Another Republican President, Another Recession.
- Thread starter hanimmal
- Start date
hanimmal
Well-Known Member
https://apnews.com/article/joe-biden-business-congress-mitch-mcconnell-6e330d9fb94b73787ea70e7807b87151
WASHINGTON (AP) — Senate leaders announced an agreement Thursday to extend the government’s borrowing authority into December, temporarily averting an unprecedented federal default that experts say would have devastated the economy.
“Our hope is to get this done as soon as today,” Senate Majority Leader Chuck Schumer declared as he opened the Senate.
In their agreement, Republican and Democratic leaders edged back from a perilous standoff over lifting the nation’s borrowing cap, with Democratic senators accepting an offer from Senate GOP leader Mitch McConnell.
McConnell made the offer a day earlier just before Republicans were prepared to block longer-term legislation to suspend the debt limit and as President Joe Biden and business leaders ramped up their concerns that a default would disrupt government payments to millions of people and throw the nation into recession.
The Senate leaders had worked into the night hammering out the details.
“The Senate is moving forward,” McConnell said Thursday.
Wall Street continued to rally on the news. The S&P 500 rose 1.5% by midday, and the Nasdaq composite, with a heavy weighting of technology stocks, rose 1.8%.
The agreement sets the stage for a sequel of sorts in December, when Congress will again face pressing deadlines to fund the government and raise the debt limit before heading home for the holidays.
The agreement will allow for raising the debt ceiling by about $480 billion, according to a Senate aide familiar with the negotiations who spoke on condition of anonymity to discuss them. That is the level that the Treasury Department has said is needed to get to Dec. 3.
“Basically, I’m glad that Mitch McConnell finally saw the light,” Bernie Sanders, the independent senator from Vermont, said late Wednesday. The Republicans “have finally done the right thing and at least we now have another couple months in order to get a permanent solution.”
Sen. Chris Murphy, D-Conn., added that, assuming final details in the emergency legislation are in order, “for the next three months, we’ll continue to make it clear that we are ready to continue to vote to pay our bills and Republicans aren’t.”
Unsurprisingly, McConnell portrayed it differently.
“The pathway our Democratic colleagues have accepted will spare the American people any near-term crisis, while definitively resolving the majority’s excuse that they lacked time to address the debt limit through (reconciliation),” McConnell said Thursday. “Now there will be no question: They’ll have plenty of time.”
Congress has just days to act before the Oct. 18 deadlinewhen the Treasury Department has warned it would quickly run short of funds to handle the nation’s already accrued debt load.
McConnell and Senate Republicans have insisted that Democrats would have to go it alone to raise the debt ceiling and allow the Treasury to renew its borrowing so that the country could meet its financial obligations. Further, McConnell has insisted that Democrats use the same cumbersome legislative process called reconciliation that they used to pass a $1.9 trillion COVID-19 relief bill and have been employing to try to pass Biden’s $3.5 trillion measure to boost safety net, health and environmental programs.
McConnell said in his offer Wednesday that Republicans would still insist that Democrats use the reconciliation process for a long-term debt limit extension. However, he said Republicans are willing to “assist in expediting” that process, and in the meantime Democrats may use the normal legislative process to pass a short-term debt limit extension with a fixed dollar amount to cover current spending levels into December.
While he continued to blame Democrats, his offer will also allow Republicans to avoid the condemnation they would have gotten from some quarters if a financial crisis were to occur.
Earlier Wednesday, Biden enlisted top business leaders to push for immediately suspending the debt limit, saying the approaching deadline created the risk of a historic default that would be like a “meteor” that could crush the economy and financial markets.
At a White House event, the president shamed Republican senators for threatening to filibuster any suspension of the $28.4 trillion cap on the government’s borrowing authority. He leaned into the credibility of corporate America — a group that has traditionally been aligned with the GOP on tax and regulatory issues — to drive home his point as the heads of Citi, JP Morgan Chase and Nasdaq gathered in person and virtually to say the debt limit must be lifted.
