Dems Ignoring The Failures Of Their Partisan Spending Bill In Their Rush For Another

As Democrats Attempt To Force Through Another Partisan Reconciliation Spending Bill, The Track Record Of Their First One Is Poor: A Massive Labor Shortage Fueled In Part By Higher Unemployment Benefits, States That Didn’t Need Another Infusion Of Federal Money Swimming In Cash, And A Restaurant Relief Fund Beset By ‘A Cloud Of Errors And Confusion’


SENATE REPUBLICAN LEADER MITCH McCONNELL (R-KY):Recent headlines have reinforced a warning that Republicans and economic experts have been articulating for months: The massive spending Democrats insisted upon at the outset of the Biden Administration was not in step with actual needs…. I talked about some of the ways the multi-trillion-dollar spending spree rammed through in March has actually delayed our reopening and recovery… About the disappointing fall-off in hiring, despite an historic number of open jobs, after Democrats renewed a federal program that pays people extra not to work. Well, here’s another misplaced priority from that spending spree: Our Democratic friends’ insistence on stuffing another wheelbarrow of cash into the accounts of state and local governments that were already rebounding from the crisis! Back in February, as Democrats insisted states were in dire need of another huge bailout, 29 of the 50 states were actually closing a 12-month chapter in which their revenues met or exceeded the year before! The faster-than-expected economic recovery, combined with the five bipartisan bills Congress passed in 2020, left a lot of cities and states in even better shape exiting the pandemic than they were heading into it. Rising tax revenues had put these states in a position not only to weather pandemic-related downturns, but to fill in pre-existing budgetary potholes that had nothing to do with COVID hardships. But that didn’t stop Democrats from cramming nearly another $200 billion in state bailouts into the ‘American Rescue Plan’.… Experts warned it was poorly targeted. Republicans said American families deserved better. But the big catalog of political pay-outs was pushed through. Let’s remember exactly how this played out, before we’re doomed to repeat it.” (Sen. McConnell, Remarks, 5/18/2021)


Democrats Are Preparing To Install Julie Su At The Department Of Labor, Who Oversaw As Much As $31 Billion In Fraudulent Unemployment Insurance Claims In California

“California officials said [in January] they have confirmed that $11.4 billion in unemployment benefits paid during the COVID-19 pandemic involve fraud — about 10% of benefits paid — and another 17% are under investigation. … In addition to the 10% of benefits confirmed to involve fraud, the state is investigating another 17% of benefits involving suspicious claims that have not yet been proven to be fraudulent — about $19 billion worth. Officials said a large number of those claims could end up being fraudulent as well.” (“California Officials Say Unemployment Fraud Now Totals More Than $11 Billion,” Los Angeles Times, 01/25/2021)

“California Labor Secretary Julie Su’s admission that her department spent up to $31 billion on fraudulent claims for jobless benefits has collided with White House plans to tap her for a key labor post, creating a potential liability for her promotion to the federal stage.” (“California Unemployment Fraud Woes Complicate Su’s DOL Hopes,” Bloomberg Law, 01/26/2021)


Meanwhile, ‘Extended Unemployment Benefits And Relief Checks’ Continue To Be Cited As A Factor In A Labor Shortage That ‘Poses The Biggest Threat To The Economy’s Still-Nascent Recovery’

“A worker shortage plaguing businesses across the country poses the biggest threat to the economy’s still-nascent recovery from the coronavirus pandemic, according to a new report published [July 6th] by the U.S. Chamber of Commerce…. The Chamber estimated there are about 1.2 available workers per job opening; before the crisis, the ratio was hovering around 1…. ‘While some skills mismatches remain, the major problem is that the available workers are reluctant to go back to work, whether because of lingering COVID-19 concerns, childcare issues, or generous government benefits,’ Chamber economist Curtis Dubay wrote in a blog post.” (“Worker Shortage ‘Biggest Issue’ Facing US Economy This Summer, Chamber Of Commerce Warns,” Fox Business, 7/08/2021)

