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      Chuck Schumer Delivers on Climate Change and Health Care Deal

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      WASHINGTON — Senator Chuck Schumer was huddled in his Capitol office on Thursday evening awaiting a climactic meeting with Kyrsten Sinema, a critical holdout on his painstakingly negotiated climate change, tax and health care deal, when the loud booms and flashes of a powerful thunderstorm shook Washington, setting the lights flickering.Mr. Schumer and his aides, so close to a signature legislative achievement to top off a surprise string of victories, glanced anxiously at one another and wondered if it was a bad omen. A 50-50 Senate, a pandemic that kept Democrats constantly guessing about who would be available to vote and the sheer difficulty of managing the nearly unmanageable chamber had left them superstitious.“I’ve been a worrier all my life, but a happy worrier,” said Mr. Schumer, Democrat of New York and the majority leader.He needn’t have fretted. After a half-hour meeting, Mr. Schumer shook hands with Ms. Sinema, Democrat of Arizona, who agreed to lend her support to the legislation in exchange for a few revisions and some home-state drought relief. After a grueling overnight session, the Senate approved the sweeping measure on Sunday, with Vice President Kamala Harris casting the tiebreaking vote. The House was expected to follow suit later this week.It was a head-snapping change in fortune. Just a few weeks earlier, Mr. Schumer, the Democratic agenda and the party’s chances of retaining its bare Senate majority all seemed in sorry shape as last-gasp negotiations over the broad legislation appeared to collapse for good under the weight of resistance from Senator Joe Manchin III, Democrat of West Virginia.Instead, Democrats not only landed their biggest prize — the party-line climate and tax legislation — but also capped off an extraordinarily productive run for a Congress better known for its paralysis. It included passage of the first bipartisan gun safety legislation in a generation, a huge microchip production and scientific research bill to bolster American competitiveness with China, and a major veterans health care measure.The series of successes was all the more sweet for Democrats because it came with the political benefit of Republicans making themselves look bad by switching their position and temporarily blocking the bill to help sick veterans, in what appeared to be a temper tantrum over the abrupt resurrection of the climate deal.“We’ve had an extraordinary six weeks,” Mr. Schumer said in an interview, calling the climate, health and tax measure “the most comprehensive piece of legislation affecting the American people in decades.”It was far from certain he could attain this result. Mr. Schumer, who unlike his predecessors is not known as a master tactician or gifted legislator, has struggled to produce for long stretches, needing every single vote from an ideologically mixed Democratic membership. Even his allies wondered whether he was too driven by a need to be liked or his own personal political considerations in warding off a potential primary challenge from his left to be capable of the kind of ruthlessness that would be needed.Mr. Schumer said it was stamina, not bare knuckles, that had been the main requirement.“This is the hardest job I’ve ever had, with a 50-50 Senate, a big agenda and intransigent Republicans,” Mr. Schumer said. He cited a persistence instilled in him by his father, who ran an exterminating company and died last year, as a motivating factor. “Keep at it, keep at it. Look at all the pitfalls we have faced to get this done.”What’s in the Democrats’ Climate and Tax BillCard 1 of 6A new proposal. More

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      States Turn to Tax Cuts as Inflation Stays Hot

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      WASHINGTON — In Kansas, the Democratic governor has been pushing to slash the state’s grocery sales tax. Last month, New Mexico lawmakers provided $1,000 tax rebates to households hobbled by high gas prices. Legislatures in Iowa, Indiana and Idaho have all cut state income taxes this year.A combination of flush state budget coffers and rapid inflation has lawmakers across the country looking for ways to ease the pain of rising prices, with nearly three dozen states enacting or considering some form of tax relief, according to the Tax Foundation, a right-leaning think tank.The efforts are blurring typical party lines when it comes to tax policy. In many cases, Democrats are joining Republicans in supporting permanently lower taxes or temporary cuts, including for high earners.But while the policies are aimed at helping Americans weather the fastest pace of inflation in 40 years, economists warn that, paradoxically, cutting taxes could exacerbate the very problem lawmakers are trying to address. By putting more money in people’s pockets, policymakers risk further stimulating already rampant consumer demand, pushing prices higher nationally.Jason Furman, an economist at Harvard University who was an economic adviser under the Obama administration, said that the United States economy was producing at full capacity right now and that any additional spending power would only drive up demand and prices. But when it comes to cutting taxes, he acknowledged, the incentives for states do not always appear to be aligned with what is best for the national economy.