June Washington D.C. Issues Update
The clock is ticking with President Joe Biden's July 4 deadline to get 70 percent of American adults vaccinated less than a month away. But many Americans are still reeling from the impact of the pandemic, and reopening the economy is already sparking a fierce debate about the role of the government in a post-pandemic world.
POLITICO policy teams took a deep dive on how different sectors of the economy are trying to reopen and what policy challenges remain.
— Republican governors are cutting off unemployment benefits. Jobless workers in two dozen states are losing the extra $300 a week in federal benefits, as GOP governors look to push people back into the labor force.
— Boosts in tax credits could help revive the economy. Those eligible for the expanded Child Tax Credit will see the first payment July 15, lining pockets in the hopes that the cash will be spent at businesses. The air and road travel industries will likely see a big boost as well.
— But rebounding doesn't come without mammoth obstacles. Restaurants and meat plants are looking at severe staff shortages, but business owners and policymakers aren't on the same page about what incentives are needed to fully reopen.
Welcome to the June edition of the CEO Report, POLITICO Pro’s high-level outlook on the policy issues driving the month … and beyond.
Restaurants see rebound but shortages: Restaurants are sensing relief after reopenings and the return of customers, but many are still seeking additional aid to make up for losses. After the White House created a special fund for smaller restaurants, nearly 200,000 applied within the first few days. Biden announced that only 100,000 would receive aid, prompting restaurant lobbyists to call for more money — a call that remains unanswered.
Restaurants, and the food sector in general, are also feeling the strains of labor shortages. The National Retail Federation and other grocery, restaurant and food service lobbying groups, have raised concerns over the extended unemployment benefits’ role on the shortened labor force. Businesses are still unsure about how to handle upcoming OSHA guidance on workplace Covid-19 safety, which some argue could send a message that workplaces are not safe.
Biden has vowed to help small businesses and rural areas get pandemic assistance and vaccine access as the summer begins. The Agriculture Department helped launch a new initiative on June 3 to help with vaccine education, access and outreach in rural areas. Previously, first lady Jill Biden attended an event to promote vaccines among farmworkers, but more outreach is needed to reach the White House’s goal to have 70 percent of U.S. adults vaccinated by July 4. — Ximena Bustillo
Cash for kids: The ongoing revival of the U.S. economy should soon get another shot in the arm thanks to changes to a popular tax benefit.
The boost will come from the IRS, which in July will start paying out the Child Tax Credit in regular, once-a-month installments to millions of American households, a change from the traditional annual schedule for claiming the credit. Instead, from July through December, recipients will get a share of up to $3,600 per child, depending on their age and household income.
The increased frequency marks the latest step taken by Washington policymakers to get money into people’s pockets and help sustain the economic rebound.
The first monthly payment will be made July 15 for the more generous CTC, which this year is worth as much as $3,600 for children under 6 and $3,000 per child for those between 6 and 17, and doesn’t include a minimum income requirement. Supporters say the expansions will help household spending and cut child poverty, and the Biden administration wants Congress to extend the expanded amounts through 2025.
About 39 million households will begin receiving monthly payments via direct deposit, paper check or debit card, without any further action required. The distribution will reach 88 percent of children in the U.S., according to the IRS. — Aaron Lorenzo
Eviction ban lapse becomes problem for states, localities: State and local officials are facing pressure to enact new protections for renters with the Centers for Disease Control and Prevention's nationwide eviction moratorium set to expire June 30. They will have to decide whether to enact their own interim bans to give themselves breathing room as they try to get federal relief money out the door. Congress has passed nearly $50 billion in rental assistance to help tenants who lost jobs during the pandemic pay overdue rent, but relatively little of that money has made it into landlords’ hands so far. Many landlords themselves are struggling to meet their obligations, including monthly mortgage payments and property taxes, and they face the risk of having to sell their properties at fire-sale prices. — Katy O’Donnell
EMPLOYMENT AND IMMIGRATION
Partly cloudy for labor: Employers, workers, unions, and federal and state officials aren’t on the same page when it comes to the next steps for labor as the recovery picks up steam. Perhaps the biggest conflict is over aid for the unemployed.
