Our nation's economic outlook.
Plus, some good news on COVID-19 treatment.
I’m Isaac Saul, and this is Tangle: an independent, ad-free, subscriber-supported politics newsletter that summarizes the best arguments from across the political spectrum. You can read Tangle for free, and you can reach me anytime by replying to this email. If someone sent you this email, they’re asking you to subscribe. You can do that by clicking here.
Today’s read: 10 minutes.
The state of the economy and what’s next. Plus, some good news on COVID-19 treatment.
Photo: Carlos Delgado
Reader feedback.
Douglas from Asheville, North Carolina, wrote in with an ask for more focus on Biden’s campaign fibs and lies. "You constantly harp on Trump’s hyperbole, but you don’t mention Biden’s HUGE lie that is one of the foundations of his campaign. In most of his speeches, Biden mentions the "Fine People On Both Sides Hoax." It has clearly been debunked. If you read the full transcript of Trump’s speech after Charlottesville, you see where he says, immediately and without prompting, that he is not talking about neo-Nazis, who he condemns totally. What the mainstream media cut out when reporting it (and even today) was Trump’s condemnation of the white supremacists. As a result, probably 35% of the population (who live in the left-wing news bubble) probably still believe that fake news."
It is true that many left-wing media outlets took some of Trump’s comments in the now-infamous post-Charlottesville presser out of context. I’m not sure if I’d call it a hoax, but you can read the full transcript for yourself here.
Quick hits.
In Massachusetts, Democratic Sen. Ed Markey held off challenger Joseph Kennedy III in a closely watched Senate primary race. Markey was supported by the progressive left while Kennedy III was endorsed by Nancy Pelosi and more establishment Democrats. It’s the first time a member of the Kennedy family has ever lost a Congressional race in Massachusetts. In other news, House Ways and Means Committee Chairman Richard E. Neal dominated Alex Morse, a progressive challenger who was endorsed by Alexandria Ocasio-Cortez and was considered a threat to his three decades long term. The outcomes were considered a “1-1” split between the more progressive wing of the party and the establishment Democrats who are vying for power heading into 2020.
New York City announced it was delaying the start of school until September 21st after the powerful teachers’ union threatened to strike this week. Mayor Bill de Blasio reached a deal with the unions to help New York City become the “only major school district in America to welcome children back to classrooms this fall,” The New York Times reported. 1.1 million schoolchildren will start both remote and in-person classes September 21st, 10 days later than they expected. The major demand de Blasio met from teachers was an ask to randomly test between 10 and 20 percent of the student body and staff in every city school building once a month.
In Maryland, Republican Gov. Larry Hogan announced all Maryland businesses will be allowed to open on Friday at 5pm EST. This includes movie theaters and live theaters, and allows outdoor venues to have as many as 250 people. Retail stores, churches and religious institutions can have 75% capacity, up from 50%. “Maryland's positivity rate has been under 5% for 68 consecutive days, and under 4% for 24 consecutive days,” according to WBAL. “Hospitalizations are down more than 77% from their peak. The state has seen a nearly 30% decline in ICU levels since July 25.” Hogan said, “We have crushed the curve and saved lives, and our response to this global pandemic continues to serve as an example for the rest of the nation.”
House Speaker Nancy Pelosi (D-CA) is under fire after getting an indoor haircut in San Francisco, where salons have been shut down for six months. Pelosi, who has been one of the most outspoken Democrats on following coronavirus restrictions, was shown in surveillance footage walking through a salon with her stylist while her mask was around her neck. “Speaker Pelosi has pushed policies that would keep our economy closed and our small businesses shut down. But for herself?” Senate Republicans tweeted. “A salon visit whenever she pleases.” Pelosi’s spokesperson said her mask was removed for a hair wash, and that “This business offered for the speaker to come in on Monday and told her they were allowed by the city to have one customer at a time in the business. The speaker complied with the rules as presented by this establishment.”’
Joe Biden is expected to report $300 million in fundraising between his campaign and the Democratic party’s committees, a record-shattering haul of donations for August. “The sum would shatter past monthly records as small donors have poured money into Mr. Biden’s coffers, especially since the selection of Senator Kamala Harris as his running mate, and big contributors, from Silicon Valley to Wall Street, have given checks that can be as large as $721,300,” The New York Times reports. The previous record is believed to be set by Barack Obama in 2008, at $193 million.
What D.C. is talking about.
The economic outlook. Fallout from social distancing restrictions and the way coronavirus has changed American life is still reverberating across the country. But, like most economic disruptions, it’s hitting the country in very uneven ways. A new report from The Wall Street Journal explains this disparity in clear terms, and the data is stark.
