White House warns of recession if …

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House to vote next week on debt ceiling suspension

Majority Leader Steny Hoyer (D-MD) said on Friday the House would vote on a measure to suspend the debt ceiling next week. He did not say whether the bill would be associated with a funding measure from the federal government, which could close when the new fiscal year begins on October 1 if Congress does not act before that date.

The House Rules Committee is expected to consider a bill on Monday to fund the government until December 3 or 10. Democratic leaders have reportedly considered tying the debt limit legislation to the interim financing bill.

“Decoupling government funding from the debt limit would leave many Republicans more willing to support a short-term government funding bill that includes billions of dollars in disaster assistance for the southern red states. is hit by hurricanes, which was requested by President Joe Biden, ”Caitlin Emma from politics reports.

The bottom line: Republicans have vowed not to support any effort to raise the debt ceiling, arguing Democrats must do it themselves. Next week’s vote could bring this stalemate to a head and force one side or another to change tack.

White House warns default could trigger recession

The Biden administration issued new warnings on Friday about the potential damage that could result from a default on US debt.

“Reaching the debt ceiling could cause a recession,” said a White House letter to state and local governments. “Economic growth would weaken, unemployment would rise and the labor market could lose millions of jobs. “

The recession would hit state and local governments hard, the White House has warned. “If the United States defaults on its debt, cities and states could suffer a double whammy: declining revenues and no federal aid as long as Congress refuses to raise or suspend the debt ceiling,” indicates the letter. “This means essential public services will be threatened with budget cuts, from education to healthcare to pensions.”

A plea for bipartite cooperation: At a meeting of the United States Conference of Mayors on Friday, Democratic Mayor Nan Whaley of Dayton, Ohio, called on lawmakers to work together to tackle the debt ceiling.

“Both sides in Washington have increased our debt, and both sides have an obligation to ensure that the United States can continue to pay its bills,” Whaley said. “This is one of Congress’ most fundamental responsibilities, and there is no good reason for lawmakers to create a crisis that undermines the full faith and credit of the United States.”

Column of the day: Democrats are reluctant to tax the rich

Polls consistently find broad support for taxing the rich – but what exactly does that mean? Washington Post columnist Catherine Rampell points out that Democrats’ definition of “rich” has shrunk over time to “a tiny – and endangered – group.”

President Obama has set the limit on tax increases at $ 250,000 in annual income. President Biden moved it to $ 400,000. And Rep. Alexandria Ocasio-Cortez (D-NY), who wore a much-discussed dress that read “Tax the Rich” as she attended the Met Gala this week, responded to criticism in part by saying: “They want you to think that when we talk about the rich, we are talking about a doctor or a lawyer instead of someone with hundreds of millions of dollars, even billions of dollars.”

Rampell notes that Democrats’ focus on the richest of the rich comes as the Democratic base has shifted to include more high-income voters and college graduates – but the tax changes proposed by the House Democrats this month are also leaving plenty of breaks in place for the ultra-rich.

The House plan, for example, stops long before raising capital gains tax to match the income tax rate, as President Joe Biden had requested, and it does not eliminate the “grossed-up basis” provision that allows assets that have appreciated in value to be passed on to heirs tax-free. “This is a huge boon for anyone with dynastic level wealth because it means their wealth can escape capital gains tax,” says Rampell. Democrats are also considering options to repeal or increase the $ 10,000 limit on State and Local Tax Deductions (SALT), another change that would benefit higher earners (see more on this below).

“Yes, Democrats are planning to raise the highest personal and corporate income tax rates,” Rampell writes. ” It’s not nothing. But that’s nowhere near enough to pay for the generous welfare state Democrats want to build. Paying for it would ultimately require levying higher taxes on the middle class as well, as do other countries with more extensive safety nets. “

Read the full column at the Washington Post.

Reinstatement of SALT deduction would cut Democrats’ tax hikes for top earners: report

If the Democrats’ budget plan restores the full deduction for local and state taxes, it would leave top earners facing much smaller overall tax hikes – or even tax cuts – according to Tax Foundation data. on the right cited by Bloomberg News.

The richest 1% of earners, those earning more than $ 401,600, would see their after-tax income drop 5% as part of the House’s Democratic plan. But if the $ 10,000 cap on SALT deductibility is removed, their after-tax impact would only be 1.9%. Taxpayers earning between $ 165,181 and $ 401,600 would see an after-tax gain of 0.3% with the SALT cap in place turn into a gain of 0.9% with the cap raised.

Restoring the full SALT deduction would cost about $ 85 billion a year over the next five years, according to the Committee for a Responsible Federal Budget, with most of the benefits of the change going to the top 1%.

House lawmakers would consider options other than a complete repeal of the cap, including a two-year suspension or an increase in the deduction limit by $ 10,000.

Ocasio-Cortez calls for unemployment benefit reform in $ 3.5 trillion spending bill

Representatives Alexandria Ocasio-Cortez (D-NY) and Cori Bush (D-MO) call for the inclusion of major UI reforms in the $ 3.5 trillion spending package that contains much of the program domestic economy of President Joe Biden.

In a letter to Democratic leaders on Thursday, the couple, joined by 11 other House Democrats, said they wanted to “express the urgency of including Unemployment Insurance (UI) reforms in the Build Back Better law for protect the millions of unemployed across this country. “

Citing the success of the temporary programs adopted by Congress during the Covid-19 crisis, the group called on Democrats to revise the unemployment system so that it permanently includes part-time workers and establishes a minimum duration of compensation, among other reforms. The changes would be particularly significant for workers in minority groups, who disproportionately hold low-wage jobs and live in states with weak unemployment systems, the group said.

“A strong and responsive unemployment insurance system not only helps our entire economy recover faster and more equitably from future recessions, but it is also an essential tool in helping displaced workers stay in touch with the job market and to support their families when they look for a new job, ”they said.

Number of the day: $ 2.1 billion

The Biden administration on Friday announced a $ 2.1 billion spending plan to improve infection prevention and control in the U.S. healthcare system, the largest such investment in the country’s history.

“This funding will dramatically improve the safety and quality of health care provided in the United States during the pandemic and into the future,” said Dr. Rochelle Walensky, director of the Centers for Disease Control and Prevention.

The CDC plans to distribute $ 1.25 billion in funding to 64 state, local and territorial health departments over the next three years to help prevent infections in healthcare facilities, including hospitals. and nursing homes. An additional $ 880 million will be used over several years to “support healthcare partners, academic institutions and other not-for-profit partners” in developing infection prevention and control measures.

There were 647,000 healthcare-associated infections in acute care hospitals in 2015, including 72,000 deaths, according to CDC estimates cited by Bloomberg News.

The new funding is part of the $ 1.9 trillion US bailout package promulgated in March.

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