Two dozen GOP governors have decided to cut federally supplemented unemployment benefits amid reports of a labor shortage — carving jobless workers in their states out of programs that provided an extra $300 a week in direct aid, extended benefits to independent contractors, and lengthened the amount of time residents could receive state benefits. One Labor Department official told POLITICO the agency likely lacks the practical, and the legal, ability to do anything about it. But the agency is nonetheless meeting with lawmakers and advocacy groups who oppose the cutoffs to see what options might be available.
Senate Finance Chair Ron Wyden (D-Ore.) has said he will “change the law” if necessary to give the Labor Department legal authority to intervene. Any effort to overturn the states’ decisions, though, is likely to be met with lawsuits aplenty — and a time crunch, seeing as the benefits are slated to end in September anyway. In the meantime, the dip in income means spending is likely to take a hit: A recent Joint Economic Committee analysis estimated that local economies could lose as much as $12 million.
Workplace safety is another contentious issue. Some major corporate employers — including the nation’s largest, Walmart — were quick to ditch worker masking requirements after the CDC said in May that fully vaccinated people — except those in health care settings, correctional facilities and homeless shelters — can resume activities indoors without wearing masks or physically distancing, even if some in their group are unvaccinated.
But Democrats, unions and safety advocates are still pushing the Labor Department to issue mandatory Covid-19-specific workplace safety rules. They say that precautions like masking and social distancing that were expected to be required as part of the DOL rules are necessary to protect unvaccinated workers, who may not be getting the shot for a variety of reasons. Business groups and conservatives argue that issuing stringent safety requirements this late into the pandemic would create confusion, impose unnecessary costs and ultimately undermine Biden’s goal of getting the U.S. back to normalcy.
On a more bipartisan note, the reports of labor shortages are helping drive lawmakers’ efforts to reauthorize the Workforce Innovation and Opportunity Act, which funds the Labor Department’s programs for helping workers learn new skills or upgrade skills they already have. — Eleanor Mueller and Rebecca Rainey
Cannabis companies want expanded sales options made permanent: The pandemic led to boom times for the cannabis industry. In almost every state, dispensaries and cultivators were declared essential businesses and sales soared as stressed-out, hunkered-down Americans increased their weed consumption. The end result: Revenues soared by 50 percent, topping $20 billion, according to New Frontier Data.
That success means cannabis companies don’t want a return to the status quo. Instead, they’re seeking to make many of the changes that were implemented to address safety concerns permanent . At the top of the list: continuing to allow curbside pick-ups and deliveries. They’re now lobbying state regulators and lawmakers to keep those options in place, arguing that they proved to be safe and effective ways to facilitate sales. — Paul Demko
A priority forced on Biden: ransomware: Biden’s strategy to push to restart the economy as he charges ahead on his 70-percent vaccination goal could hit a snag: an onslaught of ransomware attacks that keep targeting consumers’ wallets. In May alone, Russian-based hacking groups came after gas prices through an attack on Colonial Pipeline and then again hit their meat supplies when they targeted JBS. And ransomware attacks are also hitting the health system directly as it tries to implement Biden’s plans: Scripps Health lost access to patient files for several weeks in May, prompting delays in basic medical appointments.
Now, the question of how to stop these ransomware attacks is looming large for the administration. Biden meets with Russian President Vladimir Putin on June 16 where he’s expected to discuss the recent string of attacks since Colonial and JBS have been linked to Russian-based hackers. And the administration continues to weigh different approaches to toughening up the country’s critical infrastructure security, with a reported second TSA action targeting pipeline security in the works, per a Washington Post report.
