America's Talking - Episode 2: New unemployment claims spike after weeks of decline

Episode Date: June 18, 2021

The number of people filing new unemployment claims spiked last week, the latest economic indicator that's troubling economists. Data released by the Department of Labor Thursday showed that for the week ending June 12, unemployment claims hit 412,000, a jump of 37,000 from the previous week. That increase comes after several weeks of steadily declining claims. Next week’s report will show whether the most recent data was an anomaly or if it may be a reversal of the previous trend. The data comes after the White House touted a steady drop in jobless claims last week. Support this podcast: https://podcasters.spotify.com/pod/show/america-in-focus/support Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome to America and Focus powered by the Center Square and the Center Square.com. I'm Dan McAulb, executive editor of the Center Square Newswire Service. This is the 24th week of 2021. We'll take a look at the top stories coming out of Washington, D.C. this week. And later, I'll be joined by the Center Square D.C. Bureau Chief Casey Harper, who will analyze the latest jobless report and what it means. We'll also take a look at a new study that examines President Joe Biden's spending plans. All of that and more coming up.

right after this. Hi, this is Chris Krug, publisher of the Center Square. Our team produces the nationally read and recognized news stories at thecenter square.com, the country's fastest growing, non-profit, nonpartisan, state-focused news and information site. We deliver essential information with a taxpayer sensibility through reporting that's easy to understand and easy to share with your friends and family. We know that you need information that allows you to understand what the governor

and your local legislators are doing. Get the news that you need to know at thecentersquare.com. That's thecentersquare.com. Thecenter square.com. Welcome back. Here are the top stories of the week at the center square.com. After several weeks of declining claims, the number of people filing new unemployment claims spiked last week.

That's just the latest economic indicator that's troubling economists. And a new study, evaluating the Biden administration's proposed 2022 budget, found the plan would significantly lower GDP and cost more than 150,000 jobs. As inflation in the U.S. continues to impact consumer prices in the marketplace, who are Americans blaming for the rise in costs, and what does it mean for the political aspirations of both Democrats and Republicans alike? A new poll may provide some answers. President Biden is fresh off a meeting with a group of seven nations,

where leaders said they would publicly endorse a new global tax rate of 15 percent, How do business leaders and others feel about the plan? And for the third time, the U.S. Supreme Court weighed in on the Affordable Care Act, also known as Obamacare. What does that mean for the taxpayer-subsidized health care plan? To read more about these stories and others out of Washington, D.C., and from states around the country, visit thecentersquare.com. Now joining me to discuss today's top headlines is Casey Harper. Casey, how are you? Doing well, Dan. How are you?

I'm doing fine. We're recording this, Casey, on Friday, June 18th, a lot to discuss this week. Why don't we start with a new jobless claims report that came out from the U.S. Department of Labor yesterday, Thursday. What was in that report? Good question. This is an interesting report because the Biden administration has been touting that these reports have shown a study, you know, more jobs being created, that unemployment claims are going down. So the Bureau of Labor Statistics keeps track of how many people are filing for unemployment

and, you know, as a marker of economic health of, you know, if people are going to work because they have the federal documentation proving if people are working or not. And we saw that the reports this week that unemployment claims hit 412,000, which is a jump of 37,000 from the previous week. So 37,000 more people filed for unemployment, which broke off this nine-week trend of unemployment claims decreasing. Yeah, and, you know, we're reading about the trouble that many businesses are having, finding workers.

This latest unemployment claims report seems to contradict that. When there are so many job openings out there and businesses are struggling to fill those open jobs, why are unemployment claims spiking? Yeah, it is kind of an interesting, it seems upside down. that we're hearing different representatives, senators from different states saying that all the businesses they talk to, we've heard it ourselves from different businesses, are having trouble hiring workers. At the same time, unemployment claims are going higher. So people aren't going back to work even though the jobs are available. Now, this is kind of being an ongoing problem.

