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Today’s read: 10 minutes.
The debate over unemployment benefits, a question about the civil unrest and an important story about manufacturing jobs.
Democratic House Leader Nancy Pelosi, who many view as being in control of the coronavirus package negotiations. Photo: Flickr / Gage Skidmore
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- The New York prosecutors trying to get their hands on Trump’s tax records have also subpoenaed Deutsche Bank, the president’s longtime lender. The subpoena means the criminal inquiry into Trump and his businesses is much broader and more wide-ranging than previously understood and comes just after another filing that referenced “public reports of possibly extensive and protracted criminal conduct at the Trump Organization.” Deutsche Bank has lent Trump over $2 billion in the last two decades, and this is the first time a criminal complaint has involved the German bank.
- Despite record levels of federal aid, farmers across the United States are still declaring bankruptcy in the midst of the coronavirus pandemic. Bankruptcies are up 8% amongst farmers in the last 12 months, and 580 farmers filed for bankruptcy in the last year. Meanwhile, the Trump administration is expected to give a record $33 billion of agricultural relief this year, accounting for 36% of farm income, the highest share in two decades.
- New York City Mayor Bill de Blasio said he is setting up “traveler registration check points” at bridges and tunnels for people coming into the city to stave off coronavirus. But images of police checkpoints are misleading. More likely, the city will be informing travelers about quarantine rules as they come into the city. In Los Angeles, Mayor Eric Garcetti announced Wednesday that he will authorize the city to shut off water and power in a resident’s home if they have a house party, particularly if there have been repeated complaints of large gatherings at the home.
- Rep. Rashida Tlaib (D-MI), one member of the “squad” of four female women of color in Congress, successfully defended her House seat for the first time yesterday. She won in convincing fashion over the more moderate Detroit City Council President Brenda Jones. Tlaib’s win comes after the shocking victory for Cori Bush in Missouri, marking a strong week for progressive candidates who are rejecting corporate super PAC money and calling for Medicare for All, more police reform and a large government response to climate change.
- Republican strategists in about a half dozen states are trying to help Kanye West get on the ballot, according to a New York Times report. The effort became overt on Tuesday when Lane Ruhland, a lawyer who has worked for the Trump campaign, was seen delivering ballot signatures to Wisconsin election officials on behalf of the West campaign. Similar interactions have now been recorded in several states across the U.S. West’s wife, Kim Kardashian, says her husband is struggling with mental illness. West has been an outspoken supporter of President Trump, though that support has wavered in recent months.
What D.C. is talking about.
The COVID-19 stimulus package. Democrats, Republicans and the White House can’t seem to reach a breakthrough in negotiations over the second coronavirus stimulus. In March, Congress passed the CARES Act, which allocated $2 trillion of spending. Americans making less than $75,000 a year were sent $1,200 checks. The federal government funded a $600 per week “enhanced unemployment benefit” and — for the first time — included gig workers and freelancers in unemployment. Around 30 million Americans were receiving the enhanced unemployment benefits on top of state unemployment.
That bill also set up the Paycheck Protection Program (a loan program for small businesses), sent hundreds of billions of dollars to hospitals, and provided more than $300 billion to state and local governments, among other things. Democrats in the House of Representatives passed a second, $3.5 trillion bill in May. Senate Republicans proposed their own $1 trillion dollar bill a few weeks ago — meaning the difference between the two bills is larger than the original $2 trillion in the CARES Act, the largest stimulus in American history.
Both sides have already agreed to send out another round of $1,200 checks. They’re now debating over how much money to give the Postal Service, whether state and local governments should get additional funding to cover budget shortfalls, funding for the elections, reopening schools and how to extend eviction moratoriums. Republicans also want a liability shield for businesses, schools and churches that operate during the pandemic. The White House has threatened to use executive action to address unemployment benefits and extend an eviction ban if the two sides can’t agree on something by tomorrow.
