U.S. Gov faces shutdown with DACA as bargaining chip

With the Friday night deadline looming over Congress, and the spectre that the U.S. government would effectively shutdown -- except for essential services -- looms largely as the lights burn late in Capitol Hill offices. Part and parcel of a permanent spending bill hangs on the slender threads of an agreement for the DACA kids, as they are known in some quarters, but in reality, young adults who came to this country as toddlers and most have attained education, and jobs, and nearly one-quarter have earned college degrees, despite not having access to the federal school loan programs. 

As a rider to the spending bill their fate also faces great political and even moral dilemmas for those that are deciding, mostly Democrats, whether they should vote for a bill that keeps the government open, and leaves no decision for the DACA kids, or includes them, but risks the inclusion of the president’s demands to build a wall at the southern border with Mexico. 

The wall notwithstanding, the White House also wants increased border security, an end to previous programs that extended immigration though lottery programs, that also included relatives, what the president refers to as chain migration, noted the Deputy Press Secretary Raj Shai in an interview with Chris Cuomo on his CNN program, "The President has been pretty clear about what it will take to get us to the next phase," he said, speaking on "Cuomo Prime Time." This week White House Chief of Staff, General John Kelly, said that a continuous wall across thousands of miles would prove impossible and that Trump was misinformed. 

The Administration also is asking for $18 billion in funding versus the $1.6 billion that is being proffered by the bipartisan proposal form by Sens. Lindsay Graham and Dick Durbin, of South Carolina and Illinois. Thursday saw the Rev. Samuel Rodriguez, an evangelical minister throw his support toHouse Minority Leader Nancy Pelosi for her continued support for these young people. Rodriguez who offered prayer at President Trump's inauguration, gave this unexpected show of support based on the needs of the 800,000 affected. "You have always taken the lead. Your commitment to the immigrant community to the 'Dreamers' is second to none. So America is in a better place because of your prophetic leadership on this matter," he said at a news conference Thursday. The fate of those who fall under the Deferred Action for Childhood Arrivals who could be deported to countries that they know little of, could happen sooner rather than later, but also face the near Byzantine machinations of the Trump administration, who has also asked that the Supreme Court of the United States, hear the DACA case, even as it is still in the circuit court, a previously unknown precedent,(called petition for certiorari in advance of judgement). 

This might allow the White House to circumvent a recent ruling, “issued last week by Judge William Alsup, ordering the administration to resurrect part of the DACA program and allow the 690,000 young unauthorized immigrants protected from deportation under the program when the Trump administration started shutting it down in October to apply for renewals of their two-year work permits,” reported vox.com.. 

The Administration in its own manner gave three conditions for revealing applications, at an individual cost of $495 dollars, before the March 5, 2018 deadline, of no renewals. As Vox said: “It took the administration less than five days to announce that it would begin to accept renewal applications for three broad categories of people who had already received DACA

● Immigrants whose work permits were set to expire after March 5, 2018 (who previously had been barred from renewing) 

● The 22,000 immigrants whose work permits expired (or are about to expire) between September 5 and March 5, who didn’t get the chance to renew in the narrow window DHS created in September 

● Immigrants whose work permits had already expired in the year before Trump wound down the program.” In this sense the Trump White House gave a partial restoration, that belies what the GOP called President Obama’s unconstitutional move, giving credence to the old adage that politics makes strange bedfellows. 

Judicial reality has shown that the earliest time that the case could be taken up is during the Court’s new term in October, and that a ruling might not come until June, at the earliest. On the presidential campaign Trump was not supportive of DACA, but then as president, we have been told that he has wrestled with the dilemma of the DACA youth, and wanted to be fair, yet his actions belie that narrative, as he has held firm to his base, and their mantra of “build the wall,” amid the chants of “USA! USA!” hovering in the background like a movie score. 

With the DACA fate as a bargaining chip, Trump, fresh from his only legislative victory with the tax reform bill is flexing his muscles to try and fulfill a campaign promise to satisfy them, and the agenda of division that he heralded on the trail, which has the support of such conservative personalities such as Dr. Laura Ingraham who has been quoted as saying: “The No. 1 reason I voted for him was for the immigration. I want the wall. I want it to be seen in space like the Chinese wall.” 