“I think all these tax cuts in states are adding to inflation,” Mr. Furman said. “The problem is, from any governor’s perspective, a lot of the inflation it is adding is nationwide and a lot of the benefits of the tax cuts are to the states.”States are awash in cash after a faster-than-expected economic rebound in 2021 and a $350 billion infusion of stimulus funds that Congress allocated to states and cities last year. While the Biden administration has restricted states from using relief money to directly subsidize tax cuts, many governments have been able to find budgetary workarounds to do just that without violating the rules.Last week, Gov. Ron DeSantis of Florida signed a $1.2 billion tax cut that was made possible by budget surpluses. The state’s coffers were bolstered by $8.8 billion in federal pandemic relief money. Mr. DeSantis, a Republican, hailed the tax cuts as the largest in the state’s history.“Florida’s economy has consistently outpaced the nation, but we are still fighting against inflationary policies imposed on us by the Biden administration,” he said.Adding to the urgency is the political calendar: Many governors and state legislators face elections in November, and voters have made clear they are concerned about rising prices for gas, food and rent.“It’s very difficult for policymakers to see the inflationary pressures that taxpayers are burdened by right now while sitting on significant cash reserves without some desire to return that,” said Jared Walczak, vice president of state projects with the Center for State Tax Policy at the Tax Foundation. “The challenge for policymakers is that simply cutting checks to taxpayers can feed the inflationary environment rather than offsetting it.”The tax cuts are coming in a variety of forms and sizes. According to the Tax Foundation, which has been tracking proposals this year, some would be phased in, some would be permanent and others would be temporary “holidays.”Next month, New York will suspend some of its state gas taxes through the end of the year, a move that Gov. Kathy Hochul, a Democrat, said would save families and businesses an estimated $585 million.In Pennsylvania, Gov. Tom Wolf, a Democrat, has called for gradually lowering the state’s corporate tax rate to 5 percent from 10 percent — taking a decidedly different stance from many of his political peers in Congress, who have called for raising corporate taxes. Mr. Wolf said in April that the proposal was intended to make Pennsylvania more business friendly.States are acting on a fresh appetite for tax cuts as inflation is running at a 40-year high.OK McCausland for The New York TimesMr. Furman pointed to the budget surpluses as evidence that the $1.9 trillion pandemic relief package handed too much money to local governments. “The problem was there was just too much money for states and localities.”A new report from the Tax Policy Center, a left-leaning think tank, said total state revenues rose by about 17.6 percent last year. State rainy day funds — money that is set aside to cover unexpected costs — have reached “new record levels,” according to the National Association of State Budget Officers.Yet those rosy budget balances may not last if the economy slows, as expected. The Federal Reserve has begun raising interest rates in an attempt to cool economic growth, and there are growing concerns about the potential for another recession. Stocks fell for another session on Monday, with the S&P 500 down 3.2 percent, as investors fretted about a slowdown in global growth, high inflation and other economic woes.Cutting taxes too deeply now could put states on weaker financial footing.The Tax Policy Center said its state tax revenue forecasts for the rest of this year and next year were “alarmingly weak” as states enacted tax cuts and spending plans. Fitch, the credit rating agency, said recently that immediate and permanent tax cuts could be risky in light of evolving economic conditions.“Substantial tax policy changes can negatively affect revenues and lead to long-term structural budget challenges, especially when enacted all at once in an uncertain economic environment,” Fitch said.The state tax cuts are taking place as the Biden administration struggles to respond to rising prices. So far, the White House has resisted calls for a gas tax holiday, though Jen Psaki, the White House press secretary, said in April that President Biden was open to the idea. The administration has responded by primarily trying to ease supply chain logjams that have created shortages of goods and cracking down on price gouging, but taming inflation falls largely to the Fed.The White House declined to assess the merits of states’ cutting taxes but pointed to the administration’s measures to expand fuel supplies and proposals for strengthening supply chains and lowering health and child care costs as evidence that Mr. Biden was taking inflation seriously.“President Biden is taking aggressive action to lower costs for American families and address inflation,” Emilie Simons, a White House spokeswoman, said.The degree to which state tax relief fuels inflation depends in large part on how quickly the moves go into effect.Gov. Laura Kelly backed a bill last month that would phase out the 6.5 percent grocery sales tax in Kansas, lowering it next January and bringing it to zero by 2025. Republicans in the state pushed for the gradual reduction despite calls from Democrats to cut the tax to zero by July.Inflation F.A.Q.Card 1 of 6What is inflation? More

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      Disney vs. Florida