And Republicans have been pretty vocal about this. And what they're saying is that the federal unemployment benefits are so generous that people are actually better off not going back. to work and it's creating problems. So you may remember that when the COVID pandemic hit, you know, members wanted to be compassionate to people because so many businesses shut down, there was just actually no way to go to work. And so they pass these federal unemployment benefits. Now, normally unemployment benefits come from the state level. So, you know, you file for unemployment with your state. They give you a certain amount of money every week as you file. But these new benefits are in addition to your state benefits and they come from the federal

government. So you're basically getting unemployment funds from two sources. And when you combine those two in a lot of states, the benefits get to a level where you could, you know, afford to almost basically replace a minimum wage job or at least be comparable. And so a lot of Americans are forced with this decision. Do I take a minimum wage job? working 40 hours a week and basically make about the same as I was making when I don't work and just take unemployment benefits from the government. So you can see why that would be a hard choice for a lot of people. You can imagine.

Yeah, that's quite the quandary. The federal unemployment supplement, the benefit that's on top of the state claims, currently stands at an additional $300 a week. they're set to expire in September, and that's only if Congress doesn't extend them as they have throughout the pandemic. Now, a number of Republican-led states, as I understand it, have elected to dump the federal unemployment claims. Is that correct? That's correct. Yeah, we've had about half of states in the country, and those are all Republicans states, have just said that they're going to phase out, all of them kind of doing in a different. ways, but they're phasing out of these federal benefits because they think it's doing more harm than good.

Part of the reason for this is, you know, there's a reason that unemployment benefits are done at the state level because states can adjust them according to their individual unemployment. And so the unemployment rate varies widely by states. There's a lot more unemployment right now in California than some of these red states that are declining these benefits. The other thing is the cost of living varies so widely. $1,200 a month in federal unemployment, you know, may not seem like too much to a representative representing Los Angeles. Right.

You know, but some of those high-execades. Right. Right. But if you're, if you're in rural Mississippi, $1,200 is going to go a lot further for rent and different things where the cost of living is lower. And so a lot of these Republican governors are saying this one size fits all unemployment package is just doing a disservice to them. You referenced California being.

one of the higher unemployment states in this latest Department of Labor report. Are there any other states that fared poorly that were driving some of the significant higher unemployment claims? Yes, Illinois and Pennsylvania saw quite a spike as well, which is interesting. It's just keeping track of these things over time. It's important to note that there are dips, and sometimes a state will spike one week and then kind of it'll settle. and over time, it might be more of a normal thing. But yes, California, Pennsylvania, Illinois, were the big sources this week,

or the last week of this spike. So the next report comes out next Thursday, June 24th. So it'll be interesting to see if that spike continues or if there's a downturn. I'm sure, Casey, you'll be keeping an eye on that next week, something to keep an eye out for at thecenter square.com. You know, how else will be keeping an eye out, is the Biden administration. They're watching this stuff like a hawk, and it's so hard on their messaging

and everything when these indicators come out. And I think we're going to talk about more here now, but there's a lot of these economic indicators that don't, they're struggling to message around. That's a perfect segue into our next headline, Casey. Thank you for providing that. A new study out this week takes a look at President Biden's 22, 22 budget plan, excuse me, and the spending within that plan. the report from the Tax Foundation came out this week. Tell us what the report found, Casey. Sure. So this report studied Biden's 2022 budget, which is about $6 trillion.

It assumes that his roughly $2 trillion infrastructure and $2 trillion family plans stay the same. Now, those can be a negotiation. It could change. But that $6 trillion budget, it's not great for the Biden administration. I found that the plan would significantly lower GDP costs $165,000, $165,000 U.S. jobs, and that it would lower American wages and incomes over time. Now, I mean, yeah, you can go ahead. I think it sounds like you're going to ask a question.

You referenced GDP stands for gross domestic product. That's a big economic term. Can you just explain to listeners, what does gross domestic product measure? What is it? Sure. In some ways, it's just a way of managing or measuring something that is very difficult to measure, which is the size of an economy. I mean, economy is so big.

