House introduces its stopgap spending bill. McConnell rejects it. The House Democrats introduced a continuing resolution to keep the federal government funded through December 11. But the plan excluded $30 billion President Trump wants for farm aid, so the Senate majority leader rejected it out of hand. Two weeks ago, word was that Congress and the president reached an agreement to keep the government running at current levels until after the election. Now, with a bit more than a week before the fiscal year ends on Sept 30, the dreaded phrase “government shutdown” is back on people’s lips.
CBO: It would take $900 billion in annual spending cuts or tax increases for 25 years to restore the nation’s debt to pre-COVID-19 levels. The Congressional Budget Office released long-term budget projections yesterday. It finds that even if the United States waits until 2025 to act, restoring debt to the nation’s pre-crisis level would require dramatic changes in spending and taxing. Said CBO director Phil Swagel, “There is no set tipping point at which a fiscal crisis becomes likely or imminent, nor is there an identifiable point at which interest costs as a percentage of GDP become unsustainable. But as the debt grows, the risks become greater.”
Dallas Fed President: Near-zero interest rates likely needed for two to three years. Dallas Federal Reserve President Robert Kaplan told Bloomberg that he won’t commit to hyper-low rates after that: “I would rather leave those judgments to future committees.” He told Reuters that the US economy is rebounding strongly now and should continue to grow into 2021.
Will Bay Area voters raise taxes in November? The Mercury News reports on a half-dozen ballot measures in Silicon Valley. Across four California counties, voters will consider a variety of tax initiatives which would increase general taxes and can be approved with a simple majority vote. The funds could be spent however elected leaders decide. Some of the tax measures don’t have expiration dates. Some political observers think that voters may less willing to raise taxes in the postCOVID-19 era.
Some states seem to have avoided tax crises. Accounting Today reports on August sales-tax receipts in several states. New Jersey receipts climbed 3 percent from a year earlier, and California’s revenue is exceeding forecasts. Georgia’s tax collections are climbing, and in Cuyahoga County, Ohio, has thus far avoided a predicted revenue decline. For now, at least. Brian Sigritz, director of state fiscal studies for the National Association of State Budget Officers, says “The expectation is still that the worst is yet to come.”
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