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      A debate over taxes is rapidly unraveling Florida’s long relationship with Disney, with broader implications for corporate America.Supporters of Florida’s so-called “Don’t Say Gay” bill at a weekend rally outside Walt Disney World in Orlando.Octavio Jones/ReutersNot so special anymoreYesterday, the Florida Senate voted to revoke special benefits that, since the 1960s, have given Disney the ability to essentially self-govern a vast area around its Disney World theme park and issue tax-free municipal bonds. The state’s House, which like its Senate is led by Republicans, is expected to vote for the measure today.It’s a rapid unraveling of a long relationship. Last month, Disney C.E.O. Bob Chapek, facing a backlash from employees, spoke out against Florida’s so-called “Don’t Say Gay” law, which prohibits classroom discussion of sexual orientation and gender identity until the third grade, and limits it for older students as well. Gov. Ron DeSantis, who is eying a 2024 presidential run, has hit back, calling the company “Woke Disney,” and saying it no longer deserves its long-held special status. “If Disney wants to pick a fight, they chose the wrong guy,” DeSantis wrote in a recent campaign fund-raising email.This is about more than taxes, with broader implications for Disney, Florida and all of corporate America:For Disney: The company’s theme parks are flying, thanks to looser pandemic restrictions and higher-priced ticket sales. The loss of Disney’s special tax district could put a dent in that growth, and it would also restrict the company’s ability to develop the land it owns and tap state resources to do it.For Florida: The biggest issue is nearly $1 billion in tax-free bonds that have been issued by Disney. Florida law says that if a special tax district is dissolved, the responsibility to pay those bonds reverts to local governments. Democratic state lawmakers say that the interest on those bonds equates to an additional tax burden of $580 per person for the 1.7 million residents of neighboring Orange and Osceola counties, which would also have to step in and provide many of the public services for the area that are currently funded by the company. Disney employs about 80,000 people in Florida.For corporate America: Disney’s clash with Florida is the latest example of how companies’ growing willingness to speak out on social and political issues puts them in conflict with some lawmakers. Last year, Georgia politicians threatened to raise taxes on Delta after the airline spoke out against the state’s restrictive voting laws. More recently, Texas lawmakers have said they would bar Citigroup from underwriting the state’s bonds unless the bank revoked its policy to pay for employees to travel out of state for abortions, which are severely restricted there.“I don’t think this is going to stop companies that have a strong reputation and value system,” Paul Argenti, a professor at Dartmouth’s Tuck School of Business, told DealBook. “It’s a real test of what is the Disney value system and what they are willing to stand up for.” Lloyd Blankfein, the former Goldman Sachs C.E.O., tweeted that Disney’s special tax status may not have been a good policy when it was first adopted, but DeSantis’s recent move looks like “retaliation” for the company’s stance on unrelated legislation. “Bad look for a conservative,” he said.HERE’S WHAT’S HAPPENINGThe Justice Department appeals to reinstate the transportation mask mandate. It will challenge the ruling by a federal judge in Florida who struck down the mandate on Monday, with the C.D.C. declaring that the mask rule was necessary to prevent the spread of the coronavirus. Meanwhile, Gov. Kathy Hochul of New York urged people to take “common sense” safety measures, as New York City prepared to raise its Covid alert level amid rising cases.Workers at an Apple store in Atlanta move to form a union. If they are successful, it would be the first of the tech giant’s stores in the U.S. to unionize. The move reflects increasing momentum in service-sector unionization, with recent union wins at Starbucks, Amazon and REI locations.The Obamas are leaving Spotify. Barack and Michelle Obama will not renew their production company’s lucrative podcasting contract with the streaming service, Bloomberg reports. In a speech at Stanford today, the former president is expected to speak about the scourge of falsehoods online, as he wades deeper into the public fray about how misinformation threatens democracy.Nestlé raises prices steeply, suggesting that inflation will persist. The world’s largest food company said today that the prices it charges for products rose by more than 5 percent on average in the first quarter, the biggest jump in that quarter since at least 2012. The largest increases, of more than 7 percent, were in pet food and bottled water.Chinese energy giant Cnooc surges in Shanghai debut. The company’s listing comes months after it was delisted from the New York Stock Exchange to comply with a Trump-era executive order banning American investment in companies that the U.S. says aid China’s military. Cnooc raised $4.4 billion in the offering.Tesla’s mixed messageTesla reported its latest quarterly earnings yesterday and, no, the company’s C.E.O., Elon Musk, did not talk about his attempt to buy Twitter. (Musk could fund the purchase, in part, by selling some of his Tesla shares or using them as collateral for loans.)Musk instead kept the discussion focused on Tesla, delivering some good and bad news to the electric carmaker’s shareholders. The company’s shares rose 5 percent after the results were released.The good: Tesla made a $3.3 billion profit in the first three months of the year, up from $438 million a year earlier and the biggest quarterly profit since the company’s creation. Tesla sold 310,000 vehicles in the first quarter, up almost 70 percent from a year earlier.The bad: