[y66]

Thomas P. Bossert, former homeland security adviser to Trump and deputy homeland security adviser to Bush said:

At the worst possible time, when the United States is at its most vulnerable — during a presidential transition and a devastating public health crisis — the networks of the federal government and much of corporate America are compromised by a foreign nation. We need to understand the scale and significance of what is happening.

Last week, the cybersecurity firm FireEye said it had been hacked and that its clients, which include the United States government, had been placed at risk. This week, we learned that SolarWinds, a publicly traded company that provides software to tens of thousands of government and corporate customers, was also hacked.

The attackers gained access to SolarWinds software before updates of that software were made available to its customers. Unsuspecting customers then downloaded a corrupted version of the software, which included a hidden back door that gave hackers access to the victim’s network.

This is what is called a supply-chain attack, meaning the pathway into the target networks relies on access to a supplier. Supply-chain attacks require significant resources and sometimes years to execute. They are almost always the product of a nation-state. Evidence in the SolarWinds attack points to the Russian intelligence agency known as the S.V.R., whose tradecraft is among the most advanced in the world.

According to SolarWinds S.E.C. filings, the malware was on the software from March to June. The number of organizations that downloaded the corrupted update could be as many as 18,000, which includes most federal government unclassified networks and more than 425 Fortune 500 companies.

The magnitude of this ongoing attack is hard to overstate.

The Russians have had access to a considerable number of important and sensitive networks for six to nine months. The Russian S.V.R. will surely have used its access to further exploit and gain administrative control over the networks it considered priority targets. For those targets, the hackers will have long ago moved past their entry point, covered their tracks and gained what experts call “persistent access,” meaning the ability to infiltrate and control networks in a way that is hard to detect or remove.

While the Russians did not have the time to gain complete control over every network they hacked, they most certainly did gain it over hundreds of them. It will take years to know for certain which networks the Russians control and which ones they just occupy.

The logical conclusion is that we must act as if the Russian government has control of all the networks it has penetrated. But it is unclear what the Russians intend to do next. The access the Russians now enjoy could be used for far more than simply spying.

The actual and perceived control of so many important networks could easily be used to undermine public and consumer trust in data, written communications and services. In the networks that the Russians control, they have the power to destroy or alter data, and impersonate legitimate people. Domestic and geopolitical tensions could escalate quite easily if they use their access for malign influence and misinformation — both hallmarks of Russian behavior.

What should be done?

On Dec. 13, the Cybersecurity and Infrastructure Security Agency, a division of the Department of Homeland Security — itself a victim — issued an emergency directive ordering federal civilian agencies to remove SolarWinds software from their networks.

The removal is aimed at stopping the bleeding. Unfortunately, the move is sadly insufficient and woefully too late. The damage is already done and the computer networks are already compromised.

It also is impractical. In 2017, the federal government was ordered to remove from its networks software from a Russian company, Kaspersky Lab, that was deemed too risky. It took over a year to get it off the networks. Even if we double that pace with SolarWinds software, and even if it wasn’t already too late, the situation would remain dire for a long time.

The remediation effort alone will be staggering. It will require the segregated replacement of entire enclaves of computers, network hardware and servers across vast federal and corporate networks. Somehow, the nation’s sensitive networks have to remain operational despite unknown levels of Russian access and control. A “do over” is mandatory and entire new networks need to be built — and isolated from compromised networks.

Cyber threat hunters that are stealthier than the Russians must be unleashed on these networks to look for the hidden, persistent access controls. These information security professionals actively search for, isolate and remove advanced, malicious code that evades automated safeguards. This will be difficult work as the Russians will be watching every move on the inside.

The National Defense Authorization Act, which each year provides the Defense Department and other agencies the authority to perform its work, is caught up in partisan wrangling. Among other important provisions, the act would authorize the Department of Homeland Security to perform network hunting in federal networks. If it wasn’t already, it is now a must-sign piece of legislation, and it will not be the last congressional action needed before this is resolved.

Network operators also must take immediate steps to more carefully inspect their internet traffic to detect and neutralize unexplained anomalies and obvious remote commands from hackers before the traffic enters or leaves their network.

The response must be broader than patching networks. While all indicators point to the Russian government, the United States, and ideally its allies, must publicly and formally attribute responsibility for these hacks. If it is Russia, President Trump must make it clear to Vladimir Putin that these actions are unacceptable. The U.S. military and intelligence community must be placed on increased alert; all elements of national power must be placed on the table.