“It’s not right and it’s dangerous,” Biden said of the resistance by Senate Republicans.
His moves came amid talk that Democrats might try to change Senate filibuster rules to get around Republicans. But Sen. Joe Manchin, D-W.Va., reiterated his opposition to such a change Wednesday, likely taking it off the table for Democrats.
The business leaders echoed Biden’s points about needing to end the stalemate as soon as possible, though they sidestepped the partisan tensions in doing so. Each portrayed the debt limit as an avoidable crisis.
“We just can’t wait to the last minute to resolve this,” said Jane Fraser, CEO of the bank Citi. “We are, simply put, playing with fire right now, and our country has suffered so greatly over the last few years. The human and the economic cost of the pandemic has been wrenching, and we don’t need a catastrophe of our own making.”
Ahead of the White House meeting, the administration warned that if the borrowing limit isn’t extended, it could set off an international financial crisis the United States might not be able to manage.
“A default would send shock waves through global financial markets and would likely cause credit markets worldwide to freeze up and stock markets to plunge,” the White House Council of Economic Advisers said in a new report. “Employers around the world would likely have to begin laying off workers.”
The recession that could be triggered could be worse than the 2008 financial crisis because it would come as many nations are still struggling with the COVID-19 pandemic, the report said.
Once a routine matter, raising the debt limit has become politically treacherous over the past decade or more, used by Republicans, in particular, to rail against government spending and the rising debt load.
hanimmal
Well-Known Member
https://apnews.com/article/social-security-cola-increase-4f2cd7b763371b91923227be883e367e
WASHINGTON (AP) — Millions of retirees on Social Security will get a 5.9% boost in benefits for 2022. The biggest cost-of-living adjustment in 39 years follows a burst in inflation as the economy struggles to shake off the drag of the coronavirus pandemic.
The COLA, as it’s commonly called, amounts to $92 a month for the average retired worker, according to estimates released Wednesday by the Social Security Administration. That marks an abrupt break from a long lull in inflation that saw cost-of-living adjustments averaging just 1.65% a year over the past 10 years.
With the increase, the estimated average Social Security payment for a retired worker will be $1,657 a month next year. A typical couple’s benefits would rise by $154 to $2,753 per month.
POLITICS
FDA spells out lower sodium goals for food industry
Aim to ease supply chain bottlenecks with LA port going 24/7
US talks global cybersecurity without a key player: Russia
US to reopen land borders in November for fully vaccinated
'Difficult decisions' as Biden, Democrats shrink plan to $2T
But that’s just to help make up for rising costs that recipients are already paying for food, gasoline and other goods and services.
“It goes pretty quickly,” retiree Cliff Rumsey said of the cost-of-living increases he’s seen. After a career in sales for a leading steel manufacturer, Rumsey lives near Hilton Head Island, South Carolina. He cares at home for his wife of nearly 60 years, Judy, who has advanced Alzheimer’s disease. Since the coronavirus pandemic, Rumsey said he has also noted price increases for wages paid to caregivers who occasionally spell him and for personal care products for Judy.
The COLA affects household budgets for about 1 in 5 Americans. That includes Social Security recipients, disabled veterans and federal retirees, nearly 70 million people in all. For baby boomers who embarked on retirement within the past 15 years, it will be the biggest increase they’ve seen.
Among them is Kitty Ruderman of Queens in New York City, who retired from a career as an executive assistant and has been collecting Social Security for about 10 years. “We wait to hear every year what the increase is going to be, and every year it’s been so insignificant,” she said. “This year, thank goodness, it will make a difference.”
Ruderman says she times her grocery shopping to take advantage of midweek senior citizen discounts, but even so price hikes have been “extreme.” She says she doesn’t think she can afford a medication that her doctor has recommended.
AARP CEO Jo Ann Jenkins called the government payout increase “crucial for Social Security beneficiaries and their families as they try to keep up with rising costs.”
Policymakers say the COLA was designed as a safeguard to protect Social Security benefits against the loss of purchasing power, and not a pay bump for retirees. About half of seniors live in households where Social Security benefits provide at least 50% of their income, and one-quarter rely on their monthly payment for all or nearly all their income.