But the biggest, most important sticking point on the bill being negotiated now is whether and how to extend the enhanced unemployment benefits, which expired last week. Republicans had initially proposed a $200 federal enhancement on top of state pay, but Democrats are sticking to their bill’s extension of $600 a week. Now Republicans have moved their offer up to $400 — but Democrats still haven’t budged. I’m going to focus mostly on this enhanced unemployment benefit today because it’s the single most important thing that needs to get resolved for a deal to happen.
What the right is saying.
The right supports enhanced unemployment benefits, just not at the $600 a week level. In The Washington Post, Marc Thiessen made the case that there’s an economic consensus here: we can’t end the benefits with no replacement, but we can’t continue the program in its current form either. 60 to 70 percent of the 30 million Americans receiving unemployment are making more than they did when working — the bottom 20% are making, on average, double (according to a University of Chicago study).
“The federal supplement did not affect employment during the lockdown, because the economy was shut down and there were no jobs available,” Thiessen said. “But now that businesses are reopening, employers trying to rehire workers are finding that they can’t compete with enhanced unemployment. Nearly 1 in 5 small businesses report that they have had an employee turn down a job offer to remain on unemployment.”
Thiessen pointed to a plan proposed by former Obama treasury secretary Timothy Geithner, which caps the supplement at $400 a week and ties it to a state’s unemployment rate. Once a state’s unemployment rate is below 7%, the benefit stops.
The Wall Street Journal editorial board said it’d be bad politics to give Nancy Pelosi what she wants and split Republicans in the process. Instead, it suggests Trump press his own economic agenda, let Pelosi reject it, and then take that to voters in November.
“On jobless insurance, Mr. Trump and Republicans can keep offering an alternative of $200 a week plus the current state benefits; this is still generous,” the board said. “Extend the duration of enhanced benefits for those who can’t find a job, rather than increasing the disincentive not to work for those who can get a job.”
Matt Weidinger made the case in USA Today that Americans don’t even want the enhanced unemployment benefits. 58% said it should expire in August, while 62% said the benefits discourage people from going back to work. Even among unemployed Americans, 46% said they’d avoid returning to work if the benefits continue past July 31.
“That’s why Senate Republicans propose reducing bonuses to generally $200 per week in the months ahead (some states might provide more, but benefits would still be less than earnings),” he wrote. “The $200 bonus is still generous; it is eight times the $25 bonus included in the 2009 Obama stimulus plan… Paid in addition to state unemployment benefits averaging $342 per week, the resulting $542 per week average offers unemployed workers more than they have ever received previous to the pandemic.”
What the left is saying.
Democrats in Congress aren’t budging, and there are plenty of columnists defending them. The $600 weekly benefit is a product of the situation we’re in: most states’ unemployment programs replace only 40% of wages. So Congress wanted to fill that replacement out because of the breadth of this economic crisis. Since many states’ unemployment systems are “ancient and decrepit,” though, Congress couldn’t simply target state-specific wage replacement. Instead, they settled on $600 a week because it would make the average worker “whole.”
Peter Ganong, a co-author of the University of Chicago study, pushed back on Republicans’ attempt to use his study to claim it created disincentives to return to work. “Their research did calculate that the median wage replacement rate is 134 percent (so, yes, more than the typical worker used to earn), but, crucially, the study did not look at whether these more-generous benefits discouraged work,” Catherine Rampell noted in The Washington Post.
But five studies by top economists have explored that idea, and they all concluded the same thing: a $600 federal unemployment supplement did not appear to depress job growth. One study noted that in June, “around 70 percent of unemployment recipients who resumed working had been receiving more from benefits than their prior wage — yet nonetheless returned to work.”
Others have made the case that the $600 unemployment checks are one of the best kinds of stimulus the government can offer. 70% of our economy is consumer spending, and those making more than they did before the pandemic are putting that money back into retailers, landlords and other businesses, which helps them to stay afloat. “This powerful and ongoing jolt would help revive the economy – or at least keep it alive – as well as offset worries that economic inequality will soar as a result of the pandemic,” David Salkever said in Salon.
The USA Today editorial board landed somewhere in the middle. It suggested keeping the $600 weekly benefit but with a clear path that reduces the benefit over time, or pegging the benefit to a national or state unemployment rate.
