Biden ally in U.S. Senate says Republicans have until end of May for infrastructure deal

By David Morgan

WASHINGTON (Reuters) – Republicans in Congress have until the end of May to negotiate provisions of an infrastructure bill before Democrats opt to move sweeping legislation on their own, one of U.S. President Joe Biden’s closest Senate allies predicted on Wednesday.

Democratic Senator Chris Coons of Biden’s home state of Delaware said several senior Senate Republicans had privately signaled they would support a package of up to $1 trillion that targets roads, bridges and other typical infrastructure areas and includes some tax increases to pay for legislation.

Biden has proposed a more sweeping $2 trillion infrastructure package, which invests in traditional projects but also seeks to change the course of the U.S. economy by addressing climate change and boosting human services such as elder care.

The president and his Democratic allies, who narrowly control both houses of Congress, have insisted that they want Republican support for the package but will not wait long before deciding whether to move forward on their own.

“I believe that President Biden is open to spending the next month negotiating what the possibility is,” Coons told Punchbowl News in an interview. He said he spoke to the president earlier this week.

If no clear deal exists by the May 31 Memorial Day holiday, Coons added, “I think Democrats just roll it up into a big package and move it.”

Biden is expected to meet with a bipartisan group of lawmakers on infrastructure next week, said White House spokeswoman Jen Psaki.

Coons said talks with “several fairly seasoned senior Republicans” suggest bipartisan support for a narrower bill that could be funded partially by higher gasoline taxes and a new fee for electric vehicles to be dedicated to road infrastructure.

But the president’s larger plan faces determined opposition from Republicans including Senate Minority Leader Mitch McConnell, who describes the Biden package as “a Trojan horse” for tax hikes and unnecessary spending.

“There’s broad bipartisan support for tackling the infrastructure issue. But it depends on what your definition is,” McConnell told a Wednesday news conference in his home state of Kentucky.

“Infrastructure is roads, is bridges. It’s broadband. But beyond that, they’ve thrown everything but the kitchen sink into it,” he said.

Republican opposition raises the odds Democrats will use a maneuver called reconciliation to pass a package with just their own votes. Democrats control half the 100 seats in the Senate with Kamala Harris, Biden’s vice president, the tie-breaking 51st vote.

(Reporting by David Morgan; Editing by Scott Malone and Howard Goller

Yellen says more work needed to shore up weaknesses revealed by pandemic

By Andrea Shalal and David Lawder

WASHINGTON (Reuters) – U.S. Treasury Secretary Janet Yellen said a rapid recovery in the United States would boost overall global growth, but more work was needed to shore up weaknesses the COVID-19 crisis exposed in the non-bank financial sector, global supply chains and the social safety net.

Yellen on Tuesday told leaders of the International Monetary Fund and the World Bank that the Biden administration had decided to “go big” with its COVID-19 response to avert the negative “scarring” impact of long-lasting unemployment, adding that she hoped the U.S. economy would return to full employment next year.

Speaking during the IMF and World Bank spring meetings, Yellen said the crisis had dealt a huge blow worldwide, and it was the responsibility of advanced economies to ensure that years of progress in reducing poverty were not reversed by the crisis.

“We are going to be careful to learn the lessons of the (global) financial crisis, which is: ‘Don’t withdraw support too quickly,'” Yellen said, “And we would encourage all those developed countries that have the capacity… to continue to support a global recovery for the sake of the growth in the entire global economy.”

Yellen said she hoped global finance officials make progress on approving a new allocation of the IMF’s emergency reserve, or Special Drawing Rights, during the meeting, and said it was critical to tackle global debt issues exacerbated by the crisis.

She also underscored the Biden Administration’s commitment to tackling climate change at home and ensuring the needed “transfer of resources” to enable similar actions in developing countries.

“We need to make sure that we help developing countries meet their climate goals along with their development objectives. And the availability of green finance is critical to that,” she said, noting that addressing climate change would also bring opportunities for investment to the private sector.

Yellen said it was critical to ensure the world was better prepared for the next global health crisis, citing the need to improve the resilience of supply chains and social safety nets around the world.

