A report released on Tuesday that examined poverty in the United States has invited comparisons of the effectiveness of government stimulus in response to the two most recent economic emergencies: the 2009 financial crisis and the 2020 coronavirus pandemic.
Despite the pandemic, the share of people living in poverty in the United States fell to a record low last year — a finding that economists and policymakers across the political spectrum have hailed as a sign that the emergency stimulus program worked.
Robert Reich, the Berkeley economics professor who served as labor secretary under President Clinton, tweeted that the data proved government aid was effective in fighting poverty. Douglas Holtz-Eakin, head of the conservative American Action Forum and a former adviser to Senator John McCain, told the DealBook newsletter that the recent stimulus was “the best policy response to a recession the U.S. has ever seen.â€
But there is still room for interpretation. According to the report, a measure of the poverty rate that accounts for the impact of government programs fell to 9.1 percent of the population last year, from 11.8 percent in 2019. But the official rate, which was devised in 1963 by a Polish immigrant and Social Security administrator, Mollie Orshansky, is based almost entirely on the cost of food and leaves out some major aid programs, rose last year to 11.4 percent. (The difference between poverty measures was once a plotline in “The West Wing.â€)
So, was the pandemic stimulus the “best†emergency response? One thing it has going for it is a seemingly flattering comparison to the government’s efforts in the financial crisis in 2009.
As David Leonhardt of The Morning newsletter recently wrote, President Obama’s 2009 economic aid package has long been seen as a failure, even though the economy began growing again within a few months of its passage and it likely helped stave off an even deeper downturn. Government benefits and tax changes lifted 53 million Americans out of poverty last year, more in absolute and relative terms than in 2009, according to calculations from the liberal-leaning Center on Budget and Policy Priorities.
But consider the other side of the ledger. In 2009, the government spent $810 billion on its stimulus. Last year’s increase in government aid was some $1.8 trillion. That translates, very roughly, to around $35,000 per person lifted out of poverty versus $20,000 in 2009, though not all the money in either package went to lower-income Americans.
The debate over cost and efficiency will influence whether the government should spend trillions more, as President Biden and many Democrats now want, to fund more permanent government aid programs. Detractors, including many Republicans, can point to data showing a seeming drop in the benefit per dollar spent as a reason to be cautious.
But Arloc Sherman, an economist at the Center for Budget and Policy Priorities, said spending now could save money later.
“I would not say the 2020 stimulus was a less effective stimulus,†he said. “But it could have been more efficient and effective if we had a comprehensive and well-designed security system in the first place.â€
SAN JOSE, Calif. — A key whistle-blower against Theranos, the blood testing start-up that collapsed under scandal in 2018, testified on Tuesday in the fraud trial of the company’s founder, Elizabeth Holmes.
The whistle-blower, Erika Cheung, worked as a lab assistant at Theranos for six months in 2013 and 2014 before reporting lab testing problems at the company to federal agents at the Centers for Medicare & Medicaid Services in 2015. Her first day of testimony revealed to a jury what those following the Theranos saga most likely already knew: The company’s celebrated blood testing technology did not work.
Her testimony is expected to continue on Wednesday.
In a crowded courtroom, Ms. Cheung said she had turned down other job offers out of college to join Theranos because she was dazzled by Ms. Holmes’s charisma and inspired by her success as a woman in technology. Ms. Holmes said Theranos’s machines, called Edison, would be able to quickly and cheaply discern whether people had a variety of health ailments using just a few drops of blood.
“She was very articulate and had a strong sense of conviction about her mission,†Ms. Cheung said of Ms. Holmes.
Who’s Who in the Elizabeth Holmes Trial
Erin Woo📍Reporting from San Jose, Calif.
Who’s Who in the Elizabeth Holmes Trial
Erin Woo📍Reporting from San Jose, Calif.
Elizabeth Holmes, the disgraced founder of the blood testing start-up Theranos, stands trial for two counts of conspiracy to commit wire fraud and 10 counts of wire fraud.
Here are some of the key figures in the case →
But Ms. Cheung’s excitement faded after she witnessed actions she disagreed with in Theranos’s lab, she said. In some cases, outlier results of the blood tests were deleted to ensure that Theranos’s technology passed quality control tests. Ms. Cheung was also alarmed when she donated her own blood to Theranos and tests on the company’s machines said she had a vitamin D deficiency but traditional tests did not, she testified.
Ms. Cheung, who viewed a menu of around 90 blood tests offered by Theranos, said that despite Ms. Holmes’s promises about the Edison machines, they could process only a handful of the tests listed. The rest had to be done by traditional blood analyzers or sent out to a diagnostic company, she said.
Ultimately, Ms. Cheung resigned over her misgivings about Theranos’s testing services.
“I was uncomfortable processing patient samples,†she said. “I did not think the technology we were using was adequate enough to be engaging in that behavior.â€
During Ms. Cheung’s testimony, Ms. Holmes’s lawyers objected to a wide variety of emails and other internal communications submitted by the prosecution as evidence. The two sides sparred over the rules of the arguments that could be used and the relevance of Ms. Cheung’s testimony.
“The C.E.O. is not responsible for every communication that happens within a company,†said Lance Wade, a lawyer representing Ms. Holmes.