If anything could make an American cynical about the way Congress functions, these latest negotiations are it. 30 million people are claiming unemployment, over 158,000 have now died of COVID-19, hardly any businesses have been untouched by the pandemic and yet — here we are. Mired in political mud.
First, Democrats passed a bill back in May to address what they knew would be a long summer and a needed extension of benefits and stimulus, given the pandemic’s worsening trends. The bill, naturally, was stuffed with progressive wishes that were either unrelated to COVID-19 or they knew had no chance of passing. That’s normal, and most first bills are similar — a starting point for negotiations.
But Republicans sat on the bill for months. They cheered on one decent looking jobs report and even, for a moment, entertained the idea that no further stimulus would be needed. It took until early July for them to get serious about drafting their own legislation.
Then, they spent two weeks trying to get on the same page as their Republican leader: President Trump. This was a bad sign from the start. How could Democrats and Republicans hope to get to a deal done if Republicans and Republicans couldn’t?
But the lack of urgency seemed to spread. Republicans actually tried to stave off the expiration of enhanced benefits by offering to extend them for one week while negotiations continued. Nancy Pelosi, though, understood she had the upper hand and was laser focused on defeating Trump and McConnell. So instead of accepting an extension and preventing a gap in benefits for unemployed Americans, she cynically chose to win.
Republicans deserve credit for moving to the middle. They offered a $400 benefit that phases out gradually as a replacement for the $600 benefit we just had for most of the spring and summer. That’s smack dab in the middle between the $200 and $600 each side started at, and Democrats may be wise to take it and get this relief out as soon as possible.
On the other hand, there’s little evidence that reducing the benefit will help anyone. Republican claims that the benefit will keep people from going back to work counter Democratic claims that it hasn’t to this point. The two sides are talking past each other. One’s arguing about what might happen while the other argues about what has happened. The Congressional Budget Office, a non-partisan group both sides love to cite when it supports their narrative, says keeping the benefits in place through 2021 will lower overall employment. That’s an important data point to consider.
The reality seems to be that these benefits are keeping families from going hungry, keeping consumer spending (and therefore the economy) alive and keeping those who are vulnerable to COVID-19 from rushing back into a low wage job that could kill them. The fact that so many millions of Americans are making more (or double) than what they were before the $600 a week in federal unemployment is much more an indictment of the wages we pay workers and the conditions much of the country is living in than of the benefit itself.
The pandemic isn’t going anywhere, but this kind of money can’t be spent in perpetuity and we can’t bring back an economy based on consumer spending that’s only a product of unemployment benefits. Congress should extend the $400-$600 benefit with a firm deadline for slowly phasing it out this fall. Give workers and businesses an opportunity to plan for what’s coming, give Americans a chance to plan, and keep things from cratering in the short-term while we crawl back to normalcy.
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Your questions, answered.
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Q: After seeing the unrest amidst a pandemic and thinking and reading NYMag Intelligencer interview of David Shor, what do people think of the idea that the unrests were a very planned part of the 2020 election campaign by Democrats? Keith Ellison is a DNC insider, etc. No doubt both parties have dirty tricks but this seems particularly diabolical.
— Anonymous, Palo Alto, California
Tangle: The David Shor interview in NY Mag is fascinating, and I highly recommend reading it if you haven’t yet. For those not familiar with Shor, he’s the data scientist who was recently fired after tweeting out a study that concluded nonviolent demonstrations were more effective than rioting to sway public opinion in 1968. Shor signed an NDA, so nobody really knows if this tweet alone was how and why he was fired, but Twitter blasted Shor for being insensitive and he ultimately lost his job shortly after the tweet.
Since then, the self-proclaimed “Marxist” and “socialist” has become an example of cancel culture the right cites, which is ironic. But he’s also a brilliant, experienced pollster with deep knowledge of, and some really interesting things to say about, the 2016 election and the state of politics.
