Best Stimulus Ever?

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Poverty rate acounting for

government aid programs

20

%

(Supplemental poverty measure)

16

12

11.4%

Official poverty rate

9.1%

8

4

0

’70

’80

’90

’00

’10

’20

20

%

Poverty rate acounting for

government aid programs

(Supplemental poverty measure)

16

12

11.4%

Official poverty rate

9.1%

8

4

0

’70

’80

’90

’00

’10

’20

Notes: The supplemental poverty measure includes noncash and after-tax government aid; estimates for 2019 and 2020 reflect revised methodology.

Sources: Census Bureau; Columbia University

By The New York Times

The stimulus and the response

Despite the pandemic, the share of people living in poverty in the U.S. 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 DealBook that the recent stimulus was “the best policy response to a recession the U.S. has ever seen.”

There is still room for interpretation. According to the government’s new 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 leaves out some major aid programs, rose last year to 11.4 percent. (The difference between the measures was once a plotline in “The West Wing.”)

So, was the pandemic stimulus the “best”? One thing it has going for it is a seemingly flattering comparison. As David Leonhardt of The Morning, DealBook’s sister 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.”

HERE’S WHAT’S HAPPENING

Gavin Newsom prevails in a recall vote and will remain governor of California. Around 65 percent of voters, according to the latest results, said Newsom should stay in office, defeating a Republican campaign that targeted his handling of the pandemic, especially the shutdowns of businesses and schools. Newsom said he was “humbled and grateful.”

Apple introduces a new line of iPhones, but no major advances. The iPhone 13 is slightly faster than its predecessor, with a slightly bigger screen and better camera. The price is mostly unchanged, as it is for new iPads and Apple Watches. More than 2 million people watched the unveiling on YouTube — Apple’s shares dipped as it became clear the updates were modest.

A former Theranos lab assistant testifies in the Elizabeth Holmes trial. Erika Cheung reported lab testing problems at the company to federal agents in 2015. The whistle-blower affirmed her complaints in court, testifying that outlier results of blood tests were deleted to avoid quality control warnings. “I was uncomfortable processing patient samples,” she said.

A federal judge temporarily blocks New York from mandating coronavirus vaccines for medical workers. A number of health care workers had sued over the mandate, saying it violated their constitutional rights because it had no religious exemptions. In Arizona, the state’s attorney general filed a lawsuit to stop a national vaccine mandate, while Los Angeles is being sued by six L.A.P.D. employees who claim that a vaccine requirement for city workers has created a “hostile work environment.”

Latest Updates

Some of America’s biggest companies announce C-suite reshuffles. Denis Coleman was named Goldman Sachs’s new C.F.O., shortly after Bank of America announced changes to its executive team. In tech, Microsoft’s president and top lawyer, Brad Smith, will become vice chair of the board and Uber’s C.T.O., Sukumar Rathnam, is leaving after only a year in the role, after reportedly clashing with the chief product officer.

A timeline of the feud between Coinbase and the S.E.C.

The cryptocurrency exchange Coinbase went public on the same day in April that Gary Gensler, who taught courses on blockchain technology at M.I.T., was confirmed as chair of the S.E.C. Coinbase has embraced regulation of the freewheeling crypto industry — “we’re very excited and happy to play by the rules,” the exchange’s chief, Brian Armstrong, has said — so the arrival of a regulator with deep knowledge of digital assets, like Gensler, seemed to signal that the company and the agency would often agree.

But lately, Coinbase and the S.E.C. appear on the outs. Yesterday, the friction intensified when Gensler singled out the company while testifying before the Senate Banking Committee, after Armstrong had criticized the agency’s approach to crypto. Here’s how the showdown developed:

Sept. 7: Coinbase publishes a blog post revealing that the S.E.C. had said it would sue if the company launched an interest-generating crypto product, called Lend. Armstrong also accuses the S.E.C. of “sketchy” behavior in an extensive tweet thread disputing the agency’s claim that Lend should be considered a security (with all the regulation this would entail).