She said the core banking sector had been strengthened after the 2008-2009 financial crisis, but some areas in the non-bank financial sector “showed tremendous stress” during the pandemic and would require attention.

(Reporting by Andrea Shalal and David Lawder; Editing by Chris Reese and Dan Grebler)

‘Every step of the way’: McConnell pledges battle over Biden infrastructure plan

WASHINGTON (Reuters) -U.S. Senate Minority Leader Mitch McConnell on Thursday said he will fight President Joe Biden’s $2 trillion infrastructure plan “every step of the way” and predicted the sweeping package would not see support from Republican lawmakers in Congress.

At a news conference in Owensboro, Kentucky, McConnell said the Biden proposal underscores deep philosophical differences between Republicans and Democrats over taxes and the national debt. He told reporters that he does not believe the White House has a public mandate to pursue the plan.

“I’m going to fight them every step of the way, because I think this is the wrong prescription for America,” he said.

Biden’s infrastructure plan, unveiled on Wednesday, charts a course for dramatic change in the direction of the U.S. economy and includes investments in traditional projects like roads and bridges along with climate change initiatives and human services like elder care.

“There’s more money in that plan that the president laid out in Pittsburgh for electric cars than for roads and bridges. Let me say that again: more money for electric cars than roads and bridges,” McConnell said.

Biden has proposed funding the package by raising the tax rate on U.S. corporations to 28% from 21% and making it harder for companies to use offshore tax shelters and other methods to reduce their tax burdens.

McConnell warned that “massive tax increases” would harm the economy and said the package’s spending level could run up the debt. The White House says the infrastructure proposal would more than pay for itself.

“My view about infrastructure is, we ought to build that which we can afford and not either whack the economy with major tax increases or run up the national debt,” he said.

(Reporting by David Morgan and Doina Chiacu, Editing by Franklin Paul and Sonya Hepinstall)

Biden targets big offshore wind energy expansion to fight climate change

By Richard Valdmanis

(Reuters) – The administration of U.S. President Joe Biden said on Monday that it has set a goal to vastly expand the nation’s offshore wind energy capacity in the coming decade by opening new areas to development, speeding environmental permitting, and boosting public financing for projects.

The plan is part of Biden’s broader effort to rapidly transition the U.S. economy to net zero greenhouse gas emissions to fight climate change, a politically controversial agenda that Republicans say could bring economic ruin but which Democrats say can create jobs while protecting the environment.

“President Biden believes we have an enormous opportunity in front of us to not only address the threats of climate change, but use it as a chance to create millions of good-paying, union jobs,” National Climate Advisor Gina McCarthy said in announcing the plan. “Nowhere is the scale of that opportunity clearer than for offshore wind.”

The plan sets a target to deploy 30 gigawatts of offshore wind energy by 2030, which the administration said would be enough to power 10 million homes and cut 78 million metric tonnes of carbon dioxide per year, while creating jobs in construction, development, and steel-making.

One of the first steps will be to open a new offshore wind energy development zone in the New York Bight, an area off the densely populated coast between Long Island, New York and New Jersey, with a lease auction there later this year.

The administration said it will also aim to prioritize environmental permitting and provide billions of dollars in public financing for offshore wind projects.

The United States currently has just two small offshore wind farms, the 30 megawatt Block Island Wind Farm off Rhode Island and a two-turbine pilot project off the coast of Virginia. There are more than 20 GW of proposed projects in various stages of development.

Europe, by contrast, has more than 20 GW of capacity and plans to expand that more than ten-fold by 2050.

(Writing by Richard Valdmanis; Editing by Marguerita Choy)

U.S. factory activity near 2-1/2-year high; COVID-19 disrupting supply chains

By Lucia Mutikani

WASHINGTON (Reuters) -U.S. factory activity accelerated to its highest level in nearly 2-1/2 years in December as the coronavirus pandemic continues to pull demand away from services towards goods, though spiraling new infections are causing bottlenecks in supply chains.

The strength in manufacturing reported by the Institute for Supply Management (ISM) on Tuesday likely helped to soften the blow on the economy in the fourth quarter from the relentless spread of COVID-19 and government delays in approving another rescue package to help businesses and the unemployed.

