Government
COVID-19 clawbacks, spending caps and a cut – what House Republicans got in return for pushing the US to the brink of default
The White House and House Republicans agreed to a deal just days before the US is expected to default.
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House Republicans pushed the U.S. to the edge of a fiscal crisis because they wanted deep cuts in government spending.
So, based on the tentative deal announced on May 27, 2023, how did they do?
In broad strokes, the deal would suspend the debt limit until January 2025, freeze nondefense discretionary funding at current levels and make a few additional cuts and policy changes designed to appeal to enough Republicans and Democrats to get it through Congress. The deal also included incentives to motivate lawmakers to pass a budget on time in four months.
That provision and the 2025 expiration date should mean the U.S. should avoid a self-inflicted fiscal crisis – including an unprecedented default – until at least after the next presidential election.
No one got everything they wanted. President Joe Biden didn’t get the clean debt ceiling increase he had insisted on for months. Republicans didn’t get most of what they sought in a bill they passed in April – though they did get some of it.
As a professor of public policy and former deputy director at the Congressional Budget Office, I believe the deal, which still needs to pass both houses of Congress by June 5 to avoid a default, does hardly anything to address America’s long-term debt problem, which to me shows why a debt ceiling standoff is not the right way to solve it.
Let’s take a closer look at what I would consider the five main components of the deal to see what they’ll accomplish.
1. Expanded work requirements for SNAP
The Supplemental Nutrition Assistance Program has been a Republican target for a while.
Under current law, an individual must work or be in training for 80 hours per month if they receive SNAP food benefits in three or more out of 36 months, is able-bodied, does not live with dependent children and is under 50 years old. This entitlement program is 100% funded by the federal government but is administered by states, which have the ability to waive the requirements in some low unemployment areas.
The new deal would expand the definition to people up to age 54 and limit some of the state waiver authority. It would exclude veterans and homeless people from the tougher work requirements and expire in 2030.
The Congressional Budget Office had estimated that a similar provision in the House bill – based on extending the age requirement to 55 – would kick 275,000 people off the SNAP roles and save US$11 billion over a decade.
Since states would have to expand their work reporting systems, their increased costs would offset some of the federal savings.
The bill also contains some additional work requirements for welfare recipients for the temporary assistance for needy families program, but the changes are relatively minor.
2. Cap on nondefense discretionary spending
The main way the agreement would restrict federal spending is through the temporary cap on nondefense discretionary spending.
Spending on everything other than defense, entitlements like Social Security and veterans benefits, would stay flat in next year’s budget relative to the 2023 amount and increase 1% the following year, with no limits after that.
But, ultimately, the caps apply to just a small share of total government spending – less than 13%. So not only is it a very minor reduction in spending, it involves a small fraction of the federal budget.
In their House bill, Republicans had sought a larger cut in discretionary spending.
Entitlement programs would be unaffected by the deal, while defense spending would grow by 3.3% next year, as Biden requested in his budget.
One item that would see actual cuts would be the $80 billion that had previously been allocated to beef up IRS enforcement of tax cheats. The deal would trim that by about $20 billion, and the savings would be used to offset cuts to other areas of discretionary spending.
Republicans had wanted to slash this by $71 billion – which, ironically, would have actually resulted in a larger budget deficit because much of that money was going to be used to beef up enforcement to collect more revenue from people who didn’t pay all the taxes they owed.
3. Streamlining energy leasing and permitting
Both Republicans and Democrats have interest in expediting the environmental review process for new energy leases, but they have very different priorities.
Republicans are more interested in gas pipelines and fossil fuel projects, while Democrats are more interested in wind, solar and other alternative energy installations. The problem for both is that the approval of environmental and technical plans is very slow and often involves all three levels of government. Also, at the federal level decisions often involve federal agencies with overlapping jurisdictions.
The new deal would make some minor changes to the environmental review process to make it go faster – though it’s less than what Republicans initially wanted.
4. COVID-19 funding clawback
White House and House Republican negotiators agreed to claw back as much as $30 billion in unspent funds from six COVID-19 programs passed by Congress. The estimate is based on the broadly similar House bill.
Some of these funds were allocated to various agencies, while others have already been distributed to states and even to local governments. The actual amount recovered will likely be less than estimated because funds continue to be spent and will take a while to recover.