“More than nine million Americans said in May that they wanted jobs and couldn’t find them. Companies said they had more than nine million jobs open that weren’t filled, a record high. As the economy reopens, the process of matching laid-off workers to jobs is proving to be slow and complicated … The disconnect helps to explain why so many companies are complaining about having trouble filling open positions so early in a recovery. It also helps to explain why wages are rising briskly even when the unemployment rate, at 5.9% in June, is well above the pre-pandemic rate of 3.5%. The relatively high jobless rate suggests an excess of labor supply that in theory should hold wages down.” (“Job Openings Are at Record Highs. Why Aren’t Unemployed Americans Filling Them?,” The Wall Street Journal, 7/09/2021)

  • “Several factors are behind the development: Many workers moved during the pandemic and aren’t where jobs are available; many have changed their preferences, for instance pursuing remote work, having discovered the benefits of life with no commute; the economy itself shifted, leading to jobs in industries such as warehousing that aren’t in places where workers live or suit the skills they have; extended unemployment benefits and relief checks, meantime, are giving workers time to be choosy in their search for the next job.” (“Job Openings Are at Record Highs. Why Aren’t Unemployed Americans Filling Them?,” The Wall Street Journal, 7/09/2021)
  • “Other policies might be playing a role in driving labor market mismatch, most notably, federal jobless benefit programs and Covid-19 relief payments. Generous benefits might be slowing down the search of workers on the sideline. Among 24 states that have announced a June or July end to supplemental unemployment insurance benefits, the average unemployment rate in May was 4.4%. The rest of states and the District of Columbia set a later end to the program in September. The jobless rate on average in those states was 6.0% in May …” (“Job Openings Are at Record Highs. Why Aren’t Unemployed Americans Filling Them?,” The Wall Street Journal, 7/09/2021)

In Sector After Sector, Businesses Are Struggling To Find Workers To Fill Openings And Keep Up With Spikes In Demand

HOSPITALITY: “As COVID-19 restrictions loosen across the United States, the hospitality industry — which was walloped by the pandemic — is experiencing a new challenge: too few workers available to address soaring demand for dining out. A furious debate is underway over what’s behind the labor shortage, which is prompting restaurants to adapt by modernizing with kiosks and digital ordering. Many are biting the bullet and ponying up more in compensation just to attract employees. ‘A lot of us are paying over time,’ Laurie Thomas, executive director of the Golden State Restaurant Association, said in an interview with Yahoo Finance. Thomas, who owns two restaurants in California’s Bay Area, explains that her salaried managers and chefs are working six days a week, 12 hours a day. ‘People are just exhausted,’ she added…. The labor gap has become an acute problem for small and medium-sized businesses, which have to adjust hours and services, or pass along higher costs to consumers, which is putting upward pressure on soaring inflation. ‘If you don’t have folks in the kitchen to make the food, if you don’t have folks to be able to deliver and serve it, then you’re continuing to suffer financially,’ Thomas added.” (“‘Exhausted’ Restaurants Turn To Technology To Address Worker Shortages,” Yahoo Finance, 6/29/2021)

CONSTRUCTION: “[Matthew] Messer is the owner of New York Solar Maintenance, but these days he’s working right alongside his lead technician seven days a week as business booms. ‘This is not the perfect way to be spending my time right now,’ Messer says of his days spent up on roofs. ‘But it’s what needs to happen.’ That’s because Messer says he can’t find anyone to hire. His small business has three open roles, ranging from entry level to lead technician — one example of an industry-wide problem as a labor shortage meets increased demand.” (“America Desperately Needs 1 Million More Construction Workers,” CNN Business, 7/11/2021)

  • “New home construction and improvement are surging, thanks to the lack of inventory in a red-hot housing market and more people working from home. In an industry already short on workers before the pandemic, construction businesses will need to hire 430,000 workers this year and 1 million more over the next two years in order to keep up, according to Associated Builders and Contractors. ‘The phone is ringing off the hook,’ Messer said. ‘I am expanding as quickly as I can, but right now that’s governed by the amount of skilled technicians I can bring on.’” (“America Desperately Needs 1 Million More Construction Workers,” CNN Business, 7/11/2021)
  • “The construction industry shut down for a few months last year during the pandemic — but was quickly deemed essential, allowing paused projects to continue. But in that short time, the sector lost more than 1 million workers. The industry has recouped nearly 80% of its workforce since then, but is still down 238,000 workers from pre-pandemic levels as of June, according to the Labor Department. ‘We’re losing more people than we’re bringing into the industry,’ said Matthew Schimenti, owner of Schimenti Construction Company…. Schimenti Construction — which primarily works on commercial projects — has 20 open positions across all skill levels. They’ve even hired two internal recruiters just to look for talent. Commercial construction remained largely flat during the pandemic, but it’s expected to pick up as the US economy returns to pre-pandemic norms. ‘If we wished it was just a bad dream and it would go away and everybody would just come back— that’s not going to happen,’ Schimenti said.” (“America Desperately Needs 1 Million More Construction Workers,” CNN Business, 7/11/2021)

