And it doesn’t apply just to state and municipal workers who had to actually go into work during the pandemic; they must only have “volunteered to work… at their respective worksites or any worksite outside of their personal residence.” Employees who went in for a single day would also qualify. So do employees who worked from home but one day when the internet was down went to a family member’s home to work. (They meet the provision that you did your job from a “worksite outside of [your] personal residence.”)
Administrators, accountants, techies, teachers, finance officers, grant writers, trash collectors and all those paid with public dollars are potentially in line for the benefit. As currently written, state legislators are eligible to take advantage of the bill. More than half of the Legislature has signed on to H.2808. Support spans the political spectrum. The bill may provide a jump in pension benefits for those employed during the pandemic who have already retired.
Pioneer estimates that the bill’s cost would be in the billions of dollars. As of this May, the state pension fund, state Teachers’ Retirement System and the Boston Teachers Retirement system were underfunded by a combined $44 billion. Annual payments to the systems are scheduled to rise from the current $3.1 billion to nearly $12.4 billion over the next 15 years, and would be even higher under H.2808. The bill would also further burden over 100 local pension funds in the Commonwealth, many of which are already woefully underfunded.
The Labor Department’s consumer price index surged 5% year-over-year in May, the largest increase since August 2008 when oil was $140 a barrel. But don’t worry, Americans. The Federal Reserve says inflation is “transitory” and that it has the tools to control prices if they start to spiral out of control. Let us pray.
Nobody should be surprised that prices are increasing everywhere from the grocery store to the car dealership. Demand is soaring as the pandemic recedes while supply constraints linger, especially in labor and transportation. As always, this is a price shock largely made by government. Congress has shovelled out trillions of dollars in transfer payments over the past year, and the Fed has rates at zero while the economy may be growing at a 10% annual rate.
The personal savings rate in April was 14.9%, double what it was before the pandemic. Record low mortgage interest rates have enabled homeowners to lower their monthly payments to burn more cash on other things. Congress’s $300 unemployment bonus and other welfare payments for not working have contributed to an enormous worker shortage, which is magnifying supply shortages.
All of this is showing up in higher prices. Over the last 12 months, core inflation excluding food and energy is up 3.8% and much more for used cars (29.7%), airline fares (24.1%), jewelry (14.7%), bikes (10.1%) and footwear (7.1%). Commodity prices from oil to copper to lumber have surged. Higher lumber prices are adding $36,000 to the price of a new home.
Less than half a year into the Biden Presidency, the Internal Revenue Service is already at the center of an abuse-of-power scandal. That news broke Tuesday when ProPublica, a website whose journalism promotes progressive causes, published information from what it said are 15 years of the tax returns of Jeff Bezos, Warren Buffett and other rich Americans.
Leaking such information is a crime, since under federal law tax returns are confidential. ProPublica says it received the files from “an anonymous source” and doesn’t know who provided them, how they were obtained, or what the source’s motives are.
Allow us to fill in that last blank. The story arrives amid the Biden Administration’s effort to pass the largest tax increase as a share of the economy since 1968. The main Democratic argument for a tax hike is that the rich should pay their “fair share.” The ProPublica story is a long argument that somehow the rich don’t pay enough. The timing here is no coincidence, comrade.
This still leaves the real scandal, which is that someone leaked confidential IRS information about individuals to serve a political agenda. This is the same tax agency that pursued a vendetta against conservative nonprofit groups during the Obama Administration. Remember Lois Lerner?
This is also the same IRS that Democrats now want to infuse with $80 billion more to chase a fanciful amount of uncollected taxes. As part of this effort, Mr. Biden wants the IRS to collect “gross inflows and outflows on all business and personal accounts from financial institutions.” Why? So the information can be leaked to ProPublica?
A closer look at the FRS shows that there is no problem to be fixed, leaving SB 84 little more than a vehicle to divert millions that would appreciate over time into alternative — and riskier — investment funds managed by Wall Street firms friendly to Republican politicians.
The Senate’s consternation over Florida’s retirement program might surprise people who actually know something about it. The state’s pension program still has a AAA credit rating and a very manageable liability relative to the size of Florida’s economy. Its funded ratio sits among the nation’s best. Its sizeable returns on investment pay the bulk of retirement benefits.
“I would say overall that we’re in a reasonably good place, and we’re heading in the right direction,” said Ash Williams, executive director and chief investment officer for the State Board of Administration, the body responsible for managing the state’s defined contribution program.
It’s getting harder for the Biden Administration to claim we’re in an economic crisis that demands more spending. It’s closer to the truth to say the economy is growing in a way that calls for spending and monetary restraint.
The latest evidence arrived Monday with the Institute for Supply Management’s news that its March survey for service businesses hit 63.7. That’s an all-time high, and it signifies rapid growth and optimism. The only problem is that many businesses say they can’t find enough workers or supplies to meet their order books.
That follows Friday’s blowout employment report for March, with a net total of 1.07 million new jobs including revisions from the previous two months. Wage gains were bigger than they looked at first glance, given that many returning workers were those in lower-wage services jobs hurt by the pandemic.
The budget deal Gov. Andrew Cuomo cut this week with the Legislature lifts the top marginal rate on the state’s income tax to 10.9%, from today’s 8.82%. Add New York City’s top local tax of 3.88%, and the total is 14.78%. Take a knee, California (top marginal rate of 13.3%), and recognize America’s new tax king. Wall Street types already are migrating to Florida, which has an income tax of 0%.