5. No government shutdown
Negotiators included a provision that would ensure there isn’t another fiscal crisis when Congress must pass 12 appropriations bills by October to keep the government funded into the next fiscal year. I think this is the most important component of the deal.
It automatically funds everything at 99% of the previous year’s level if Congress fails to pass the bills in time. Besides eliminating the possibility of a shutdown over the budget, as the U.S. has experienced in the past, the 1% decrease in funding provides a strong incentive for Republicans and Democrats to negotiate a compromise that keeps their priorities fully funded.
The bottom line
The deal would limit some spending in the short run but does very little to tackle America’s long-term debt problem, which I believe urgently needs to be addressed.
The U.S. national debt has exploded, most recently as a result of trillions of dollars in spending related to the COVID-19 pandemic. At a little under $32 trillion, it’s over 120% of gross domestic product, which is considered unsustainably high and is costing well over half a trillion dollars in annual interest payments. At some point, investors may begin to see U.S. government bonds as a risky investment and stop buying, which would lead to higher borrowing costs and could bring down the entire U.S. financial system.
But using the debt ceiling as a negotiating tactic is unlikely to achieve the kinds of tough choices needed to meaningfully slow the growing mountain of U.S. debt.
About 60% of total government spending goes to fund just a few items, such as Social Security, Medicare and national defense, that are very hard, politically, to cut. And political realities make it nearly impossible to increase taxes.
But a budgeting process known as reconciliation was created specifically for this purpose because it allows Congress to cut any mandatory spending and entitlement program and increase taxes in one bill. It also can’t be filibustered in the Senate – it just needs a majority.
To truly address the debt problem, what is needed, in my view, is a balanced bipartisan proposal that includes cuts to all programs, as well as some significant tax increases. Political brinkmanship won’t get America there.
For all the debt ceiling drama and the risks of profound economic damage and global tensions that resulted from it, Republicans achieved only a two-year cap on a small fraction of the total budget. Reconciliation – and lawmakers willing to govern and compromise – is a far superior way to attain a comprehensive deficit-reduction plan.
Raymond Scheppach does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.
unemployment default pandemic covid-19 bonds government bonds irs budget deficit white house congress senate unemployment
Government
Low Iron Levels In Blood Could Trigger Long COVID: Study
Low Iron Levels In Blood Could Trigger Long COVID: Study
Authored by Amie Dahnke via The Epoch Times (emphasis ours),
People with inadequate…
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Authored by Amie Dahnke via The Epoch Times (emphasis ours),
People with inadequate iron levels in their blood due to a COVID-19 infection could be at greater risk of long COVID.
A new study indicates that problems with iron levels in the bloodstream likely trigger chronic inflammation and other conditions associated with the post-COVID phenomenon. The findings, published on March 1 in Nature Immunology, could offer new ways to treat or prevent the condition.
Long COVID Patients Have Low Iron Levels
Researchers at the University of Cambridge pinpointed low iron as a potential link to long-COVID symptoms thanks to a study they initiated shortly after the start of the pandemic. They recruited people who tested positive for the virus to provide blood samples for analysis over a year, which allowed the researchers to look for post-infection changes in the blood. The researchers looked at 214 samples and found that 45 percent of patients reported symptoms of long COVID that lasted between three and 10 months.
In analyzing the blood samples, the research team noticed that people experiencing long COVID had low iron levels, contributing to anemia and low red blood cell production, just two weeks after they were diagnosed with COVID-19. This was true for patients regardless of age, sex, or the initial severity of their infection.
According to one of the study co-authors, the removal of iron from the bloodstream is a natural process and defense mechanism of the body.
But it can jeopardize a person’s recovery.
“When the body has an infection, it responds by removing iron from the bloodstream. This protects us from potentially lethal bacteria that capture the iron in the bloodstream and grow rapidly. It’s an evolutionary response that redistributes iron in the body, and the blood plasma becomes an iron desert,” University of Oxford professor Hal Drakesmith said in a press release. “However, if this goes on for a long time, there is less iron for red blood cells, so oxygen is transported less efficiently affecting metabolism and energy production, and for white blood cells, which need iron to work properly. The protective mechanism ends up becoming a problem.”
