Tag: federal stimulus

MoneyPalooza Monstrosity — The Return: Multiemployer Bailout

Mary Pat Campbell

Link: https://marypatcampbell.substack.com/p/moneypalooza-monstrosity-the-return

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Now, you can say that they are just about to add $2 trillion to the federal debt, so what’s $2 trillion more? (and yes, people will be saying that – we shall see how much that money printer can go BRRRRRR)

In my own opinion, the standard measures for DB pension shortfalls greatly underestimate the cash flows needed, given this time of extremely low interest rates. But still, let’s pretend.

The public pension bailout would be at least 20 times the amount of a MEP bailout. Just because you bailout a set of pensions that would have pulled down a federal guarantee fund (the PBGC) does not mean you’re going to bailout other pensions that are much bigger and that you never guaranteed in the first place.

Author(s): Mary Pat Campbell

Publication Date: 3 March 2021

Publication Site: STUMP on Substack

The ‘COVID Relief Bill’ Is Mostly an Expensive Bundle of Politically Motivated Giveaways

Mary Pat Campbell
The ‘COVID Relief Bill’ Is Mostly an Expensive Bundle of Politically Motivated Giveaways

Excerpt:

A sizable portion, about $500 billion, is a bailout of state and local governments that for the most part do not need one. While state tax revenues took a small hit from the pandemic and associated economic lockdowns, the damage is far smaller than was once feared. States should handle their own finances.

But it’s not just a bailout; it’s a bailout in which the funding is allocated based on the size of each state’s unemployed population. In other words, states that imposed draconian and unnecessary economic lockdowns during the past year are going to get a larger share of the federal cash than states that managed to balance public health needs and the economy—an arrangement that New Hampshire Gov. Chris Sununu rightly calls “outrageous.”

Author(s): Eric Boehm

Publication Date: 3 March 2021

Publication Site: Reason

$350 Billion Covid “Bailout” To States, Cities, And Counties – Here’s What You Need To Know

Mary Pat Campbell

Link: https://www.forbes.com/sites/adamandrzejewski/2021/03/03/350-billion-covid-bailout-to-states-cities-and-counties–here-are-the-details/?sh=626de35e661c

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This week, the U.S. House passed, along party lines, the $1.9 trillion American Rescue Plan Act of 2021. A vote in the U.S. Senate is expected soon.

Buried within the 591-page bill is a $350 billion bailout for 50 states, tribal governments, U.S. territories, and more than 30,000 cities and counties.

Our auditors at OpenTheBooks.com finally located the $350 billion allocation, line-by-line, in a supplemental database hidden on the back end of the House Oversight Committee’s website.

Map Link: https://www.openthebooks.com/maps/?Map=90043&MapType=Pin

CBO data: https://www.openthebooks.com/assets/1/6/CD13263501.pdf

Author(s): Adam Andrzejewski

Publication Date: 3 March 2021

Publication Site: Forbes

Economy: Inflation Concerns Are Growing

Mary Pat Campbell

Link: https://cgfa.ilga.gov/Upload/0221revenue.pdf

Excerpt:

It has been over a year since the COVID-19
recession began in February of 2020. After going
through a brutal loss of 31.4% in the second quarter
and an immediate, rapid rebound of 33.4% in the
third quarter last year, the economy appears headed
for a recovery. Overall, the U.S. economy shrank by
3.5% in 2020, compared to 2019. This was the worst
growth since one year after World War II. In
January, personal income rose 10% and consumer
spending jumped by 2.4%, the biggest increase since
June of 2020, both of which mostly resulted from the
COVID-19 relief payments by Congress. Housing
markets are still robust, partly supported by low
mortgage rates.
However, the employment report in January showed
weaker-than-expected data. The unemployment rate
fell to 6.3% from 6.7% mostly due to a decrease in
the labor force (i.e. people gave up looking for jobs).
The economy gained 49,000 jobs, which was lower
than expected. Inflation, currently at 1.5%, is
persistently below the Fed’s average goal of 2%.
Having said that, the outlook on the U.S. economy
has improved as daily COVID-19 infection cases are
falling and more dosages of the vaccines are being
administered. In addition, $1.9 trillion is ready to be
pumped into the economy once a third COVID-19

relief bill passes Congress. However, the recovery
rate will not be as fast as the rate seen in the third
quarter of the previous year.