Tesla said it resumed “limited production” in Shanghai after a three-week shutdown, but “persistent” supply-chain problems and the rising cost of raw materials mean that it expects its factories to run below capacity for the rest of 2022. Despite concerns that supply-chain issues could hamper the company’s growth, Musk told analysts that his “best guess” was that Tesla would produce 1.5 million cars this year, meeting the company’s goal of 50 percent sales growth.The lithium interlude: Musk said that soaring prices for lithium, a key material in batteries, had forced the company to raise prices, potentially slowing the pace at which people switch to electric vehicles. Soaring demand for the metal has given producers 90 percent profit margins, Musk said. “Do you like minting money? Then the lithium business is for you,” Musk said. He hinted that Tesla could get more involved in the supply chain for raw materials but didn’t say whether it would expand into mining metals like lithium directly.What’s Happening With Elon Musk’s Bid for Twitter?Card 1 of 3The offer. More

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      Kathy Hochul Gives Her First State of the State Speech

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      Gov. Kathy Hochul pledged $10 billion to boost the state’s decimated health care work force, proposed a new transit line, and directed funds to combat gun violence.In her first State of the State address, Gov. Kathy Hochul announced a $10 billion pledge to fortify New York’s health care work force and outlined her economic recovery plan.Cindy Schultz for The New York TimesALBANY, N.Y. — In her first State of the State address, Gov. Kathy Hochul on Wednesday outlined her vision for shepherding New York State through its recovery from the coronavirus pandemic, while vowing to open a new chapter of ethical, more transparent government.In her most ambitious proposal, Ms. Hochul, the state’s first female governor, called for spending $10 billion to bolster the state’s health care work force, which has been devastated by the pandemic. She also pushed initiatives to support small businesses and to lure new investments, vowing to position New York as the most “business-friendly and worker-friendly state in the nation.”The annual address, typically as much a declaration of politics as policy, provided Ms. Hochul her most expansive opportunity yet to define her agenda. She faces a contested Democratic primary in June, her first election since she unexpectedly ascended to the state’s highest job after former Gov. Andrew M. Cuomo abruptly resigned in August amid allegations of sexual misconduct.In the speech, Ms. Hochul, a moderate from outside Buffalo, sought to balance competing political challenges: She wants to court more liberal urban voters in the party’s primary, but not so much that she becomes vulnerable to Republicans hoping to make electoral gains in November’s general election.She offered some left-leaning measures like a “jails-to-jobs” program, and others aimed at the political center, including tax cuts for middle-class New Yorkers and several initiatives meant to curb a spike in gun violence, which is likely to be a contentious election-year issue.“My fellow New Yorkers, this agenda is for you,” Ms. Hochul said at the State Capitol. “Every single initiative is filtered through the lens of how it’ll help you and your families, because I know you’re exhausted. I know you want this pandemic to be over. I know you’re worried about the economy, inflation, your kids, their education and what the future holds.”The state faces immense challenges: The unemployment rate in New York City is 9.4 percent, more than double the national average. In the past year, New York’s population declined by more than 300,000 people — more than any other state in the country. The economic struggles underscore the state’s gravest loss: 60,000 lives since the pandemic began.Ms. Hochul outlined a lengthy list of proposals intended to appeal to a constellation of constituencies, including business leaders, homeowners and influential unions representing teachers and construction workers, all of whom could play a crucial role in her campaign.Wearing suffragist white, Ms. Hochul stressed that she would be different from Mr. Cuomo, declaring that she would pursue a more collaborative relationship with Democrats who control the Legislature and with Eric Adams, New York City’s new mayor. She positioned herself as a champion of good government, proposing to overhaul the state ethics commission and to institute term limits on governors. The latter measure, which would curb her own power, was seen as a not-so-subtle rebuke of the outsize influence Mr. Cuomo amassed over more than a decade in office.“For government to work, those of us in power cannot continue to cling to it,” Ms. Hochul said, speaking before a sparse crowd of about 50 people.The package of ethics and government reforms were meant to hold accountable elected officials in a State Capitol with a long history of graft and corruption.One of her boldest proposals called for abolishing the embattled ethics commission, the Joint Commission on Public Ethics, whose members are appointed by the governor and state lawmakers. Instead, under Ms. Hochul’s plan, a rotating, five-member panel of law school deans or their designees would oversee ethics enforcement.The address, typically a lively affair that attracts crowds of activists and lobbyists to the Capitol, was tinged with decidedly 2022 touches: masks, testing requirements and attendance limits that meant many lawmakers watched remotely. The Assembly speaker, Carl E. Heastie, was absent, because of Covid-19 concerns. Outside the Capitol, a throng of protesters waving American flags crowded the lawn and railed against vaccine mandates.Keenly aware of potential attacks from Republicans, Ms. Hochul focused part of her remarks on new efforts to combat a surge in gun violence, including financing for more police officers and prosecutors, investments in neighborhoods where violent crime is common and money earmarked for tracing the origin of illegal guns.