The research team believes that consistently low iron levels could explain why individuals with long COVID continue to experience fatigue and difficulty exercising. As such, the researchers suggested iron supplementation to help regulate and prevent the often debilitating symptoms associated with long COVID.
“It isn’t necessarily the case that individuals don’t have enough iron in their body, it’s just that it’s trapped in the wrong place,” Aimee Hanson, a postdoctoral researcher at the University of Cambridge who worked on the study, said in the press release. “What we need is a way to remobilize the iron and pull it back into the bloodstream, where it becomes more useful to the red blood cells.”
The research team pointed out that iron supplementation isn’t always straightforward. Achieving the right level of iron varies from person to person. Too much iron can cause stomach issues, ranging from constipation, nausea, and abdominal pain to gastritis and gastric lesions.
1 in 5 Still Affected by Long COVID
COVID-19 has affected nearly 40 percent of Americans, with one in five of those still suffering from symptoms of long COVID, according to the U.S. Centers for Disease Control and Prevention (CDC). Long COVID is marked by health issues that continue at least four weeks after an individual was initially diagnosed with COVID-19. Symptoms can last for days, weeks, months, or years and may include fatigue, cough or chest pain, headache, brain fog, depression or anxiety, digestive issues, and joint or muscle pain.
Government
Walmart joins Costco in sharing key pricing news
The massive retailers have both shared information that some retailers keep very close to the vest.
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As we head toward a presidential election, the presumed candidates for both parties will look for issues that rally undecided voters.
The economy will be a key issue, with Democrats pointing to job creation and lowering prices while Republicans will cite the layoffs at Big Tech companies, high housing prices, and of course, sticky inflation.
The covid pandemic created a perfect storm for inflation and higher prices. It became harder to get many items because people getting sick slowed down, or even stopped, production at some factories.
Related: Popular mall retailer shuts down abruptly after bankruptcy filing
It was also a period where demand increased while shipping, trucking and delivery systems were all strained or thrown out of whack. The combination led to product shortages and higher prices.
You might have gone to the grocery store and not been able to buy your favorite paper towel brand or find toilet paper at all. That happened partly because of the supply chain and partly due to increased demand, but at the end of the day, it led to higher prices, which some consumers blamed on President Joe Biden's administration.
Biden, of course, was blamed for the price increases, but as inflation has dropped and grocery prices have fallen, few companies have been up front about it. That's probably not a political choice in most cases. Instead, some companies have chosen to lower prices more slowly than they raised them.
However, two major retailers, Walmart (WMT) and Costco, have been very honest about inflation. Walmart Chief Executive Doug McMillon's most recent comments validate what Biden's administration has been saying about the state of the economy. And they contrast with the economic picture being painted by Republicans who support their presumptive nominee, Donald Trump.
Image source: Joe Raedle/Getty Images
Walmart sees lower prices
McMillon does not talk about lower prices to make a political statement. He's communicating with customers and potential customers through the analysts who cover the company's quarterly-earnings calls.
During Walmart's fiscal-fourth-quarter-earnings call, McMillon was clear that prices are going down.
"I'm excited about the omnichannel net promoter score trends the team is driving. Across countries, we continue to see a customer that's resilient but looking for value. As always, we're working hard to deliver that for them, including through our rollbacks on food pricing in Walmart U.S. Those were up significantly in Q4 versus last year, following a big increase in Q3," he said.
He was specific about where the chain has seen prices go down.
"Our general merchandise prices are lower than a year ago and even two years ago in some categories, which means our customers are finding value in areas like apparel and hard lines," he said. "In food, prices are lower than a year ago in places like eggs, apples, and deli snacks, but higher in other places like asparagus and blackberries."
McMillon said that in other areas prices were still up but have been falling.
"Dry grocery and consumables categories like paper goods and cleaning supplies are up mid-single digits versus last year and high teens versus two years ago. Private-brand penetration is up in many of the countries where we operate, including the United States," he said.
Costco sees almost no inflation impact
McMillon avoided the word inflation in his comments. Costco (COST) Chief Financial Officer Richard Galanti, who steps down on March 15, has been very transparent on the topic.
The CFO commented on inflation during his company's fiscal-first-quarter-earnings call.