Once lockdowns spread across the country, the economy evaporated at a rate we’ve never seen — from the stock market falloff to the sheer number of people applying for unemployment benefits every week. The federal government’s initial response — trillions of dollars of aid, stimulus checks, enhanced unemployment benefits, moratoriums on evictions and foreclosures — softened the blow for millions.
But it also sent things on divergent paths. As we noted on Monday, 45% of Americans say they’re setting aside more money than usual. Those who have kept their jobs are spending less on food, dining, travel, commuting and social life, and spending more on things like home improvement. Home sales skyrocketed last month as the most well-off Americans fled to the suburbs and more rural areas. Car sales are up, the stock market returned to record levels, and high-end goods like pools and boats are in high demand, according to The Wall Street Journal. In other words: the folks who kept their jobs or were already in a strong economic position have mostly seen their financial situation improve over the last five months.
That’s the good news.
At the same time, there’s a mirror version of America. For many who lost their jobs, the first few months were a boon: a slim majority of workers made more with the enhanced unemployment benefits than they did at work, and “used the cash to pay down debt, add to savings accounts and spend,” WSJ reported. But now those benefits are gone — and those workers’ situations are becoming increasingly dire.
With their job losses, as many as 12 million Americans also lost their health insurance. President Trump signed an executive order to send $300 of additional federal unemployment benefits, half of the $600 benefit Congress had in place until July, but — as unemployment experts predicted — the president’s executive order has been ensnared in delays and complications. Just six states are using the money, which was earmarked for disaster relief, to offer enhanced benefits.
In the meantime, many millions of Americans who work in the restaurant industry are seeing their places of work open back up, which creates a whole new set of problems: come in, and you’ll likely be making far less every night in a dining space with limited capacity. Stay home for fear of getting sick, and you risk losing the unemployment benefits you had qualified for during most of the summer.
In the last seven days, 11% of U.S. households didn’t have enough to eat, The Wall Street Journal reported. At this time around 2018 that number was 4%. Millions of American immigrant workers who do not have permanent legal status are also ineligible for unemployment. Now, with the fall quickly approaching, parents are facing perhaps the most confounding problem of all: what to do with their kids. Send them to school and they may be vectors for the virus. Keep them home and you either need child care or the ability to give them the proper attention while you work.
To make matters worse, Congress could be headed for another shutdown. Yes, you read that right: government funding runs dry September 30th, and the same people who failed to agree to terms on the coronavirus relief package will be negotiating how to extend that funding — and likely tying a new relief package to it. That means the millions of Americans who came face-to-face with many states’ outdated, complex and dysfunctional unemployment systems could soon be calling offices whose government workers have been sent home thanks to a shutdown.
Agreed.
There is a consensus that the federal government’s job is not done. The first CARES package, which basically dumped cash into every conceivable part of American life, helped keep millions afloat and improved the economic outlook for millions more. But as the benefits in that package — from additional unemployment to eviction moratoriums — expired, the Senate has begun to acknowledge the fact more help is needed.
What the left is saying.
The left’s case was most clearly summed up in a single column by Paul Krugman, who made the case that in one area related to the COVID-19 pandemic, America “did a surprisingly good job, containing the hardship and collateral damage from the pandemic much more effectively than cynics, myself included, expected.” That one thing, Krugman argued, is the thing Republicans have killed: expanding aid to the unemployed.
“Benefits were expanded to people like gig workers who had previously fallen through the cracks, and everyone receiving benefits got an extra $600 a week,” Krugman wrote. “This expansion of aid to the unemployed did double duty. It alleviated hardship, letting laid-off workers continue to pay rent and put food on the table. And it supported overall spending much more effectively than those stimulus checks, most of which were probably just saved.”
“But Republicans hated that $600 supplement, insisting — with no evidence — that it discouraged workers from taking jobs,” he added. “Trump appeared to agree, and — perhaps buoyed by rising stocks — encouraged Senate Republicans to take a hard line as key provisions of the CARES Act expired. And because Republicans refused to extend crisis aid, or make a good-faith counteroffer, the supplement expired a month ago, even though we’re still down 13 million jobs from where we were in February… It may take some time before we see the full effects of this abandonment of American workers, but it’s a good bet that we’ll see slowing growth, a surge in evictions and, in general, the kind of mass suffering we managed to avoid in the first round of the Covid-19 crisis.”
As for the negotiations ahead, the Washington Post editorial board has called for another sweeping response. Republicans, the board noted, are preparing a “skinny” package to put on the table.
“The roughly $500 billion concept would include enhanced unemployment benefits, small business loans and money for schools and covid-19-related health needs,” Washington Post editorial board said. “Those are good priorities, but Ms. Pelosi has said, correctly, that the dollar amounts are far too small. Also, no deal should be done that fails to provide funds for election administration and state and local governments.”