While we must reserve our right to unilateral self-defense, allies must be rallied to the cause. The importance of coalitions will be especially important to punishing Russia and navigating this crisis without uncontrolled escalation.

President Trump is on the verge of leaving behind a federal government, and perhaps a large number of major industries, compromised by the Russian government. He must use whatever leverage he can muster to protect the United States and severely punish the Russians.

President-elect Joe Biden must begin his planning to take charge of this crisis. He has to assume that communications about this matter are being read by Russia, and assume that any government data or email could be falsified.

At this moment, the two teams must find a way to cooperate.

President Trump must get past his grievances about the election and govern for the remainder of his term. This moment requires unity, purpose and discipline. An intrusion so brazen and of this size and scope cannot be tolerated by any sovereign nation.

We are sick, distracted, and now under cyberattack. Leadership is essential.

So much for the idea that the biggest threat to security frequently comes from someone inside the organization.

[Winstonm]

The signature legislative accomplishment of the past 4 years was the massive tax break for corporations and the wealthiest individuals. Turns out - and it never was a secret - that trickle down economics does not work as advertised, and, in fact, the trickle is more like a stream and it smells funny.

Quote

Careful empirical research finds that, contrary to overstated "supply side" predictions, tax cuts on high-income people's earnings or income from wealth (such as capital gains and dividends) don't lead to substantial job growth.

[y66]

Good interview by Jonathan Martin at NYT: Senator Jon Tester on Democrats and Rural Voters: ‘Our Message Is Really, Really Flawed’

Excerpt:

Quote

Can Democrats go on the offensive in rural America?

Democrats can really do some positive things in rural America just by talking about infrastructure and what they’re doing for infrastructure, particularly in the area of broadband. And then I would say one other policy issue is how some Republicans want to basically privatize public education. That is very dangerous, and I think it’s a point that people don’t want to see their public schools close down in Montana.

Is the issue for Democrats in rural areas the appeal of President Trump, or is this a longer-term structural problem for the party?

There’s no doubt about it, he has an appeal in rural America. I can’t figure it out, but there’s no denying it.

But I will also tell you I think there’s a long-term structural issue. And by the way, I’ve had this conversation with Chuck Schumer [the Senate Democratic leader] several times — that we have to do a better job developing a message so that rural Americans can say, “Yeah, those guys, they think like I do.” Because that’s what Trump has right now.

I can go into the list of things that might be insane about this president, but the truth is that rural people connect more with a millionaire from New York City than they do with the Democrats that are in national positions.

So that tells me our message is really, really flawed, because I certainly don’t see it that way.

We do not have a — what do I want to say — a well-designed way to get our message out utilizing our entire caucus. So we need to do more of that. You cannot have Chuck Schumer talking rural issues to rural people; it ain’t gonna sell. And quite frankly, I don’t know that you can have Jon Tester go talk to a bunch of rich people and tell them what they need to be doing.

Some Democrats believe they are never going to establish a durable Senate majority because of the nature of every state having two senators and the party’s difficulties with rural voters. When you hear that, does that tick you off?

Yeah, it does. Yeah, it does.

Why?

Because the problem isn’t that the country’s skewed against the Democrats; the problem is that the Democrats have not done a very good job talking about what we believe in.

If there’s one mistake that is made way, way, way too often by folks in public service, it’s that you walk into a room and who does most of the talking? The senator.

Now, some forums that’s what the people want. But for the most part if you’re in a town hall, and you let people tell you what they’re thinking, let them tell you what’s going on — and then search into your mental database to find out if there’s anything that we’ve done to help solve that problem — then maybe you can have a conversation. But to walk in and say, “You need to think this, and this is what I believe is the right thing to think,” that switch goes off.

In 2008 Barack Obama cracked 40 percent of the vote in a lot of rural America. Flash forward 12 years and Joe Biden is in the 20s in some of these counties. At this time 10 years ago, South Dakota had one Democratic senator, North Dakota had two, Montana had two. What has happened in about 10 years’ time?

You know where Barack Obama spent Fourth of July in 2008?

Butte.

Butte, Mont. He showed up. Now, he didn’t win much in it, but he did a hell of a lot better than people thought he was going to do because he showed up.

