Jun 9, 2020

Is the economy really improving?

Is the economy really improving?

Plus, a question about the charges against Derek Chauvin.

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Today’s read: 11 minutes.

A new Tangle poll for you to take, what’s next with the economy, tons of reader feedback and a question about the murder charges against Derek Chauvin.

Sen. Mitch McConnell (R-KY) above declared that the economy “bottomed out” last week. Photo: Gage Skidmore

Reader notes.

Yesterday, a reader from Los Angeles pointed out to me that six days ago I had written this: “I think defunding police departments during massive riots is kind of like talking about defunding WHO during a pandemic. It's a pretty extreme view.”

Then, after diving further into the topic over the last week, I ended up advocating for some of the reforms the “defund the police” activists are calling for yesterday.

Abby from Chicago wrote in to take issue with my comparing phrases like “all cops are bastards” and “defund the police” to “Mexicans are rapists” or “illegal immigrants are criminals.” She said, “You can't pretend ‘defund the police’ is remotely on the same level and needs to be condemned like those statements.”

This was sloppy writing, but to be clear: my point was that reductive political slogans like “all cops are bastards” or “defund the police” are similar in complexity to “illegal immigrants are criminals,” not equally morally repugnant. I think a better example would have been comparing “defund the police” to “build the wall.” Either way, I was hoping to make the point that there's a lot more beneath the surface.

Mike — a paramedic in training from Deerfield Beach, Florida — wrote in to express skepticism about sending paramedics or social workers onto the scene without police. “In training, we’re taught that domestics are the most dangerous calls,” he said. Even calls with someone who is just really drunk can go south quickly, he added, explaining that he needs to see specific policies for handling those situations from the people calling to defund the police before we “start sending social workers to a scene where they may have to deal with a 6’4”, 300-pound man in the middle of a psychotic episode and no police in sight.”

5 quick hits.

  1. Democratic presidential candidate Joe Biden says he doesn’t support defunding the police. Biden’s comments came after calls and debate grew on the left about defunding or abolishing the police, which Tangle covered yesterday. "I support conditioning federal aid to police based on whether or not they meet certain basic standards of decency and honorableness. And, in fact, are able to demonstrate they can protect the community and everybody in the community."
  2. President Donald Trump plans to bring back his campaign rallies in the coming weeks, sources say. The president believes massive protests in recent weeks will insulate him from criticism on the left and his campaign manager is already laying out plans — and shopping locations — to host the rallies. The packed arenas are one of Trump’s favorite ways to connect with supporters, but epidemiologists have cautioned that they could lead to huge outbreaks.
  3. Sen. Tom Cotton (R-AR) has made it clear he is enjoying the fallout from his Times op-ed. He’s raised roughly $200,000 since the op-ed controversy, done a round of press tours and is planning to use the money to run ads against Joe Biden. Cotton’s name is even being floated as a possible 2024 presidential candidate.
  4. President Trump’s polling has become dire. His approval rating has fallen 12.7 percentage points among registered or likely voters, down from 6.7 points on April 15th, according to FiveThirtyEight. Even Rasmussen, Trump’s favorite polling outfit, has his approval rating down six net points to 44-55. Trump had hired an outside polling outfit to criticize the negative polls about him, but new numbers — even from usually favorable polling places — paint a bleak picture.
  5. Sen. Chuck Schumer (D-NY) has called for a Department of U.S. Labor investigation into Florida’s bungled unemployment response. Florida has struggled to process 2.4 million unemployment claims in a way other states haven’t — it’s been the slowest state to process the claims and was the only one to see its trust fund for paying unemployment increase. Just 1.2 million people have seen benefits and systemic problems still exist. Many Floridians have only been paid a fraction of what they’re owed. Florida Gov. Ron DeSantis said Schumer was playing “partisan politics.”

What D.C. is talking about.

The economy. Last week, a surprise jobs report sent D.C. into a tizzy. The U.S. unemployment rate officially fell from 14.7% to 13.3%, and 2.5 million jobs were added. This stunned economists and politicians, who in the first few minutes after the report was released struggled to explain it. Restaurants and bars alone added 1.4 million jobs as people came back to work.

Stocks surged on the news. President Trump celebrated and quickly leveraged the numbers as a talking point that the economy was roaring back. Senate Majority Leader Mitch McConnell (R-KY) declared that “the economy has bottomed out.”

