Overpayments on Unemployment Benefits

    
     During the pandemics, more and more people lost their job. At the beginning of the pandemic, states started to use a new federal benefit program created by the CARES to give out unemployment benefits. However, not every transaction was done correctly. Some people received more money than they should have. In an article from CNBC, Greg Iancurci writes how states can solve this problem.

    According to Iancurci, the problem occurred because of the quick changes of the pandemic, the program being newly created, the high number of claims, and applicants making mistakes when they applied for the financial aid. The CARES, however, does not offer states a safety valve to forgive the overpayments. Some states tried for households to pay the "extra" money back to the state. However, there is a problem with this plan, because most households have already spent that money. In May 2021, Labor Department officials made rules so that states could ignore the overpayments in certain situations if they wanted to. The Labor Department also asked the states to pay back the "extra" money that they collected from the households. Michele Evermore, an advisor for the unemployment insurance at the Labor Department, explains why they do not want households to have to pay the "extra" money back. She says: "Otherwise, potentially millions of claimants have been or will be issued overpayment notices that will cause them to make drastic decisions with regard to how to reimburse states with money they do not necessarily have." This guidance from the Labor Department is optional, so states do not have to follow this guidance. However, Iancurci points out that the money used for aids is federal and not state money.

    The certain situations where states can choose to waive the overpayments are when people did not respond correctly to application questions assessing the eligibility for the unemployment insurance, or when the state was at fault for the extra high payment. For example when the state miscalculated the amount of payment someone should receive.

https://www.cnbc.com/2022/02/07/labor-department-tries-to-stop-states-clawing-back-unemploymentbenefits.html?&qsearchterm=unemployment%20benefits

Rising International Inflation and Its Effect on Worker's Real Wages

 

Rising International Inflation Rates and Their Effects on Real Wages of Workers

During the past three years, the world economy has continued to produce significant increases in inflation rates. During the month of January, consumer price grew much more than expected in the United States, Britain, and Europe. Additionally, recent territorial tensions between Ukraine and Russia sent the price of oil to over ninety-six dollars a barrel, the highest market price it has reached since 2014. As a result, economies on both sides of the Atlantic Ocean have introduced some regulatory economic policies, particularly that of monetary tightening. While the primary reason for implementing these policies is the aforementioned sudden increase in inflation rates, another reason for this action comes in the form of public opinion, as many banking institutions have begun to worry their credibility in the eyes of the public has waned during this most recent period of economic instability and decline.

These occurrences have garnered the concern of policymakers, particularly in relation worker wage demands. One of the more dangerous effects of high inflation is that in some cases, it can cause an increase in worker wage demands, or the amount of money that workers feel they should be paid in comparison to prices, the economy, etc. If these two singularities begin to affect one another, it can create a scenario known as a wage-price spiral, where workers demand to be paid more because of rising prices. If allowed to escalate, a demand for higher wages can cause increases in other sectors of the economy such as inflation and price, hence the wage-price spiral.

Unfortunately, the group that suffers the most from this economic phenomenon is workers themselves, as they suffer disproportionately compared to corporations or businesses when it comes to changes in price. However, it is important to note that it does put the policymakers in charge of price and money supply in a precarious situation, as the idea of wages increasing too quickly can be politically divisive and cause negative reception from the labor force.

Source: https://www.economist.com/leaders/workers-have-the-most-to-lose-from-a-wage-price-spiral/21807722

Halt the Gas Tax?

     As the price of gas keeps climbing and climbing, hitting a national average of $3.49 per gallon, lawmakers look to policy to lower that price. Some lawmakers have proposed a halt on the gas tax until 2023 to give some relief to consumers who rely on gas in their everyday life. The gas tax is a levy imposed on the overall price per gallon of gas. While states have their own tax, the Federal Government has a 18.4 cent tax per gallon that some lawmakers have proposed putting on hiatus, in a newly proposed bill. 

    This would be the first change in the gas tax since 1993, and is being proposed to combat a 7.5% rise in the cost of living experienced in 2021. The bill itself would put the tax on hold, as well as authorize the allocation of other general funds to keep funding the Highway Trust Fund, previously funded by the federal and state gas taxes. 

    The bill is meeting some criticism however, with critics calling the bill "ineffective," and "short sighted".  The main issue critics have with the bill is that they think the effect the pause has on gas prices won't be as large as lawmakers think it will be. Saying that gas retailers "might" pass along some of the relief, but the majority would ultimately feed into inflation. Critics are worried this bill might make inflation worse as the revenue of the gas tax for 2022 is estimated to be around $20 Billion, something that the Government would miss out on if they halt the tax.

 https://www.marketwatch.com/story/would-a-federal-gas-tax-holiday-mean-lower-prices-at-the-pump-dont-bet-on-it-critics-say-11644951388

Ukraine seeks meeting with Russia within 48 hours to discuss build-up

 Dmytro Kuleba, Ukraine's foreign minister, claimed Russia has rejected official pleas to justify the army buildup. He stated that the "next step" would be to propose a discussion over the next 48 hours to discuss Russia's objectives in "transparent."

Despite the presence of 100,000 troops on Ukraine's borders, Russia has dismissed any ambitions to invade the country. However, several Western countries have cautioned that Russia is ready for armed intervention, with the US suggesting that it may start with aircraft airstrikes "at any time." 

Upwards of a dozen countries have encouraged their people to abandon Ukraine, and several have withdrawn diplomatic personnel from the country's capital. According to three sources, CBS News reports the US Is prepared to evacuate all of its employees in Kiev in the next 48 hours. Meanwhile, 

Ukraine's President Volodymyr Zelensky, which criticized the "panic" that certain accusations may cause, said he had seen no evidence that Russia was plotting an invasion in the next days. On Sunday, he chatted on the phone for nearly two hours with US Vice President Joe Biden. According to the White House, President Biden underlined the United States' commitment for Ukraine, and both leaders agreed on the "need of persuing diplomacy and deterrence."

The Fed

 According to the last data on inflation, it has become clear that the Fed's monetary policy is too expansionary. The Fed was late in ending quantitative easing and raising interest rates. In the fourth quarter of 2021, nominal spending increased at an annual rate of 14.3 percent. The quick growth in spending pushed inflation well above the Fed's two percent goal. One of the mistakes was the intensive focus on closing the "output gap" between actual real GDP and potential GDP, which is extremely difficult to estimate. Consequently, the Fed should focus on other economic variables such as nominal GDP. The nominal GDP growth rate of 4 percent is consistent with the Fed's 2 percent inflation goal. Market players pay close attention to Powell's, who is the chairman of the Fed, comments. Fed officials seem to assume that financial markets desire as predictable a path for interest rates as possible. However, markets want is the assurance of a stable outcome for the economy. It does no good to hold interest rates at zero for an excessive period if that causes the broader economy to overheat.