FARMING: “Farming in Pennsylvania is an $81 billion-a-year industry, according to a 2021 report from the Pennsylvania Department of Agriculture, yet many farmers say local workers aren’t interested in taking the jobs available. And the struggles have become that much harder since labor shortages have hit other industries as pandemic shutdowns ease. Those in the ag industry are competing with jobs in restaurants and warehouses that offer things that farmers can’t afford — like a bump in starting salary, a bonus just for applying, less labor intensive responsibilities and air conditioning. ‘It’s even more challenging now to find people who want to work on farms than it was before,’ said Jayne Sebright, executive director of the Center for Dairy Excellence, an advocacy organization based in Harrisburg.” (“Farm Labor Shortage Nothing New, Getting Worse, Farmers Say,” The Associated Press, 7/03/2021)

  • “At Vale Wood Farms in Cambria County [Pennsylvania], a group of high school kids is learning the right way to move a cow. The newest hires are getting up to speed — a process that could be more time consuming than usual this year, said Carissa Itle Westrick, the farm’s director of business development. After weeks of struggling to fill positions for full-time work with benefits, the farm decided to rely more heavily on part-timers. ‘Our sort of Plan B here is to hire a handful of high school kids looking for summer work,’ said Ms. Westrick.” (“Farm Labor Shortage Nothing New, Getting Worse, Farmers Say,” The Associated Press, 7/03/2021)
  • “No matter where their workers are from, many farmers said the recent trend toward rising wages for entry-level jobs is making it even harder to drum up interest. Those farmers looking to employ local workers find themselves competing against warehouse operators like Amazon that pledge a $15-an-hour starting wage or McDonald’s and other restaurants that are raising pay to attract more workers…. Farmers say they’re trying to keep up with the competition but don’t have the flexibility to make up for the extra expenses in other areas that some businesses do. ‘It’s not like we’re going to sell milk for $20 a gallon,’ said Ms. Westrick, from Vale Wood Farms.” (“Farm Labor Shortage Nothing New, Getting Worse, Farmers Say,” The Associated Press, 7/03/2021)

TRUCKING: “A shortage of truckers and replacement parts is persisting even as the economy looks to recovery. The Virginia Farm Bureau says farmers are producing plenty of products for interstate shipping, but it’s hard to find truck drivers to move them. According to a recent U.S. Department of Agricultural Marketing Service report, most shipping routes to major U.S. cities are operating with trucking shortages. Economists say COVID-19 pandemic-related fears reduced the workforce during 2020, and an interrupted global supply chain has resulted in fewer trucks and parts being available. The release adds that tightening federal regulations, driver restrictions, and increasing fuel prices are creating additional strain while the average trucker is getting older and few young people are seeking the job.” (“Issues With Trucker Shortage Lingering,” CBS 19 Charlottesville, 7/09/2021)

TECHNOLOGY AND TECH-ADJACENT BUSINESSES: “[T]here’s broad consensus that some sectors of the economy — technology, health care and tech-adjacent businesses such as insurance — face a genuine dearth of qualified talent…. Worker shortages are particularly acute in tech, where companies compete for workers who can take their skills anywhere. But technological proficiency isn’t a priority only in Silicon Valley, said CompTIA’s Kardel, whose employer is working with the U.S. Department of Labor to promote on-the-job learning. Employers who rely on technology — a group that includes most manufacturers, many retailers and the government — are chasing the same workers. ‘Tech is not only a vertical, it’s horizontal,’ Kardel said. ‘These jobs are part of companies we all rely on every day.’” (“Facing Skilled Worker Shortage, U.S. Companies Try To Train Their Own New Labor Pools,” The Hechinger Report, 7/01/2021)


