A Nevada man reportedly waited 7 months to get unemployment benefits, but he was evicted and died months later

uber passenger driver
  • A report from Bloomberg Businessweek found half of those who applied for unemployment didn’t get any.
  • One recipient, Ralph Wyncoop, applied in May 2020 and only got them the following December.
  • After having a heart attack and losing his home, he moved into his car. He was found dead in March 2021.
  • See more stories on Insider’s business page.

Millions of Americans applied for unemployment benefits during the pandemic and either didn’t get them or had to wait for months, according to a new report from Bloomberg Businessweek. Half of applicants either got rejected or didn’t get them, the report said, and the wait was deadly for some.

One person profiled, Ralph Wyncoop, was an Uber driver in Las Vegas who was rejected from regular unemployment. He applied to the Pandemic Unemployment Assistance (PUA) program, a federal program that expanded unemployment insurance eligibility to gig workers, which opened in May 2020. Wyncoop was eligible for $455 a week, but he didn’t receive the money right away and ended up joining a lawsuit.

Eventually, his PUA application was rejected in July; Leah Jones, one of the lawyers working with him, told Businessweek that he was told he needed to show a utility bill, but his landlord had paid that expense.

Relief didn’t come for Wyncoop until the day before Christmas, when benefits finally arrived. In the interim, he had a heart attack over the summer, and was evicted in October. Technically, a national eviction moratorium is still in place through the end of July 2021, but Businessweek reports that he slept in his car following his eviction. On March 17, according to the report, Wyncoop was found dead in a motel.

Wyncoop was one of millions who found themselves at the mercy of a patchwork unemployment system. The report found that only half of the 64.3 million Americans who applied for benefits from March 1, 2020 to March 31, 2021, were either turned down, or never received money.

Many Americans found themselves staring down ailing state unemployment systems as the pandemic ravaged the economy. Insider’s Nick Lichtenberg and Allana Akhtar reported in September 2020 that at least 35 states had struggled to get benefits out to workers, as state-run systems were overwhelmed by an unprecedented number of claims.

Some senators have seized on these state-system failures to call for permanent reforms to the UI system, with Sens. Ron Wyden of Oregon and Michael Bennet of Colorado introducing a plan that would beef up benefits and modernize the system’s infrastructure. Such legislation has not yet passed in Congress.

Even as some jobless workers struggled to access any aid, over half of the states in the US have opted to cut off enhanced federal benefits early. That decision – which governors have said is meant to compel workers back into the workforce amidst labor market tightness – will impact an estimated 4 million Americans. For many of those who are on programs like PUA, which made gig workers like Wyncoop eligible for aid, benefits will end completely.

There may be some relief for those workers getting cut off, though: A judge in Indiana recently granted a preliminary injunction in a lawsuit brought by cut off workers against the state. That decision may preserve benefits for thousands of jobless Hoosiers.

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AOC blasts Republicans for wasting time and ‘negotiating in bad faith’ on bipartisan infrastructure deal

AOC alexandria ocasio cortez
Rep. Alexandria Ocasio-Cortez (D-NY).

  • Alexandria Ocasio-Cortez slammed Republicans for walking back from a bipartisan infrastructure deal.
  • On Twitter, the New York lawmaker accused GOP senators of negotiating “in bad faith.”
  • She also blasted the lack of diversity in the bipartisan group of senators negotiating with Biden.
  • See more stories on Insider’s business page.

On Friday, Rep. Alexandria Ocasio-Cortez slammed Republicans for walking back on a bipartisan infrastructure deal just a day after President Joe Biden said “we have a deal.”

On Twitter, Ocasio-Cortez argued the senators had wasted time and negotiated “in bad faith.”

“Wow, who could have possibly predicted that Senate Republicans were wasting months of a Dem majority’s precious time negotiating in bad faith just to suddenly renege on a bipartisan agreement w/ new, mercurial demands after doing exactly the same w the Jan 6th commission,” the New York lawmaker wrote in a tweet.

The criticism came in response to news that one GOP senator was wavering in his support of the $1 trillion infrastructure agreement he had been part of negotiation with the White House, on the grounds that Biden was tying it to Democrats’ passage of another, larger spending package.

Bloomberg’s Erik Wasson reported that Republican Sen. Jerry Moran of Kansas, who helped hammer out the details of the infrastructure deal, “wants assurances” that Democratic Sens. Joe Manchin of West Virginia and Krysten Sinema of Arizona would oppose the second bill. Moran joins other Republicans who also said they would refuse to back a bipartisan deal if it’s tied to another.

Biden said on Thursday that the two deals were tied together. “If this is the only thing that comes to me,” he said at the White House, in reference to the bipartisan deal, “I’m not signing it.”

Also on Thursday, top Democrats said they would work to pass a multitrillion-dollar package that covers other Biden initiatives left out of the bipartisan deal on a straight party-line vote through a process called budget reconciliation.