"Most recently, in the last fourth-quarter discussion, we had estimated that year-over-year inflation was in the 1% to 2% range. Our estimate for the quarter just ended, that inflation was in the 0% to 1% range," he said.
Galanti made clear that inflation (and even deflation) varied by category.
"A bigger deflation in some big and bulky items like furniture sets due to lower freight costs year over year, as well as on things like domestics, bulky lower-priced items, again, where the freight cost is significant. Some deflationary items were as much as 20% to 30% and, again, mostly freight-related," he added.
bankruptcy pandemic trumpGovernment
Walmart has really good news for shoppers (and Joe Biden)
The giant retailer joins Costco in making a statement that has political overtones, even if that’s not the intent.
Share this:
As we head toward a presidential election, the presumed candidates for both parties will look for issues that rally undecided voters.
The economy will be a key issue, with Democrats pointing to job creation and lowering prices while Republicans will cite the layoffs at Big Tech companies, high housing prices, and of course, sticky inflation.
The covid pandemic created a perfect storm for inflation and higher prices. It became harder to get many items because people getting sick slowed down, or even stopped, production at some factories.
Related: Popular mall retailer shuts down abruptly after bankruptcy filing
It was also a period where demand increased while shipping, trucking and delivery systems were all strained or thrown out of whack. The combination led to product shortages and higher prices.
You might have gone to the grocery store and not been able to buy your favorite paper towel brand or find toilet paper at all. That happened partly because of the supply chain and partly due to increased demand, but at the end of the day, it led to higher prices, which some consumers blamed on President Joe Biden's administration.
Biden, of course, was blamed for the price increases, but as inflation has dropped and grocery prices have fallen, few companies have been up front about it. That's probably not a political choice in most cases. Instead, some companies have chosen to lower prices more slowly than they raised them.
However, two major retailers, Walmart (WMT) and Costco, have been very honest about inflation. Walmart Chief Executive Doug McMillon's most recent comments validate what Biden's administration has been saying about the state of the economy. And they contrast with the economic picture being painted by Republicans who support their presumptive nominee, Donald Trump.
Image source: Joe Raedle/Getty Images
Walmart sees lower prices
McMillon does not talk about lower prices to make a political statement. He's communicating with customers and potential customers through the analysts who cover the company's quarterly-earnings calls.
During Walmart's fiscal-fourth-quarter-earnings call, McMillon was clear that prices are going down.
"I'm excited about the omnichannel net promoter score trends the team is driving. Across countries, we continue to see a customer that's resilient but looking for value. As always, we're working hard to deliver that for them, including through our rollbacks on food pricing in Walmart U.S. Those were up significantly in Q4 versus last year, following a big increase in Q3," he said.
He was specific about where the chain has seen prices go down.
"Our general merchandise prices are lower than a year ago and even two years ago in some categories, which means our customers are finding value in areas like apparel and hard lines," he said. "In food, prices are lower than a year ago in places like eggs, apples, and deli snacks, but higher in other places like asparagus and blackberries."
McMillon said that in other areas prices were still up but have been falling.
"Dry grocery and consumables categories like paper goods and cleaning supplies are up mid-single digits versus last year and high teens versus two years ago. Private-brand penetration is up in many of the countries where we operate, including the United States," he said.
Costco sees almost no inflation impact
McMillon avoided the word inflation in his comments. Costco (COST) Chief Financial Officer Richard Galanti, who steps down on March 15, has been very transparent on the topic.
The CFO commented on inflation during his company's fiscal-first-quarter-earnings call.
"Most recently, in the last fourth-quarter discussion, we had estimated that year-over-year inflation was in the 1% to 2% range. Our estimate for the quarter just ended, that inflation was in the 0% to 1% range," he said.
Galanti made clear that inflation (and even deflation) varied by category.
"A bigger deflation in some big and bulky items like furniture sets due to lower freight costs year over year, as well as on things like domestics, bulky lower-priced items, again, where the freight cost is significant. Some deflationary items were as much as 20% to 30% and, again, mostly freight-related," he added.
bankruptcy pandemic trump
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Low Iron Levels In Blood Could Trigger Long COVID: Study
Walmart has really good news for shoppers (and Joe Biden)
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