“Time and time again, New Yorkers tell me that they don’t feel safe,” Ms. Hochul said during the half-hour speech. “They don’t like what they see on streets and things feel different now, and not always for the better.”Members of her party’s ascendant left wing were pleased to hear the governor express support for the Clean Slate Act, which is meant to seal certain crimes on the records of formerly incarcerated people to help them find jobs and housing.But some of her proposals were not as far-reaching as some left-leaning Democrats had hoped. Ms. Hochul’s plan to expand child care would increase access for 100,000 families, well short of the more expansive Universal Childcare Act recently introduced in the Legislature. She made no reference to longstanding efforts to advance universal health care, or to institute a carbon tax.Ms. Hochul offered a five-year plan to build 100,000 units of affordable housing and, with the state’s moratorium on evictions set to expire this month, she proposed a program that would provide free legal assistance to poor renters facing eviction. But she was silent on demands to enshrine in state law a requirement limiting the ability of landlords to evict tenants and raise rents. The housing plan was applauded by the state’s influential real estate lobby, but criticized by a group of democratic socialist legislators for not doing enough to address the affordability crisis. A leading coalition of tenant activists, Housing Justice for All, called Ms. Hochul “Cuomo 2.0” in a statement.Most notably, Ms. Hochul sidestepped an explosive ideological wedge issue that is bound to come up this year: potentially amending the bail reform legislation passed in 2019. Embracing such a move could put her at odds with many lawmakers in her party. The legislation, which was meant to address inequities in the criminal justice system by abolishing cash bail for most crimes, has since been attacked by Republicans, who argue that the changes released violent criminals and cited the reforms in successful campaigns against Democrats last November.Republicans criticized Ms. Hochul’s plans, saying they would do little to address rising inflation or to lower taxes.“Our state’s oppressive tax burden drives businesses and families away in record numbers because, year after year, New Yorkers have been forced to pick up the tab for the out-of-control spending habits of liberal politicians,” said Will Barclay, the Assembly’s Republican leader.A Guide to the New York Governor’s RaceCard 1 of 6A crowded field. More

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      SALT Deduction That Benefits the Rich Divides Democrats

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      House Democrats are poised to lift a cap on the state and local tax deduction, a gift to wealthy homeowners in some blue states.WASHINGTON — A plan by House Democrats to reduce taxes for high earners in states like New Jersey, New York and California in their $1.85 trillion social policy spending package is becoming an early political albatross for the party, with Republicans already mobilizing to accuse Democrats of defying their populist principles in favor of cutting taxes for the rich.The criticism offers a preview of the emerging battle lines ahead of next year’s midterm elections and underscores the challenge that Democrats face when local politics collide with the party’s national ambitions to promote economic equity. For Republicans who have defended their 2017 tax cuts, which overwhelmingly benefited the wealthy, the proposal by Democrats to raise the limit on the state and local tax deduction is an opportunity to flip the script and cast Democrats as the party of plutocrats.“I think they’re struggling to maintain their professed support for taxing the wealthy, yet they are providing a huge tax windfall under the SALT cap,” said Representative Kevin Brady of Texas, the top Republican on the House Ways and Means Committee, referring to the acronym for state and local taxes. “If your priorities are working families, make that the priority, not the wealthy.”Republicans, looking for ways to finance their own tax cuts in 2017, capped the amount of state and local taxes that households could deduct from their federal tax bills at $10,000. Democrats from high-tax states like New York, New Jersey and California have spent years promising to repeal the cap and are poised to lift it to $80,000 through 2030, before reducing it back to $10,000 in 2031. The cap, which is currently set to disappear in 2025, would then expire permanently in 2032.The bill would cut taxes sharply for the next five years by increasing the value of the deduction, but it would mean higher taxes in the following five years than if the cap were allowed to expire. The Congressional Budget Office said on Thursday that over the course of a decade, the changes to the deduction would amount to a tax increase that would raise about $14.8 billion in revenue.The House proposal is likely to change in the Senate, where it has its own champions and detractors. Senator Chuck Schumer, Democrat of New York and the majority leader, has embraced a more generous deduction while Senator Bernie Sanders, the Vermont independent who is the