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Senators return to Washington, D.C., today from their annual summer recess, no closer than when they left three weeks ago to resolving sharp divisions over another coronavirus aid package and now facing a potential government shutdown that could deepen the economic pain, the New York Times reported. The impasse amounts to a fraught political situation for both parties less than two months before the November election, with millions still unemployed and cities and states beginning to enact significant budget cuts with no promise of relief from Congress. Senate Republican leaders are hoping to corral their caucus around a scaled-back stimulus plan that would reinstate lapsed federal unemployment benefits at $300 per week — half their previous level — and allocate $105 billion for schools and funds for testing and the Postal Service, according to Republican aides familiar with the discussions. The plan represents an effort to intensify pressure on Democratic leaders, who want to restore the $600 unemployment benefits and have refused to consider any measure below $2.2 trillion. The Republicans’ bill would carry a likely price tag of $500 billion to $700 billion, far less than the $3 trillion measure Democrats passed in the House and smaller than the $1 trillion measure Senate Republicans introduced in July. A procedural vote advancing the legislation could come as early as this week, according to Republican aides, but it remains unclear whether Republicans can coalesce around it. Even if they do, Democrats are expected to block it. In a letter to his caucus, Senator Chuck Schumer of New York, the minority leader, called the bill “emaciated” and urged Democrats to push for “another comprehensive, bipartisan bill that meets the moment facing our nation.” Lawmakers are more optimistic about the chances for a stopgap budget bill to avert a shutdown at the end of the month; Speaker Nancy Pelosi and Steven Mnuchin, the Treasury secretary, have reached an informal agreement on the bill. It is unclear how long the measure would provide funding after the new fiscal year begins on Oct. 1, but it would be all but guaranteed to last beyond the Nov. 3 election. Read more.

https://www.nytimes.com/2020/09/08/world/covid-19-coronavirus.html?acti…

In related news, states and cities across the nation have made an array of fiscal maneuvers to stay solvent and are planning more in case Congress can’t agree on a fiscal relief package after the August recess, the New York Times reported. House Democrats included nearly $1 trillion in state and local aid in the relief bill they passed in May, but the Senate majority leader, Mitch McConnell of Kentucky, has said that he doesn’t want to hand out a “blank check” to pay for what he considers fiscal mismanagement, including the enormous public-pension obligations some states have accrued. There has been little movement in that stalemate lately. Economists warn that further state spending reductions could prolong the downturn by shaking the confidence of residents, whose day-to-day lives depend heavily on state and local services. “People look to government as their backstop when things are completely falling apart,” said Mark Zandi, chief economist at Moody’s Analytics. “If they feel like there’s no support there, they lose faith and they run for the bunker and pull back on everything.” Collectively, state governments will have budget shortfalls of $312 billion through the summer of 2022, according to a review by Moody’s Analytics. When local governments are factored in, the shortfall rises to $500 billion. That estimate assumes the pandemic doesn’t get worse. Read more.

https://www.nytimes.com/2020/09/07/business/state-budgets-coronavirus-a…

The California legislature passed S.B. 832 to update its homestead exemption for consumer debtors. The law's major provisions include:

1) Making the homestead exemption the greater of $300,000 or the countywide median sale price of a single-family home in the calendar year prior to the year in which the judgement debtor claims the exemption, not to exceed $600,000

2) Adjusting annually for inflation, beginning on January 1, 2022, based on the change in the annual California Consumer Price Index for All Urban Consumers for the prior fiscal year, published by the Department of Industrial Relations.

"This homestead exemption increase is long overdue," said bankruptcy attorney Jenny Doling of J. Doling Law PC (Palm Desert, Calif.). "It represents the median priced home in California, not a home of great value, just the average family home. Further, if a debtor’s home is sold and the debtor is paid the value of the homestead, the debtor only has 6 months to roll the funds into a new homestead or the debtor loses those funds.” The previous California law prescribed that the amount of the homestead exemption was either $75,000, $100,000, or $175,000, depending on certain characteristics of the homestead’s residents. Having passed both the California Senate and Assembly, S.B. 832 is expected to be signed by Gov. Newsom soon and will go into effect immediately. Click here to read the bill text.

