Trump Says He’ll Terminate WHO Funding

Plus, why incomes jumped during the pandemic By Yuval Rosenberg and Michael Rainey Trump Says He’ll Terminate US Relationship With WHO Accusing the World Health Organization of protecting China during the coronavirus pandemic, President Trump said Friday that the U.S. would sever its relationship with the agency. “We will be today terminating our relationship with the World Health Organization and redirecting those funds to other worldwide and deserving urgent global public health needs,” Trump announced in the White House Rose Garden. “The world needs answers from China on the virus.” Earlier this month, Trump announced a temporary funding halt for the WHO, and threatened a permanent withdrawal if it did not "commit to major substantive improvements in the next 30 days." Trump has repeatedly criticized the WHO for its response to the coronavirus pandemic, alleging that the organization pushed misinformation from China and allowed Beijing to exert control over the United Nations health agency. Critics said Trump was blatantly trying to shift blame for his administration’s own failures in halting the spread of the coronavirus in the U.S., where it has resulted in more than 100,000 deaths so far. Currently, the U.S. provides about 15% of the WHO’s roughly $2.3 billion annual budget, or about $450 million per year. It’s not clear, however, that Trump can end U.S. funding for the health organization without the intervention of Congress, which controls the power of the federal purse. Mike Ryan, the Irish doctor who leads the emergencies program at the agency, said the funding loss would be difficult, but hoped to find the money from other nations. “[T]his is going to have major implications for delivering essential health services to some of the most vulnerable people in the world,” Ryan [told]( Stat News, “and we trust that other donors will if necessary step in to fill that gap.” Why US Incomes Jumped During the Pandemic U.S. personal income rose by $1.97 trillion in April, the Commerce Department [reported]( Friday. It was the largest month-over-month increase on record, 10.5%, and it was driven almost entirely by the coronavirus relief transfer payments authorized by Congress in March. The one-time relief checks of up to $1,200 per adult and $500 per child sent to most households made up the lion’s share of the transfer payments. Unemployment benefits, boosted by an extra $600 per week in supplemental federal payments, made up most of the rest. At the household level, average monthly compensation fell by $600, no doubt reflecting significant job losses. But that drop was more than made up for by an increase of $1,400 in government assistance. (The [chart]( below from Ernie Tedeschi of Evercore ISI beaks down the household income components in April.) As Vox’s Matthew Yglesias noted, the monthly jump in income has everything to do with the median wage of lower-income workers, who were more likely to lose their jobs and temporarily earn more on unemployment once state and federal benefits were taken into account. The “median American worker earns about $949 per week,” Yglesias [said]( Friday, “so $600 plus a fraction of that is going to come up to more income in many cases than what they would earn by working.” Without transfer payments from various government sources, personal income would have dropped 6.3% in April. This would have been the largest drop in personal income on record, former White House economic adviser Jason Furman [said](. Despite the jump in income, consumer spending dropped by 13.6% in April, the Commerce Department said, as the economy shut down in response to the coronavirus epidemic. It was the largest one-month drop on record. A one-time event: “The reason the numbers look so extreme this month was because of the one-time checks that were sent out -- which won’t be continuing,” Michelle Meyer, head of U.S. economics at Bank of America, [told]( Bloomberg News. And as numerous economists have warned, if federal relief efforts end after July, the income numbers will start looking considerably worse in August and beyond. $1,200 Checks? $450 Bonuses? The Latest on the Next Coronavirus Lifeline Congress has provided a lifeline for millions of Americans hurt by the coronavirus pandemic, providing a boost to incomes via one-time direct payments and implementing a range of other emergency programs to prevent more widespread financial hardship, joblessness and hunger. “This summer,” writes Ben Casselman at The New