“Regardless of the size of the COLA, you never want to minimize the importance of the COLA,” said retirement policy expert Charles Blahous, a former public trustee helping to oversee Social Security and Medicare finances. “What people are able to purchase is very profoundly affected by the number that comes out. We are talking the necessities of living in many cases.”
This year’s Social Security trustees report amplified warnings about the long-range financial stability of the program, but there’s little talk about fixes in Congress with lawmakers’ attention consumed by President Joe Biden’s massive domestic legislation and partisan machinations over the national debt. Social Security cannot be addressed through the budget reconciliation process Democrats are attempting to use to deliver Biden’s promises.
Social Security’s turn will come, said Rep. John Larson, D-Conn., chairman of the House Social Security subcommittee and author of legislation to tackle shortfalls that would leave the program unable to pay full benefits in less than 15 years. His bill would raise payroll taxes while also changing the COLA formula to give more weight to health care expenses and other costs that weigh more heavily on the elderly. Larson said he intends to press ahead next year.
“This one-time shot of COLA is not the antidote,” he said.
Although Biden’s domestic package includes a major expansion of Medicare to cover dental, hearing and vision care, Larson said he hears from constituents that seniors are feeling neglected by the Democrats.
“In town halls and tele-town halls they’re saying, ‘We are really happy with what you did on the child tax credit, but what about us?’” Larson added. “In a midterm election, this is a very important constituency.”
The COLA is only one part of the annual financial equation for seniors. An announcement about Medicare’s Part B premium for outpatient care is expected soon. It’s usually an increase, so at least some of any Social Security raise goes for health care. The Part B premium is now $148.50 a month, and the Medicare trustees report estimated a $10 increase for 2022.
Economist Marilyn Moon, who also served as public trustee for Social Security and Medicare, said she believes the current spurt of inflation is an adjustment to highly unusual economic circumstances and the pattern of restraint on prices will reassert itself with time.
“I would think there is going to be an increase this year that you won’t see reproduced in the future,” Moon said.
Policymakers should not delay getting to work on retirement programs, she said.
“We’re at a point in time where people don’t react to policy needs until there is a sense of desperation, and both Social Security and Medicare are programs that benefit from long-range planning rather short-range machinations,” she said.
Social Security is financed by payroll taxes collected from workers and their employers. Each pays 6.2% on wages up to a cap, which is adjusted each year for inflation. Next year the maximum amount of earnings subject to Social Security payroll taxes will increase to $147,000.
The financing scheme dates to the 1930s, the brainchild of President Franklin D. Roosevelt, who believed a payroll tax would foster among average Americans a sense of ownership that would protect the program from political interference.
That argument still resonates. “Social Security is my lifeline,” said Ruderman, the New York retiree. “It’s what we’ve worked for.”
CatHedral
Well-Known Member
Dealing with climate change will be ruinously expensive.
Not dealing with it will be many times worse.
hanimmal
Well-Known Member
https://www.washingtonpost.com/business/2021/10/14/inflation-prices-supply-chain/
The bumpy economic recovery has had policymakers, economists and Americans at large grappling with greater price hikes for groceries, gas, cars, rent and just about everything else we need.
For months, officials at the Federal Reserve and White House have argued that pandemic-era inflation is temporary, or “transitory,” and that prices will simmer back down as the economy has time to heal. The hope was that inflation would have started cooling down by now.
But the delta variant of the coronavirus and the persistent supply chain backlogs have kept prices elevated. There is no clear answer for when that will change, leaving Americans to feel the strain in their pocketbooks in the meantime. This is a breakdown of how we got here.
Policymakers were encouraged when August prices eased slightly, breaking an eight-month streak of rising or steady inflation. But September reversed course, coming in at 5.4 percent compared to the year before, in large part due to the rapidly spreading delta variant stifling the recovery.