Mr. Cuomo’s budget deal also raises the business franchise tax to 7.25%, from 6.5%. This affects many independent proprietors and will be another incentive to escape from Manhattan. Both of these tax increases are sold as temporary “surcharges,” running through 2027 for the income tax and 2023 for the corporate tax. But politicians in Albany used the same line when they passed the “millionaires tax” in 2009. Does Mr. Cuomo think two decades is temporary?
The reason for the tax increase isn’t the pandemic or a revenue shortfall. Mr. Cuomo last year pointed a gun at New York’s head and threatened to shoot unless Congress sent more money. He received the ransom he demanded, and more. The state is getting $12.6 billion in direct budget relief from President Biden’s $1.9 trillion Covid bill.
Since the Republican tax reform of 2017, the federal government has allowed taxpayers to deduct $10,000 of their state and local tax payments from their federal taxes. What the Democrats now seek is a restoration of the unlimited tax deduction that had previously been in place. Only the highest earners hit that cap, so getting rid of it would directly benefit only them. The Tax Foundation estimates that lifting the cap would raise the after-tax incomes of the bottom-earning 40 percent of households by nothing. People in the middle of the income distribution would see an average increase of 0.01 percent. People in the top 1 percent, on the other hand, would receive a 2.8 percent increase. Another analysis, from the Tax Policy Center, found that the top 20 percent of taxpayers would receive 96 percent of the benefit of repealing the cap.
Supported by Angela Merkel, the German chancellor, the EU Commission (its administrative arm) took over the negotiations with vaccine manufacturers on behalf of all EU member-states last June. This was designed both as a declaration of EU “solidarity” and because of the belief that bargaining on behalf of the whole bloc could secure the vaccine at a cheaper price, a calculation that appeared to take little account of the economic costs of any delays, and delay was what — for a variety of reasons — Brussels delivered.
The U.K. came to its deal with AstraZeneca (the manufacturer of the Oxford vaccine) three months earlier than the EU, and its contract came with sharper teeth. The EU also took four months longer than the U.K. and U.S. to sign up with Pfizer.
Making matters worse, the EU’s FDA, the European Medicines Agency (EMA), a body by definition particularly receptive to the precautionary principle that plays such a dominant role in EU policy-making (except when it comes to setting up a new currency), took its time to approve the first vaccines. Its first approval came some weeks after the U.K. and ten days or so after the U.S.
The $1.9 trillion bill marketed as Covid relief includes $350 billion in federal aid to states and localities. While states can use the money to increase spending, Congress decreed that they can’t use it to cut taxes. “A state or territory shall not use the funds,” the bill says, “to either directly or indirectly offset a reduction in the net tax revenue” from a new law or regulation.
Because the mandate applies to “indirect” revenue offsets, states are at risk of violating the law for any tax reduction “during the covered period,” which stretches through 2024. Ohio’s lawsuit by Attorney General Dave Yost argues that “this coercive offer of federal funds violates the Constitution.”
In 2018, administrators of the Western Pennsylvania Teamsters and Employers Pension Fund announced it would cut benefits by 30% for 17,000 Pittsburgh-area retirees or their beneficiary survivors. The cut was needed to avoid insolvency and an accompanying collapse of the pension structure. Now, it is expected that those cuts will be restored.
Pension protection is critical, both for its morality and for its necessity. Pensions are a lifeline for older citizens. They should not lose their retirement money at the time they are depending on it — when they are no longer able or intending to work. The alternative reasonably could be poverty.
Were it not for the language in the new federal law, many people who spent decades toiling in union jobs would be in jeopardy of losing their benefits through no wrongdoing on their part. Forces conspired to put their retirement plans at risk. These are plans that were negotiated. These are plans that were promised. Nonetheless, many of the employers have gone out of business and have left their pension liabilities inadequately funded.
It was perhaps inevitable that Congress would bail out multi-employer pensions for the Teamsters and other private unions after doing so for coal miners in 2019. But the Democrats’ spending bill does nothing to fix the structural problems that have made these union pensions funds so sick.
Unions like the plans because workers continue to accrue benefits if they switch employers. If one business goes bankrupt, others must pick up the cost for worker benefits. Workers also don’t lose benefits—at least not immediately—if union-driven costs contribute to putting employers out of business.
But the plans are riddled with perverse incentives that make them risky. Employers award generous benefits and make paltry contributions so they can pay higher wages. Pension funds invest in riskier assets to achieve higher returns to support generous benefits and low contributions, but their investments often underperform. As a result, 430 or so multi-employer plans are now at risk of failing.
At Tuesday’s confirmation hearing, Sen. Pat Toomey pressed Gary Gensler on the scope of the SEC’s authority to regulate politics. Let’s say “a publicly-traded company spends a financially insignificant amount of money on, let’s say, electricity,” Mr. Toomey proposed. “Is it material whether that electricity came from renewable sources or not?”
Mr. Gensler resisted answering, saying “it may not be material or it may be material.” This isn’t reassuring. The concept of materiality is crucial to securities regulation because it defines the transparency required for investors to make prudent decisions. The SEC is supposed to protect investors from fraud by making sure they have access to accurate information about a firm’s performance.
But progressives want to use the agency’s watchdog responsibilities as a guise to bend finance in service of unrelated political goals, like climate. Mr. Gensler seemed to reserve the right to impose such politicized disclosure requirements, even when the information is “financially insignificant.”