York Times, “that lifeline could snap.” As states continue to reopen and Congress considers the contours of a next coronavirus relief package, many of the unprecedented steps taken to help businesses and consumers weather the pandemic and economic shutdown are set to expire, creating uncertainty for those who have benefited — and for the economy overall. “The $1,200 checks sent to most households are long gone, at least for those who needed them most, with little imminent prospect for a second round. The lending program that helped millions of small businesses keep workers on the payroll will wind down if Congress does not extend it. Eviction moratoriums that are keeping people in their homes [are expiring]( in many cities,” Casselman writes. “And the $600 per week in extra unemployment benefits that have allowed tens of millions of laid-off workers to pay rent and buy groceries will expire at the end of July.” Aneta Markowska, chief financial economist for the investment bank Jefferies, tells the Times that the legislation passed thus far, including the $2.2 trillion CARES Act, won’t be enough. “The CARES Act was massive, but it was a very short-term offset to what is likely to be a long-term problem,” she says. “This economy is clearly going to need more support.” What might that support look like? Here’s the latest: McConnell says decision on ‘fourth and final’ bill will come in about a month: The [$3 trillion package]( passed by the House this month has little chance of getting through the Senate, where Republican Majority Leader Mitch McConnell, while acknowledging this week that another aid bill is likely, has pushed for a pause, and for any additional legislation to be narrow. McConnell added Friday that the next coronavirus relief bill will be the final one. “We’re taking a careful look at a fourth and final bill,” McConnell [said]( Friday. “You could anticipate the decision being made on whether to go forward in about a month. And it will be narrowly crafted, designed to help us where we are a month from now, not where we were three months ago.” House Speaker Nancy Pelosi, Senate Minority Leader Chuck Schumer and other Democrats have been urging Republicans to start negotiating immediately. "The cost of Republican inaction grows every day,” Schumer [said]( Thursday. “Senate Republicans ought to stop sitting on their hands and work in a bipartisan way to provide the immediate help workers and families need.” Some Dems skeptical about more $1,200 stimulus checks: House Democrats included another round of $1,200 relief payments in their bill, but the idea of additional direct payments faces oppositions not only from Senate Republicans but some Democrats as well, The Hill’s Alexander Bolton [reports](. “I think the next round we’ve got to be more targeted to those who are really in need,” said Sen. Ben Cardin (D-MD), according to The Hill. “So I hope we can target this a little bit better to those who have been hit hard because of COVID-19.” And Sen. Ron Wyden (D-OR) says that he would support another round of direct payments but that isn’t his top priority. “My top priorities are tying expanded unemployment benefits to economic conditions and providing more help for the smallest of small businesses,” he said in a statement cited by The Hill. $450 ‘back-to-work’ bonuses may be gaining momentum: With Republicans opposed to extending the $600-a-week in enhanced unemployment benefits set to expire at the end of July, Sen. Rob Portman (R-OH) has proposed that the federal government provide payments of $450 a week for several weeks to people who go back to work and stop collecting unemployment. President Trump, who reportedly [opposes]( extending the $600 unemployment-benefit boost, likes the back-to-work bonus idea, according to [The Washington Post](. "We've got to reward individuals for coming back to work," Larry Kudlow, the president’s top economic adviser, said Friday on [Fox News](. "There will be some kind of re-employment bonus. We're not going to go to the $600, that's a disincentive to work." Discussions are reportedly ongoing about how big the bonus should be and how long it should last. Some White House officials and Rep. Kevin Brady (R-TX) have discussed allowing returning workers to get up to $1,200, the Post says. There are still concerns about the idea, though. “An extra $450 gives people an extra incentive to go back to work,” Diane Swonk, chief economist at Grant Thornton, told the Post. “But the real issue is, how many jobs will we have and