Meanwhile, economists from the Labor Department cautioned that data collection challenges and errors may be muddying the waters. A footnote in the report says a survey of houses showed a large number of workers who were “employed but absent from work,” and many of them should have been counted as a temporary layoff. That could have bumped the May unemployment rate from 13.3% to as high as 16.3%.

And remember: all of this is historic. April’s 14.7% was a post-World War II high. Employment was down 20 million jobs since February. By comparison, the U.S. lost 9 million jobs between December of 2007 and February of 2010, in what is now dubbed “the great recession.” We just lost twice that in a matter of months.

Then, yesterday, the National Bureau of Economic Research said that COVID-19 had officially caused a recession, ending the longest economic expansion on record. All of this is unprecedented, and the latest jobs report comes as Congress debates what to do with the next package of aid. Democrats have already passed another bill in the House, worth an additional $3 trillion, that extends the $600 federal unemployment bonus through January and sends another round of stimulus checks, among many other provisions. Republicans have called it a “liberal wish list” and turned it down out of hand, but have yet to produce a bill of their own.

What the right is saying.

Senate Republicans are in no rush to hand out more COVID-19 relief. The surprise jobs report left a lot of Republicans betting big on the economy, and the fact that all of the first $3 trillion of coronavirus relief hasn’t been spent yet is keeping them noncommittal. Most Republicans are saying it’s only responsible to wait and see how that money impacts things. Politico reports that bipartisan talks for a second round of aid have not even begun yet.

“The biggest takeaway is that the ~2.7 million people who self-identified last month as ‘temporarily laid-off’ appeared to be right, and the dozens upon dozens of economists, experts, and analysts who sympathetically patted them on the head last month, saying, ‘There, there, it will be okay’ while assuring us those folks were all sitting ducks in a post-COVID economy where no one would ever go out to eat again were, well, wrong.  Really, really wrong,” David L. Bahnsen said.

Those 2.7 million temporarily laid-off workers were also aided by the Paycheck Protection Program, a major score for the government’s response. “This isn’t the moment, however, for Congress and the administration to relax,” Brent Orrell of the American Institute said. “Instead, they should maintain and improve policies that appear to work both for keeping people safe and getting them back to work.”

One big concern for Republicans is the $600 federal unemployment bonus, which is supposed to expire in July. A recent CBO report says 5 out of 6 recipients are making more money by not working than they were by working (with state and federal unemployment combined). A University of Chicago study had a similar conclusion, estimating 68% of “unemployed workers eligible for benefits would actually suffer income losses by returning to work.” That’s not how things are supposed to work — and while Democrats are pushing to extend that bonus through January, Republicans are reluctant.

All of this, of course, comes after a “limited economic reopening.” That has a lot of Republicans asking: what will happen if the economy comes back full throttle, especially when urban areas begin to reopen restaurants and bars?

What the left is saying.

We’re in uncharted territory — and Americans need direct relief. One month of a positive jobs report is no reason to put an end to the government’s COVID-19 response. Close to 14% of the country is unemployed, more than 100,000 Americans have died and we are looking at a labor force in worse shape than anything we’ve seen since the Great Depression. Even if restaurants and bar jobs come back, most will be operating at half capacity — an untenable situation in a sector with already thin margins.

The “saving grace,” Paul Krugman said in The New York Times, is that unemployment has mostly hit “contact-intensive” sectors and the economic hardship is not nearly as bad as you might expect given the unemployment numbers. That’s because of the government’s response, not in spite of it. Federal support has given Americans without jobs disposable income and given businesses incentives to keep people on the payroll. If we pull that support in August, we’ll see the worst of the economic hit by the fall.

In The New Yorker, Eric Levitz agreed with Brent Orell’s assessment that the PPP program is “doing its job,” but he took the argument to the next level, saying that means all of those jobs that were protected and saved by the PPP are still at-risk. If we let it expire in July, those jobs could disappear with it — especially given how few cities will be fully operational by the end of the summer.

Plenty of Democrats are also reminding us about COVID-19. Remember that? Cases are up in 19 states — and there are early signs of spikes in places like Florida, Arizona and Texas, where reopenings happened hastily. If there is another outbreak, or a package for bringing America back to work that doesn’t include funding for things like tests and contact tracing, we’re in big trouble.

My take.

