Legislative Update, November 17, 2020
Georgia Runoff: Two U.S. Senate races called on Wednesday of last week, in Alaska (Dan Sullivan – R) and North Carolina (Thom Tillis – R) bring the composition of the Senate to 50 Republicans – 48 Democrats. A January 5 runoff election in Georgia in which two Senate seats are on the ballot will determine the majority. 50 seats plus Vice President Kamala Harris as the tying vote would mean a Democratic majority. In one race, incumbent Senator Kelly Loeffler (R) faces challenger Raphael Warnock (D). In the other race, incumbent Senator David Perdue (R) faces challenger John Ossoff (D). Under Georgia law, if no candidate gets more than 50% of the vote, a runoff election is required. In both Senate races there were enough third party votes that neither major party challenger passed the 50% threshold. Normally, Senate elections are staggered. In this instance, Senator Perdue is running on schedule to win another term while Senator Loeffler is running after having been appointed last year to fill the seat of Johnny Isakson (R) who had to retire for health reasons last December.
October Budget Deficit: The Wall Street Journal reports that, for the month of October, which is the first month of the federal fiscal year, the federal government ran a budget deficit of $284 billion, a figure more than twice that of the same time last year. For FY 2020, which ended on September 30, the budget deficit was $3.1 trillion, as the government responded to the coronavirus pandemic crisis, a figure comprising some 15.5% of GDP.
Affordable Care Act and the Court: During arguments before the Supreme Court last Tuesday, Chief Justice John Roberts and Justice Bret Kavanaugh gave indications that, in the event that the Court finds that the individual purchase mandate is unconstitutional, they would favor severing it from the rest of the Affordable Care Act.
Doing so would leave the rest of the law intact. Should Roberts and Kavanaugh ultimately favor severability, they would be in agreement with the three-member liberal wing of the Court, Justices Sotomayor, Breyer, and Kagan.
The individual mandate was held to be constitutional by the Supreme Court in 2012 based on the majority’s interpretation of the financial penalty for failure to comply with the individual purchase mandate as a tax.
Congress removed the financial penalty for failure to meet the individual purchase mandate in 2017. Opponents of the law brought suit claiming that the lack of a penalty rendered moot the reliance on it being a tax and that, without the tax penalty the purchase mandate was unconstitutional. They further argued that the mandate was inseverable and that, as a result, the whole Act would have to be struck down.
In the case currently before the Court, California v. Texas, No. 19-840, a federal judge in Texas previously ruled for the plaintiffs. This past December a federal court in Louisiana deemed the individual purchase mandate to be unconstitutional but declined to rule on severability.
The case hinges on three arguments: 1) that the plaintiffs have suffered harm sufficient to give them standing to sue; 2) that the elimination of the tax penalty made the individual mandate unconstitutional; and 3) that the law cannot stand without the individual purchase mandate. It seems as though the defendants might prevail where the third argument is concerned.
Positive October Jobs Report: Based on the October jobs report (Employment Situation Summary) issued by the Bureau of Labor Statistics this past Friday, the U.S. economy added 638,000 jobs in October. This constitutes the sixth straight month of job gains after the pandemic shutdown in March and April cost 22 million jobs. The economy has recovered some 12.5 million of those jobs since. The unemployment rate came down a point to 6.9%.
Unemployment Claims: For the week ending November 6, initial claims for unemployment were 709,000, a 48,000 reduction from the prior week. Weekly claims, while lower than the catastrophic levels which reached nearly 7 million toward the end of March, are still historically high. Prior to the pandemic, claims averaged about 200,000 per week. The pre-pandemic record for weekly claims was set at 695,000 for the week ended October 2, 1982.