The issue which has for many become a cause celebre, like Ingraham, has a large racial component against Mexicans, but in fact, the reality is far different than the fears that are played upn. For all of the fear, the actual illegal immigration on the southern border has actually decreased from its peak in 2009, and went lower in 2015, as has the influx of unauthorized immigrants from Mexico, according to the Pew Research Center, who concluded that, “There were 11 million unauthorized immigrants in the U.S. in 2015, a small but statistically significant decline from the Center’s estimate of 11.3 million for 2009.” 

It’s going to get a lot rougher and the number one question is whether, the Dems can win playing by the rules; will Trump score a legislative victory by triangulation, that is by working with the Democrats, or will his base, fueled by the thundering, and condemning rhetoric of Ingraham and the redoubtable Ann Coulter, who in a Twitter rant, said, “At this point, who DOESN’T want Trump impeached,” survive unscathed, even in office. 

For the Dems, they face being blamed for a government shutdown, rather than Trump, yet there is another play that they could make, and that is let the government shutdown in the absence of either a temporary, or permanent fix; stand on the morality of the DACA issue and hope. But, that play may not be for the best, and some say, putting all of their political capital in one basket when they could play a stronger hand in March might be the better option. 

That could be gamble for the political gap between now and then, say other observers John Cassidy writing for The New Yorker, also on Thursday, noted that “The racist comments that President Trump made in the Oval Office last week have inflamed things further, and many Democratic activists are demanding that Schumer and other elected Democrats vote against the G.O.P. spending bill even at the risk of a government shutdown, which could happen as soon as this weekend. On Wednesday, three protesters from the Dream Action Coalition, a group that advocates for the undocumented, were arrested while demonstrating outside Schumer’s office in New York City, and there were more protests in Washington.” 

The stakes are at their highest, and the emotions that have boiled over can make this issue galvanize into even more, now, and certainly into the 2018 midterm elections, and if the Democrats capitalize on the “shithole” adjectives that the president used, they might have a chance, if only in the court of public opinion.  

December jobs report show wages still flat

Closing the year’s job outlook, was something that most economists, lawmakers, and even the president, were looking forward to. Many were anticipating a great report, if not outstanding, based on prior months. But, there was no joy in Mudville, when the December Jobs Report was released by the Bureau of Labor and Statistics (BLS) this past Friday, as it showed a disappointing 148,000 jobs created, versus an anticipated 190,000.

As often stated, success has many fathers, while failure is an orphan; yet this time around, some claimed paternity of sorts, while others abandoned the baby to the Christmas shopping season, that added, then subtracted its annual flow of temporary workers.

Others still were quick to reassure the public that this was not a time to panic, and reassured them that this was no time to panic, repeat -  no time to panic; and the same reassurance kept hitting the internet and Twitter. Methinks they protest too much.

"It's a disappointment in the headline but on the other hand, lower payroll growth is exactly what we expect," said Josh Wright, the chief economist at iCIMS. "We haven't managed to sustain job growth of above 200,000 jobs per month for three months in a row since the end of 2015,” reported Business Insider.

The details then began to emerge: 20,300 jobs lost in the retail sector. There is no real surprise here, just as a decade ago, a “surprise” loss of employment was seen when temporary census workers were released after their duties.

To be fair, there were some good signs - construction jobs soared with 30,000 jobs, bars and restaurants hitting 25,000, as well as manufacturing, and professional business services, at 15,000, but that’s a figure that we have seen before as being suspicious, since it’s a catchall category that can hold temporary clerical workers, as well as clerks and copyists, and even some of dubious “business” distinction.

The banner rate of unemployment held steady as most predicted, and wanted, at 4.1 percent, reaching a 17 year low rate, which pleased many. But, as the name implies, it gets all of the attention, but is not a wholly accurate number, the broad number is the indicator that should get more attention, than its big brother, but doesn’t. That rate includes discouraged workers who have given up looking and those that are stuck in part-time jobs, but prefer, and often need, full-time employment.

That news is not good -- the rate dropped to 7,9 percent last month, and has not been that low since December 2006; it showed a decreased from 8.3 percent in September.

One uptick was that Black unemployment reached a record low of 6.8 percent, giving encouragement to leaders in the nation’s urban centers.