There's so many moving pieces. It's hard to quantify it. But GDP is one of the best measurements we have of just saying exactly how big is the economy and is it growing. And it may seem like, oh, well, it'll be good if it grows, but it doesn't have to grow. But actually, the GDP needs to grow. The economy needs to grow because the population is growing. growing. And so you may think, oh, well, if we add more jobs, that's good, but we don't necessarily

have to. But actually, the economy has to add more jobs every month because more and more people enter the workforce every month. So, you know, every month, more people are turning 18 years old or entering the workforce and they're graduating from college and looking from jobs. And they're entering the workforce at a much faster rate than people are retiring. So we actually have to grow the economy. We have to add more jobs at a steady rate just to keep up with the population growth, let alone see some kind of economic prosperity. So when GDP grows, that means the economy is growing and the economy is adding jobs. When GDP declines, that means the economy is shrinking, and the number of jobs shrink as well. So the report then says that under Biden's spending

plans, the GDP would shrink in the long run, which would mean fewer jobs for what should be a growing workforce. Right. It would decrease, you know, there's, in some ways, these are estimates. And so you don't want to get too hung up on the exact percentages because it is an estimate and there's so many factors when doing these kind of analysis. But you can say roughly 0.9% or just 1% reduction in GDP. Now, some people that may not sound like a lot, but remember what we said of we want the economy to grow, not decrease, just to keep up with jobs.

And the other thing is, this is supposed to be a stimulus bill. So you can imagine a $6 trillion, you know, $6 trillion aggressively, aggressive budget that has two large, big spending bills in it to grow the economy and to, you know, invest in infrastructure to spend all that money to spend six trillion. trillion dollars to shrink the economy. And, yeah. And of course, to pay for this increased spending, President Biden has also proposed some tax increases. I want to just briefly tell us about what those tax increases would be. Again, these are proposals right now. They have not passed Congress, but go ahead. Correct. They're being negotiated, especially the infrastructure is in a lot of negotiations right now. They haven't really gotten to some of the other priorities yet. But a part of that,

and one of the more controversial things is increasing the corporate tax from 21% the corporate tax rate for 21% to 28%, which is a pretty big one. There's other things like a 15% minimum corporate book tax, raising capital gains tax rates, different things like that. Some of it is just changing the corporate tax law to prevent corporations from doing different things to evade taxes. And some of that's pretty complicated and technical. We don't have to get into it. But what you need to know is that several changes to really up how much corporations pay in taxes. And that is the biggest source of the shrinking economy. So when corporations have to pay more taxes, they hire less people, they may let people go.

They raise costs. They're less willing to invest in new ventures to open new offices. And you can imagine a corporation might open a new office and hire a few hundred people in a small town. but because of the smaller revenue or less profits, they're not going to be as willing to do that. And that kind of has a domino effect. And that's how you see these jobs open up. And the reason is the problem is because basically taxes are when the federal government tells you,

you know, you have to give us your money because we know what's best to do with it. And actually we'll spend it more efficiently than you. So there's there's the, the opportunity costs of letting Americans keep $6 trillion and spend it how they see best, which we just know from Danes that people spending grows the economy. But when you funnel that much money through the government, so much of it is lost, so much of it is wasted.

And I don't think there's many Americans right now who don't want some level of infrastructure investment, who don't want to understand that some level of taxes is important and everything. But what you see is when you, when you amplify how much money is being given to the government through taxation or how much they're spending, you almost exponentially amplify the waste and amplify the downsides and economic consequences of that taxation. Interesting. I suspect that that's another, the negotiations on the infrastructure and the budget overall,

something else you'll be paying attention to in the days and weeks to come. Absolutely. So read about it at the center square. Why don't we move on to our next headline this week? A new poll came out regarding inflation. Inflation, of course, means that consumer costs are going up. What did this poll found on who Americans blame for inflation and what it means? Yeah, this is kind of a reference that I made earlier to the other economic indicators.