What has happened in Montana as far as losing Max Baucus’s seat, and in North Dakota and in South Dakota, I think speaks to the fact that we’re not speaking to rural America. And look, Steve Bullock lost [this year’s Senate race in Montana] for a number of reasons. One was they nationalized it. They totally nationalized his race. They tried to do it to me, too. What I had that Steve didn’t have was there wasn’t a damn pandemic, and I could go out. And we did, man. We showed people that I was not A.O.C., for Christ’s sake.

You said, “Our party should stand for three words: ‘opportunity for everyone.’” Democrats always complain that they can’t distill their message onto a bumper sticker. But that’s three words — could that fit on a sticker?

Yeah, it could — it could work, yeah. It means you take care of the folks who need help, you give them opportunity.

In your book, you challenge Donald Trump Jr. to a day of “pickin’ rock” on your farm. Does your offer still stand?

You’re ***** right.

You lost your home county in 2018 even though you exceeded 50 percent statewide. Did that personally sting you, and does that speak to the larger structural problems facing the party?

Look, for sure. I mean, yeah, I would love to win my home county, but it is very red.

How much of that is just people living on Facebook?

It is a big part of it, right? I’ve got good friends of mine, I might add, really, really good friends of mine, lifelong friends, that quite frankly say stuff that I go: “Really? That’s what you think? That’s crazy.”

When you started in state politics in 1998, I’m guessing that you had many more weekly and daily papers in Montana. And now people are getting their news from Facebook every morning.

That’s exactly right. That’s exactly right. And all from people that have the same view.

Your seat was once held by Mike Mansfield, the former Senate Democratic leader, whose tombstone at Arlington National Cemetery simply reads, “Pvt., U.S. Marine Corps.” Do you think any of your Senate colleagues will have a tombstone that modest?

[Laughs] Hopefully my tombstone will say “Jon Tester …”

“Farmer?”

“Farmer.”

[y66]

Linda Greenhouse at NYT said:

The Supreme Court was never going to hear, let alone grant, the request by red-state attorneys general and the White House to overturn the election results in four battleground states that went for Joe Biden. We knew that, we privileged few who could have offered an inventory of the lawsuit’s flaws while standing on one foot. We had not the slightest doubt that the case was a non-starter.

Or did we?

I spent much of last week, nearly up to the moment on Friday night when the court tossed the Texas case into history’s garbage bin, assuring friends and strangers alike that Texas v. Pennsylvania had no merit whatsoever. Texas had no business invoking the court’s original jurisdiction — seeking to come directly to the Supreme Court and bypassing the lower courts — in order to complain directly to the justices about other states’ election processes. The justices, I added, would never permit themselves to be drawn into such a sorry charade.

Many people who emailed me with their questions knew little about the Supreme Court and its jurisdictional quirks, but some were lawyers or avid court-followers who know a lot. Their anxiety was a measure of how much of what we once took for granted has been upended during these past four years. I confess that by the end of the week, the tiniest shadow of doubt had invaded my own mind. And no wonder: The usual inference that even young children are able to draw from experience — “This has never happened before so it’s very unlikely to be happening now” — has proved of dubious utility. We can know all the facts and all the rules, but still, we can’t be sure.

In the aftermath, with the electoral votes counted and the justices off on their four-week winter recess, what more is there to say about the justices’ refusal to grant the Trump team and its statehouse enablers their day in court? It’s easy to understand why the response offered by Michigan’s attorney general, Dana Nessel, became the go-to quote in many accounts of the week’s denouement. The court, she said, delivered “an important reminder that we are a nation of laws, and though some may bend to the desire of a single individual, the courts may not.”

It’s a comforting thought, one that we needed to hear and yearn to believe. But I think it gives the court too much credit. Texas v. Pennsylvania had the form of a Supreme Court case. But it was a Potemkin village of a case, with the proper Gothic typeface on the front cover but nothing inside that resembled sound legal argument. It’s as if someone filed a case asking the court to exercise its original jurisdiction and declare the moon to be made of green cheese. We would hardly pat the justices on the back for tossing out such a case. More likely, we would shrug and say, “There goes another nut case.”

The court receives its share of those among the 6,000 petitions that it whittles down every year to the 65 or so accepted for decision. Of course, those cases don’t arrive, as this one did, with the support of 126 of the 196 Republican members of the House of Representatives. The fact that members of Congress are sometimes called “lawmakers” does not, evidently, bestow on them an actual regard for law.