Still problematic is that wages are  low, with an average of 2.5 percent in November, and little changed in December, where it was 0.3 percent, rising from 2.5 percent the previous year.

“This still broadly reflects the sluggish pay increases we've seen through much of the recovery. With headline unemployment so low, employers should be competing for the best workers on pay. Some indicators like the Atlanta Fed's alternative wage tracker do show this pay pressure,” continued Business Insider.

One important and overlooked factor: “the average hourly earnings are skewed as older, better-paid workers retire and leave the equation.” Going even further, "Average hourly earnings probably is one of our lowest-quality indicators because it doesn't control for changes in composition," Wright said. "Anecdotally, there are wage pressures growing, especially in particular industries and more so in some occupations like data scientists and programmers."

Wages represent the real test of our economic strength and we are not there yet, say some, but then there is still optimism and the not-so greek chorus that have been extolling the banner rate: “Economists, however, remain optimistic that wage growth will accelerate with the labor market near full employment. The unemployment rate, which has declined by 0.7 percentage point since January, is now at its lowest level since December 2000 and below the Fed’s median forecast for 2017.”

For those that watch the Federal Reserve and their anticipated moves, and their mandate, of 2 percent inflation,”October’s job growth acceleration reinforced the Federal Reserve’s assessment on Wednesday that “the labor market has continued to strengthen,” and the sluggish wage data did little to change expectations it will raise interest rates in December.”

“The weakness in wages will not go unnoticed at the Fed, particularly for members that remained more concerned over the inflation outlook,” said Michael Hanson, chief U.S. economist at TD Securities in New York. “Overall, sustained job growth and labor market slack at pre-crisis lows keeps December in play.”

If the outlook seems murky, to naysayers, then the labor participation rate, which measures those workers that hold a job, and those seekers that are searching for one, fell four-tenth of a point and is now 62.7, a rate that has remained virtually unchanged, over the last year.

The New York TImes did note one trend, primarily in professions that don’t require post-secondary education, such as warehouse stocking, and low paying security jobs, that have shown significant pay increases.

Business observers note that some corporations are taking recent savings and reinvesting them in plant and machinery, which leads to increased hiring and higher wages, some as high as 7 percent, affecting a group that President Trump targeted during the 2016 presidential campaign; but it’s too early to tell is whether the recent tax reform bill has had any direct effect.

In certain jobs, and in some geographic areas, such as Indianapolis, the increase has been from 3.1 percent to 5 percent, seen in the second quarter of 2017.

For e-commerce warehouse workers the increase has also been seen, they noted, in such far flung areas as Inland Empire, Ca.; all of which points out that this is not your father’s economy.

More common is that companies are using perks, rather than wage increases, to attract, and retain worker;, finding this easier than prematurely offering higher wages, only to have to pull them back later. Such perks include paying for, or reimbursing the cost of daycare.

Even more common are those that have been shy about wage increases all along, in the post recession era, with its economic uncertainty, despite the optimism of some.

Taking a wider look is the Economic Policy Institute that has seen the flat wages as a barometer of the American economy. They have noted that “On some fronts, the economy is steadily healing from the Great Recession. The unemployment rate is down, and the pace of monthly job growth is reversing some of the damage inflicted by the downturn. But the economy remains far from fully recovered.

A crucial measure of how far from full recovery the economy remains is the growth of nominal wages (wages unadjusted for inflation). Nominal wage growth since the recovery officially began in mid-2009 has been low and flat. This isn’t surprising–the weak labor market of the last seven years has put enormous downward pressure on wages. Employers don’t have to offer big wage increases to get and keep the workers they need. And this remains true even as a jobs recovery has consistently forged ahead in recent years.”

They advise that the Fed hold off on increasing interest rates till nominal wages increase at least from 3.5 percent to 4 percent. They also feel that “there is no threat that price inflation will begin to significantly exceed the Fed’s 2 percent inflation target. And it will take wage growth of at least 3.5 to 4 percent for workers to begin to reap the benefits of economic growth–and to achieve a genuine recovery from the Great Recession.”

Say it again, Sam.