chairman of the Senate Budget Committee, has sharply criticized the House proposal. He joined Senator Bob Menendez, Democrat of New Jersey, in negotiating an income cap — as high as $550,000, though that number is in flux — on who can receive the deduction.This week, the National Republican Congressional Committee released survey data that it said suggested most voters in battleground states would be less likely to vote for Democrats who supported a policy that gave tax cuts to rich homeowners in New Jersey, New York and California. It said that the Democratic Party would have “to defend its politically toxic policies which penalize hard working families to reward liberal elites.”Prominent tax and budget analysts have argued that expanding the deduction amounted to an unnecessary giveaway to the rich.According to the nonpartisan Committee for a Responsible Federal Budget, a family of four in Washington making $1 million per year would receive 10 times as much tax relief next year from expanding the state and local tax deduction as a middle-class family would receive from another provision in the social policy package, an expansion of the child tax credit. Citing calculations from the nonpartisan Urban-Brookings Tax Policy Center, the group said that two thirds of households making more than $1 million a year would get a tax cut under the legislation because of the increase to the state and local property tax deduction.The proposal has put some Democrats on the defensive.Rep. Jared Golden, Democrat of Maine, said this week that tax giveaways to millionaires sounded like something that Republicans would have come up with.“Proponents have been saying that the BBB taxes the rich,” Mr. Golden said on Twitter, referring to the bill known as the Build Back Better Act. “But the more we learn about the SALT provisions, the more it looks like another giant tax break for millionaires.”The issue is further complicating passage of the bill, which Democrats are trying to get through both the House and Senate without Republican support. Given their thin majorities in both chambers, Democrats can afford to lose no more than three votes in the House and none in the Senate.Some Democrats in Congress from states with high taxes have made the inclusion of the more generous deduction as a prerequisite for their backing the bill.“There’s a series of competing views on SALT, but I mean, it’s pretty obvious something has to be in there, that’s for sure,” said Representative Richard E. Neal of Massachusetts, the chairman of the House Ways and Means Committee.The unexpectedly tight race for governor of New Jersey was a clear reminder that the state’s high property taxes — and the limit on their deductibility — are high on voters’ lists of worries, strategists and other political observers said.“As Covid kind of recedes, taxes are taking its place as the top issue in New Jersey,” said Michael DuHaime, a Republican political strategist with Mercury Public Affairs.The SALT cap “essentially resulted in a pretty large tax increase for a lot of families” in the suburbs of New York City, Mr. DuHaime said. With Democrats in power, those homeowners are counting on some relief, he said.Now that former President Donald J. Trump is out of office, New Jersey has “reverted to its mean” of being deeply concerned about the state’s affordability, said Julie Roginsky, a strategist who advised Gov. Philip D. Murphy, a Democrat, during his first campaign in 2017. The average homeowner in the state pays about $10,000 in property taxes, she said, with the cap hitting about one-third of New Jersey residents.“I think it’s absolutely a line in the sand that some of these vulnerable members of Congress need to draw,” Ms. Roginsky said.Several Democrats who represent affluent suburban areas where most homeowners pay much more than $10,000 a year in property taxes will face stiff challenges in the midterm election next year, strategists said. Their short list of vulnerable House members include Josh Gottheimer, Mikie Sherrill and Tom Malinowski from North Jersey, and Andy Kim, who represents part of the Jersey Shore, all of whom support raising the SALT cap.If the Democrats can engineer a change to the SALT deduction that is retroactive to cover 2021 taxes, those incumbents can campaign on having provided a tax cut, Ms. Roginsky said. But if they fail, their Republican opponents — like Thomas Kean Jr., a state senator who is challenging Mr. Malinowksi — will be able to use that against them, she said.Several House Democrats who represent affluent suburbs, including Mikie Sherrill, whose district includes part of Montclair, N.J., are expected to face stiff challenges in next year’s elections.Todd Heisler/The New York Times“It may not play well in Vermont or in Alexandria Ocasio-Cortez’s district, but if you’re Nancy Pelosi, you understand that the road to your majority runs through places like suburban New Jersey and suburban California and suburban New York,” Ms. Roginsky said.Ben Dworkin, the director of the Rowan Institute for Public Policy and Citizenship at Rowan University in Glassboro, N.J., cited the unexpectedly close race for New Jersey governor this year. He noted how effective Mr. Murphy’s challenger, Jack Ciattarelli, was in playing to voters’ feelings about the state’s high taxes.“He hammered home that issue,” Mr. Dworkin said.Public polling leading up to that election showed that affordability in general was the “top issue” in the state, he said.Biden’s ​​Social Policy Bill at a GlanceCard 1 of 6A proposal in flux. More

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      Will Murphy Turn to the Center After Barely Winning Re-Election in N.J.?