What the right is saying.
They’re ready to move — but they’re not ready to pour money into state and local governments. The right’s positions are best summed up in a single editorial from the Wall Street Journal. Part of the House Democrats’ ask that has hung things up is $1 trillion in aid to state and local governments, which they say have been so decimated that public services will crumble without this huge boost in aid. “Don’t believe it,” The Wall Street Journal editorial board says. “State tax revenues are rebounding as the economy reopens and improves.”
“We examined recent monthly revenue reports for various states and, not surprisingly, Democratic states that maintained stricter and longer lockdowns appear to be recovering more slowly,” the board wrote. “But even they are raking in more cash than they let on. Take California, which ended its fiscal year in June with $3.2 billion (2.6%) more revenue than its May budget forecast. Its July revenues beat estimates by 5.6% due to much better than expected individual tax payments. Credit the rebound in equities and the boom in tech stocks, which have lifted capital gains. The Nasdaq is up 28% this year.”
As much as the left complains about the wealthy, it’s the wealthy who will keep state budgets afloat. 40% of state and local government funds come from property taxes, and home buying is skyrocketing thanks to the comfortably well off Americans who are fleeing the cities for the burbs. Meanwhile, investors are dumping money into equities and municipal funds while they “seek a relatively safe tax-exempt yield.” All the while, sales tax revenue has held up well in most states across the U.S. thanks to online retail.
“The virus will be here for many more months, but the worst of the lockdowns should be over. Congress has already doled out tens of billions of dollars to state and local governments, and the Fed has repeatedly eased the terms of its state and municipal lending facility,” the board added. “States and cities could use more flexibility in how they spend the federal relief they’ve received so far, but their finances don’t justify tens of billions more from taxpayers.”
Even the USA Today editorial board, which tends to lean left, took a stand with Republicans on the state budgets. “The Democratic demand for $915 billion is arguably too high,” it said. “Several nonpartisan analysts have projected state budget shortfalls falling somewhere between $200 billion and $800 billion, plenty of room for Congress to make a deal. And, in good faith, the Democrats should also agree to the Republican demand to protect businesses that follow public-health guidelines from COVID-related liability lawsuits.”
While Nancy Pelosi and House Democrats say they wouldn’t be willing to accept anything less than a $2.2 trillion package, they’ve already come down from the $3.4 trillion package they passed in May. Steve Mnuchin and Republican negotiators have moved up off their $1 trillion cap to $1.5 trillion, narrowing the gap between the two sides, and on Tuesday Mnuchin said “Democrats and Republicans agree that more money is needed for grants for small businesses, enhanced unemployment insurance and direct payments to households,” according to a WSJ report.
My take.
It seems to me there’s a middle ground here. Democrats want to prioritize unemployed and low-income Americans. Republicans want a bill that’s targeted and doesn’t just broadly dump more money into bloated state governments. Fine. Even in their skinny, $500 billion proposals, Republicans are willing to put $150 billion of cash on the table for state governments — which is important. The Wall Street Journal’s editorial board is right that some states are doing fine or even rebounding toward pre-pandemic revenue. But it glosses over the states that are in far more dire straits. You don’t have to take it from Democrats, either.
Florida’s Republican Gov. Ron DeSantis compared his state budget to the Red Wedding scene from Game of Thrones (for those of you not familiar: everyone dies in gruesome fashion). Maryland’s Republican Gov. Larry Hogan said "Responding to this crisis has created a multiyear budget crisis unlike anything the state has ever faced before, more than three times worse than the Great Recession." Here in New York, the state is already contemplating cuts to crucial programs that help give aid to students attending four-year universities or provide healthcare to low-income New Yorkers. In other words: the states are going to need more help.
But Republicans and Democrats seem to agree that there’s a pyramid of priorities here, and the first one should be ensuring American families can eat and stay housed for the upcoming fall and winter. If the economic recovery here is as good as Trump and his allies say, then the richest nation on earth should have no trouble ensuring that its citizens who are most in need are taken care of. A few weeks ago, I proposed re-upping the $600 enhanced unemployment benefit and slowly phasing it down to $300 a week heading into January. That’s far more generous than past federal assistance programs, but it meets the moment for what we’re facing — and it gives people a timeline to prepare with a gradual weaning off the benefit.
We’re living in two vastly different economies simultaneously. Catherine Campbell described the one that’s struggling like this: “Meanwhile, overall unemployment remains higher than it ever was during the Great Recession. New jobless claims are ticking up. Layoffs once hopefully considered ‘temporary’ are being officially recategorized as ‘permanent.’ With lockdown orders partly lifted but coronavirus infections not yet contained, the virus is still in charge — and still disproportionately inflicting pain upon both the bodies and the finances of the working class.”
