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Virus Did Not Bring Financial Rout That Many States Feared

Windfalls for Some StatesIn his survey, Peter DeGroot, head of municipal research and strategy at J.P. Morgan, found a handful of states, including Idaho, South Dakota and New Mexico, that managed to take in even more money last year than in 2019. The survey also identified several states where tax revenues have not yet bounced back because they depend heavily on tourism, oil and gas, or coal extraction — among them Hawaii, Nevada, Florida, Texas and West Virginia.Ms. Sheiner’s analysis showed that Idaho had the biggest revenue recovery of any state. She conducted her research with Byron Lutz, an …

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Democrats Push to Borrow More Money as Deficit Is Set to Shrink Slightly in 2021

WASHINGTON — As top Democrats continued to push a $1.9 trillion economic aid package through the House, some lawmakers and aides to President Biden raised the prospect of borrowing even more money to finance the president’s next set of spending plans, on infrastructure, buoyed by new projections that showed the nation’s fiscal picture was not as dire as officials feared in the fall.On Thursday, the nonpartisan Congressional Budget Office released updated forecasts that showed a $2.3 trillion deficit for the 2021 fiscal year, an amount lower than last year’s $3 trillion deficit but still the second highest since World War II. …

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C.B.O. Report Says U.S. Economy Is Healing, But Workers Have A Ways to Go

WASHINGTON — The United States economy will return to its pre-pandemic size by the middle of this year, even if Congress does not approve any more federal money to aid the recovery, the Congressional Budget Office said on Monday. But it will be years before everyone thrown off the job by the coronavirus is able to return to work.Those projections could further complicate President Biden’s ability to quickly pass a $1.9 trillion stimulus package, as moderate Republicans and even some left-leaning economists express concerns that too much new federal borrowing could overheat the economy.Still, Democrats worried about families putting …

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Biden Wants to Raise Taxes, Yet Many Trump Tax Cuts Are Here to Stay

During the presidential campaign, Mr. Biden proposed trillions of dollars in tax increases on corporations and the rich, but his plans stopped short of a full repeal of Mr. Trump’s tax law. He said he would raise income taxes to pre-Trump levels only at the top bracket, an increase to 39.6 percent from 37 percent. He called for raising the corporate tax rate to 28 percent from 21 percent, where Mr. Trump set it — still short of the top rate of 35 percent that preceded the law.Even Mr. Biden’s international tax plan, which is meant to encourage domestic investment and job creation …

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A Second Economic Crisis for Biden, but a Different First Response

Mr. Biden has stressed that such aid will support increased consumer spending, but he and his team cast the goal of distributing the money in more human terms: to ensure as many Americans as possible avoid the scarring damage of homelessness, hunger and the virus itself.The Biden team and its allies are confident that, if they succeed, the economy will be poised for a roaring rebound. Other policymakers and forecasters, including Jerome H. Powell, the Federal Reserve chair, have predicted a swift rebound once the virus is under control.“The recovery from the Great Recession was delayed by years …

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As Some Deficit Hawks Turn Dove, the New Politics of Debt Are on Display

And while running big deficits might have once stoked fears about inflation — as too many dollars chased too few goods — price gains have been too low for comfort for years. Add to that the emergency needs prompted by the pandemic, and even the Fed’s leader, who had long warned about the nation’s debt load, has said this is a reasonable time to spend money.“As a general rule, it is important to be on a sustainable fiscal path,” the Fed chair, Jerome H. Powell, a Republican, said at a news conference last month. “From my way of thinking …

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Biden Expected to Name Top Economic Officials This Week

WASHINGTON — President-elect Joseph R. Biden Jr. is expected to name top members of his economic team this week, including Cecilia Rouse, a Princeton labor economist, to run the Council of Economic Advisers, and Neera Tanden, the chief executive of the Center for American Progress, to lead the Office of Management and Budget, according to people familiar with the matter.The announcement — which will include Mr. Biden’s decision to name Janet L. Yellen, the former Federal Reserve chair, as Treasury secretary — would potentially culminate in several women in top economic roles, including the first Black woman to lead the Council …

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Yellen Would Assume Vast Policy Portfolio as Treasury Secretary

WASHINGTON — Janet L. Yellen’s expected nomination as Treasury secretary will place the former Federal Reserve chair into a critical role overseeing President-elect Joseph R. Biden Jr.’s economic and national security agenda at an agency that has increasingly become a center of power.While Ms. Yellen’s views on monetary policy are well known from her time leading the central bank, her perspective on a range of issues that are part of the Treasury Department’s portfolio is less known.As Treasury secretary, Ms. Yellen will be the Biden administration’s chief economic diplomat and will face the challenge …

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Economic Risks Are High as Chances for Quick Stimulus Narrow

WASHINGTON — Two of the world’s most powerful central bankers said on Thursday that economic risks from the coronavirus remain high, and they cautioned against putting too much faith in a quick fix from a vaccine, delivering a sober message as U.S. lawmakers signaled that another stimulus package was unlikely before year’s end.

“The next few months could be challenging,” Federal Reserve Chair Jerome H. Powell said during a webcast panel discussion, where he appeared alongside his European counterparts. Both Mr. Powell and Christine Lagarde, head of the European Central Bank, warned that while recent progress toward a vaccine was welcome news, it was too soon to write off looming risks to the global recovery as coronavirus cases surge globally, causing renewed lockdowns in some jurisdictions.