Victory for the GOP: Senate passes tax reform bill

With a 51-48 vote the U.S. Senate, on Wednesday, approved a sweeping tax reform bill, the first in 30 years, and what supporters, are calling “historic” and a chance to increase both jobs and income for American families, despite polls that show those that the bill purports to help, believe that it is solely designed to help wealthy corporation and individuals.

It’s a boon for the Trump Administration as it limped along for the last ten months without a legislative victory, seeing most of its efforts shot down in appeal courts, dying in committee, or getting congressional nays, respectively with the travel ban, and the attempt to repeal the Affordable Care Act.

After what was considered a rocky start with defectors in both chambers, from both original intent, and also with genuine concerns, they eventually succumbed to party loyalty, and a desire to show in 2018, that not only could they legislate, but they could do so in a long sought after area, thus the “:aching for a victory” that some in the press noted.

This path to the midterm elections is now a rallying call for Democrats to tailgate onto their victories in Virginia and Alabama, and the public’s distrust of the bill, to score big, and take some of the joy from the jubilant faces that were shown on the South lawn of the White House, as President Trump held sway.

On Tuesday elated members of the U.S,. House of Representatives voted, in an overwhelming vote of 227-203, to pass their version that like its Senate counterparts offers steep cuts to corporations and wealthy individuals, and also claims to be a bill that offers Americans fatter paychecks; as Speaker of the House Paul Ryan says will give the people of the United States their money back, “because after all it’s their money.”

“The bill, which marks the largest tax overhaul in 30 years, would permanently slash the corporate rate from 35 percent to 21 percent, a reduction Ryan, President Trump and other Republicans say will lead to investment, new jobs and economic growth,” noted The Hill.

Others are less sanguine pointing out that the tax cuts are dependent on who you are and where you live, and how you file your tax returns. For working families the modest tax cuts will expire in a decade due to Congressional rules that harness any tax cuts to a limit of $1.5 trillion dollars.

While the bill comes in a hair underneath the limit, many polls have revealed how deeply unpopular the bill, titled the “Tax Cuts and Jobs Act,” is; in fact 64 percent of Americans oppose the Act and say that it favors the wealthy, and 76 percent for corporations, more than it does the average American; especially families living in high tax states,such as New York and California.

Sen. John Cornyn (R-Texas), asked why the bill polled poorly, even while in final conference, pointed to misinformation” and “lying.”“So many people are lying about it, for one thing. ... Unfortunately that sort of information tends to get around faster than the truth, so it’s our job to try to tell the truth about it,” he said.

On the House side, Rep. Greg Walden (R-Oregon), said, “I don’t think we’ve done a good job messaging.”

As it inched towards final form, the House version, as well as the Senate, and now the final law, chipped away at the state and local tax deduction that many middle-class families depend on, which now has a cap of $10,000.dollars.This has stung many residents in high tax states, (New York, New Jersey, and California) which as we have noted before, held high Democrat majorities that voted for Clinton in 2016, and has  especially stung them, as critics noted; in fact, the only House defector was Rep. Rodney Frelinghuysen from New Jersey.

“The average household would get a tax cut of $1,610 in 2018, a bump of about 2.2 percent in that average household's income, according to a report released Monday by the Tax Policy Center, a nonpartisan think tank that has been critical of the tax overhaul plan,” says National Public Radio.

Most searing of those figures is that “however, extremes make averages, and the benefits would be much larger for richer households. A household earning $1 million or more would get an average cut of $69,660, an income bump of 3.3 percent. Compare that with the a tax cut of $870, or 1.6 percent, for the average household earning $50,000 to $75,000.”

For those that itemize on their returns, approximately 28 percent of all filers, then the odds that what was previously gained, will be a lot less.

“No Democrats have backed the tax bill at any time, which would have been a surprise at the beginning of the year.  The House revote is the latest evidence of just how shoddily written the GOP tax scam really is,” said House Minority Leader Nancy Pelosi (D-Calif.).”

A bonus for the GOP was the repeal of the individual mandate for the ACA, colloquially known as Obamacare, that required all Americans to have health insurance, or to pay a penalty. While most received a subsidy for coverage, there was a number of high earners that did not qualify for help, and paid the higher premiums (now part and parcel of healthcare in America) but yelped at the price, despite having higher than average incomes.