“It’s time to move forward, rebuild infrastructure and drawdown carbon, lower the age of Medicare and extend it to cover vision & dental, expand childcare and housing accessibility, and serve the American people,” Ocasio-Cortez continued in another tweet. “That is bipartisan too, with 2 party support among the electorate.”

Her comments come a day after she blasted the all-white bipartisan group of 10 senators who led negotiations with Biden for lacking diversity.

“The diversity of this ‘bipartisan coalition’ pretty perfectly conveys which communities get centered and which get left behind when leaders prioritize bipartisan dealmaking over inclusive lawmaking (which prioritizes delivering the most impact possible for the most people),” the New York Democrat tweeted alongside a photo of the group of lawmakers with Biden on Thursday.

The bipartisan proposal includes funding for traditional infrastructure like roads and bridges as well as clean water, nationwide broadband, and improved public transit. It also aims to establish a nationwide network of 500,000 electric-vehicle charging stations.

The White House plans to offset the measure’s cost with repurposed unemployment-insurance funds, stricter IRS enforcement, and the purchase of unused toll credits. The corporate tax hike initially sought by the Biden administration wasn’t included in that deal.

Republicans beyond Moran seem mortified that Biden could pass a bipartisan deal while simultaneously passing a party-line bill that covers the rest of his proposals on infrastructure.

“It seems like the momentum in the Republican caucus is to abandon this deal,” Brian Riedl, a former Republican Senate aide who is now a budget expert at the conservative-leaning Manhattan Institute, told Insider’s Joseph Zeballos-Roig. “The fact they feel lied to and misled by the president gives them a pretty clear justification for pulling out.”

Sen. Lindsey Graham of South Carolina went further on Friday, telling Politico that “most Republicans could not have known” that Biden would tie the two bills together. “There’s no way. You look like a f—ing idiot now.”

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Infrastructure talks enter last-ditch stage as both Republicans and Democrats eye gas tax increase

Mitt Romney congress
Republican Sen. Mitt Romney of Utah.

  • Sen. Mitt Romney told Insider a bipartisan group is weighing indexing the gas tax to inflation.
  • The gas tax hasn’t been raised since 1993.
  • Other Democrats appeared noncommittal, reflecting the delicate state of the talks.
  • See more stories on Insider’s business page.

Republicans and Democrats are eyeing a potential increase to the gas tax as both parties entered a chaotic last-ditch effort to strike a bipartisan infrastructure deal after a month of failed discussions between President Joe Biden and Senate GOP

The bipartisan group is in the early stages of assembling a plan they hope will draw at least 60 votes in the evenly-divided Senate. The cohort is equally split between Republicans and Democrats.

It includes Republican Sens. Mitt Romney of Utah and Rob Portman of Ohio, as well as Democratic Sens. Joe Manchin of West Virginia, Kyrsten Sinema of Arizona; and Jon Tester of Montana. The group emerged after Biden pulled the plug on negotiations with Sen. Shelley Moore Capito of West Virginia, who had been Republicans’ chief negotiator since April.

Romney told Insider on Thursday that the new working group was weighing indexing the gas tax to inflation. The 18-cent levy hasn’t been raised since 1993. “It keeps it at the same value that it has today,” the Utah Republican said.

The White House has previously said bumping the gas tax was off limits given Biden’s pledge to not hike taxes for households earning under $400,000. They did not immediately respond to a request for comment.

But the idea gained some momentum among Democrats when Sen. Dick Durbin of Iowa, second-ranked in the chamber, said he believed it “ultimately has to happen.”

“I look at it as a user fee. We pay taxes on gasoline because we want to drive our cars on safe roads,” Durbin told reporters.

Still, other Democrats in the group like Tester appeared noncommittal. “It’s not one of my favorite things, but we’ll see what the entire deal looks like,” he said in an interview. “I gotta see it in the context of everything, see what stays in and drops out.”

Sen. Mark Warner of Virginia, another Democrat in the group, declined to answer whether he supported it, a sign of the delicate state of the negotiations. “I actually think it’s better … until the cake is fully baked, to keep the ingredients quiet,” he told Insider.

Seth Hanlon, a tax expert and senior fellow at the liberal-leaning Center for American Progress, projected that indexing the gas tax to inflation would generate between $30 billion to $35 billion over a decade.

“It would be borne by consumers,” Hanlon told Insider. “We could get roughly the same revenue by rolling back the 2017 corporate tax cut by a fraction of a percentage point.”

He added that indexing the gas tax could have “modestly positive environmental effects,” though not if it’s only paired with spending focused on physical infrastructure and if it omits climate.

Biden’s two-part economic plans amount to $4 trillion in fresh spending on physical infrastructure like roads and bridges, as well as caregiving, cash payments, universal pre-K, community college, and a wide range of measures.

Both parties remain far apart on the scope of an infrastructure bill and how to pay for it. Other Republicans are increasingly signaling that climate provisions wouldn’t be included in their package.