Senate Majority Leader Mitch McConnell (R-Ky.) expressed doubts about whether Congress can get a deal on another pandemic relief package after lawmakers return to Washington, D.C., after a month-long recess, despite the Trump administration push for a quick, targeted stimulus, Bloomberg News reported. “I don’t know if there will be another package in the next few weeks or not,” McConnell said. He said that talks between top administration officials and House Speaker Nancy Pelosi haven’t been fruitful, and that any embrace of bipartisanship in the Capitol has “descended” as the fall elections near. His comments come a day after Treasury Secretary Steven Mnuchin testified to Congress that parts of the U.S. economy urgently need additional fiscal stimulus to fully rebound from the COVID-19 crisis. Mnuchin told a House panel the most important thing is “that we deliver some relief quickly to the American workers impacted by this.” Mnuchin later initiated a call with Pelosi, amid the stalemate in talks. In a statement Tuesday night, the speaker said she told the Treasury chief that Democrats have “serious questions” remaining in any negotiations. That includes, she said, the view of the administration that a smaller package can be pursued now and a larger one later. There have been no negotiations since the last round broke up almost a month ago. Democrats have offered to lower their demand for a $3.5 trillion package to about $2.2 trillion. Senate Republicans originally put forth a $1 trillion plan, but are now discussing with the administration a smaller $500 billion package they say will be more focused on areas of the economy most affected by the pandemic. Mnuchin singled out the travel industry and small businesses as needing more aid.

A telephone call on coronavirus economic relief between U.S. House Speaker Nancy Pelosi and an adviser to President Donald Trump ended yesterday with no breakthrough, and Pelosi said that talks would not resume until the Trump administration agreed to $2.2 trillion in aid, Reuters reported. Pelosi and White House Chief of Staff Mark Meadows spoke by phone for about 25 minutes, the first chance in weeks to resume stalled COVID-19 aid negotiations. But the two sides soon appeared to be as far apart as ever. Meadows and Pelosi are two of the four negotiators who were involved in talks on legislation to help Americans and businesses suffering from a coronavirus pandemic that has now killed nearly 180,000 people. The others are Treasury Secretary Steven Mnuchin and Senate Democratic leader Chuck Schumer. The talks broke down on Aug. 7, with the sides far apart on major issues including the size of unemployment benefits for tens of millions of people made jobless by the pandemic, aid for state and local governments and funding for schools and food support programs. The Democratic-controlled House of Representatives in May passed a $3.4 trillion coronavirus relief bill, but Pelosi offered to reduce that sum by $1 trillion. The White House, which had proposed $1 trillion in aid, rejected the offer. Democrats have since demanded that the White House agree to “meet in the middle.”

Cutting taxes during periods of high unemployment will produce fewer jobs than during more robust economic times, according to a new working paper from the nonpartisan Congressional Budget Office (CBO), The Hill reported. "I find that effects on hours worked, employment, and the unemployment rate become smaller in times of higher unemployment," the paper's author, U. Devrim Demirel, wrote. The reason, Demirel suggested, is that employers are less concerned about the costs of hiring at times of high unemployment, where labor is already relatively cheaper. In negotiations over COVID-19 emergency relief, Republicans have pushed to provide tax breaks for struggling businesses. The paper did not weigh in on whether such tools would help keep businesses afloat, but its findings suggest that it wouldn't be the best route to add jobs to the economy.

White House Chief of Staff Mark Meadows said yesterday that he is not optimistic about reaching a new coronavirus relief deal before the end of September, predicting House Speaker Nancy Pelosi will use the government funding cliff at the end of next month as leverage to strike a deal on pandemic aid, Politico reported. Meadows said his staff had reached out to Pelosi's office on Tuesday but added that he does not anticipate a response. The White House chief of staff said that lawmakers from both parties have privately expressed to him a desire to make progress on coronavirus relief. The hold up, Meadows said he suspects, is that Pelosi is holding back her party's rank and file in order to secure more Democratic priorities in any legislation. "It's really been Speaker Pelosi really driving this train as a conductor more so than really anybody," Meadows said. "And I think privately she says she wants a deal and publicly she says she wants a deal, but when it comes to dealing with Republicans and the administration, we haven't seen a lot of action." Pelosi spokesman Drew Hammill told Politico that a member of Meadows' staff texted the speaker's staff to confirm they had the correct number for the chief of staff, but did not mention resuming talks. Meadows also said he would call Pelosi during an interview on ABC News on Sunday, but Hammill said he never did.