As we have noted before, “According to the Congressional Budget Office (CBO), the repeal of the individual mandate penalties could result in as many as 13 million fewer Americans having health insurance. About 5 million are projected to be people who previously bought health insurance as individuals either within or outside the ACA’s marketplaces. Some will choose not to buy insurance because the penalty has disappeared. Others, especially higher-income individuals who don’t qualify for subsidies under the ACA, will drop insurance because of increases in average premiums predicted by the CBO.”

Politico noted the following from the president’s remarks: “When the individual mandate is being repealed, that means Obamacare is being repealed. Because they get their money from the individual mandate,” Trump told reporters during a Cabinet meeting at the White House. “Obamacare has been repealed in this bill.”

“Yet while the bill removes the requirement that individuals must possess health insurance, large portions of the law would remain intact, though others have been weakened during the Trump administration,” they emphasized.

The Harvard Business Review said, “It will mean less health insurance for individuals; less coverage for elderly and poor Americans; less revenue for doctors, hospitals, and myriad health care businesses; and, quite possibly, a less-healthy, less-productive workforce.”

“These premium increases will occur because, with the repeal of the mandate, many young, healthy people will exit markets, leaving a sicker, more costly insurance pool behind. Older individuals will be most affected. For example, a 60-year-old not receiving subsidies could face premium increases of $1,781, $1,469, $1,371, and $1,504, respectively, in Alaska, Arizona, Nevada, and Maine,” they concluded.

Additionally, The GOP saw an opening to slash at what they have long-called entitlements, and the opportunity to delete the mandate also urged them to go further: with further cuts,“Because Medicare and Medicaid together accounted for about $1.25 trillion in federal spending in 2016, about 30% of the federal budget, they will be the major targets for deficit reduction”

While there is no guarantee that they would succeed (although they have Ryan’s support) but these,“reforms could take a number of directions. For Medicare, this could include increasing the eligibility age from 65 to 67 or beyond (resulting in fewer covered elderly), caps on spending per beneficiary (possibly reducing covered benefits), or increases in cost-sharing that would lead to beneficiaries using fewer services. For Medicaid, reforms would likely lead similarly to fewer people covered, reduced benefits, and/or higher cost-sharing.”

With the devil being in the details, one area to pay close attention to are those expiring tax cuts. For example, as NPR noted, “the bill changes tax rates across income brackets, increases the standard deduction and increases the child tax credit — but only until the end of 2025. As a result, the Tax Policy Center predicts that in 2027, the average tax cut would amount to $160, or just a 0.2 percent income bump,” hardly a long-term solution.

“This would mean a tiny tax bump for many lower- and middle-class households — the average $50,000 to $75,000 — earning household would have a tax bill that is $30 higher than today. The average household earning more than $1 million would get a cut of more than $23,000,” they continued.

While Sen. Marco Rubio of Florida was able to increase the child tax credit from $1,100 to $1,400 dollars the push also comes with a cost of other health reductions that hurt other populations, an aspect that many might have not been aware of in the rush to get the bill through Congress, and to President’s Trump’s desk.

“The proof will be in the paychecks,” said Ohio senator, Rob Portman, but the details don’t suggest that there will be sustained increases.

On the job front, most critics have noted that Ryan and others are returning to the old David Stockman, (budget director under Ronald Reagan) mantra,that the “trickle down” will result in greater job creation, and benefits, an argument, long discredited, even by Stockman.

Previous temporary reductions resulted not in job gains, but rewards to stockholders, and in this case many are saying that this could be another benefice, and for middle income earners who invest in a retirement plan that is stock heavy, gains might be seen.

Most are predicting that fewer than 339,000 jobs over a decade will come from the House predictions, with 925,000  predicted from the Senate version; now merged into one bill, some are saying maybe 250,000, at best guess.

While the top rate of 39.6 percent has been decreased under the bill to 37 percent, only one-third of all Americans believe this will benefit them in the long run.

The president’s Council of Economic Advisers predicted a $4,000 salary increase for the average worker, but that seems wildly optimistic, to many economists. For a family of four, with a median income of $73,000, the tax cut would be $2.059.

A poll this Monday from Monmouth University said that 26 percent disapprove of recent tax bills. And 50 percent say they will go up,and only 14 percent believe will go down. Yet, Ryan insists that “Results are what’s going to make this popular.”