President Biden after visiting a Lockheed Martin arms factory in Troy, Alabama last week. (Reuters)

Congress increases aid to Ukraine to $40 billion as Democrats delink Covid money

Congressional Democrats reportedly decided to hold a vote in the House as early as Tuesday on a nearly $40 billion aid package for Ukraine that would de-link aid to the $10 billion war-torn nation from additional funding for the Covid pandemic.

The aid package would add $3.4 billion in military aid and $3.4 billion in humanitarian aid to an earlier Biden administration request for $33 billion in aid to Ukraine, bringing the total at $39.8 billion, according to multiple reports.

The plan represents a shift in strategy after Senate Democrats considered combining the Ukraine and Covid aid programs in a bid to push through pandemic funding that has been stalled for weeks. Republicans had signaled that they would not support this combined legislation due to an ongoing dispute over border policy. GOP lawmakers have demanded that the Covid bill be accompanied by a vote on an amendment blocking the Biden administration from ending a pandemic immigration policy known as Title 42, which allows for rapid deportation migrants at the southern border.

The decision to move forward without Covid funding comes at the behest of President Joe Biden, who has informed congressional leaders that he wants the two aid programs to move separately to avoid delaying the aid to Ukraine. “We cannot afford to delay this vital war effort. Therefore, I am ready to accept that these two measures be taken separately, so that the Ukrainian aid bill can arrive on my desk immediately,” Biden said in a statement. “However, let me be clear: as vital as it is to help Ukraine fight Russian aggression, it is equally vital to help Americans fight COVID. Without COVID funding in in due course, more Americans will die unnecessarily.”

Pentagon spokesman John Kirby
told reporters Monday that the administration had nearly exhausted the drawdown power used by Biden to send weapons to Ukraine, with only about $100 million remaining, or just enough to last until about the third week of May.

Republicans have reportedly yet to agree to the new plan, though aid to Ukraine enjoys broad bipartisan support in Congress. Senate Republicans have reportedly pushed for a larger $8 billion increase in military aid.

Senate Majority Leader Mitch McConnell (R-KY) argued for decoupling the two funding programs. “I’m focused on doing it without superfluous questions,” he said. News Monday of aid to Ukraine. “And do it quickly. We have to do it without this Covid issue and Title 42. And I believe the president is fine with that.”

Biden signs lend-lease deed: The President Monday

signed into law the Ukraine Democracy Defense Lend-Lease Act of 2022, a separate aid funding bill that will help expedite the process of getting U.S. weapons and supplies to Ukraine. The legislation had passed the House by a margin of 417 to 10 and unanimously approved by the Senate.

The bottom line: The outlook for Covid funding remains clouded, but with the rapid depletion of aid funds for Ukraine, the new assistance package has become urgent. “The Democrats’ decision to decouple pandemic aid is painful for some party members who have worried about how they might otherwise coerce Republicans into supporting a Covid aid package that has languished in Congress for months.” , said Sarah Ferris and Burgess Everett of Politico.
write. “But other Democrats have publicly and privately warned their leaders not to delay US aid to Ukraine as the brutal Russian onslaught intensifies.”

Rising tax revenue, Meme stocks providing a boost

Tax collections in the current financial year so far are at an all-time high – around 43% higher than in the same period in 2019, the last full year before the onset of the Covid pandemic -19 – and the Congressional Budget Office now estimates the IRS will run a $308 billion surplus in April.

Soaring tax revenues are reducing the federal budget deficit, producing a shortfall of $360 billion in the first seven months of the fiscal year, well below the $1.9 trillion deficit recorded in 2021, a said the CBO in its last monthly budget review. Compared to the previous year, estimated revenues are $843 billion (or 39%) higher while estimated expenses are $729 billion (or 18%) lower.

“April surpluses are the norm – but they are quite large”,

wrote Marc Goldwein of the Committee for a Responsible Federal Budget, referring to the typical spike in tax revenue around April 15.

The CBO said its April revenue estimate of $864 billion is nearly double the revenue recorded in the same month last year. While some timing issues were at play and the year-over-year comparison is somewhat overstated due to the late tax day last year, the increase was also driven by payments significantly higher personal and corporate taxes, which have soared with the strong economic recovery. . And like
Bloomberg’s Laura Davison reportsindividual stock trading produced capital gains tax payments three times the level recorded in 2019.

“A lot of it comes from short-term capital gains,” Lou Crandall, chief economist at research firm Wrightson ICAP, told Bloomberg. “Meme stocks were very, very good for the IRS.”

Will it last? Experts are unsure whether the rise in earnings is a one-time event or reflects a deeper structural change, although recent stock market losses are a reminder that trading profits can be fleeting. Be that as it may, the lower budget deficit has led the US Treasury to scale back its debt issuance plans, at least in the short term.

“I wouldn’t be surprised if we end up with a sub-$1 trillion deficit for the year,” the CRFB’s Goldwein said, while noting that the level is “still huge” even though it’s lower. at the $1 trillion mark.

In the longer term, inflationary pressures could lead to a further increase in the deficit, as benefit payments under social security and health care programs increase and rising interest rates increase the cost of payments on the national debt.

Still, rising revenues could help Democrats as they push for their spending plans on Capitol Hill. On the other hand, inflation could drive up the cost of bills, negating the increase in tax revenue.

“We’re going to have some political maneuvering around the rating of this bill,” Bill Hoagland of the Bipartisan Policy Center told Bloomberg.

Day number: $30

The Biden Administration
announcement Monday that 20 service providers agreed to provide high-speed Internet to low-income households at a cost of no more than $30 per month. Combined with the $14 billion Affordable Connectivity Program – which was created as part of the $1 trillion infrastructure package signed last year and provides subsidies to eligible households – the discounted offer means that millions of Americans will now be able to enjoy high-speed Internet at no cost. The White House said the effort will cover 48 million homes in the United States, or about 40% of the country.

Senate Democrats seek to revive child care plan

Senate Democrats led by Patty Murray (WA) and Tim Kaine (VA) are revamping a plan to provide hundreds of billions of dollars for child care, hoping they can still win support from Sen. Joe Manchin ( WV) for including the idea as part of a budget reconciliation package, Politico reports.

“The White House proposed in October to invest an additional $400 billion in the [child care] sector as part of the Democrats’ multi-billion dollar reconciliation program, Build Back Better, which would have been enough to establish a universal pre-K; a new program capping child care costs for eligible families; and more,” writes Eleanor Mueller of Politico. “Now Murray and Kaine are proposing to spend about half – between $150 billion and $200 billion – on a future bill. More than $100 billion would be used to channel $72 billion into the existing Child Care and Development Block Grant program for stronger child care grants; $18 billion for a new grant program that would help states expand access to pre-K; and $12 billion to the Head Start program to increase teachers’ salaries – all over six years.”

Read the full story on Politico.