Sept. 8: The S.E.C.’s investor education Twitter account publishes a 30-second video tutorial on bonds, which some see as a subtweet of Coinbase and Armstrong. Its example security sounds similar to Coinbase’s proposed Lend product, which would offer up to 4 percent interest on holdings of USDC, a stablecoin issued by Coinbase and the payments company Circle and pegged to the dollar.

Sept. 9: “The U.S. is absolutely the best place to build crypto innovation if we can get it right,” Armstrong says. The back and forth begins to inspire memes, a sure sign that the budding feud is gaining public attention.

Sept. 12: Coinbase publishes a “fact check” blog post about its executives’ stock sales around the time of the S.E.C.’s warning about Lend, which led to a fall in the company’s share price. The sales were executed under a rule called 10b5-1, which is meant to insulate executives from accusations of insider trading but has some workarounds.

Sept. 13: Gensler releases his prepared remarks ahead of the Senate hearing. Crypto regulation and 10b5-1 feature prominently: He warns of risks from crypto products and exchanges and says that 10b5-1 needs to be modernized.

Sept. 14: Gensler testifies. When asked about customer protections, he seems to go out of his way to mention Coinbase, saying that it is not licensed to operate as a stock exchange “even though they have dozens of tokens that might be securities.” Armstrong has not since tweeted about the S.E.C. But this is probably not the end of the saga.

“Thiel isn’t the richest tech mogul, but he has been, in many ways, the most influential.”

— Max Chafkin, in an excerpt from his new book, “The Contrarian,” about the billionaire investor Peter Thiel, a “disruption-preaching power broker” who was a key adviser to former President Donald Trump and retains sway over rising Republican stars like the Senate hopefuls Blake Masters and J.D. Vance.

On, on its I.P.O.

On, the Swiss running shoe company backed by Roger Federer, raised $746 million last night in an I.P.O. valuing it at more than $6 billion. It’s one of a spate of direct-to-consumer brands now going public, with Allbirds, Warby Parker and Rent the Runway also in the pipeline. As On prepared for its first day of trading on the New York Stock Exchange, DealBook spoke with its co-founder Caspar Coppetti and C.F.O., Martin Hoffmann.

On the burst of I.P.O.s of direct-to-consumer brands.

“We’ve been getting ready for this for many years,” Coppetti said. “I think a lot of brands probably feel this is a good market environment to do it.”

Coppetti said the offering would give On funds to expand internationally. “That’s really what’s adding to the compounding of the top line,” he said. The company booked $315 million in sales in the first half of the year, an 84 percent rise over the same time last year.

On the pandemic’s impact on sneaker purchases.

“The pandemic has really increased demand,” Hoffmann said. “More people ran, more people moved in the mountains — but also more people didn’t go into the office in suits and leather shoes, but basically stayed in sneakers.”

THE SPEED READ

Deals

The fintech start-up Pagaya is reportedly close to a deal to go public via a SPAC merger that would value it at around $9 billion. (WSJ)

After a new funding round, the Australian design start-up Canva is now one of the most valuable private software companies in the world, worth around $40 billion. (TechCrunch)

WeWork’s listing, once slated for an I.P.O. in 2019 and now taking place via a SPAC merger, could be delayed and is likely to slip to the fourth quarter. (Bloomberg)

Policy

Senator Elizabeth Warren called for the Fed to break up Wells Fargo. (NYT)

TikTok is under investigation in Europe over its handling of personal data, including potential transfers of information to China. (FT)

President Biden’s push for a corporate coronavirus vaccine mandate could persuade a further 12 million people to get shots, Goldman Sachs estimated. (CNN)

The software analytics company App Annie agreed to pay $10 million to settle an S.E.C. fraud investigation, which the agency called the first action against a provider of “alternative data” to traders. (WSJ)

Best of the rest

With a launch window that opens tonight, SpaceX will send four people, none of them professional astronauts, into orbit on a three-day trip that marks a new frontier in space tourism. (NYT)

No one attending the Met Gala is rebelling against the power structure. (The Atlantic)

Just over half of workers in London’s financial center are back in the office. (Bloomberg)

Amazon’s C.E.O., Andy Jassy, said the company is still in its “early days” in media, hinting at bigger plans. (CNBC)

“America’s Grand Reopening, Postponed” (NYT)

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