Author(s): Julie Bae

Publication Date: February 2021

Publication Site: Illinois Commission on Government Forecasting and Accountability

Our View: Federal stimulus checks should not increase state taxes

Mary Pat Campbell

Link: https://www.bluemountaineagle.com/coronavirus/our-view-federal-stimulus-checks-should-not-increase-state-taxes/article_5efb3986-7ae2-11eb-9c94-e30cd7275f13.html

Excerpt:

The federal stimulus checks helped a lot of Oregonians out when they needed it. And it is also going to help out Oregon government — about $100 million in federal stimulus payments is going to wind up in the state treasury.

The federal government is not taxing the stimulus payments. In Oregon, they are not taxed as income, either. But the payments can impact the federal tax calculations used on your Oregon income tax. And so the stimulus payment may mean you owe state tax on more of your income and wind up paying more taxes or get a reduced refund.

Does that sound right to you? The stimulus checks sure seemed to be aimed at helping individuals, not helping state government.

Author(s): Editorial board

Publication Date: 2 March 2021

Publication Site: Blue Mountain Eagle

Multiemployer pension measures cleared for relief bill vote

Mary Pat Campbell

Link: https://www.pionline.com/legislation/multiemployer-pension-measures-cleared-relief-bill-vote

Excerpt:

Legislation to help struggling multiemployer pension funds is to remain in the COVID-19 relief measure headed for a Senate vote this week.

The package also calls for some funding relief for single-employer plans, through extended amortization periods and pension interest rate smoothing changes.

The pandemic relief package was approved by the House along party lines Feb. 27. Its pension provisions were at risk of being stripped until the Senate parliamentarian ruled late Monday that they fit the rules for a budget reconciliation process that allows Democrats to prevail under a simple majority.

Author(s): Hazel Bradford

Publication Date: 2 March 2021

Publication Site: Pensions & Investments

Teamsters Laud House Committee For Including Pension Reform In Stimulus Bill

Mary Pat Campbell

Link: https://www.prnewswire.com/news-releases/teamsters-laud-house-committee-for-including-pension-reform-in-stimulus-bill-301225317.html

Excerpt:

 The Teamsters are applauding the House Ways & Means Committee’s inclusion of a multiemployer pension reform measure in a broader stimulus package introduced by the panel yesterday.

In unveiling language included in the Butch Lewis Emergency Pension Plan Relief Act of 2021, the House panel took the first step towards ensuring that millions of retirees and active workers who have played by the rules will receive the pension benefits they earned through years of hard work.

“The financial distress many of these plans are facing is beyond the control of retirees and workers,” Teamsters General President Jim Hoffa said. “While multiemployer pension plans have been buffeted by economic turbulence over the decades, the situation has been seriously exacerbated by the current pandemic.”

Author(s): International Brotherhood of Teamsters

Publication Date: 9 February 2021

Publication Site: PR Newswire

Editorial: The dangers of an oversized stimulus package and a lesson from Illinois — yes, Illinois!

Mary Pat Campbell

Link: https://www.chicagotribune.com/opinion/editorials/ct-editorial-stimulus-payments-1400-economy-20210210-3jtgubimtjgi5deaigdplzilpe-story.html#new_tab

Excerpt:

Look at Illinois, of all places. Next week, Gov. J.B. Pritzker plans to introduce his budget for the next fiscal year. While the details are sketchy, his office estimates the state will need to close a $3 billion deficit, less than the $5.5 billion his office originally estimated. A stronger than expected economy is partly due the credit. While closing a $3 billion hole is not great news, we’ll take what we can get around here.

Yet, rather than take into account rosier economic pictures states like Illinois are projecting, Democrats in Washington are pressing for another big spending bill, even as they juggle the other big news of the week, the start of former President Donald Trump’s impeachment trial in the Senate. They insist an undersized response during the Great Recession slowed that recovery. But keep in mind during that far worse slump, President Barack Obama’s stimulus program had a price tag around $800 billion. Since the pandemic hit, by contrast, Congress has responded with $4 trillion in new outlays.