Anyway, Shor’s interview doesn’t really touch on the crux of your question: which is whether civil unrest was “planned” as part of a 2020 campaign by Democrats. I appreciate any kind of skepticism around dirty political tricks, but I don’t think there’s anything to this — and I don’t think Keith Ellison’s position in the Democratic party is relevant at all.
Conservative commentator Candace Owens, who is Black, recently went viral for admonishing Black Americans for making George Floyd a hero. She criticized them for martyring someone who had a criminal record, was a drug user, and clearly couldn’t avoid getting in trouble with the law. I thought Dave Chappelle’s response to Owens was beautiful and poignant: he said we didn’t choose George Floyd, the police did. It was the cops who knelt on his neck for eight minutes, not the activists calling for police reform, who picked Floyd. The rest was the result of their decision.
I think the same logic applies here. Democrats were not pining for weeks of civil unrest in the middle of a pandemic, progressive activists just finally snapped under the weight of so many horrific and egregious stories. First, it was Breonna Taylor being killed in her own home on a shoddy warrant, then Ahmaud Arbery being chased down and killed by civilians, then the officers who killed Elijah McClain in 2019 were reassigned, then Floyd was suffocated on camera in May.
And while the public’s opinion of police and Black Lives Matter has moved to the left in recent weeks, there’s also little reason to think the events of the last few months will help Democrats much anyway. The protests may galvanize the Democratic base, but that was already happening thanks to Trump. And the right has used incidents of violence, rioting and looting to try to convince their own voters that a mob is coming to destroy their towns and abolish their police departments. For Democrats in Congress, that’s a nightmare scenario: they know “abolishing” or “defunding” the police is bad politics right now and bad for their election prospects. So why would they organize this kind of unrest?
In short: there’s a lot of dirty politics happening everywhere, but the civil unrest is not a Democratic plot — it’s simply the people, making their voices heard. Shoot, Democrats have no control over the activists and progressives in the street. Many of those activists are critical of the Democratic party too. They have shamed and shunned Democratic leaders and are calling for far bolder reforms than establishment Democrats are willing to embrace.
The truth is the civil unrest we’re seeing is the result of months and years of viral video footage showing police using excessive force. The breadth of the issue, the degree to which it’s driven by racism, and the solutions for it are all things worthy of robust debate. But the idea that this unrest was “planned” or part of an election campaign in 2020 doesn’t pass a basic sniff test.
A story that matters.
Struggling U.S. manufacturers are making a pivot into something they know will be good for business: masks. With states and cities instituting mask mandates to get businesses and schools open, manufacturers facing reduced sales are abandoning their previous plans and getting in the mask business. “Companies are stitching them on repurposed manufacturing lines in New England and 3-D printing them at workshops in California,” The Washington Post reports. “Hundreds of Etsy entrepreneurs have stopped sewing bags and table linens and switched to full-time mask production.” For many companies, the mask demand has been a lifeline in a time of economic hardship.
- 115. The number of hand sanitizers that the FDA told consumers to avoid due to inadequate levels of alcohol or for containing methanol.
- 58%. The percentage of Americans who approve of the way the Supreme Court is handling its job.
- 60%. The percentage of Republicans who approve of the way the Supreme Court is handling its job.
- 56%. The percentage of Democrats who approve of the way the Supreme Court is handling its job.
- 42%. The Supreme Court’s approval rating in the same poll in 2016.
- 30%.The percentage of Americans who think coronavirus/disease is the most important problem facing our country today.
- 45%. The percentage of Americans who thought coronavirus/disease was the most important problem facing our country in April.
- 51%. The percentage of registered voters who know someone who has been infected with coronavirus.
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Rates of dementia are falling in the U.S. and Europe, despite lack of treatment, a new study found. The risk for a person to develop dementia is 13% lower than it was in 2010 and rates are dropping at every age level over the last 25 years. If the trend continues, 15 million fewer people will have dementia in the U.S. and Europe than there are right now. One leading hypothesis for why the decline is happening is better control over cholesterol and cardiovascular diseases, which have been associated with high blood pressure that can cause brain disease. Some also speculate that improved education is helping expand the brain’s capacity.