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      The Democratic governor won re-election in a surprisingly close race that has raised questions about his ability to enact liberal measures on gun control and abortion.For much of his first term, Gov. Philip D. Murphy of New Jersey governed his largely suburban state as a steadfast liberal, winning an increase in the minimum wage, a tax hike on the wealthy and the legalization of marijuana.But when he ran for re-election this year on that unabashedly left-leaning record, Mr. Murphy, a Democrat who just weeks ago seemed destined for an easy victory, came surprisingly close to losing to a conservative Republican, Jack Ciattarelli.Mr. Murphy’s narrow victory, combined with a Republican upset in the Virginia governor’s race and Republican gains in the New Jersey State Legislature, suggest the nation’s political winds may have shifted rightward. And that has raised a major question in Trenton: Will Mr. Murphy still push forward with liberal initiatives on issues like abortion and gun control, as he had once planned?Republicans and even some Democrats say a left-leaning agenda will face stiff opposition, predicting that Mr. Murphy and Democratic legislators will become increasingly mindful of independent suburban voters whose party loyalty is famously fluid and whose political ideology tends toward the center.The key to courting those voters will be to focus on “affordability,” some officials say, in particular, containing the state’s property taxes, which are among the nation’s highest.“This is not that complicated,” said Assemblyman Jon M. Bramnick, a Republican who was elected Tuesday to the State Senate. “Most people are kind of in the middle.”But where moderates may see the need for a course correction and heightened attention to issues like the cost of living and safe streets, Mr. Murphy’s progressive allies speak mainly of opportunity.On Tuesday, voters in South Jersey ousted the state’s second most powerful lawmaker, the Senate president, Steve Sweeney, a Democrat who was also Mr. Murphy’s main political rival. Mr. Sweeney’s loss simultaneously created an unexpected power vacuum in the State House and eroded the influence of the most conservative region of the state — without making a significant dent in the Democrats’ majority in Trenton.That could clear an easier pathway for the governor’s unfinished legislative priorities, some analysts and legislators say. Despite losing some seats, Democrats will still control both houses of the Legislature.“Politically, it’s an incredible opportunity for Murphy,” said Julia Sass Rubin, a professor at the Edward J. Bloustein School of Planning and Public Policy at Rutgers University. “Sweeney keeping his seat and Murphy winning by 10 would be nowhere near as good.”Still, the day after the election, few Democrats were talking much about Mr. Murphy’s most contentious policy goals: codifying abortion rights to protect against the possibility of a Supreme Court decision overturning Roe v. Wade; expanding gun control laws to allow victims to sue gun manufacturers; reducing long mandatory sentences for nonviolent crimes.“We’re going to obviously revisit what we’ve been doing,” said Senator Nick Scutari, a Democrat from northern New Jersey who led the fight to legalize marijuana in the state and is seen as a contender to become the next Senate president.Mr. Scutari, a former municipal prosecutor in Linden, N.J., said he expected more discussion about “kitchen table issues.”“Making sure there’s a strong economy,” he said. “Good strong job prospects. Making sure the taxes are stable and we do provide services because of those taxes.”.css-1xzcza9{list-style-type:disc;padding-inline-start:1em;}.css-3btd0c{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-3btd0c{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-3btd0c strong{font-weight:600;}.css-3btd0c em{font-style:italic;}.css-1kpebx{margin:0 auto;font-family:nyt-franklin,helvetica,arial,sans-serif;font-weight:700;font-size:1.125rem;line-height:1.3125rem;color:#121212;}#NYT_BELOW_MAIN_CONTENT_REGION .css-1kpebx{font-family:nyt-cheltenham,georgia,’times new roman’,times,serif;font-weight:700;font-size:1.375rem;line-height:1.625rem;}@media (min-width:740px){#NYT_BELOW_MAIN_CONTENT_REGION .css-1kpebx{font-size:1.6875rem;line-height:1.875rem;}}@media (min-width:740px){.css-1kpebx{font-size:1.25rem;line-height:1.4375rem;}}.css-1gtxqqv{margin-bottom:0;}.css-19zsuqr{display:block;margin-bottom:0.9375rem;}.css-12vbvwq{background-color:white;border:1px solid #e2e2e2;width:calc(100% – 40px);max-width:600px;margin:1.5rem auto 1.9rem;padding:15px;box-sizing:border-box;}@media (min-width:740px){.css-12vbvwq{padding:20px;width:100%;}}.css-12vbvwq:focus{outline:1px solid #e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-12vbvwq{border:none;padding:10px 0 0;border-top:2px solid #121212;}.css-12vbvwq[data-truncated] .css-rdoyk0{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-12vbvwq[data-truncated] .css-eb027h{max-height:300px;overflow:hidden;-webkit-transition:none;transition:none;}.css-12vbvwq[data-truncated] .css-5gimkt:after{content:’See more’;}.css-12vbvwq[data-truncated] .css-6mllg9{opacity:1;}.css-qjk116{margin:0 auto;overflow:hidden;}.css-qjk116 strong{font-weight:700;}.css-qjk116 em{font-style:italic;}.css-qjk116 a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;text-underline-offset:1px;-webkit-text-decoration-thickness:1px;text-decoration-thickness:1px;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:visited{color:#326891;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:hover{-webkit-text-decoration:none;text-decoration:none;}George E. Norcross, an insurance executive and powerful Democratic power broker strongly allied with Mr. Sweeney, said the most potent issue in New Jersey has always been taxes.“If you look at New Jersey history from a political way, you see Democrats and Republicans alternating as governors, and it always happens over the same issue, which is taxes,” Mr. Norcross said. “It’s taxes, taxes, taxes. And people move back and forth between parties in that regard, and that’s the way in which it historically has happened.”George Helmy, Mr. Murphy’s chief of staff, said the governor’s economic agenda had always been rooted in making life more affordable for working families.But he said he anticipated the party “wanting to focus more” on bread-and-butter economic issues, as well as better communicating the benefits of Mr. Murphy’s progressive policies for working-class families.“I think we need to continue to focus on the affordability picture and the progress we’ve made for working families,” he said.“People need to hear that message more,” he added. “We have to be more focused on speaking to what we have delivered for working families and the bold vision going forward.”On Thursday, Mr. Murphy spoke at a convention in Atlantic City, N.J., organized by one of his strongest allies, the New Jersey Education Association.Takeaways From the 2021 ElectionsCard 1 of 5A G.O.P. pathway in Virginia. 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      No, California Isn’t Doomed