The ISM said the virus was “limiting manufacturing growth potential” because of absenteeism and short-term shutdowns to sanitize facilities at factories and their suppliers.

“U.S. manufacturing should fare reasonably well this winter as businesses need to restock inventories and the shift in consumer spending away from services to goods helps manufacturers,” said Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Pennsylvania.

The ISM’s index of national factory activity rebounded to a reading of 60.7 last month. That was the highest level since August 2018 and followed a reading of 57.5 in November. A reading above 50 indicates expansion in manufacturing, which accounts for 11.9% of the U.S. economy. Economists polled by Reuters had forecast the index would slip to 56.6 in December.

But some of the surprise rebound in the ISM index was due to an increase in the survey’s measure of supplier deliveries to a reading of 67.6 last month from 61.7 in November.

A lengthening in suppliers’ delivery times is normally associated with a strong economy and increased customer demand, which would be a positive contribution. But in this case slower supplier deliveries also indicate supply shortages related to the pandemic.

Nevertheless, demand for manufactured goods has been strong as the resurgence in new COVID-19 cases has led to fresh business restrictions across the United States, largely impacting the vast services sector.

A large section of the population continues to work and take classes at home, fueling a scramble for electronics, home improvement products and other goods like exercise equipment.

Computer and electronic products manufacturers said they continued to have “tailwinds from the COVID-19 pandemic research support for vaccines and treatments,” adding that “business picked up for us in the last month.”

Makers of miscellaneous products said “sales are now exceeding pre-COVID-19 levels.” Electrical equipment, appliances and components producers reported that business was stronger than expected, “with higher demand for many products.”

Despite strong demand, manufacturing output is still about 3.8% below its pre-pandemic level, according to the Federal Reserve. That could persist for a while as the new wave of infections causes disruptions to labor and the supply chain.

Food manufacturers complained the virus was “affecting us more strongly now than back in March.” Similar sentiments were echoed by transportation equipment makers who said the outbreaks were constraining suppliers. Plastics and rubber products also reported that their suppliers were having difficulty finding and retaining labor.

STRONG ORDERS GROWTH

The ISM report followed on the heels of data on Monday showing strong construction spending in November and October. Strength in the two sectors supports economists’ predictions that the economy grew at around a 5% annualized rate in the fourth quarter after a record 33.4% pace in the third quarter.

The manufacturing boost to gross domestic product would come through an accumulation of inventory by businesses.

The virus and depleted government pandemic money took a bite out of consumer spending in November. More than $3 trillion in government pandemic relief fueled growth in the July-September quarter after the economy contracted at a historic 31.4% rate in the second quarter. Nearly $900 billion in fiscal stimulus was approved in late December.

The ISM’s forward-looking new orders sub-index rose to a reading of 67.9 last month from 65.1 in November. Strong orders growth boosted manufacturing employment, which had contracted in November. The ISM’s manufacturing employment gauge rebounded to 51.5 from a reading of 48.4 in November.

But the supply chain gridlock is driving up costs for manufacturers. The survey’s prices paid index jumped to a reading of 77.6 last month, the highest since May 2018, from 65.4 in November. That raises the risk of higher inflation this year, though high unemployment could limit price pressures.

The labor market has lost steam in tandem with the economy since job growth peaked at a record 4.781 million in June.

According to an early Reuters survey of economists, nonfarm payrolls probably increased by 100,000 jobs last month after rising by 245,000 in November. That would mean the economy recouped about 12.5 million of the 22.2 million jobs lost in March and April. The government is scheduled to publish December’s employment report on Friday.

(Reporting by Lucia MutikaniEditing by Chizu Nomiyama and Paul Simao)

U.S. states enlist medical, nursing students to give out COVID-19 vaccine

By Tina Bellon and Melissa Fares

NEW YORK (Reuters) – U.S. states, facing a backlog in administering coronavirus vaccines, are asking medical and nursing students, and even firefighters, to help give the shots and free up healthcare workers battling a raging pandemic at overcrowded hospitals.

At least seven state health departments are seeking volunteers for their vaccination sites, some partnering with local universities or nursing schools to offer incentives such as tuition discounts and hands-on training. Others are teaching first responders to administer shots.