“From our standpoint, it’s just too soon to assess with any confidence the implications of the news for the path of the economy, especially in the near term,” Mr. Powell said.

On Monday, the pharmaceutical company Pfizer announced encouraging results from its vaccine trials, nudging stock markets toward new heights. On Thursday, stocks ceded some of their recent gains, with losses deepening after Mr. Powell and Ms. Lagarde spoke.

While Mr. Powell acknowledged the vaccine progress, he cautioned that “significant challenges and uncertainties” remain around timing, production, distribution and the efficacy for different groups.

Ms. Lagarde, explaining that she did not want to be “exuberant” about the treatment, also pointed to “uncertainties — about the logistics, about the transportation, about the rolling out, about the fabrication” and about how many people will actually be vaccinated in 2021.

Economic risks in the United States remain acute as millions remain out of work, government support fades and the country sets records for virus cases and hospitalizations, prompting cities and states to impose new restrictions on activity.

Yet prospects for another relief package before year’s end narrowed on Thursday as Democrats and Republicans continued to disagree over the scope and cost of a bill and as a top Republican indicated that Senator Mitch McConnell, the majority leader, was no longer planning to rely on Treasury Secretary Steven Mnuchin to cut a deal with Democrats, reflecting his party’s wariness that Mr. Mnuchin had been too eager to concede.

Speaker Nancy Pelosi of California and Senator Chuck Schumer of New York, the minority leader in the Senate, cited record-breaking infections across the country, along with the election of Joseph R. Biden Jr., to justify their position that any package must be much larger than what Republicans had been suggesting.

But in holding firm to their respective positions — Democrats demanding $2.4 trillion as a starting point, with Republicans proposing a fraction of that amount — congressional leaders appeared to be closing the door on the possibility of a year-end compromise.

“My view is, the level at which the economy is improving further underscores that we need to do something at about the amount that we put on the floor in September and October,” Mr. McConnell told reporters, referring to the targeted $500 billion packages Senate Republicans tried to pass before the election.

The price tag Ms. Pelosi and Mr. Schumer were discussing, he said, “is not a place I think we’re willing to go, but I do think there needs to be another package.”

Key supports for displaced workers and shuttered businesses have expired, and while households have been using savings that they built up earlier in the year to keep up with their bills, there is a risk that many will struggle to make ends meet as they run through those nest eggs. Mr. Powell and his colleagues have been clear that more support will be needed, in particular as the pandemic accelerates shifts in the economy — like increased remote work and automation — and leaves some workers permanently displaced.

“We’re recovering, but to a different economy,” Mr. Powell said, warning that a “substantial group of workers” are “going to need support as they find their way in the post-pandemic economy, because it’s going to be different in some fundamental ways.”

Mr. Powell said that while the United States’s recovery has been faster and stronger than anticipated and is expected to continue, it has been uneven — and it remains incomplete.

“The main risk we see to that is clearly the further spread of disease here in the United States,” Mr. Powell said. “We’ve got new cases at a record level, we’ve seen a number of states begin to reimpose limited activity restrictions, and people may lose confidence that it is safe to go out.”

Credit…Anna Moneymaker for The New York Times

Ms. Pelosi and Mr. Schumer huddled with Mr. Biden by phone on Thursday, stressing afterward that they were on the same page about the “urgent need” for Congress to provide bipartisan funds to support the unemployed, workers, small businesses, state and local governments facing huge budget deficits, and the nation’s health care system before he takes office. It had been unclear how actively Mr. Biden, the incoming head of the party, would involve himself in negotiations before his inauguration.

Ms. Pelosi portrayed Republicans as “coldhearted” for insisting on a smaller relief package and tried to upbraid them.

“It’s like the house is burning down and they just refuse to throw water on it,” she said.

That message had clear political overtones. Nearly everything said in the halls of Congress these days appears to be aimed, at least in part, at voters in a pair of runoff Senate elections in Georgia in January that will determine control of the Senate. Economists at Goldman Sachs suggested that Republicans might be eager to secure a deal before the Jan. 5 vote to avoid claims that the Republican-controlled Senate prevented help from reaching households — but Democrats might have an incentive not to compromise much, with that vote imminent.

“The political atmosphere is less conducive to a deal than it seemed a week ago,” Alec Phillips and his colleagues at Goldman Sachs wrote in a research note on Thursday, noting that the prospect for a vaccine could itself reduce appetite for a big government package.

The two sides will also have to reach an agreement on crucial spending legislation to prevent a lapse in government funding on Dec. 11, with either an agreement on the dozen annual must-pass bills or another stopgap spending bill. There is a possibility that lawmakers will wrap additional relief funding into a larger package with that legislation.

“We’d like to do a streamlined or targeted stimulus bill, but we’ve got to have some support from the other side,” said Senator Richard C. Shelby of Alabama, the chairman of the Senate Appropriations Committee.

Senator Charles E. Grassley of Iowa, chairman of the Senate Finance Committee, suggested that Republicans were in no mood to compromise, signaling that Mr. Mnuchin would no longer be leading talks with Ms. Pelosi.

“There hasn’t been any discussion yet between McConnell and Pelosi, but McConnell is not going to rely on Mnuchin anymore to do the dealing,” Mr. Grassley told reporters on Thursday morning. “I think he’s intending to take it over and try to get something going.”

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