It’s tough to describe the absurdity of this moment, but I’ll try: The stock market is convulsing in record surges and plummets. Nearly 14% of the country — the highest percentage since the Great Depression — is unemployed, yet 4 out of 5 people receiving unemployment are doing better (financially) than they were before the crisis. In the same weekend that a “stunning” and “great” jobs report was released, showing unemployment shrinking and more than two million jobs brought back, we officially entered a recession. Then the market had a record surge. The stock markets have recovered nearly all of their losses from March, yet, employment numbers have recovered just an eighth of the job losses since then.

Or, take this, from Derek Thompson at The Atlantic: “The economy added the most jobs in history in the same month that economists predicted it would lose the most jobs in history. These expert forecasts weren’t off by a hair, or an arm’s length, or any remotely anthropomorphic margin. They were off by more than the civilian labor force of New York State.”

Given all this, it’s tough to make sense of what will work and what won’t. There’s an old joke about how economists are the only people paid to constantly be wrong — and the pandemic has only worsened the prediction market.

The complexity of the PPP program and keeping small businesses afloat is a debate Congress needs to have. What’s clear to me, though, is that we can’t simply rip the rug out on the unemployment benefits this summer. The right’s concern about “negative incentives” to return to work is an important concern, and it’s shared by many on the left. But it was also the point: we needed people to stay home.

As Alan Binder laid out in The Wall Street Journal, we can neither let the federal unemployment benefits expire nor keep them as they are. I share that assessment. 13% unemployment is unthinkable, and Congress needs to move now if they want to get something done. Historically speaking, there’s significant precedent for major federal benefits when we have double-digit unemployment. The Senate has another two week recess after July 3rd, and if they don’t start negotiating now there won’t be any time to get something in place by the end of July.

Binder offers two compelling ideas: one is raising the “replacement” rate across every state. In most states, you get unemployment benefits as a percentage of your previous income. So if you make $40,000 a year in a state with a 50% replacement rate, your unemployment benefits will be approximately $20,000 a year (generally speaking).

Binder says we should bump the replacement rate by a certain percentage across states, that way people are still receiving more unemployment benefits than they would in a normal time but we’re not spending quite as much government money — or inducing people to stay home.

His other suggestion is “universal hazard pay” or a “back to work” bonus. He doesn’t price this out, but I’m not a big fan of it anyway — given the pandemic, some people can’t and shouldn’t be motivated back into crowded workplaces (yet). Still, both of these ideas seem like better solutions than to do nothing or leave it as it is. And what’s clear is we need Congress to strike a deal and update the aid package they’ve already delivered. Letting it expire in the midst of an economic catastrophe and global pandemic would be an unfathomable dereliction of duty and a potential economic and healthcare disaster.


Every few weeks, I try to run a new Tangle poll — then I share some of the data with my readers. If you want me to be able to reply to your feedback, be sure to fill out the *optional* section to leave your email. And please only take the poll once!

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Your questions, answered.

Reminder: reader questions are one of my favorite parts of Tangle. If you have something you want to see in the newsletter, simply reply to this email and write in. I’ll try to get to it as soon as I can.

Q: Can you explain the nuances between the third-degree and second-degree murder charges for Chauvin?  I’ve heard fear expressed around the idea that it might actually be easier for Chauvin to be acquitted on a second-degree murder charge since it’s harder to prove guilt.

— Kathleen, St. Louis, MO

Tangle: The fear is well-placed and the updated charges are significant — but the difference may be less pronounced than people think. First, the outlines: Derek Chauvin was initially charged with third-degree murder and second-degree manslaughter. The latest is a new charge, not a change in the charges against him. And that’s an additional charge of second-degree murder, brought forward by the new prosecutor Keith Ellison. That’s pretty common in situations like this — prosecutors often lead with the lesser-degree charge and then add more serious charges as they build their case.

Most of the public fear stems from two misunderstandings: one is that the charges against Chauvin were changed (as opposed to being added) and the other is a misunderstanding that a second-degree murder charge must include proof of intent. Neither of those things is true. The law varies state-by-state, but we should just be talking about Minnesota here.

Minnesota statute 609.19 says a second-degree murder can be intentional or unintentional. An example of an intentional second-degree murder charge would be a drive-by shooting where the offender was trying to kill someone but there was no premeditation or plan. An unintentional second-degree murder charge may be a scenario where an armed robbery goes south and someone is shot. A third-degree murder charge is rare and describes an unintentional killing but relates to a reckless act that would endanger someone so much so that they die.