The national rollout of COVID-19 vaccines are the best hope to end a pandemic that has cost the lives of more than 320,000 Americans and crippled the U.S. economy.

This month, U.S. regulators authorized the first two COVID-19 vaccines, one from drugmakers Pfizer Inc and BioNTech SE and another from Moderna Inc.

As of Wednesday, nearly 10 million doses have been delivered across the country, but only about 1 million administered due to staffing shortages at hospitals and the special requirements for preparing the shots. The slow pace of the vaccination campaign threatens the federal government’s goal of inoculating nearly 20 million people by year’s end.

While inoculation is currently focused on frontline healthcare workers, the vaccination drive is expected to expand to tens of millions of essential industry workers beginning in January or February.

From New York to Tennessee, states are hoping medical and nursing students will free up medical staff focused on tending to the record numbers of new COVID-19 patients.

“Being able to staff vaccination clinics with volunteers from our reserve workforce means that staff at the vaccination sites can continue to perform their normal duties, which is crucial as our hospitalization rate has increased,” said a spokeswoman for Indiana University’s School of Medicine.

‘STRIKE BACK AGAINST COVID’

As the first vaccines arrived, Indiana health officials called on the state university because of its far-reaching campuses. More than 630 of Indiana University’s medical and nursing students have signed up as volunteers and receive 90 minutes of online and hands-on training.

Fourth-year medical student Nicholas Clough began administering COVID-19 vaccines to frontline healthcare workers last Wednesday. He has lost several family members during the pandemic.

“It finally felt like it was a real, tangible strike back against COVID,” said Clough, 26.

The University of Wisconsin is offering a $500 tuition credit to students with medical credentials working at understaffed hospitals during the winter break, including administering vaccines.

The university is also talking to government officials to turn universities into vaccine distribution hubs, a spokesman said.

In California, fire department paramedics have been trained to administer the vaccine, initially to fellow employees.

“They have already received online training and will have another one-hour live training session,” said Peter Sanders, a spokesman for the Los Angeles Fire Department, which expected its first shipment of the Moderna COVID-19 vaccine on Wednesday.

Michigan has set up a volunteer registry allowing officials and hospitals to recruit help for upcoming vaccine clinics.

“We encourage all medical and nursing students to register now so they will be ready when their assistance is needed!” a health department spokeswoman said.

Other states are not actively recruiting nursing students. A spokeswoman for Georgia’s health department said the state might do so later, as the vaccine becomes more widely available to the public.

Depending on state licensing laws, medical and nursing students are allowed to administer vaccines, often under supervision of a fully-licensed professional.

Facing a shortage of vaccinators, the Association of Immunization Managers, a nonprofit representing state and local health officials, recommends relaxing regulation or adjusting licensing requirements.

At least two states, Massachusetts and New York, have changed their laws in recent weeks to expand those who are eligible to give shots.

New York Governor Andrew Cuomo on Dec. 13 allowed medical, nursing, pharmacy, dentistry, podiatric and midwifery students to administer flu and COVID-19 shots under supervision.

(Reporting by Tina Bellon and Melissa Fares in New York; Additional reporting by Deena Beasley in Los Angeles; Editing by Michele Gershberg and Aurora Ellis)

Fed’s Kaplan concerned about next six months as virus surges

By Ann Saphir

(Reuters) – Dallas Federal Reserve President Robert Kaplan said on Tuesday he was “cautious and concerned” about downside economic risks in the short run because of the resurgence of the coronavirus, but more optimistic in the longer term.

“The next two quarters are going to be very challenging, very difficult,” Kaplan told Bloomberg’s Future of Finance virtual conference. “Downside risks are growing with this resurgence.”

Still, he said, the U.S. economy will likely rebound strongly in the second half of next year, after a vaccine is widely available, adding that his business contacts have told him they are gearing up for exactly that.

The United States is experiencing a rise in cases, hospitalizations and deaths from COVID-19, with some state and local governments re-imposing restrictions to slow the spread.

With millions of out-of-work Americans dipping into savings built with government aid distributed earlier this year, Kaplan said, household income and spending will drop off “at some point” unless more fiscal aid is forthcoming.