what kind of risk are people taking to go back to work?” Economists widely expect the unemployment rate to [stay above 10%]( through the end of the year, meaning that back-to-work bonuses may have more limited reach. “If you talk about a return-to-work bonus and you’re not also extending unemployment insurance, that’s a problem,” labor economist Martha Gimbel of Schmidt Futures told the Post. “We know a lot of people will still be unemployed.” The bottom line: It’s likely going to be awhile before significant progress is made on the next coronavirus bill. A summer [calendar]( sent by House Majority Leader Steny Hoyer (D-MD) shows no votes happening before June 30, though Hoyer wrote to colleagues Friday that he expects the House will be in session “at some point in June,” once the Senate acts on a bill. Your Prize for Making It Through the Week Summer is here, albeit unofficially, so it probably won’t be long before some pop music hit becomes ubiquitous (or unavoidable, we suppose, depending on your perspective). USA Today recently featured this look back at all the [songs of summer since 2000]( according to Billboard. Some are real pop classics, others we hardly remembered — and there’s maybe a few we wish we could forget. Have a good weekend. Email us at yrosenberg@thefiscaltimes.com. And please tell your friends they can [sign up here]( for their own copy of this newsletter. News - [House Pushes Back Schedule to Pass Spending Bills]( – The Hill - [Relief Aid Stalls With Small Businesses Returning Loans Unused]( – Bloomberg - [People Are Mistaking Stimulus Payments for Junk Mail or a Scam]( – Washington Post - [Powell Says Federal Reserve Crossed Red Lines to Help Economy]( – New York Times - [In U.S., 71% Believe Economy Is in Recession or Depression]( – Gallup - [Americans Have Stopped Thinking the Economy Is Getting Worse]( – Bloomberg Businessweek - [Lawsuit Accuses Trump Administration of Illegally Seizing Tax Refunds From Student Loan Borrowers]( – The Hill - [Mnuchin’s $29 Billion Loan Fund Untapped as Airlines Eye Rebound]( – Bloomberg - [Pandemic Upends State Plans to Expand Health Insurance]( – Politico - [COVID-19 Clouds Early Health Insurance Premium Requests]( – Roll Call - [Coronavirus Continues to Disrupt Prescription Drug Supplies]( – New York Times - [SEC Is Scrutinizing Public Companies Granted Virus Relief Funds]( – Bloomberg - [Watchdog Groups Want Trump's Coronavirus Vaccine Czar to Disclose All Pharma Ties]( – The Hill - [How Private Jet Owners Got a Subsidy From Coronavirus Relief Funds]( – NBC News - [Big Pharma Is Betting on This Rookie Arizona Senator]( – Daily Beast - [Trump Officials Consider Defying Congress to Sell More Weapons to Saudi Arabia]( – New York Times Views and Analysis - [Hidden Cost of Mass Layoffs: Why Job Cuts Won’t Solve States’ Budget Crisis]( – Brandon Kochkodin, Bloomberg - [U.S. Can’t Beat Coronavirus, But Americans Can Cope With It]( – Michael R. Strain and Scott Gottlieb, Bloomberg - [Retraining, Instead of Layoffs, Will Speed Economic Recovery]( – Jeb Bush and Terry McAuliffe, USA Today - [For Trump, It's Never Been About the Economy]( – Amy Walter, Cook Political Report - [Forget Swooshes and V’s. The Economy’s Future Is a Question Mark]( – Jeanna Smialek, New York Times - [Should We Fear Post-Pandemic Inflation?]( – Neil Irwin, New York Times - [Why the Fed May Not Duck Inflation This Time]( – Phil Gramm and Mike Solon, Wall Street Journal (paywall) - [On the Economics of Not Dying]( – Paul Krugman, New York Times - [Why Is the Fed Spending So Much Money on a Dying Industry?]( – Sarah Bloom Raskin, New York Times - [A Case for More Scientists in Office]( – Shaughnessy Naughton, Morning Consult - [Still the World’s Safe Haven? Redesigning the U.S. Treasury Market After the COVID-19 Crisis]( – Darrell Duffie, Hutchins Center at Brookings - [COVID-19, Unemployment Compensation, and State Medicaid Expansion Decisions]( – Linda J. Blumberg et al, Urban Institute - [Are States With Lower Income Tax Rates Better At Winning Championships?]( – Ty Schalter, FiveThirtyEight [Like Us on Facebook]( [Like Us on Facebook]( [Read Us On the Web]( [Read Us On the Web]( Copyright © 2020 The Fiscal Times, All rights reserved. You are receiving this newsletter because you subscribed at our website, thefiscaltimes.com, or through Facebook. Our mailing address is: The Fiscal Times 399 Park AvenueNew York, NY 10022 [Add us to your address book]( Want to change how you receive these emails? [Update your preferences]( or [unsubscribe](.