John Bostic, a prosecutor and an assistant U.S. attorney, argued that documents showing Theranos’s internal issues were relevant to the case, regardless of whether Ms. Holmes’s name was on them.
Mr. Wade countered that Ms. Cheung had been an entry-level employee and hardly interacted with Ms. Holmes.
“To the best of our knowledge, the interview you just heard was the longest conversation she ever had with our client,†he said.
Through it all, Ms. Holmes sat quietly in a gray blazer and black dress, watching the proceedings from behind a medical mask.
Ms. Cheung’s 2015 letter to the Centers for Medicare & Medicaid Services outlining problems with Theranos’s testing triggered a surprise inspection by the agency that led the company to close its labs. Tyler Shultz, another young employee in Theranos’s lab, also shared details about the lab problems with The Wall Street Journal, which published exposés of the company. Mr. Shultz is also listed as a potential witness in the trial. (An earlier version of this item misspelled his name as Schultz.)
Since her role in Theranos’s demise, Ms. Cheung has become an advocate for ethics in technology. She has delivered a TED Talk about speaking truth to power and helped found Ethics in Entrepreneurship, a nonprofit that provides ethics training and workshops to start-up founders, workers and investors.
Spain’s government approved emergency measures on Tuesday to help households pay for the spiraling cost of electricity, and promised to cap profits made by electricity companies as a result of the recent jump in the price of natural gas.
Wholesale prices for natural gas across Europe have soared to levels almost five times where they were in 2019. The rising price is causing electric bills to jump, because gas is often used to generate electricity. Some other European governments have also recently outlined plans to help consumers, including Greece, where the government is setting up a fund to subsidize the electricity bills paid by households.
In Spain, the steep rise has become a political problem. Pedro Sánchez, the Socialist prime minister, leads a minority left-wing coalition government that relies on support from Unidas Podemos, a party committed to protecting the most vulnerable households. The package of emergency measures would, among other things, protect poorer families that cannot pay their bills by extending the grace period before utilities can cut off their power.
The government’s action was announced after Mr. Sánchez outlined his plans in a television interview on Monday night. Without providing details, he said about 650 million euros (about $770 million) of “extraordinary profits†would be taken from energy companies and “redirected to consumers.â€
Some welcomed the government’s decision. “No Spanish government had ever dared to take on the energy companies that control our market as an oligopoly, so I consider this to be historic, but obviously it’s going to create a lot of anger in these companies,†said Javier GarcÃa Breva, a former Spanish lawmaker and an expert on renewable energy.
But an opposition politician from the Ciudadanos party, Edmundo Bal, said Mr. Sánchez was hurriedly applying a “patch†on the energy problem, rather than seeking a long-term solution.
Electric companies said the moves would be counterproductive. Natural gas prices have risen across Europe because of a variety of factors, including a resurgence of global demand after pandemic lockdowns and a late-winter cold snap that drained storage levels.
Iberdrola, one of Spain’s three main electric companies, said energy prices were rising because of “international factors†and would not be restrained by the government’s action. The association representing Spain’s nuclear power producers threatened to suspend operations in response.
Mr. Sánchez pledged to reduce electric rates paid by consumers to the level of 2018, excluding inflation. The measures approved Tuesday include a cut on the electricity generation tax, which is paid by consumers, until the end of this year. In June, the government reduced the value-added tax paid on electric bills to 10 percent from 21 percent.
The latest data from the national statistics office shows that Spaniards last month paid about 35 percent more than a year earlier for their electricity, while the wholesale price of electricity has continued to climb in recent weeks.
Teresa Ribera, Spain’s minister for ecological transition, told reporters that the emergency measures would help reduce the monthly electricity bill paid by households by 22 percent.
To achieve this goal, the government will cap profits made by energy companies from the worldwide rise in natural gas prices until at least March, when the situation will be reviewed.
“The forecast for the coming months points to a spiral without precedent,†Ms. Ribera said, which in turn “impacts the well-being of families and the whole of the Spanish economy.â€
Demand for backup generators soared over the last year, as housebound Americans focused on preparing for the worst just as a surge of extreme weather ensured many experienced it.
The vast majority are made by a single company: Generac, a 62-year-old Waukesha, Wis., manufacturer that accounts for roughly 75 percent of standby home generator sales in the United States. Its dominance of the market and the growing threat posed by increasingly erratic weather have turned it into a Wall Street darling, Matt Phillips reports for The New York Times.
Generac’s stock price is up almost 800 percent since the end of 2018, and its profit has roughly doubled since June 2020. Need is driving the demand. The United States suffered 383 electricity disturbances last year, according to the Energy Department, up from 141 in 2016. As of the end of June — the most recent data available — there had been 210 this year, a 34 percent leap from the same point in 2020.
“We’re not climate scientists, but weather events have become a lot more severe,†said Aaron Jagdfeld, the chief executive of Generac. He ticked off a list of headline-grabbing weather events over the past year, from freezes to floods to droughts.
“The air is hotter, the water is warmer,†he said. “And the combination of those two things is producing weather events that are more extreme.â€
Even after opening a new plant in Trenton, S.C., demand and pandemic-related supply chain snarls have pushed customers’ wait times to roughly seven months. READ THE ARTICLE →