Biden, along with congressional Democrats, are pushing clean energy tax incentives, a national system of electric vehicle charging stations, and federal funds to retrofit homes.

“If they’re looking for a line item that says ‘climate,’ they’re not going to see that,” Sen. Lisa Murkowski of Alaska said of Democrats.

A few Senate Democrats have stepped up their criticism of the bipartisan talks in recent days, warning that such talks risk omitting measures to combat climate change in an infrastructure deal. Another top Democrat threatened to withhold his vote if climate wasn’t sufficiently addressed.

“On a big infrastructure bill, to pass on climate altogether? No way!” Sen. Ron Wyden of Oregon, chair of the Senate Finance Committee, told Insider. “Think I’m blunt enough? No way.”

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It’s perfectly legal for billionaires to pay so little in taxes. Democrats say they could finally change that after the bombshell ProPublica report.

Felipe Castro holds a sign advertising a tax-preparation office for people who still need help completing their taxes before the IRS deadline on April 14, 2010, in Miami.
Felipe Castro holds a sign advertising a tax-preparation office for people who still need help completing their taxes before the IRS deadline on April 14, 2010, in Miami.

  • A ProPublica report based on secret IRS files showed billionaires pay relatively little tax.
  • Inequality experts have been warning for years that the wealthy pay relatively low taxes.
  • The details added impetus to a push by Democrats to ramp up taxes on the country’s highest earners.
  • See more stories on Insider’s business page.

On Tuesday morning, ProPublica published a bombshell report showing how little America’s wealthiest pay in taxes, based on leaked documents from the Internal Revenue Service (IRS).

The report shows in detail how billionaires like Jeff Bezos and Warren Buffett have seen billions added to their net worth with little impact on their tax bill. It’s totally legal, and for many, not all that surprising.

“It’s not surprising at all, I think,” Chuck Collins, who works at the left-leaning Institute for Policy Studies, an organization dedicated to highlighting wealth inequality, told Insider.

Collins recently wrote a book on the ways the ultrawealthy hide their money and avoid taxation. In it, he uses the term “wealth defense industry” for the cottage industry that’s grown around helping the rich hold onto their money.

“It’s going to be very hard for ordinary people to decipher these tax transactions because they’re purposefully complex,” Collins said. “The wealth defense industry, their bread and butter is complexity, and opaqueness.”

Chuck Marr, the director of federal tax policy at the liberal-leaning Center on Budget and Progressive Priorities, said “we’ve been making this case for a long time.” He pointed to a paper from 2019 that outlines many findings similar to those in Tuesday’s report.

Still, it’s one thing to know something is likely happening, and another to see the details laid bare, and the figures involved. For example, ProPublica found that Warren Buffett paid 0.1% in “true tax rate,” which compares how much he paid each year in taxes to how much his wealth grew.

ProPublica’s report could draw widespread attention – and scrutiny – to certain intricacies of the tax code just as President Joe Biden moves to reform taxes to pay for his infrastructure proposals.

Already, Democratic lawmakers are seizing on the public report as a way to kickstart tax reform.

The report “should make it very hard for the Congress to not address it,” Marr said. “I think it really underscores, again, that very wealthy people do not pay tax on much of their income. And so this tax bill is a clear opening to address that.”

Jeff Bezos
Amazon CEO Jeff Bezos, the world’s wealthiest man.

America’s wealthiest make most of their money from assets, not income

As the 2019 CBPP paper lays out, a good amount of the income that the wealthiest bring in isn’t technically income – or at least it’s not taxed that way.

If you work a job where you receive wages in a paycheck, you’re probably familiar with the income tax, which taxes the money you get for going to work. Those wages would be income, and you’d be taxed under the income tax.

But, as both the CBPP and ProPublica note, the wealthiest Americans get most of their wealth from assets like stocks, and therefore pay taxes on capital gains.

As Marr and coauthors Samantha Jacoby and Kathleen Bryant write, capital-gains taxes are “effectively voluntary to a substantial extent: High-wealth filers may accumulate capital gains every year as their investments appreciate, but they don’t owe tax on those gains until – or unless – they ‘realize’ the gain, usually by selling the appreciated asset.”

So if you hold onto your stock assets, you’re not seeing that capital gains rate. Goldman Sachs estimated last month that the wealthiest Americans possessed between $1 trillion to $1.5 trillion in unrealized capital gains at that time. Some argue that those unrealized gains should be taxed, since the wealthiest could be sitting on valuable stocks, making money, and not paying taxes. Meanwhile, researchers at the right-leaning Tax Foundation argue that a progressive consumption tax would be a better way to tax the rich.

ProPublica reported that the ultrawealthy can also borrow hefty sums of money to pay off their bills as they sit on stocks and take in little income. “They’ll borrow money and they’ll use the stock as collateral,” Marr said. That means the wealthy are essentially using these loans as a form of income, but aren’t taxed as such.

