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US Chamber Of Commerce Urges Biden To End Pandemic Handouts: “Paying People Not To Work” Is Killing The Recovery
from ZeroHedge:
Update (1055ET): Right on cue, just after Minneapolis Fed chief Neel Kashkari admitted that expanded unemployment insurance was keeping workers out of the labor market, contributing to Friday’s disappointing employment number, the US Chamber of Commerce released a statement calling for ending the $300 weekly supplemental benefit.
Executive Vice President and Chief Policy Officer Neil Bradley released the following as a statement, saying that while there might have been a time when the benefit was needed, that time has now passed. “Paying people not to work is dampening what should be a stronger jobs market” and is hurting the overall recovery, he said.
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“The disappointing jobs report makes it clear that paying people not to work is dampening what should be a stronger jobs market. We need a comprehensive approach to dealing with our workforce issues and the very real threat unfilled positions poses to our economic recovery from the pandemic. One step policymakers should take now is ending the $300 weekly supplemental unemployment benefit. Based on the Chamber’s analysis, the $300 benefit results in approximately one in four recipients taking home more in unemployment than they earned working.”
While Dems often butt heads with the Chamber of Commerce, the Party and its leader, President Joe Biden, certainly won’t appreciate this growing chorus of opposition as they try to order up even more stimulus under the guise of “infrastructure”.
In an interview with CNBC, Bradley repudiated a question about whether businesses need to simply raise wages. He noted that wages were actually a bright spot in Friday’s report, and that the problem is businesses aren’t just competing with each other for workers, but with the government, which is paying workers more to sit at home than businesses can afford to pay them to work.
CNBC’s David Faber concluded by affirming that this debate is “far from over”.
Elaborating on the issue, Mark Glennon at Wirepoints elaborates on how the torrent of cash pouring into the economy from both the federal government and the Fed, which are now “joined at the hip” (as former Fed economist Henry Kauffman recently wrote), is contributing to damaging worker shortages and ultimately undermining the recovery, just as the CoC asserts.
It’s key to first to get your mind around how much money Washington is pumping out, which isn’t easy. So far, lawmakers have enacted six major pandemic relief bills costing about $5.3 trillion. For a little perspective, that’s 27% more than the entire federal budget for 2019, the last fiscal year before the pandemic. And now the Biden Administration wants to spend an additional $4.5 trillion.
Through it all, the Fed has been the Treasury’s enabler. It has already wished into existence $3.5 trillion since the pandemic started, used to purchase notes and bonds. And it says it expects to continue that buying at a clip of $1.4 trillion per year while keeping interest rates low, rates that already are negative, being lower than inflation.
Here’s another bit of historical perspective. In 1988, Democratic Senator Lloyd Bentsen said this in a debate during his candidacy for Vice President: “You know, if you let me write $200 billion worth of hot checks every year, I could give you an illusion of prosperity, too.”
That $200 billion would be only $450 billion today. But this year’s projected federal deficit is five times higher than that even without the Biden Administration’s new spending proposal. The Fed is now creating as much money as Bentsen decried in today’s dollars every four months.
Granted, not everybody has benefited from federal largess. Some individuals have suffered immense financial hardship from the pandemic.
But that definitely has not been typical. Federal assistance has been so vast that total personal income in every state has actually been higher during the pandemic than before. As a Pew Research report put it, “The sharp increase in government transfer payments more than offset a slight decline in inflation-adjusted earnings, which include wages from work plus extra compensation such as employer-sponsored health benefits, as well as business profits.”
Nor have state and local governments suffered. Federal relief for almost all of them together with their own reserves has exceeded losses caused by the pandemic. Many needed no help at all, as we detailed here.
Even before Friday’s report, South Carolina and Montana had already moved to end the expanded unemployment benefits. Will we see more states follow suit in the coming days?