‘Didn’t States Say They Were Broke?’: After Democrats Sent A Massive Bailout To Big-Spending States That Didn’t Need The Money, ‘Cash Is Raining Down On State Capitals’ Leaving State Lawmakers ‘Facing The Very Unusual Problem Of How To Spend Bundles Of Money’

“As the coronavirus tore across America last spring, elected leaders and economists feared the worst: the pandemic and resulting financial turmoil would devastate the budgets of states across the nation. Governors pleaded with Washington for a massive bailout…. Now, cash is raining down on state capitals as the economy rebounds faster than virtually anyone expected…. Governors and lawmakers, who months ago thought they would be making deep cuts to their budgets, are instead facing the very unusual problem of how to spend bundles of money. These state leaders, emboldened by the brighter tax revenues and the hundreds of billions of dollars provided by the federal government, are launching transportation projects, cutting stimulus checks and even paying down debt. ‘No one would have ever dreamed that we would have this kind of funding,’ said New Jersey Senate President Steve Sweeney, a Democrat whose state just enacted a budget with a multibillion-dollar surplus…. [F]rom coast to coast, governors and lawmakers who were preparing to make difficult, politically-challenging moves are now faced with a surprise windfall.” (“States Faced Financial Ruin. Now They’re Swimming In Cash.,” Politico, 7/07/2021)

Just As Republicans Warned They Would, States Used The Money To Bail Out Their Pension Programs And Found All Kinds Of Other Ways To Use The Slush Funds Like Distributing Checks To Voters In Advance Of Elections This Fall

“New Jersey had so much extra money that it not only made its first full payment into the state’s pension system in 25 years, but exceeded it by $505 million. That’s on top of earmarking $3.7 billion for debt relief and funding half a billion dollars in one-off spending initiatives.” (“States Faced Financial Ruin. Now They’re Swimming In Cash.,” Politico, 7/07/2021)

  • “New Jersey’s Gov. Phil Murphy, a Democrat, was among those who feared for the worst. In April 2020, Murphy met with then-President Donald Trump at the White House saying he thought the state would need anywhere from $20 billion to $30 billion in assistance. Months later, Murphy then struck a deal with New Jersey lawmakers to borrow some $4 billion to offset anticipated revenue losses from the pandemic. The state’s fiscal picture was steadily improving. Then in June, with weeks until the budget was due, state forecasters delivered an astounding report: New Jersey’s tax collection estimates had improved by about $5.2 billion, more than 10 percent of the final budget. The result was a flurry of behind-the-scenes haggling over how to spend the money. Some Democrats, whose party controls both houses of the Legislature, wanted to pay down the state’s bloated debt load or pay more into the pension system. In the end, they did both — delivering a $46.4 billion spending plan that earmarks $3.7 billion to pay down or avoid debt, a $6.9 billion pension payment and $500 million in ‘add-on’ spending requested by individual lawmakers.” (“States Faced Financial Ruin. Now They’re Swimming In Cash.,” Politico, 7/07/2021)

THE WALL STREET JOURNAL EDITORIAL BOARD:  New Jersey Gov. Phil Murphy last spring was projecting a $10 billion budget shortfall due to the pandemic. Now the state boasts a $10 billion surplus. Perhaps politicians in Trenton can now fund the new Hudson River train tunnel project? Nope. They’ll leave most of that to Congress. State revenues were already improving last fall as virus restrictions eased. But Mr. Murphy still insisted on raising taxes to gird for another Covid surge. Democrats increased the income tax rate to 10.75% from 8.97% on taxpayers making between $1 million and $5 million, raised the gas tax by 9.3 cents per gallon, and reinstated a 2.5% corporate tax surcharge. Tax increases combined with an improving economy, soaring stock market and a cash drop from Congress—$6 billion in budget relief alone—allowed Mr. Murphy on Tuesday to sign a budget with a record $46.4 billion in spending. That’s 20% more than the state’s pre-pandemic budget in 2019.” (Editorial, “Didn’t States Say They Were Broke?,” The Wall Street Journal, 6/30/2021)