As Marr, Jacoby, and Bryant write, “this is often a much cheaper strategy than selling stock and paying capital gains taxes, particularly when interest rates are low.”

Joe Biden
President Joe Biden.

The report could add flame to the fire for tax reform

Even before the ProPublica report, tax debate had been brewing. In particular, a provision called the “step-up basis” had been facing scrutiny.

Let’s say you’ve held onto stock for your whole life, and it’s only grown in value. If you die and leave it to someone else, the stock takes on the value at which the recipient gets it, meaning neither the original owner nor the inheritor are taxed on those gains.

For very wealthy people, Marr said, that “wipes out a lifetime of tax liability.”

Biden wants to do away with the step-up basis and he wants to tax capital gains for those making over $1 million at a rate equivalent to income.

“Broadly speaking, we know that there is more to be done to ensure that corporations, individuals who are at the highest income are paying more of their fair share,” White House Press Secretary Jen Psaki told The Washington Post in response to the ProPublica report. “Hence, it’s in the president’s proposals. His budget and part of how he’s proposing to pay for his ideas will go ahead.”

“The principle here is to equalize the treatment of ordinary income and capital gains, and that is a principle that’s neither new or particularly novel,” Brian Deese, the director of the National Economic Council, said in an April briefing. “In fact, the last president to enact a reform to equalize the treatment of ordinary income and capital gains was President Reagan, who did so while raising capital-gains taxes as part of the 1986 tax reform.”

The White House did not respond to Insider’s request for comment.

There’s been GOP resistance to further alterations to the tax code following their 2017 tax cut, especially any increase in rates. But the new reporting already ramped up the tax debate within Congress on Tuesday.

Sen. Bernie Sanders, who chairs the Senate Budget Committee, told reporters on Capitol Hill, “To the surprise of nobody I know, the rich and powerful aren’t paying their fair share, what else is new?” He urged lawmakers to approve Biden’s tax proposals.

“I do want people to understand the bottom line,” Sen. Ron Wyden, chair of the Senate Finance Committee, told reporters. “What ProPublica is revealing is, again, some of the country’s wealthiest taxpayers [that] profited handsomely during the pandemic are not paying their fair share.”

He said he’s in the process of crafting a proposal to change that. Asked by Insider about the timeline of its introduction, Wyden responded: “I’ll have it ready to go shortly.”

“Often solutions to this are portrayed as radical, but what’s radical is the current situation,” Marr said. “What’s radical is that wealthy people, a lot of their income never gets taxed. That’s radical.”

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There’s no help coming anytime soon for the millions about to lose federal unemployment benefits in two dozen GOP states

Joe Biden sad
President Joe Biden.

  • At least 24 red states are starting to end their federal jobless benefits within weeks.
  • The moves will impact 4 million people on unemployment, with about half losing all government aid.
  • The Labor Department has concluded it has limited authority to step in to keep aid flowing.
  • See more stories on Insider’s business page.

Almost half of all US states have decided to end their participation in federal unemployment benefits, setting up some workers to receive drastically reduced payments – and others without any federal relief coming through the door.

Twenty-four GOP-run states are moving to slash federal unemployment benefits within weeks, citing a so-called labor shortage and lack of hiring. Governors in those states are ending programs set up in the early in the pandemic, which added federal cash onto state unemployment checks and extended the weeks people were eligible for aid. Nebraska was the latest to pull the plug on all stimulus jobless aid programs, on Tuesday.

The measures will slash jobless aid from 4 million people, per an estimate from Andrew Stettner at the liberal-leaning Century Foundation. That projection means that nearly one in four of all Americans receiving unemployment are poised to experience some reduction in their benefits.

One of them is Scott Heide, a 35-year-old in Florida. His state’s governor, Ron DeSantis, announced this week that the state would be terminating its participation in the extra $300 in weekly federal benefits effective June 26.

Heide told Insider that he’s been on unemployment for almost a year. When he lost his job, he also lost his health insurance, and has had to pay over $800 a month for COBRA insurance since. He had to leave his apartment and move back in with his parents.

The original $600 supplement “really made a big difference,” he said, but that expired after just a few months. Then, Biden’s American Rescue Plan added in a $300 benefit. “That was like my lifeline” for paying bills, Heide said. But at a certain point he said he knew it was a “matter of time” before DeSantis went down the same road as other GOP governors.

“It’s just really tough because I’m trying to get a job, but it’s not that easy. And I feel like I’m being punished for no reason when it’s out of my control if somebody offers me a job. All I can do is apply,” Heide said.

Florida is an anomaly among the GOP states moving to end federal benefits in that it’s only stopping the additional $300 – for now, at least – and keeping in place programs that expand unemployment eligibility and the number of weeks recipients can access benefits.

In other states, about 2.1 million workers on those programs – Pandemic Unemployment Assistance (PUA) and Pandemic Emergency Unemployment Compensation (PEUC) – will lose their benefits entirely, per Stettner’s calculations.