And celebrating the court for its restraint in the election cases may be premature. The 2020-21 term, nearly three months in, is still unfolding. We have yet to learn either the fate of the Affordable Care Act or how much further the court will go to elevate religion over the principle of nondiscrimination, the question presented in a case from Philadelphia. Both cases were argued last month, during the court’s first argument sitting since the arrival of the newest justice, Amy Coney Barrett.

The country has learned a bit recently about the court’s original jurisdiction — its power to decide without appellate review certain disputes, including between states — something most lawyers never learn much about, let alone encounter. The last time a so-called original case received this much public notice was probably in 1998, when the court gave New Jersey administrative jurisdiction over nearly all of Ellis Island, the immigrant gateway in New York Harbor that New York had long claimed as its own.

The one or two such cases the court decides in a typical year have a certain charm despite their obscurity. This week, for example, the justices decided an original case between New Mexico and Texas. The case, decided in New Mexico’s favor, involved the latest chapter in a long-running dispute over rights to water from the Pecos River. As in most original cases, the court had appointed a special master to look into the problem and recommend how to solve it. Justice Brett Kavanaugh noted in his majority opinion that the special master — the “river master” in this instance — was appointed in 1988 “and he continues to serve in that position” 32 years later. The wheels of the court’s original jurisdiction usually turn very slowly.

A new original case on the court’s docket is not likely to remain obscure for long. It promises, if the court accepts it, to bring the justices into culture-war territory. Last February, Texas sued California directly in the Supreme Court over a law California passed in 2016 that prohibits state-paid travel to states with laws that permit discrimination against L.G.B.T.Q. individuals.

Texas has a law that permits child-welfare agencies to invoke religious reasons for not placing children with same-sex couples for foster care or adoption. Once Texas enacted that law in 2017, California added Texas to the list of states, now numbering 11, to which it will not subsidize travel by its employees. Texas claims that its sovereignty is violated by California’s policy. California argues in response that its own sovereign interest against subsidizing discrimination is at stake.

In June, the justices took the somewhat surprising step of asking the Trump administration for the federal government’s view on the dispute. Early this month, the Office of the Solicitor General filed the government’s brief, urging the court to accept the case and noting that “resolving such conflicts among sovereigns falls within the core of this court’s original and exclusive jurisdiction.” The court will probably announce early in the new year whether it will assume jurisdiction.

I’ll end this column with a shout-out to a federal judge who really did stand up for the rule of law in an opinion last week. The question concerns abortion, and whether, given the conditions of the Covid-19 pandemic, the Food and Drug Administration should relax its rule requiring women to visit their doctor’s office in order to get the medication that causes an early abortion. The F.D.A. has suspended the in-person rule for some other medications, but refused requests from medical organizations to do the same for the abortion drug mifepristone.

In July, Federal District Judge Theodore Chuang, who sits in Greenbelt, Md., issued an injunction requiring the agency to permit doctors, for the duration of the pandemic, to mail or deliver the medication. In October, the Supreme Court responded to the Trump administration’s request for a stay of the injunction by sending the case back to Judge Chuang, telling him to permit the government to argue among other points, that improvements in the Covid-19 situation since the spring meant that visiting a doctor’s office was no longer a sufficient obstacle to merit relaxing the rule for mifepristone.

After receiving the administration’s brief to that effect, Judge Chuang issued a 34-page opinion explaining that while conditions have indeed changed, they have changed for the worse. Noting that the Centers for Disease Control and Prevention, the National Institutes of Health, and the Food and Drug Administration have warned about the increasing intensity of the pandemic, he observed that the administration “has offered no expert opinions from a scientist at one of these agencies or elsewhere in the federal government to contradict the facts and conclusions” about the rising danger.

“The fact that individuals are permitted to venture out during a pandemic to restaurants or businesses does not establish that women should be mandated to risk exposure to Covid-19 in order to exercise a constitutional right,” the judge wrote. Of course, the Trump administration promptly returned to the court this week seeking a stay of Judge Chuang’s decision.

So yes, let’s give credit where credit is due. Let’s thank the courts — plural — for upholding the rule of law. Let’s celebrate the judges who were there when we needed them. We still do.

[y66]

David Leonhardt at NYT said:

Over the spring and summer, Mitch McConnell repeatedly declared that he had a litmus test for any new coronavirus stimulus bill: It had to protect businesses from lawsuits from workers or customers who contracted the virus.

“We have a red line on liability,” he said at one point. “I won’t put a bill on the floor that doesn’t have liability protection in it,” he said at another. “No bill will pass the Senate without liability protection for everyone related to the coronavirus,” he added.