Economists caution against drawing too much from one month of data, good or bad. But the overall picture increasingly suggests that inflation is sticking around longer than economic policymakers at the Fed and White House anticipated just a few months ago. Fed Chair Jerome Powell told lawmakers last month that the supply-side constraints on the economy have, “in some cases, gotten worse,” adding that "we need those supply blockages to alleviate, to abate before inflation can come down.”
One Fed official is even ditching the word “transitory” altogether, saying it hands the public a false sense of hope that this will pass in a shorter time frame. Meanwhile, the Biden administration announced a 24/7 operation at a key U.S. port this week and is working with major importers to clear a path for cargo ahead of crunch time during the holiday season.
Policymakers often argue that price increases are limited to industries like hotels, airlines and cars. But federal data on Wednesday pointed to food and shelter costs rising in September, together contributing to more than half of the monthly increase of all items, when seasonally adjusted.
The concerns over soaring home prices and rising rents have economists worried about whether cost increases will last even after the pandemic has mostly passed. The still hot housing market has made it that much more difficult for first-time buyers, or those without cash or solid credit, to buy a home. Meanwhile, rising rents in major metropolitan areas are pushing out more people who are now wondering if they can afford to stay.
On top of it all, an energy crisis has ricocheted through the supply chains. According to AAA, the national average for a gallon of gas on Thursday was $3.29, up from $3.17 one month ago, and $2.18 one year ago.
Throughout the pandemic, new and used cars have been a kind of litmus test for the country’s supply chain issues and related price hikes. Used cars and trucks have been a driving force behind the surge in inflation this year, up a whopping 52 percent since fall 2019, before the pandemic.
The market relies heavily on trade-ins and auto parts, which have been in low supply amid a global microchip shortage. That pinch has made it more expensive for dealers to get any of their models, much less repair them. All of those problems are also hurting the supply of used cars, which depend on trade ins as well as rental car company inventories.
Meanwhile, the pandemic triggered a massive rental car shortage after a slew of large companies sold off hundreds of thousands of models that sat idle at the start of the pandemic as Americans stopped traveling. Back in May of this year, more than one of every three rental cars that had been in service before the pandemic was no longer available.
However, as more people got vaccinated and started itching for spring and summer trips, customer demand boomed. Companies could not get their hands on cars fast enough, driving up prices while people scrambled for reservations and companies rushed to restock lots.
New cars are now also seeing rising prices thanks to the ongoing microchip shortage. Pandemic-related shutdowns have pinched factories around the world. For instance, auto production in North America has been slowed by shutdowns in countries like Malaysia and Vietnam.
Families across the nation are also facing higher prices at the grocery store, which have people stretching their wallets for dairy, fruits and vegetables, baked goods and meats. Prices for meat, poultry, fish and eggs have surged in particular above other grocery categories. The White House has pointed to broad consolidation in the meat industry, saying that large companies bear some of the responsibility for pushing prices higher.
Meat industry groups disagree, arguing that the same supply-side issues rampant in the rest of the economy apply to proteins because it costs more to transport and package materials, while labor shortages have held back meat production. Meanwhile, food categories with less of a surge are still seeing prices tick up while supply chains lag. The September consumer price index showed apples up 3.8 percent compared to August. Peanut butter was up 3.0 percent, and potatoes were up 2.4 percent.
Where do we go from here?
Looming in the background is another major challenge for policymakers, which is how to keep inflation expectations in check. There is an inherent psychological aspect to inflation: If consumers or businesses expect the cost of goods and services to keep rising, they may change their behavior now. For instance, vacationers might rush to book hotel rooms now. Or businesses may stock up on advance orders, pushing prices higher and making those very expectations self-fulfilling events.
Fed leaders say they are not worried and would respond if they started to see concerning signs bubble up. But some measures suggest anxiety is high. One survey of consumer inflation expectations tracked by the New York Fed hit a record high in September. Consumer confidence took a tumble in August as the delta variant spread across the country, according to a closely tracked survey which is run by the University of Michigan. “There is little doubt that the pandemic’s resurgence due to the delta variant has been met with a mixture of reason and emotion,” the survey results said.