Significantly, Biden is also waiting on Congress to take up his nominations for the CISA director and first national cyber director as he fleshes out the rest of the cyber officials roster. — Sam Sabin
Profits, and scrutiny likely to stay high for Silicon Valley: The pandemic made "Big Tech" bigger than ever as people filled lockdown days with video streaming, doomscrolling on social media and endless online orders. Amazon, Google, Apple, Microsoft and Facebook boasted a combined revenue of more than $1.2 trillion over the last year alone.
As vaccinated Americans return to offices and in-person socializing, Facebook and Google anticipate less online engagement, but the companies are optimistic that other kinds of growth will continue. E-commerce, cloud-computing and virtual reality will likely continue to see massive growth after the pandemic proved how useful they can be to everyday life. "Over a year into the pandemic, digital adoption curves aren’t slowing down," said Satya Nadella, Microsoft’s chief executive, earlier this year. "They’re accelerating."
But government scrutiny of the companies is only increasing as they expand, and Washington is closer than ever to reining in the dominant tech firms at the center of the U.S. economy. The Justice Department and dozens of state attorneys general are suing Google over alleged antitrust violations. The FTC and nearly every state attorney general in the country are suing Facebook. Amazon and Apple are in regulators’ crosshairs. And bipartisan members of Congress are working to overhaul U.S. antitrust law to curb Silicon Valley’s power.
Amazon is under fire for its workplace conditions and control of the online marketplace; Facebook is facing scrutiny over its role in inflaming misinformation throughout the pandemic and presidential election; Google’s dominance over search and ad business is at the center of multiple lawsuits; and Apple’s reliance on China and tight grip over its app store is the target of lawmakers’ concerns. In other words, the bullseye the pandemic put on Silicon Valley is unlikely to disappear even as their products move from lifelines to convenient options. — Emily Birnbaum
Air travel: Federal mask mandates are still in place through summer but with more people getting vaccinated, flights are fuller than they have been since the coronavirus crisis sent passenger volumes plummeting. To get a feel for the scope of the difference, on June 3 the TSA reported having screened 1.8 million people, compared to just over 391,000 people on the same day last year.
But airlines and countries globally have yet to completely figure out how to deal with the virus, which continues to rage in some areas of the world, with new variants cropping up as well. International travel remains a mishmash of confusing policies and restrictions that make a return to international travel a more serious challenge. Some countries are moving toward a form of vaccine verification, but it’s by no means uniform — and in the U.S., calls for such a measure have already become politicized. — Kathryn A. Wolfe
Energy demand on the rise: Energy demand has surged as the U.S. emerges from the pandemic, with drivers hitting the road in droves and many of the same issues that have vexed the power grid likely to return.
Californians, especially, should be braced for power interruptions. The North American Electric Reliability Corp., the nonprofit that sets reliability standards for generators, said in its annual analysis that any early heatwave in California could leave the state without enough generation to keep the lights. That shortage in power capacity should be solved by August 1, when the state is expected to have brought on 1,300 megawatts of extra generation, including 825 MW of new batteries which should ease the way through the dog days and into fall. Parts of New England, Texas, the non-California West and the northern Midwest could face problems of their own if summer heat exceeds expectations, but NERC believes the regions should be able to meet demand otherwise.
Gasoline prices have room to rise this summer even after having reached multi-year highs last month. Fuel prices have risen by 80 cents a gallon since January as vaccinations bring greater commuting and traveling compared to the Covid lockdowns of 2019. The increase in driving has outpaced refineries’ ability to ramp operations back up after they had scaled back during the pandemic. Now gasoline prices are expected to rise further as the U.S. enters summer driving season, normally the year’s busiest time for travel. Despite the rebound, analysts are warning that gasoline demand won’t quite make a full recovery to 2019 levels: The DOE estimates summer gasoline demand will average about 9 million barrels a day through September, which is 1.2 million barrels more than last summer but still 600,000 barrels short of demand in summer 2019. — Eric Wolff and Ben Lefebvre
Global trade faces Covid-shaped recovery: As the number of vaccinated Americans rises and businesses begin returning to normal, global health officials and international economists want you to keep one thing in mind: The rest of the world doesn’t look the same.