But McConnell, the Republican leader in the Senate, has since erased that red line. Congressional leaders and Steven Mnuchin, the Treasury secretary, are nearing agreement on a $900 billion bill that doesn’t include liability protection.

So why did McConnell, arguably the savviest politician in Washington, fold?

The answer offers an important reminder of how the Senate really works and how it could become less dysfunctional in the near future than it has been lately.

When people talk about the Senate, they often imagine that McConnell, as the majority leader, is all-powerful and can prevent any bill he doesn’t like from coming up for a vote. That’s not the case. Any senator can propose that a bill receive a vote. If at least 50 other senators want it to receive one, it will.

In recent decades, though, senators have voluntarily surrendered this power to their party’s leader, giving him (and, no, the Senate has never had a female majority or minority leader) a veto over what comes to the floor. The practice helps keep parties unified.

But it comes with a major downside. It makes bipartisan compromise harder to achieve. Coalitions that could pass a bill — but that don’t include the majority leader — don’t get the chance to form. “By stopping the legislative process before it starts,” James Wallner, a former Republican Senate staff member, has told me, “it makes compromise harder.”

On the latest round of stimulus, a bipartisan group of senators changed the dynamic by making clear that they strongly favored additional aid. They did not publicly threaten to go around McConnell, but they didn’t have to. He can count to 51, and he was also worried that the two Republican candidates in next month’s Georgia Senate runoffs were “getting hammered” over the lack of a deal.

(McConnell did win a big concession as part of abandoning his red line: The proposed deal does not contain aid to state and local governments, even though the bipartisan group had included it in their earlier proposal and despite many economists favoring such aid.)

It’s possible this bipartisan deal will end up being a one-time event. But it doesn’t have to be. Senators have it within their power to find other areas of compromise next year, during Joe Biden’s presidency — even if McConnell does not favor those deals.

“In politics victory begets victory,” Rahm Emanuel, the Democratic former House member and Chicago mayor, told me yesterday. “The center-out governing coalition has a win under their belt.” It is a “big opportunity for Biden,” Emanuel said.

Perhaps most intriguing, senators have the power to craft compromises regardless of which party wins the Georgia runoffs and controls the Senate.

* * *

The proposed stimulus deal is expected to include roughly $300 per week in enhanced unemployment benefits, about half the size of the enhanced benefits that the federal government paid during the spring.

The bill will also most likely include an additional round of direct payments to individuals; a new emergency rental assistance program; and additional funding for food assistance, small businesses, schools, broadband and vaccine distribution.

[johnu]

Winstonm, on 2020-December-17, 09:59, said:

The signature legislative accomplishment of the past 4 years was the massive tax break for corporations and the wealthiest individuals. Turns out - and it never was a secret - that trickle down economics does not work as advertised, and, in fact, the trickle is more like a stream and it smells funny.

The "Tinkle Down" (sic) theory of economics was already demonstrated to be a complete failure during Reagan's 8 years. The entire idea is a total laffer (sic).

[awm]

I think it would be interesting if Biden put forward (relatively early in his term) a stimulus package that was weighted heavily towards rural and small town areas, including things like broadband, new solar/wind plants, better insulation, rebuilding roads and/or train lines, and tax breaks for companies that either relocate to these areas or allow remote work from them. Such a proposal has a number of benefits:

1. Might be difficult for Senate Republicans to oppose, since it delivers direct benefits to the places they represent.
2. Could help recover the working class union votes that Democrats need to win in places like the midwest.
3. Might encourage some Democrats to move out of cities, reducing the partisan skew in the Senate and electoral college.

Of course, a "green stimulus" will also help with climate change and rebuild the economy as a whole.

[johnu]

More incompetence from the Manchurian President

States report confusion as feds reduce vaccine shipments, even as Pfizer says it has ‘millions’ of unclaimed doses

Quote

Officials in multiple states said they were alerted late Wednesday that their second shipments of Pfizer-BioNTech’s vaccine next week had been reduced, sparking widespread confusion and spurring the company’s CEO to put out a statement saying it had millions more doses than were being distributed.

Quote

But Pfizer released a statement on Thursday that seemed at odds with that explanation, saying the company faced no production issues and had more doses available than were being distributed.

“We have millions more doses sitting in our warehouse but, as of now, we have not received any shipment instructions for additional doses,” the statement read.

