinois by 31.8%, New Hampshire by around 31%, and Alaska by 30.3%. 

Read More: New Trump rule could cost waiters more than $700 million in lost wages by allowing employers to take more of their tips to pay other workers

Restaurants’ spending levels dropped due to the in-door dining restrictions and job losses across the foodservice industry during the pandemic, according to the digital procurement network. Chain restaurants combined have permanently closed more than 1,500 locations since the pandemic began.

Buyers Edge Platform said that the numbers slowly improved and orders were slightly exceeding pre-pandemic levels as dining restrictions loosened last year, but those levels dropped again as restrictions went back into place.

Read More: These 38 retailers and restaurant companies have filed for bankruptcy or liquidation in 2020

Restaurants in Wisconsin, Wyoming, and South Carolina ordered more food, however. The average weekly restaurant orders during the pandemic were 1.8% higher in Wisconsin, 4.2% in Wyoming, and 7% higher in South Carolina compared with pre-pandemic levels.

Restaurants were stranded with a stock of food in their refrigerators in March that they were unable to profit from as bills piled up, according to Davie. Some restaurants kept their staff on payroll for longer than they needed because owners found it difficult to navigate the Payroll Protection Program, part of a federal relief package for business owners.

Restaurant operators also changed their buying habits as they focused on obtaining certain products during the pandemic. Orders for frozen dessert products increased 145%, but orders for hotel products fell 69% and slumped 57% for fresh fish and frozen crab meat orders. Pen orders also declined by 67% as in-person dining that involved in-person check-signing decreased.

Read More: 12 restaurant chains have filed for bankruptcy in 2020 in the wake of the pandemic

The demand for carryout boxes and bags increased during the pandemic, according to the analysis, as consumers were heavily relying on takeout and food delivery. 

During the period between February and December of 2020, Restaurants’ orders of disposable bags soared 115%, while orders for disposable boxes increased 114% and disposable lid orders spiked 96%.

Additionally, orders for health and food safety products increased by 81% during the same period.

In December, a new rule was rolled out that allows restaurants to pull tips from their waitstaff to pay cooks and other employees. The 148-page regulation published by the Department of Labor is expanding on employers’ ability to pool tips and share them among employees who usually receive them.

Read the original article on Business Insider