So one of the big economic indicators that's troubling economists and probably keeping some communications director, in the Democratic Party up somewhere is the rising inflation. And since, you know, the reports in the recent months have shown us a very significant rise in inflation, depending on, you know, whether you're looking at consumer goods or kind of more producer goods, it's like, you know, five, what to say roughly five percent for the same conversation. But that's a very serious jump. And what that means for Americans is you're going to have higher costs.

you're going to have more expensive goods. It means that your money in your savings account is losing value. It's not getting in such value. It's losing value. And so this report that we covered basically just asked Americans, you know, as they become more aware of it, who is to blame? Who do they see is to blame? And this isn't really even the center square here making any blame because, you know, I think there's arguments to blame both parties in different respects for this.

inflation data. But why it matters what Americans think is because we have an election coming up. And we're already seeing, and you're going to see the Republican Party, especially messaging and blaming Biden for this inflation because the party in power always, you know, takes the blame for economic problems. So we found that the poll found that the majority of Americans actually blame either Biden or the Democrat-led Congress, which is really a sense. significant. It's like over 50% of Americans blame either the Democrat-led Congress or Joe Biden in a much smaller percentage blame Trump, which is interesting to me because I'm sure you remember, Dan, you know, there's always this kind of debate when the new president comes to power. Is this

Trump's economy or Biden's economy is? Right. You remember when Obama came at office, it was, and things were bad. It was, this was Bush's economy that I inherited. But we haven't heard a lot of that talk about how Biden's economic woes are inherited by Trump. Trump. So it would be interesting to see if that kind of rhetoric is picked up by the left or not. You referenced the upcoming election. Of course, we just had an election last November, but it seems like it's always- Are you excited for another election season in America? Where you're talking about the midterm elections, of course, Democrats have a slight majority in the U.S. House. There's actually a 50-50 Republican Democrat split in the U.S. Senate.

with the vice president, Kamala Harris, being a Democrat, she holds the tie-breaking vote in the U.S. Senate. So that is the smallest of majorities possible in the Senate. So the next year's midterm elections, when all of the U.S. House representatives' seats are up and roughly a third of the Senate seats are up, it's going to be a big deal to see who controls Congress with, of course, the new administration of President Biden in there.

So never, never too early to take a look at the next election. Of course, the Republicans have already started using inflation and Biden's tax-like proposal and whatnot against the Democratic Party in fundraising and other things. Yeah, and you mentioned the Republican fundraising. They're hitting, you know, record fundraising numbers the last three months. Democrats have been doing, you know, the Democrats are not doing poor job fundraising, but Republicans have been using this economic messaging, among other things. They've been focusing a lot about on the border as well and seeing record fundraising.

The other reason it matters is because the U.S. Census is showing that the reallocation of delegates and things are going to probably favor Republican states, which is going to be another thing for Democrats to overcome. And it really affects that the negotiations now, because, if it looks like Democrats are going to lose their majority in 2022, then the Republicans and the Senate, then Mitch McConnell, Kevin McCarthy, all these guys have to do is run out the clock because if they can just make it till the spring of 2022 with nothing getting passed, there's a good chance that they're going to have stopped Biden's agenda.

You know, his first term will be nullified because once you get into that election year, you lose a lot of momentum. Representatives want to go back to their home districts. They need to start campaigning. They're facing challenges. And so in an election year, there comes a point in the year where everyone just kind of goes home

and starts focusing on the election. So that's why you see the Biden administration pushing so aggressively to get something done now because if they end up, they don't have to lose, you know, they don't have to win some sweeping victory in the center of the House. They just have to take one chamber. And it'll be gridlocked for Biden's administration.

and they know that. And so there's that element of can they get enough political capital where they know they can just run out the clock. Interesting. Let's move on, Casey. President Biden is fresh off his first face-to-face meeting with international leaders at the Global G7 summit that concluded earlier this week. One thing that raised eyebrows or that got some headlines was the G7 nations indicated that they would endorse a new global minimum rate or tax rate of 15% on businesses. What's been the reaction to that? Yeah, there has been some reaction. And there's a lot of skepticism and wariness, I would say, because, you know, the arguments for this global minimum tax rate, which is, can be, sound pretty compelling.