Aid to small businesses in the form of a renewed Paycheck Protection Program would be particularly helpful, he said, because while financial conditions are broadly fairly loose, that is not the case for smaller businesses that rely on banks for credit.

“While we are in the teeth of the pandemic I believe we need to do what we need to do to fight the pandemic,” Kaplan said in a separate event sponsored by UT Dallas.

As long as the pandemic is ongoing, the U.S. central bank should not back away from its programs supporting economic growth, which include bond purchases totaling $120 billion a month and lending programs to corporate America, he said.

Once it subsides, he said, the U.S. will need to moderate government debt.

(Reporting by Ann Saphir; Editing by Paul Simao and Chizu Nomiyama)

McConnell says U.S. needs ‘another boost’ as coronavirus relief talks continue

By Patricia Zengerle

WASHINGTON (Reuters) – Senate Majority Leader Mitch McConnell on Thursday said the U.S. economy needs an “additional boost” to cope with the fallout of the coronavirus pandemic, as his Democratic counterparts and White House officials try to hash out a next wave of relief.

As talks neared the end of their second week, the four principal negotiators – a group that does not include McConnell – appeared to be near agreement on some topics, but still trillions of dollars apart on major issues including the size of a federal benefit for tens of millions of unemployed workers.

McConnell said he agreed with Federal Reserve Chairman Jerome Powell and Treasury Secretary Steven Mnuchin that agreement is needed on another aid package, even though some of his fellow Republicans in the Senate do not think so.

“I think we need an additional agreement,” the Republican Senate leader told CNBC, adding “the economy does need an additional boost.” Nonpartisan analysts say McConnell’s Republicans face a risk of losing their Senate majority in November’s elections.

McConnell continued to insist that unemployment benefits in any deal should be adjusted downward and that the agreement should include liability protections against lawsuits for reopening businesses during the pandemic.

Mnuchin was due to join fellow Republican Mark Meadows, the White House chief of staff, and the two top congressional Democrats, House of Representatives Speaker Nancy Pelosi and Senate Democratic leader Chuck Schumer, for talks on Capitol Hill at 5 p.m. EDT (2100 GMT).

Others not in the negotiation room considered their own actions, as Republican senators said they had been told that no deal by Friday would mean no deal at all.

Republican President Donald Trump stood ready to use executive orders to address issues such as unemployment benefits and protections against evictions if talks failed, according to Meadows.

Republican Senator Marco Rubio told reporters that the Senate on Thursday could also take up a new version of the Payroll Protection Program that provides financial assistance to small businesses in the form of forgivable loans.

Congress passed more than $3 trillion in relief legislation early in the pandemic. But lawmakers missed a deadline last week to extend the $600 per week in enhanced unemployment payments that played a key role in propping up the economy.

Pelosi and Schumer have pushed for a comprehensive package of assistance for the unemployed, the poor, hospitals, schools and state and local governments.

“The leader and I are determined that we will come to agreement. But it has to meet the needs of the American people,” Pelosi said.

Mnuchin has warned that the Trump administration would not accept “anything close” to the $3.4 trillion in new aid sought by Democrats. Senate Republicans have proposed a $1 trillion package that many of their own members have rejected.

Americans on COVID-19 jobless benefits spent more than when working, study shows

By Jonnelle Marte

(Reuters) – Americans who received enhanced unemployment benefits due to the coronavirus pandemic spent more than when they were working, a study released on Thursday said, adding to concerns about a steep fall in spending when the emergency benefits expire.

The $600 weekly supplement added to jobless benefits as part of the CARES Act helped unemployed households spend 10% more after receiving benefits than they did before the pandemic, according to research by the JP Morgan Chase Institute.

Researchers analyzed transactions for 61,000 households that received unemployment benefits between March and May. Spending dropped for all households as the virus spread and led to business shutdowns, but then rose when households began receiving jobless benefits, the study found.

That contrasts with a typical recession, when households receiving unemployment benefits usually cut spending by 7% because regular jobless benefits amount to only a fraction of a person’s prior earnings, the research found.

The analysis highlighted how the additional unemployment benefits are helping to prop up the U.S. economy and consumer spending after the pandemic led to a surge in joblessness across the country.