Directly related to Chauvin, each of the charges brought against him — from murder to manslaughter — concedes that Floyd’s death was unintentional. The third-degree murder charge only needs to prove his act was so dangerous that it caused his death — or was an act taken with disregard for human life. It is called a “depraved mind” murder charge and vaguely insinuates a higher degree of risk and harm on Chauvin’s part.

Second-degree manslaughter is only different from third-degree murder in that it’s defined as an unintentional killing from the reckless act. Some people are charged with manslaughter, for instance, if they kill someone while driving drunk. The distinction between the two is tough to parse, so it’s not surprising it is causing public confusion.

The additional second-degree murder charge is felony murder. This is a law in Minnesota that allows someone to be charged with felony murder if they are committing felony conduct that results in someone’s unintended death. The charge assigns a certain level of malice while also acknowledging there was no evidence of intent to kill. I interpret this as meaning that Chauvin could be charged with second-degree murder if the jury decides he had malicious intent to hurt, assault or otherwise abuse Floyd, but did not intend to actually kill him.

Again, your confusion is not unique. Even Minnesota courts have called a second-degree murder charge an “anomaly” in homicide law because it assigns malice from “crimes qualitatively different from and far less severe than murder”  but not intent to kill — a really difficult distinction for a jury or court to make.

Typically, a felony murder charge includes a predicate like rape, arson, mayhem, robbery, or burglary. But Minnesota has actually expanded the reach of felony murder recently, so that it now includes any “felony offense other than [first and second degree] criminal sexual conduct ... or a drive-by shooting.” The predicate felony in the case of Floyd and Chauvin is third-degree assault.

Of course, the odds of Chauvin being charged with murder are low. Since 2005, 98 non-federal law enforcement officers have been arrested in connection with fatal police shootings. Only 35 were convicted of a crime, and typically it was a lesser offense like the manslaughter or negligent homicide charge (read: not murder). When civilians are defendants, prosecutors win trials or secure guilty pleas upward of 90% of the time. Data on police standing as defendants is hard to find and hard to parse, but some estimates say they are convicted or secure guilty pleas about 70% of the time (that’s for all crimes — not just things they do while on duty, which is presumably much lower).

All this is to say, statistically speaking, the odds of Chauvin being charged with anything are less than 50-50. The odds of him being charged with second or third-degree murder are much lower — but Ellison’s decision to go for a murder charge shouldn’t put a conviction of the lesser charges in danger.

A story that matters.

New cyber threats are bearing down on our elections as many states are moving to implement online voting amidst the pandemic. While mail-in voting fears have been hyped by the president, experts say the far greater threat is a shift to experiment with online voting. The Department of Homeland Security deemed online voting “high risk” in a report last week, citing the threat from outside hackers in countries like Russia as well as hackers here in the U.S. Even online voter registration is a huge problem and has become a major focus for Homeland Security. Internet voting in Delaware and West Virginia is already raising concerns and court challenges, and there are less than 150 days until election day. Click.


  • 60.2%. The percent of the U.S. population that is white.
  • 61.5%. The percent of the U.S. law enforcement population that is white.
  • 12.3%. The percent of the U.S. population that is black.
  • 15.5%. The percent of the U.S. law enforcement population that is black.
  • $1,250,000. The bail set for Derek Chauvin, the former Minnesota police officer charged with murdering George Floyd.
  • 37%. Among those who chose Joe Biden over Donald Trump in a recent CNN poll, the percentage who said their vote was more a vote for Joe Biden than a vote against Donald Trump.
  • 70%. Among those who chose Donald Trump, the percent who said their vote was more a vote for Donald Trump than a vote against Joe Biden.
  • 60 million. The number of COVID-19 cases prevented by the shutdowns, according to a new study.
  • 0.000025%. The percent of votes that are “double votes” or cast on behalf of dead people, according to a new Washington Post analysis.

Have a nice day.

Yesterday, New York City took a major step toward reforming its policing laws by banning chokeholds and repealing a decades-old statute that effectively hid the disciplinary records of police officers from public view. The statute had made it impossible for victims of police abuse to know if the officer involved had a history of breaking the law. The new legislation marks the most significant reforms in a city that has long been held back by the political power of police unions. These kinds of reforms qualify as “good news” because they are supported by an overwhelming number of Americans. Click.

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