Which brings me to the final point, and one that deserves refocusing: our economic recovery is still tied closely to the pandemic that has now killed more than 180,000 people. Winter is coming, to steal another reference from Game of Thrones, and that means huge sectors of the economy (like bars, restaurants, entertainment, etc.) that are barely getting by or were permanently crushed by limited or no access to outdoor venues and events, are going to need to move inside. If the virus is still spreading, they’ll have no chance of success. Same goes for the K-12 schools, the universities, the retail stores, the movie theaters, the sporting events, and basically every other sector of the economy that doesn’t involve “working from home” that you can think of.
We have to stop the spread of the virus — which means we need to continue to expand rapid testing, insist on responsible social activity and aggressively pursue a vaccine. This also sets the target: We need to keep the unemployed and low-wage American workers afloat until the virus is all but snuffed out. If we can do that, we’ll have a fighting chance to avoid an economic calamity.
Your blindspot.
As part of a partnership with Ground News, an app and website that uses data to rate the political lean of stories and news outlets, I’ll be featuring parts of Ground News’s “Blindspot Report” in Tangle. The Blindspot Report tells you what stories folks on the left and right miss each week because of their biased news diets.
The right missed a story this week about how Kenosha police arrested a volunteer group that was providing free meals to protesters. Riot Kitchen, the Seattle based group, showed up to provide meals but were arrested at a gas station for being in a “suspicious vehicle.”
The left missed a story this week that over half of the protesters arrested in Kenosha were from out of town, according to a statement released by Kenosha’s local police department. Of 175 suspects arrested, 102 were from 44 cities other than Kenosha.
Want to check out Ground News’s bias ratings, blindspot reports or other news sources? Click here.
Reader questions.
Today’s newsletter got long quickly, so I’m skipping the reader question for today. But remember: if you have something you want to be answered in the newsletter — or if you ever want to reach me — all you have to do is reply to this email and write in.
A story that matters.
The Trump administration is making a big bet that it will win the race to a vaccine. The administration has declined to join the World Health Organization’s effort to provide equitable doses for all countries, instead limiting its efforts to its own citizens and hoping it’s the first to land the vaccine. “Other rich countries and groups of countries — the U.K., EU, Japan — are pursuing a diversified approach of spending big on their own access, in addition to signaling support for cooperative efforts,” Axios reports. U.S. officials have compared it to strapping on their oxygen mask before helping others during an emergency on a plane, but it also sets the country up for a mess: if another set of scientists gets the vaccine first, the United States could be left out of any distribution. “The Covax decision, which has not been previously reported, is effectively a doubling down by the administration on its bet that the United States will win the vaccine race,” The Washington Post reports. “It eliminates the chance to secure doses from a pool of promising vaccine candidates — a potentially risky approach.”
Numbers.
62%. The percentage of Republicans who viewed first lady Melania Trump’s convention speech favorably.
54%. The percentage of Republicans who viewed first Ivanka Trump’s convention speech favorably.
43-43. Melania Trump’s overall favorability/unfavorable rating amongst Americans.
34-49. Ivanka Trump’s overall favorability/unfavorable rating amongst Americans.
47-39. Joe Biden’s advantage over Donald Trump when voters are asked who they trust more to handle public safety.
52%. The percentage of Americans who are receiving unemployment insurance who say they would be “very likely” to return to their previous job even if the federal government extends an additional weekly UI benefit of $450.
48%. The percentage of Americans who are receiving unemployment insurance who say they would be “very likely” to return to their previous job even if the federal government extends an additional weekly UI benefit of $300.
54%. The percentage of Americans who are receiving unemployment insurance who say they would be “very likely” to return to their previous job even if the federal government extends an additional weekly UI benefit of $150.
70%. The percentage of Americans who think the federal government should send another one-time economic impact payment to all qualified adults (based on income level).
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Have a nice day.
International clinical trials confirm that new, widely available steroids can help seriously ill patients survive COVID-19, according to The World Health Organization. New guidelines are expected to be released soon to encourage their use. “The new studies include an analysis that pooled data from seven randomized clinical trials evaluating three steroids in over 1,700 patients. The study concluded that each of the three drugs reduced the risk of death.” The only other drug that was effective in the trials was remdesivir, but the success was “modest,” they said. “Steroids like dexamethasone, hydrocortisone and methylprednisolone are often used by doctors to tamp down the body’s immune system, alleviating inflammation, swelling and pain,” The New York Times reported. “Many Covid-19 patients die not of the virus, but of the body’s overreaction to the infection.”