More than 30 million Americans are estimated to be receiving unemployment benefits – and they could be pushed off an income cliff when the supplemental benefits, which are due to expire at the end of July, are withdrawn.

“Our estimates suggest that expiration will result in large spending cuts, with potentially negative effects on both households and macroeconomic activity,” the researchers wrote.

The data also reflected the financial pain faced by households that encountered big delays in collecting benefits after states across the country were overwhelmed by applications.

Households that had to wait several weeks for their first unemployment check to arrive cut spending by about 20%, the study found. Spending recovered after the checks arrived.

(Reporting by Jonnelle Marte; editing by Richard Pullin)

Fears of second U.S. coronavirus wave rise on worrisome spike in cases, hospitalizations

By Lisa Shumaker, Carl O’Donnell and Michael Erman

(Reuters) – About half a dozen states including Texas and Arizona are grappling with a rising number of coronavirus patients filling hospital beds, fanning concerns that the reopening of the U.S. economy may spark a second wave of infections.

The rally in global stocks came crashing down on Thursday over worries of a pandemic resurgence. The last time the S&P 500 and Dow fell as much in one day was in March, when U.S. coronavirus cases began surging.

A recent spike in cases in about a dozen states partially reflects increased testing. But many of those states are also seeing rising hospitalizations and some are beginning to run short on intensive care unit (ICU) beds.

Texas has seen record hospitalizations for three days in a row, and in North Carolina only 13% of the state’s ICU beds are available due to severe COVID-19 cases. Houston’s mayor said the city was ready to turn its NFL stadium into a make-shift hospital if necessary.

Arizona has seen a record number of hospitalizations at 1,291. The state health director told hospitals this week to activate emergency plans and increase ICU capacity. About three-quarters of the state’s ICU beds are filled, according to the state website.

“You’re really crossing a threshold in Arizona,” said Jared Baeten, an epidemiologist at the University of Washington. “The alarming thing would be if the numbers start to rise in places that have clearly already peaked and are on their downtrend,” he said, referring to New York and other Northeastern states where new cases and deaths have plummeted.

Health experts worry there could be a further rise in infections from nationwide protests over racial injustice and police brutality that packed people together starting two weeks ago.

STATES WITH RISING CASES

Arizona, Utah and New Mexico all posted rises in new cases of 40% or higher for the week ended June 7, compared with the prior seven days, according to a Reuters analysis. New cases rose in Florida, Arkansas, South Carolina and North Carolina by more than 30% in the past week.

Dr. Anthony Fauci, the top U.S. infectious disease official, told Canada’s CBC news that more cases are inevitable as restrictions are lifted.

“We also as a whole have been going down with cases,” Fauci said. “But I think what you mentioned about some states now having an increase in the number of cases makes one pause and be a little bit concerned.”

Even if hospitals are not overwhelmed by coronavirus cases, more hospitalizations mean more deaths in the coming weeks and months, said Spencer Fox, research associate at the University of Texas at Austin.

“We are starting to see very worrying signs about the course the pandemic is taking in cities and states in the U.S. and around the world,” he said. “When you start seeing those signs, you need to act fairly quickly.”

Total U.S. coronavirus deaths are now over 113,000, by far the most in the world. That figure could exceed 200,000 at some point in September, Ashish Jha, the head of Harvard’s Global Health Institute, told CNN.

Jha said the United States was the only major country to reopen without getting its case growth to a controlled level – defined as a rate of people testing positive for the coronavirus remaining at 5% or lower for at least 14 days. Nationally, that figure has been between 4% and 7% in recent weeks, according to a Reuters analysis.

Health officials have stressed that wearing masks in public and keeping physically apart can greatly reduce transmissions, but many states have not required masks.

“I want the reopening to be successful,” Harris County Judge Lina Hidalgo, the top executive for the county that encompasses Houston, told reporters. “But I’m growing increasingly concerned that we may be approaching the precipice of a disaster.”

(Reporting by Michael Erman and Carl O’Donnell in New York and Lisa Shumaker in Chicago; Additional reporting by Lewis Krauskopf in New York and Brad Brooks in Austin, Texas; Writing by Lisa Shumaker; editing by Peter Henderson and Bill Berkrot)