Some advocates and politicians have said that Biden’s Labor Department has an obligation to step in and provide PUA benefits, arguing that it’s mandated under the CARES Act.

Sen. Bernie Sanders wrote a letter to Labor Secretary Marty Walsh pressing the Labor Department to continue paying out benefits on its own.

Other Democrats have called on the agency to continue exploring options without specifically urging them to distribute the aid.

“I think the administration should be looking under every rock, and every nook and cranny for ways to protect the vulnerable,” Wyden said in an interview on Tuesday. He suggested he was looking at “next steps.”

Yet it appears that the Biden administration won’t be able to prevent a lapse in unemployment aid in the GOP states. The Labor Department has concluded it’s probably unable to help pay out the benefits, an administration official told Insider last week, given that unemployment systems are administered as a federal and state partnership built on agreement from the states.

The Labor Department did not immediately respond to a request for comment.

“I think there is still going to be litigation on this topic,” Stettner told Insider. “The real legal question is whether DOL has the authority to force states to pay benefits or find a way to get them out themselves.”

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Bidenomics has been hit with a weak jobs report, gas shortages, and inflation fears. The White House says it isn’t getting knocked off course.

Joe Biden serious
President Joe Biden.

  • Biden grappled with a string of disappointing economic news in May, posing a major test for his plans.
  • But the White House appears intent on pushing ahead with another $4 trillion in spending programs.
  • The GOP is stepping up their attacks, criticizing the proposals as job-killers.
  • See more stories on Insider’s business page.

The past seven days has been the toughest stretch yet for Bidenomics – the product of President Joe Biden’s ambitious effort to slash entrenched economic inequalities through major spending on infrastructure, childcare, clean energy, education, and cash benefits.

The lackluster April jobs report fueled Republican criticism of a labor shortage, prompting at least 17 red states to announce they will start pulling out of federal unemployment programs in June. Then a sharp rise in inflation heightened concerns that consumer demand is outpacing supply in various economic sectors, pushing prices up for goods like used cars, airline tickets, and recreational activities.

Meanwhile, a gas shortage is pummeling many Americans in the southeast just ahead of Memorial Day, following a cyberattack shutting down an important pipeline that supplies fuel to the East Coast.

Yet the White House says it’s not getting knocked off course as it pursues $4 trillion in new federal initiatives to overhaul the economy, with Republicans stepping up their attacks.

“We have consistently shared our expectations that inflation would rise, and we’ve also stressed why we thought that would occur,” a White House official who spoke on condition of anonymity told Insider. “No one expected it would be smooth or easy to reopen our economy, and we have anticipated disruptions as we slowly work towards the recovery.”

Republicans contend the problems largely stem from Biden’s $1.9 trillion stimulus law in March and the huge amount of federal money it channeled into the economy on the heels of another $900 billion coronavirus relief package in December.

“I think the president’s team deserves criticism for not diagnosing the problems correctly,” Douglas Holtz-Eakin, a former economic aide to President George W. Bush, told Insider.

Holtz-Eakin said “demand is outstripping supply” and cited shortages of materials like computer chips. He added a related issue is that fewer Americans are in the workforce, arguing federal unemployment benefits are “part of that story, not all of it.”

This supply-demand imbalance has led to soaring prices, especially for used cars. “Inflation is always a supply issue,” Holtz-Eakin said. “To simply throw more money at it is not a solution.”

Larry Summers, former Treasury secretary
Former Treasury Secretary Larry Summers.

‘The trend is our friend’

Biden advisors argue the economy is demonstrating signs of healthy progress after a year of crushing restrictions, unemployment, and business closures. Despite April’s big jobs miss of just over 266,000 jobs regained, they say 500,000 jobs have been created on average in the past three months.

“We’re making good progress,” Cecilia Rouse, chair of the Council of Economic Advisors, said at a news conference on Friday. “However we must keep in mind that an economy will not heal instantaneously. It takes several weeks for people to get full immunity from vaccinations, and even more time for those left jobless from the pandemic to find and start a suitable job. Supply chains have been disrupted and sectors hardest hit are just beginning to come back.”

“The trend is our friend, moving steadily in the right direction,” White House economist Jared Bernstein told Bloomberg on Tuesday.

Many economists cautioned against misinterpreting the 4.2% rise in consumer prices last month – the largest monthly increase since 2008 – given it was measured from a year earlier. Prices plummeted in April 2020 as businesses closed their doors and people sharply cut their spending, so the resulting increase appears larger which many experts had been forecasting.

But former Treasury Secretary Lawrence Summers, who has consistently criticized the scale of Biden’s spending, is not one of them. “I was on the worried side about inflation and it’s all moved much faster, much sooner than I had predicted,” Summers told Bloomberg. “That has to make us nervous going forward.”

Federal Reserve chair Jerome Powell said he expects inflation to subside later in the year.

Despite the recent tremors, Democrats remain confident that they will be able to secure passage of Biden’s economic proposals, financed with tax hikes on high-earning Americans and large firms.