When all is said and done, incompetence by the Grifter in Chief's political stooges will be the cause of the delays. There's another month plus of total political incompetence directing the vaccine shipments before Biden takes office. Even then, it will take weeks/months to repair the damage to the supply chain and get shipments going at optimal speeds.

[johnu]

Comrade Trump had no comment about Russia hacking the US government earlier this year. White House spokesman said that the Manchurian President would discuss this with Putin, right after he confronted Putin about bounties on US troops, and after his tax audits were completed.

U.S. Cybersecurity Agency Warns Of ‘Grave’ Threat From Hackers

Quote

The cybersecurity agency previously said the perpetrators had used network management software from Texas-based SolarWinds to infiltrate computer networks. Its new alert said the attackers may have used other methods, as well.

Over the weekend, amid reports that the Treasury and Commerce departments were breached, CISA directed all civilian agencies of the federal government to remove SolarWinds from their servers. The cybersecurity agencies of Britain and Ireland issued similar alerts.

A U.S. official previously told The Associated Press that Russia-based hackers were suspected, but neither CISA nor the FBI has publicly said who is believed to be responsible. Asked whether Russia was behind the attack, the official said: “We believe so. We haven’t said that publicly yet because it isn’t 100% confirmed.”

Rachel Maddow had a segment on this last week. For the record, SolarWinds is used by most of the Fortune 500 companies, as well as federal and state governments. The breaches went undetected for months until a smaller private company became aware of the problem and sounded the alert. The Russian hackers managed to compromise a software update that was uploaded to all of the SolarWinds customers.

[johnu]

I would be remiss if I didn't mention one Manchurian President success in the past 4 years.

Former FDA Commissioner Touts Regulation Rollback Allowing 'Especially Thick' Cherry Pies

Quote

Former Food and Drug Administration (FDA) Commissioner Dr. Scott Gottlieb is celebrating a proposed regulations rollback that he says will "free" Americans to make "especially thick" frozen cherry pies.

With 311,000 Covid deaths in the US on the way well over 400,000 deaths, Russia hacking national top secret data including information about the US nuclear capability, it's great that the US has accomplished this monumental task. Who said that all the Grifter in Chief's appointments were hacks and incompetents?

[kenberg]

johnu, on 2020-December-18, 02:40, said:

I would be remiss if I didn't mention one Manchurian President success in the past 4 years.

Former FDA Commissioner Touts Regulation Rollback Allowing 'Especially Thick' Cherry Pies



With 311,000 Covid deaths in the US on the way well over 400,000 deaths, Russia hacking national top secret data including information about the US nuclear capability, it's great that the US has accomplished this monumental task. Who said that all the Grifter in Chief's appointments were hacks and incompetents?

An amusing example of mis-leading packaging of a rule change, itself regarding mis-leading packaging. My reaction to the headline was "Who cares how thick the pie is?" The answer is no one, that was not at all the issue. The rule required that to be labeled cherry pie, the pie has to be at least 25% cherry. If the headline said "Revised regulation allows retailers to call a pie a cherry pie as long as it has at least one cherry in it" the reaction might be different.

I suppose it is hardly a big deal but crowing about the change as a great provider of freedom is silly. I suppose food could be labelled organic if an organ was being played wile it was packaged.

[barmar]

johnu, on 2020-December-17, 15:02, said:

The "Tinkle Down" (sic) theory of economics was already demonstrated to be a complete failure during Reagan's 8 years. The entire idea is a total laffer (sic).

The amazing thing is that this theory has to be refuted time and time again. And no matter how many times it's refuted, lawmakers continue to make policies that assume it works, and their constituents believe them.

Trickle-down economics is more like a religion.

[y66]

From Why Some States Are Seeing Higher Revenue Than Expected Amid Job Losses by Emily Badger, Alicia Parlapiano and Quoctrung Bui at NYT

Quote

As Congress has spent the last few weeks debating aid to state and local governments, a number of states have announced surprising news: Their finances no longer look quite as bad as they had feared in the uncertain early days of the pandemic.

States are still broadly hurting from the economic crisis. But California now expects a one-time windfall this fiscal year. Wisconsin said it might still be able to sock away some revenue in its rainy day fund. Maryland nudged up its projected revenues, for the second time this fall. And Minnesota now forecasts a surplus.