  • “Now a drum roll for the budget winners. First, public unions. The budget provides a whopping $6.9 billion toward the state’s $128.3 billion unfunded pension liability. As we predicted, Democrats’ $1.9 trillion March spending bill was a bailout for blue state pensions. While the bill ostensibly prohibited states from depositing their booty into public pension funds, it freed up state revenue for pensions.” (Editorial, “Didn’t States Say They Were Broke?,” The Wall Street Journal, 6/30/2021)
  • “Next up: Potential Democratic voters. Couples making less than $150,000 with children will get $500 cash rebates this summer, ahead of New Jersey’s November election for Legislature and Governor. The budget also increases property tax rebates, expands the state earned-income and child-care tax credits, and creates tax deductions for college-savings plans, tuition and student loans. Rather than roll back last year’s tax increases, Democrats are sending checks to counter the state’s sky-high property and other taxes.” (Editorial, “Didn’t States Say They Were Broke?,” The Wall Street Journal, 6/30/2021)

“California Gov. Gavin Newsom, a Democrat facing a recall election in September, is using a surge of extra cash — more than $100 billion in surplus revenue and federal aid — to give stimulus checks to two-thirds of residents, build housing for people experiencing homelessness and provide Medicaid coverage for undocumented residents over age 50.” (“States Faced Financial Ruin. Now They’re Swimming In Cash.,” Politico, 7/07/2021)

“In North Carolina, the concerns are more terrestrial: The governor wants to direct $45 million in relief funds to motorsports, which took a hit when the pandemic halted NASCAR.” (“States And Cities Scramble To Spend $350 Billion Windfall,” The New York Times, 7/06/2021)

“Gov. Gretchen Whitmer is proposing a major investment in Michigan’s parks and trails … The governor wants to use $150 million in American Rescue Plan funds …” (“COVID Relief Funds Could Be Used for Updates to Michigan State Parks, Trails,” WXPR,  7/12/2021)

After The Biden Administration Began ‘Bending The Program’s Rules To Allow The Money To Be Spent Even More Broadly,’ Some Cities Went On A Spending Spree, As New York ‘Passed Its Largest Budget Ever’ And Philadelphia Is Considering ‘Universal Basic Income’ Welfare Payments

“The stimulus package that President Biden signed into law in March was intended to stabilize state and city finances drained by the coronavirus crisis, providing $350 billion to alleviate the pandemic’s effect, with few restrictions on how the money could be used…. Three months after its passage, cash is starting to flow … The administration … has begun bending the program’s rules to allow the money to be spent even more broadly. In May, the Treasury Department told states they could use their funding to pay for lotteries intended to encourage vaccinations. In June, Mr. Biden prodded local governments to consider using the cash to address the recent rise in violent crime, which his aides regard as a serious political hazard heading into the 2022 midterm elections.” (“States And Cities Scramble To Spend $350 Billion Windfall,” The New York Times, 7/06/2021)

“Last week, New York City passed its largest budget ever, about $99 billion, bolstered by $14 billion in federal pandemic aid that will be used in nearly every facet of the city’s finances. An infusion of cash will cover budget gaps and an array of new programs, including youth job initiatives and college scholarships, as well as allowing the city to set aside $1 billion in local expenditures for a backup fund.” (“States And Cities Scramble To Spend $350 Billion Windfall,” The New York Times, 7/06/2021)

“In Philadelphia, officials are considering using $18 million of the new aid to test a ‘universal basic income’ pilot program to help poor people. That is among the uses specifically suggested in the administration’s guidance. Several other big cities, including Chicago, are considering similar plans.” (“States And Cities Scramble To Spend $350 Billion Windfall,” The New York Times, 7/06/2021)

Other Localities Like ‘Affluent Chevy Chase, MD,’ Which ‘Was Mostly Insulated’ From The Worst Effects Of The Pandemic, ‘Are Struggling To Figure Out How The Money Can Or Should Be Used’

“Affluent Chevy Chase, Md., has one of the lowest rates of coronavirus infection in the Washington region. When shops and restaurants shuttered at the start of the pandemic, causing widespread layoffs elsewhere, most residents were able to telecommute. In a place where the average household income exceeds $400,000, there was no need for rent relief or food distribution hubs…. In the coming weeks, however, Chevy Chase is set to receive the same level of federal relief funding per capita as dozens of other municipalities hit far harder by the pandemic. According to early estimates, the town of 2,973 could receive up to $2.5 million, roughly equivalent to its entire annual operating budget…. [I]n communities like Chevy Chase, leaders are struggling to figure out how the money can or should be used …” (“Chevy Chase, Md., Was Mostly Unscathed By Covid-19. But It Could Get Up To $2.5 Million In Relief Funds.,” The Washington Post, 5/28/2021)