“It’s way too early to say that this job recovery won’t continue robustly,” Rep. Don Beyer of Virginia, chair of the Joint Economic Committee in Congress, said in an interview. “I believe it’ll take until August that we get a House bill over to the Senate that’s dealing with the potential tax increases, so there’s still a lot of time to figure out what’s happening in the economy.”

The first is a $2.3 trillion spending plan devoted to highways and roads, in-home elder care, domestic manufacturing and clean energy. The other is a $1.8 trillion package focused on cash payments for families, free community college, affordable childcare, and paid family and medical leave.

Beyer said “there isn’t any anxiety about the spending plans” among Democrats he’s spoken to, though they’re open to a deal with the GOP that would likely diminish the size of a package.

“Politics is the art of the possible. We’re not going to be angry at a President Biden who ends up finding a compromise ground that 10 Republicans can live with,” he said, referring to the number of GOP votes in the Senate that Democrats need for a proposal to clear the evenly-divided chamber.

Joe Biden Shelley Moore Capito in Oval Office White House
President Joe Biden meets with Sen. Shelley Moore Capito at the White House.

Biden could strike a spending deal with Republicans

The White House is in the midst of negotiating with Republicans on the $2.3 trillion package known as the American Jobs Plan. With Senate Minority Leader Mitch McConnell’s stamp of approval, Sen. Shelley Moore Capito of West Virginia is steering the talks on the Republican side with an initial $568 billion offer. Only a third of it is new federal spending.

On Thursday, Biden described it as “a genuine effort,” and added “I think we can get there” as a two-hour meeting with Capito and a group of Republicans got underway.

“It was a very positive meeting,” Capito told Fox News on Friday. “We’re going to go back to the president early next week with another offer that, in light of the conversation that we had, trying to seek that bipartisan agreement.”

Both parties remain far apart on the price tag of a plan and even defining what makes up infrastructure. Republicans are pushing to constrain it to only physical transportation and communications, while Democrats want to include robust safety net spending on childcare and education.

The White House is walking a tightrope when it comes to pushing a potential deal through a 50-50 Senate and narrow House majority. Many Democrats are calling for a large infrastructure package with large new investments, given their full control of Washington’s levers of power.

They are also wary of dragging out negotiations when they have the ability to approve a wide range of the spending plans in reconciliation, a tactic to approve a budgetary bill with a simple 51-vote majority in the Senate.

Sen. Ron Wyden of Oregon, who heads the Senate Finance Committee, is kicking off infrastructure hearings later this month. He said there’s “a lot more work to do to climb out of the deep economic hole the pandemic created.”

“Control of both chambers of Congress and the presidency is rare, and it’s critical that Democrats do all we can with this opportunity to make real progress for the American people,” Wyden said in a statement to Insider. “While it would be our hope that we can do much of what the president outlined on a bipartisan basis, it’s much more important to get things done for the American people.”

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Biden’s new plan pledges unemployment reform, but doesn’t put money behind it

joe biden amtrak
President Joe Biden.

  • President Joe Biden unveiled the sprawling second part of his infrastructure package today.
  • It pledges an effort to reform unemployment benefits, which Democrats have championed.
  • However, the details are still vague and it doesn’t allocate funds; Democrats have been pressing for more.
  • See more stories on Insider’s business page.

On Wednesday, President Joe Biden unveiled a $1.8 trillion economic plan that would invest heavily in childcare, education, and workers.

One part of the sprawling package includes a pledge to work with lawmakers on reforming unemployment insurance, a top priority for Democrats like Sens. Ron Wyden and Michael Bennet. The White House briefing document states the president seeks a system that puts jobless aid on autopilot, meaning government help would automatically increase when the economy crashes and there’s a sudden spike in the unemployment rate.

However, the administration’s plan does not list specific goals such as a wage replacement level, nor set aside federal money for it. Still, some experts are cautiously optimistic about the trajectory of negotiations to strengthen that element of the safety net.

“It’s a good start,” Andrew Stettner, an unemployment expert at the Century Foundation, told Insider. “It’s really clear this part of the economic policymaking is definitely going to be a partnership between the White House and Congress.”

“This part is certainly not fully baked and there needs to be additional baking for what would get into the final basket of items,” Stettner said.

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Sen. Ron Wyden (D-OR).

Acknowledging the need for reform is ‘important,’ and eyes turn to what comes next

Arindrajit Dube, a professor of economics at the University of Massachusetts, Amherst, has created his own plan for reforming UI. It includes making unemployment insurance federally administered, expanding eligibility, and upping the benefit replacement rate.

The US has various state unemployment systems “with varying degrees of dysfunction” that are being held together by pandemic-era federal policies that will expire in a few months, Dube said, underscoring the need for reform.

Dube was one of the economists who’s been calling on the Biden administration to include UI reform in the infrastructure package.