Does that sound like “too little?” More than $1 trillion of that sum has not even been spent yet, according to the Committee For a Responsible Federal Budget.

Author(s): Editorial board

Publication Date: 10 February 2021

Publication Site: Chicago Tribune

Kansas Lawmakers Already Have Plans for COVID Relief Funds

Mary Pat Campbell

Link: https://www.governing.com/finance/Kansas-Lawmakers-Already-Have-Plans-for-COVID-Relief-Funds.html

Excerpt:

Republican lawmakers are eyeing the relief dollars to fund $500 million in tax cuts, heavily targeted to multinational corporations and wealthy and retired Kansans. They also want the money for refunds to students relegated to online learning and replenishment of the state’s unemployment insurance fund, which has been depleted by a record volume of legitimate and fraudulent claims. A House committee on Thursday recommended using the federal aid to fund $500 bonuses for teachers and grants for school security.

The state Senate approved the tax cut earlier this month after growing its size from a proposed $175 million to an estimated $500 million. Though the House has not yet picked up the measure, Senate Republicans have pitched federal dollars as a way to keep it alive.

Senate Majority Leader, Gene Sullentrop, a Wichita Republican, said immediately after the vote that the final size of the cut would be dependent on federal funding.

Author(s): KATIE BERNARD, THE KANSAS CITY STAR

Publication Date: 1 March 2021

Publication Site: Governing

Virus Did Not Bring Financial Rout That Many States Feared

Mary Pat Campbell

Link: https://www.nytimes.com/2021/03/01/business/covid-state-tax-revenue.html

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Throughout the debate over stimulus measures, one question has repeatedly brought gridlock in Washington: Should the states get no-strings federal aid?

Republicans have mostly said no, casting it as a bailout for spendthrift blue states. Democrats have argued the opposite, saying that states face dire fiscal consequences without aid, and included $350 billion in relief for state and local governments in President Biden’s $1.9 trillion federal stimulus bill, which narrowly passed the House this past weekend. It faces a much tougher fight in the Senate.

As it turns out, new data shows that a year after the pandemic wrought economic devastation around the country, forcing states to revise their revenue forecasts and prepare for the worst, for many the worst didn’t come. One big reason: $600-a-week federal supplements that allowed people to keep spending — and states to keep collecting sales tax revenue — even when they were jobless, along with the usual state unemployment benefits.

Author(s): Mary Williams Walsh, Karl Russell

Publication Date: 1 March 2021

Publication Site: New York Times

Senate Rules-Keeper OKs Pension, Health Items: Stimulus Update

Mary Pat Campbell

Link: https://finance.yahoo.com/news/senate-rules-keeper-oks-pension-014128087.html

Excerpt:

The Senate parliamentarian approved provisions in Joe Biden’s $1.9 trillion pandemic-relief bill aiding multi-employer pensions and providing laid-off workers with health-care premium subsidies.

….

Senate parliamentarian Elizabeth MacDonough has found that provisions bailing out multi-employer pensions and providing laid-off workers with health-care premium subsidies are eligible for the simple-majority process Democrats are using to pass the pandemic-relief bill.

“This economic crisis has hit already struggling pension plans like a wrecking ball, and the retirement security of millions of American workers depends on getting this package across the finish line,” Senate Finance Chair Ron Wyden said in a statement after his office said the parliamentarian made the two approvals.

Author(s): Bloomberg News

Publication Date: 1 March 2021

Publication Site: Yahoo Finance

Pension Relief Plan in COVID-19 Stimulus Bill

Mary Pat Campbell
Pension Relief Plan in COVID-19 Stimulus Bill

Excerpt:

How much of a single lump sum? Would this be a forgiven loan? Would it be a reward for the worst funders? Could NFL players share in the bailout if they rejigger some assumptions?

Only clues I could find were form the Congressional Research Service (with my emphasis):

Section 9704 would establish a fund within the PBGC and appropriate amounts as necessary to provide special financial assistance to certain multiemployer DB plans. The special financial assistance would not have to be repaid.

Author(s): John Bury

Publication Date: 1 March 2021

Publication Site: Burypensions