Vaccination rates remain significantly lower across much of the globe, especially in less-affluent nations in Africa and Latin America. That means developing economies are expected to recover more slowly and global growth won’t reach its full potential in the immediate future.
An Organization for Economic Cooperation and Development forecast last week echoed concerns about a lopsided recovery. It found that economies with large manufacturing sectors have benefited from high consumer demand in wealthy countries, even though supply chain disruptions and labor shortages have been a hindrance.
The World Trade Organization sees trade policy as a solution. Director-General Ngozi Okonjo-Iweala is pushing her 164 member countries to lower trade barriers on medical supplies and Covid-19 vaccines, and urging them to look for ways to expand vaccine production.
The most controversial WTO proposal would temporarily waive intellectual property rights for vaccines. The Biden administration is backing that idea, despite pushback from Republicans, but governments including those of the U.K., Japan, South Korea and the European Union are opposed. The WTO’s intellectual property council will continue the debate when it meets June 8 and 9. — Steven Overly
Covid shots may not reach foster and migrant kids: Nearly a half million foster children in the U.S. and unaccompanied migrant teens at the southern border could be prevented from receiving coronavirus vaccines as the country continues to reopen, because of federal and state consent laws that require a parent or guardian’s approval.
Regulators authorized emergency use of Pfizer's Covid-19 shot in kids as young as 12 this month, accelerating the Biden administration’s broad immunization plans and school reopenings. But because the vaccine hasn't received full regulatory approval, it has a different status than the battery of routine vaccinations recommended by federal agencies. Kids in many states can only receive it with a parent or guardian’s consent — a requirement that's impossible to meet for many children separated from their biological parents.
The dilemma poses a major test for the federal health department's Administration for Children and Families, which is responsible for keeping unaccompanied minors at the border safe along with overseeing programs for childcare, foster children and family services. The political considerations are substantial, as the administration tries to avoid the kind of scrutiny over children in its care that beset the Trump administration.
The pandemic disrupted foster care practices such as on-site visits from government officials, while at the border the number of unaccompanied children swelled this year even as government officials made strides to connect children quickly with U.S.-based guardians. While the Centers for Disease Control has encouraged coronavirus vaccination, the way the shots are being given under an emergency authorization subjects them to a patchwork of state responses and special considerations on consent and access.
Pfizer's vaccine is authorized for children as young as 12, and teens who live with their parents or other legal guardians are already getting the shot, boosting prospects for on-site schooling, summer camps, sports and other activities. A Health and Human Services Department spokesperson said the department is working with states to identify options for broader vaccine distribution for at-risk kids, in keeping with CDC guidance. — Sarah Owermohle
BUDGET AND APPROPRIATIONS
Working to fund the government: Now that Biden has finally sent Congress his full budget request, spending leaders on Capitol Hill are starting to write their 12 annual funding bills, with less than four months left until federal cash runs out and fiscal 2022 begins.
House Appropriations Chair Rosa DeLauro (D-Conn.) has said her panel will start marking up its fiscal 2022 measures this month, with floor passage of at least some of those bills to follow in July.
Like usual, the process is moving more slowly in the Senate, where Appropriations Chair Patrick Leahy (D-Vt.) is still deciding how to handle the revival of earmarks. Leahy said he will divide earmark funding equally between the two parties, as long as Republican lawmakers “want in.” But only six GOP senators have said they will partake, and the Senate Republican conference’s unenforceable ban still stands.
Democrats also plan to start work this month on the key to harnessing budget reconciliation again to pass major legislation in the Senate on a 51-vote margin. The first step: approve a joint budget resolution for fiscal 2022. — Jennifer Scholtes