“The fact that the White House did clearly acknowledge the importance of fundamental UI reform is important, even though obviously it’s better when that’s paired with specific proposals, with specific dollar amounts, and funding stream,” Dube said. He said he credits the White House for being “ambitious and thoughtful,” and looks forward to seeing more.

In Congress, Wyden and Bennet have introduced a bill to permanently bulk up unemployment insurance payments. And last week, 38 Democrats – including Sen. Bernie Sanders and Wyden – sent the White House a letter calling for permanent unemployment reforms.

Chief among their concerns is the role that temporary pandemic measures played in bolstering benefits and income. An analysis from left-leaning Economic Policy Institute (EPI) found that the Pandemic Unemployment Assistance (PUA) program – which expanded unemployment eligibility to freelancers and gig workers – made up the largest share of UI assistance by the end of 2020.

A chance to have a ‘broader conversation’

Pandemic UI also made up an unprecedented share of Americans’ incomes in 2020, and bolstered benefits (like the additional $600 in weekly benefits from the CARES Act) helped plug holes in states’ offerings.

Early in the pandemic, state unemployment systems struggled to distribute a $600 weekly federal unemployment benefit, causing delays stretching for weeks or even months for many laid-off workers.

“One thing to keep in mind is we’ve never had as many Americans who themselves or their family members have relied on unemployment insurance since probably the Great Depression,” Dube said. He added, “I think it’s a chance for us to, in the public sphere, have a broader conversation.”

Democrats argue they want to avoid repeating mistakes of the last recession in 2009. Among them are preventing painful cuts to unemployment insurance during the recovery.

“We can’t fail again to fix and update it in the wake of the second economic crisis in 10 years,” Wyden said in a statement on Wednesday. “This is a top priority of mine as we move forward.”

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Democrats torch the 2-page GOP infrastructure blueprint as ‘a slap in the face’ and ‘a joke’

Ron Wyden
Sen. Ron Wyden (D-OR).

  • Democrats assailed the two-page GOP infrastructure blueprint, calling it too meager.
  • One Democratic senator said the GOP was “light years” away from their position.
  • The prospect of a short-term breakthrough on infrastructure appeared scant.
  • See more stories on Insider’s business page.

Democrats had scathing assessments for the two-page Republican infrastructure outline released on Thursday, a sign that a bipartisan deal was not immediately in sight on one of President Joe Biden’s top economic priorities.

A group of Senate Republicans led by Sen. Shelley Moore Capito of West Virginia had unveiled the $568 billion infrastructure blueprint that was less a detailed plan than a two-page outline of principles. It amounted to about a quarter of Biden’s proposed $2.3 trillion stimulus spending.

The GOP plan would spread out new spending over a five-year period, largely paid for with user-fees. It included no corporate tax hike, and set aside over half of its funding on to repair roads, highways, and bridges. Capito called it “a robust package” at a news conference.

But some Democrats sharply disagree – and they torched the plan as too meager to confront the dual crises of climate change and economic inequality.

“I think this Republican proposal is light years out of the ballpark in terms of being able to get a bipartisan compromise,” Sen. Ron Wyden, chair of the Senate Finance Committee, said on a press call. “They really dump it all on the backs of middle-class workers.”

Sen. Bob Casey of Pennsylvania pointed to the Republican plan slashing the $400 billion in-home elder care component of Biden’s infrastructure plan, calling it a “terrible insult” to average workers.

“When they eliminate every penny for that investment, that’s a slap in the face to not just older Americans and people with disabilities, millions of families would need this care over the next number of years,” he told reporters on the same press call.

Democratic opposition to the plan appeared to run deep, and aides said they were skeptical of Republican seriousness on cutting a deal. Insider granted anonymity to two aides so they could speak candidly.

“Having a two-pager with four bullets on four [revenue] raisers, I don’t think it’s very serious,” one Democratic aide said, referring to the GOP plan.

“It doesn’t do anything on climate, which is non-negotiable for our caucus,” the aide said. “We can’t let a decade go by without doing something more substantial on climate.”

“It’s a joke,” another Democratic aide said. “Their number is so low and achieves so few of the things even they agree are important. It’s not remotely in the ballpark of what is serious.”

Republicans recently defended the early plan, saying they sought to strike an agreement.

“Could we just kind of tone the rhetoric down here and really try to get something done?” Capito told Politico on Wednesday. “I understand disagreement, but I read that we’re trying to stall it out and not make it happen. Or being too cheap? We’re talking about a very robust package here.”

The plan set the stage for additional talks, though it was unclear how disagreements over revenue sources and the plan’s size would be bridged.

The White House said on Thursday it was ready to kick off negotiations with the group of Senate Republicans on an infrastructure plan. The GOP proposal drew Senate Minority Leader Mitch McConnell’s approval earlier in the day.

“The president has said from the beginning he would welcome any good faith effort to find common ground because the only unacceptable step would be inaction,” White House Press Secretary Jen Psaki said.