This good news reflects in part the dire economic expectations of six months ago; even modest numbers look good now compared with the worst fears written into state budgets in the spring. And state officials say they’ll still need federal help, as they expect the pandemic’s effects to drag on for years and to batter local governments. Federal help, after all, is part of what has buoyed them so far.

The states with rosier forecasts also complicate the political fight in Washington over state aid, which is likely to get pushed into the new year after lawmakers dropped the aid from a year-end stimulus deal nearing completion. Republicans have characterized state aid as a bailout for profligate blue states. But many states that are looking better now have among the most progressive tax structures in the country, and that is part of what has rescued them this year.

This recession, distinct from many before it, has piled its worst effects on low-wage workers. That means that state budgets that rely the most on wealthier residents to fund government haven’t been hurt as much by an economic crisis that left the well-off largely unscathed.

“We have a recession for low-wage earners, and we have just a weird situation for everyone else,” said Peter Franchot, the comptroller for Maryland, which announced last week a $64 million increase in estimated revenues this budget year, compared with September estimates (which were up $1.4 billion from May).

Forecasters and state officials say they didn’t see this coming back in May and June, when they drafted budgets imagining a severe downturn that might look more like the Great Recession — with broad layoffs among manufacturing workers, with a slumping stock market, with economic pain spreading into white-collar offices and middle-class subdivisions.

In typical recessions, when unemployment rises steeply, state revenues fall steeply, too. But the relationship between the two has been much weaker this year. Effectively, the inequality inherent in the Covid recession has insulated many states from worse fiscal effects.

But that doesn’t mean that everything is fine.

“Despite the progressive tax structure, despite the wealth that we have in Maryland, despite the fact that we’re back within a safe harbor of tax revenue collection, the suffering is just completely unacceptable,” said Mr. Franchot, who has called for Maryland to enact its own stimulus apart from Congress.

In California, which has a progressive income tax, state revenues collected this year through October were down only modestly from that same timeline in 2019. Texas, which has no state income tax and what is considered among the least equitable tax systems in the country, has been in a more precarious position.

While Texas does not rely on taxes from the volatile energy sector to finance its base budget, decreased oil and gas production and lower prices have also contributed to the drop in overall tax revenue.

Florida and Nevada, which rely heavily on tourism (which has been harmed by the pandemic), also have no income tax. And Florida is among the few states that never moved to capture sales taxes on online transactions after a 2018 Supreme Court decision expanded that power for states. (In Texas, the ability to tax e-commerce has been a salve in this moment, adding about $1.3 billion in the last year.)

From the start of the pandemic in March through October, tax revenues in 38 states were down 5 percent or less from the same period the year before, according to data from the Urban Institute. When states gave far graver projections in the spring, they didn’t have past experiences to draw on and tried to be conservative in their estimates, said Lucy Dadayan, a senior research associate with the Urban-Brookings Tax Policy Center.

“To be fair, they didn’t have any information,” Ms. Dadayan said. “Yes, the revenues are stronger than compared to initial forecasts prepared right after the pandemic in the spring. But that doesn’t mean revenues are performing well.”

Across all of these states [see link for graphic], federal stimulus has played a significant role. It’s not that the crisis was exaggerated; it’s that the federal aid really worked.

Stimulus checks and extra unemployment dollars increased the consumption of laid-off workers, which in turn bolstered sales tax revenues. Most states also collect income tax on unemployment benefits. And all this federal support lessened the burden on states to provide a safety net to struggling families, even as federal dollars helped cover many state Covid expenses.

States that rely on higher-income taxpayers have been helped by other unexpected ways this recession has differed from past ones. Consumption has shifted from services, which are hard to consume in person in a pandemic, to goods, which are taxed much more heavily (you pay taxes when you buy a lawn mower, for example, but typically don’t pay taxes if you pay someone to mow your lawn).

In California, forecasters in March never expected the stock market to soar as it has. That has increased capital gains, which are taxed as regular income in the state. And a series of lucrative I.P.O.s — another unexpected mid-recession trend — has added to state revenue, too.

From August through October, collections from California’s personal income, sales and corporate taxes were up 9 percent over the same window last year, according to the California Legislative Analyst’s Office. That’s a reflection of how well the well-off have fared this year. But the resulting budget windfall also exists because the state planned a budget in June for dire times.

“This is really a temporary situation,” said Gabriel Petek, the state’s legislative analyst, who prepared the latest fiscal outlook. The budget effects of this downturn have just been pushed into coming years, he said, when the state expects deficits that could further strain services.