I mean, the argument is that we need to not have a race to the bottom is what they'll say, supporters of this. And if all these countries and nations, especially in the more developed world where big corporations will have the infrastructure and things they need to place offices and headquarters there, if they're all racing the bottom, then eventually the tax rate just goes to zero and the system is set up to two heavily favor corporations. And so what the G7 is saying is let's put a 15% none of us are going to go below 15% in our taxes. But the problem with that is it takes a lot of cooperation and a lot of good faith and all of honesty. And we're already seeing some of that just not happening. And when you create these kind of rules like this, what happens is the people who break them or the people who get exceptions or carveouts are the ones who benefit most. So you're already seeing, even the UK was saying, you know, we totally agree with this minimum tax rate, but also they were trying to get an exemption for London. And, you know, China is already talking about exemptions.

And the other thing is there's so many other countries that just aren't necessarily going to be on board. And so it's kind of a prisoner's dilemma. So we see the same thing with climate change. It's like, okay, certain, some nations pledge to cut carbon emissions. And of course, like, you know, everyone wants carbon emissions to be lower. But when only certain nations actually follow through with it, others get a bunch of exemptions. What happens is the people who actually stick to the, the nations that actually stick to the pledges are penalized and the other nations take advantage of it. And so it's hard to see what kind of enforcement mechanism could actually get this to be widespread.

But the Biden administration has been optimistic about. out it and is trying to make it happen. Something else will continue to follow at the center square.com. Have time for just a couple of minutes, Casey, for one last story this week. The U.S. Supreme Court came out with its third ruling on the Affordable Care Act, also known as Obamacare. What did the Supreme Court decide? What does it mean? Yeah, so as you said, this is the third time they've looked at this.

And in the case, California versus Texas. And it's interesting. I think a lot of people will say, isn't Obamacare decided? Like, haven't we kind of settled this? And what's happened over the years is that different, the law is so vast and has so many different pieces that, you know, different things have been challenged in court, different parts. You may remember Republicans even defunding certain parts, the marketplaces fall, you know,

disappearing. So this law is very big. There's different parts. But basically what the Supreme Court decided is that, you know, that. the challengers to Obamacare didn't have legal standing. The Texas didn't have real legal standing. Couldn't prove sufficient evidence of damages, which is really what you need to file suit. So this is kind of one of those times where, and the Supreme Court does this somewhat often, where they don't actually address all the merits of the case. And they just say on some kind of

technicality or something that you can't bring this case forward. So, you know, for supporters to Obamacare, this is a victory for sure, but also it leaves the door open for some kind of future challenges. Right. And it was the state of Texas that initially brought the lawsuit against the U.S. government saying Obamacare was unconstitutional after the Republican Congress in 2017. Essentially, there was one of the many facets of Obamacare was the individual mandate where all individuals had to carry some sort of health care health insurance. And if they didn't, they were penalized with a tax.

tax. Well, Congress set that penalty, that penalty tax to zero. And the Texas argued in its lawsuit that that therefore made Obamacare unconstitutional. But as you said, on a technicality, the Supreme Court ruled this week that Texas didn't have standing to file the case. They didn't rule on Texas's argument that the, that Obamacare was unconstitutional because the tax penalty on the individual mandate was set at zero. They just said Texas was not injured because of this, so they did not have a right to bring the lawsuit. So more to come.

Thank you for your time this week, Casey. Enjoyed spending it with you. We'll be back next week. That's a wrap for this week's American Focus podcast. Talk to you all again next week.