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GOP senators oppose corporate tax hike as ‘non-negotiable red line’ as they float taxes on drivers to pay for infrastructure

Shelley Moore Capito
Sen. Shelley Moore Capito (R-WV).

  • Sen. Shelley Moore Capito said Republicans were strongly opposed to corporate tax hike.
  • “I think that’s a non-negotiable red line,” she said, and other top Republicans around her agreed.
  • Republicans are drafting an infrastructure plan that may be mostly financed with taxes on drivers.
  • See more stories on Insider’s business page.

Republican Sen. Shelley Moore Capito of West Virginia said that GOP senators won’t budge from their resistance to hiking corporate taxes, a key element in President Joe Biden’s infrastructure plan.

“I think that’s a non-negotiable red line,” Capito told reporters on Thursday of her party’s opposition to increasing corporate taxation.

Other Republican senators at the news conference said they agreed with Capito. The group also included Sens. John Barrasso of Wyoming, Roger Wicker of Mississippi, Deb Fischer of Nebraska, and John Cornyn of Texas.

Democrats assailed the Republican comments. Sen. Ron Wyden of Oregon, chair of the Senate Finance Committee, called the red line a “completely unreasonable” position.

“Republicans’ insistence that the most profitable companies in the world shouldn’t contribute a single penny to investments in roads, schools and our clean-energy future is simply not acceptable,” Wyden said in a statement.

A faction of Senate Republicans in recent days appeared to be prepping a $600 billion to $800 billion infrastructure counterproposal to Biden’s $2.3 trillion package. Several lawmakers suggested financing the plan with a vehicle mileage tax on electric vehicles or raising the gas tax.

“I think we still haven’t defined what we mean by infrastructure and what’s going to be included and so how much it’s going to be, we don’t really have an idea,” Sen. Mitt Romney of Utah told reporters on Thursday. “It’s a very early process that we’ve engaged in.”

Still, other Democrats described the $800 billion indicated by Capito as too meager to address the country’s infrastructure needs. “We’re going to do whatever it takes. If it takes $4 trillion, I’d do $4 trillion but we have to pay for it,” Sen. Joe Manchin of West Virginia told reporters on Thursday.

A JPMorgan economic research note on Thursday found that, although the corporate tax rate was higher than the global average before former President Donald Trump’s 2017 tax cut, the US had a lower ratio of corporate tax revenues to GDP dating back to 2000.

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Senate Democrats want to replace most of your lost paycheck with permanently boosted unemployment benefits

Ron Wyden
Sen. Ron Wyden (D-OR).

  • Senate Democrats have unveiled a plan to boost unemployment benefits permanently.
  • The plan aims to replace 75% of a worker’s lost paycheck.
  • It also sets up a $250 weekly benefit for gig workers who don’t qualify for regular unemployment.
  • See more stories on Insider’s business page.

A pair of Senate Democrats introduced a plan on Wednesday to permanently boost unemployment benefits, making state checks larger to cover most of a worker’s lost wages.

The plan from Sens. Ron Wyden of Oregon and Michael Bennet of Colorado would mandate states to replace up to 75% of a person’s income at their last job. It also sets up a $250 “jobseeker allowance” for gig workers and contractors – essentially a weekly benefit that replaces Pandemic Unemployment Assistance so those types of workers are no longer barred from receiving state unemployment.

Gig workers have secured access to unemployment benefits in 2020 and 2021, but only on an emergency basis via the pandemic-related stimulus programs. PUA is slated to end on Labor Day.

“Unemployment programs are critical to helping workers stay afloat during difficult times – but too many workers still struggle to access their benefits in our patchwork of outdated state systems,” Wyden said in a statement.

“This proposal will protect workers by strengthening and expanding benefits, modernize UI infrastructure with needed technology investments, and prepare us for the future by tying benefits to economic conditions” Bennet said.

The plan also requires states to provide a minimum 26 weeks of unemployment benefits, which varies greatly from one state to another. An additional 13 weeks are triggered if the unemployment rate climbs above 6.5% at the national or state level, tying the flow of aid to economic conditions. More weeks would become available if the jobless rate surges.

Under the proposal, states face some tax penalties if they break from these standards. It’s unclear whether the unemployment reforms will eventually form part of Biden’s infrastructure package.

Currently, laid-off workers are eligible for a $300 weekly federal unemployment benefit – on top of state payouts – which end in early September.

Last year, state unemployment offices were overwhelmed with a surge of claims that strained their antiquated systems to the brink. They struggled to implement a $600 benefit, keeping people from accessing critical aid as the economy tanked due to the pandemic. Democrats and labor advocates are seeking to modernize them to prevent similar chaos.

Most Republicans opposed the renewal of boosted federal unemployment benefits as the economy showed signs of recovering. They argued the federal assistance discouraged people from returning to work.

Republican lawmakers in three states are advancing plans to cut the number of weeks unemployed people can get benefits, HuffPost reported.

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