“There’s been a little bit of a narrative that has emerged that the state is doing well fiscally, and it’s true that our revenue picture is better than we thought,” Mr. Petek said. “But really the only reason we’re in a better fiscal position is this one-time difference between what we’re collecting this year and what we assumed in the budget we’d collect.”

California, like other states, still doesn’t know how bad the pandemic’s winter surge will be. In the near term, states won’t be able to draw again on one-time pots like rainy day funds. Eventually, when the public health emergency ends, the federal government will cut extra payments to states to cover Medicaid. And local governments will continue to struggle, as they rely on even less stable revenue sources like parking fees, user fees on public transit, and hotel taxes.

States still face both sides of the pandemic’s built-in inequality — the affluent residents who’ve been sitting tight, buying stocks and new cars, but also the low-wage workers who are struggling.

“Even states that have a lot of rich people often have a lot of low-income people as well,” said Tracy Gordon, a senior fellow with the Tax Policy Center. State and local governments will ultimately be responsible for the safety net, she added, “and they’re not built to absorb that risk.”

[Winstonm]

barmar, on 2020-December-18, 10:12, said:

The amazing thing is that this theory has to be refuted time and time again. And no matter how many times it's refuted, lawmakers continue to make policies that assume it works, and their constituents believe them.

Trickle-down economics is more like a religion con.

FYP

[hrothgar]

Almost have to admire this one:

https://www.nytimes....pgtype=Homepage

Quote

Lara Trump, President Trump’s daughter-in-law and a senior campaign adviser, served on the board of a limited liability company through which the Trump political operation has spent more than $700 million since 2019, according to documents reviewed by The New York Times. She was also named on drafts of the company’s incorporation papers.

The arrangement has never been disclosed. One of the other board members and signatories in the draft papers of the L.L.C., American Made Media Consultants, was John Pence, the nephew of Vice President Mike Pence and a senior Trump adviser. The L.L.C. has been criticized for purposefully obscuring the ultimate destination of hundreds of millions of dollars of spending. Ms. Trump is married to Eric Trump, one of the president’s sons.

[Winstonm]

hrothgar, on 2020-December-18, 13:38, said:

Almost have to admire this one:

https://www.nytimes....pgtype=Homepage

Quote

Lara Trump, President Trump’s daughter-in-law and a senior campaign adviser, served on the board of a limited liability company through which the Trump political operation has spent Trump supporters have been squeezed for more than $700 million since 2019, according to documents reviewed by The New York Times.

Accuracy counts.

[cherdano]

barmar, on 2020-December-18, 10:12, said:

Trickle-down economics is more like a religion.

True trickle down has never been tried. If you just let ME get rich, it will work. Promise!

[y66]

Maggie Haberman at NYT said:

SCOOP - Sidney Powell was in Oval Office last night as POTUS discussed making her special counsel for election fraud.

https://www.nytimes....tion-fraud.html

The guy can run a con.

Edit:

Jan Wolfe, legal affairs journalist for Reuters. said:

Let’s be clear: Trump can’t appoint a special counsel. Only the AG or Acting AG can do that. Neither Barr nor Rosen would stand for Sidney Powell getting that role. The story here is Trump even suggesting it.

[y66]

Matt Yglesias said:

It’s so refreshing to see someone admit error and accept responsibility — these are big tough problems and mistakes are inevitable but we haven’t seen much of this willingness to admit it.

Dan Diamond at Politico said:

GUS PERNA, the general running logistics for Operation Warp Speed, takes sole responsibility for a big problem with Pfizer vaccine rollout: states report they’re getting less than they were promised.

“It was my fault,” Perna says. “It was a planning error, and I am responsible.”

https://apnews.com/a...669d1fe2d9b5646

[y66]

Jonathan Lemire White House reporter for AP said:

Officials at the White House had been prepared to put out a statement Friday afternoon that accused Russia of being “the main actor” in the hack, but were told at the last minute to stand down”

https://apnews.com/a...def2a6dcf826611

Manchurian President Trump said:

The Cyber Hack is far greater in the Fake News Media than in actuality. I have been fully briefed and everything is well under control. Russia, Russia, Russia is the priority chant when anything happens because Lamestream is, for mostly financial reasons, petrified of discussing the possibility that it may be China (it may!). There could also have been a hit on our ridiculous voting machines during the election, which is now obvious that I won big, making it an even more corrupted embarrassment for the USA.

31 days 21 hours 31 minutes