  • “When the pandemic hit, the town council moved most of its operations online without having to dip into its $10 million in general reserves, [Mayor Barney] Rush said. While the coronavirus ravaged more diverse, densely populated neighborhoods in Montgomery and Prince George’s, the town was mostly insulated, with residents who were able to access testing and, later, vaccinations, relatively easily…. So how is this town, where two-thirds of all adult residents have graduate degrees, planning to spend its federal dollars? Most likely on storm water drainage systems for its tree-lined roads and park.” (“Chevy Chase, Md., Was Mostly Unscathed By Covid-19. But It Could Get Up To $2.5 Million In Relief Funds.,” The Washington Post, 5/28/2021)


In Addition, The Restaurant Relief Fund Included In Democrats’ Partisan Spending Bill Was Plagued By ‘Thousands Of Grants Rescinded Because Of Policy Changes And Thousands More Stalled By Delays And Glitches’

“A $28.6 billion federal relief fund for restaurants and other food businesses closed on [June 30th] after running out of money, having fulfilled fewer than a third of the grant requests it received. The Small Business Administration, which runs the Restaurant Revitalization Fund, told unsuccessful applicants in an email that it was unable to fund all qualified applications because of ‘overwhelming demand.’” (“Restaurant Grant Program Ends in a Cloud of Errors and Confusion,” The New York Times, 7/01/2021)

“The restaurant fund, which opened in May, started off smoothly but was mired in turmoil in its final weeks, with thousands of grants rescinded because of policy changes and thousands more stalled by delays and glitches. Applicants awaiting decisions grew increasingly desperate as the remaining funding dwindled.” (“Restaurant Grant Program Ends in a Cloud of Errors and Confusion,” The New York Times, 7/01/2021)

  • “When Congress created the restaurant fund in March as part of the Biden administration’s $1.9 trillion American Rescue Plan, it ordered the Small Business Administration to put a priority on funding for businesses owned by women, people of color and military veterans. But with demand far outpacing the money available, that approach risked leaving all applicants outside the priority groups empty-handed. Several white business owners sued, and federal judges ruled that they were likely to succeed in proving their claims that the program’s policy violated the Constitution’s equal protection clause. In response, the S.B.A. ended the policy and rescinded the awards of nearly 3,000 priority applicants who had been told they would receive grants.” (“Restaurant Grant Program Ends in a Cloud of Errors and Confusion,” The New York Times, 7/01/2021)

“More recently, grants for an unknown number of applicants have been revoked because of errors.” (“Restaurant Grant Program Ends in a Cloud of Errors and Confusion,” The New York Times, 7/01/2021)

  • “Linda Novak, the owner of the Starlight, a cocktail and jazz bar in New Orleans, applied just hours after the program opened and received an approval notice on May 21 for a grant of around $300,000. She was told that the money would be in her bank account within a week. But it never arrived. In early June, she called customer service hotlines for her bank and the Small Business Administration. She eventually learned from her bank, Hancock Whitney, that it had rejected the deposit because it was improperly coded as being for a savings account.” (“Restaurant Grant Program Ends in a Cloud of Errors and Confusion,” The New York Times, 7/01/2021)
  • “Kylie Sachs, an owner of two cafes in Brooklyn called Milk Bar, has also been left stranded by errors she doesn’t understand. She applied for loans for each of her locations and received approval notices for both in mid-May. The money arrived quickly for one, but the deposit for the second never came through. She began calling the S.B.A.’s hotline every few days, and was told each time by agency representatives that there were some payment delays but that the money would arrive. Last week, she, too, got an email saying her grant had been revoked. Her application had an ‘invalid industry flag,’ the letter said, and would be canceled because of the lawsuits.” (“Restaurant Grant Program Ends in a Cloud of Errors and Confusion,” The New York Times, 7/01/2021)



Related Issues: Small Business, Jobs, Labor, Economy