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      California has been struggling. It has stumbled through the Covid-19 pandemic and recession, afflicted by wildfires, an epidemic of homelessness and stratospheric housing prices. Last year it experienced its first population decline in records going back to 1900. Its latest mess was a costly and unsuccessful campaign to recall Gov. Gavin Newsom.The state’s problems are real. Nevertheless, there are positive signs. The first step toward fixing problems is recognizing them, and on that score, Californians have grown increasingly aware of what’s wrong. California is also blessed with abundant resources that enable it to fix problems that would be daunting for less endowed states.Housing is a good example. Prices are crazy: On Sept. 16, the California Association of Realtors announced that the median sale price in the state in August was $827,940, up 17 percent from a year earlier. Only 23 percent of California households could afford to buy a median-priced home in the second quarter, down from one-third a year earlier, the association announced in August.To make ends meet, many Californians scrimp and save and commute long distances from exurbs; others give up and move to cheaper states. Employers struggle to lure out-of-state recruits. Homeowners can swap one high-priced house for another, but renters can’t buy starter homes because they have no housing equity to use for a down payment. And California’s epidemic of homelessness can be traced in part to a lack of affordable housing.The upside is that almost everyone in California understands that building more housing is essential. More homes are being built in Houston, Dallas, Fort Worth and Austin combined than in the entire state of California, says Dan Dunmoyer, president and chief executive of the California Building Industry Association.One of Newsom’s first acts after surviving the recall attempt was to sign three bills to increase housing supply. Senate Bill No. 8 extends a 2019 law that accelerates approval of housing projects. Senate Bill No. 9 allows homeowners to build up to three additional housing units on their land. And Senate Bill No. 10 allows environmental review to be sped up for multiunit projects near transit hubs or in urban developments. Those are the latest of dozens of housing bills signed by Newsom and his predecessor, Jerry Brown.The California Environmental Quality Act, signed into law in 1970 by Ronald Reagan, who was then the governor, is valuable on the whole but enables people to use environmental pretexts to resist housing developments in their neighborhoods that they could not as easily oppose otherwise. There’s widespread agreement that this needs to change.Progress, though, is halting. The pace of issuance of permits for housing construction in California is slower now than in 1975, according to data compiled by the state’s Department of Finance and the U.S. Census Bureau. Environmentalists fight efforts to circumscribe the environmental quality act, worrying that legitimate environmental concerns about new projects will be neglected. And local elected officials continue to push back against efforts to increase density, which they perceive as reducing the value of existing homes. In Palo Alto, the headquarters of Hewlett-Packard and Tesla, Mayor Tom DuBois expressed opposition to Senate Bill No. 10, writing that “such legislation echoes more of Russia than of California.”Up against such forces, Dunmoyer, the president of the building industry association, told me that he’s impressed by the “courage” shown by Newsom and the California State Legislature in enacting senate bills 8, 9 and 10. But, he added, “This is a marathon, and we’re still in the first quarter of the marathon race.”Other problems in California should be fixable with effort and good will. As I wrote in my Sept. 8 newsletter, the state’s water shortages could be alleviated by diverting a little water from agriculture to other purposes. Farms account for only 0.8 percent of the state’s gross domestic product but more than 80 percent of the water used by people (that is, not counting water that stays in streams, deltas and so on).Homelessness is caused partly by a lack of housing, but also by inadequate treatment of people experiencing mental illness and drug addiction. Many conservatives argue that the state has focused too much on low-income housing as the solution to homelessness. “Focus on treatment first rather than housing first,” says Wayne Winegarden, senior fellow in business and economics at the right-of-center Pacific Research Institute for Public Policy. “Otherwise all we’re doing is taking the problem from the street to the hotel room.”Chris Hoene, executive director of the left-of-center California Budget and Policy Center, disagrees with Winegarden, and calls for more spending on Homekey, the state’s program for housing the homeless. Social services should be “wrapped around,” or integrated with, a home, Hoene says. It’s unfortunate, he says, that “people on different sides of strategies pit the potential solutions against each other.”One advantage that California has in dealing with these and other challenges — fixing K-12 education, lowering the tax burden on families and businesses and so on — is that the state’s finances have improved. The state raised taxes and trimmed spending to brace for the Covid-19 recession, but tax revenues came in unexpectedly high because higher-income workers kept working and the financial markets did well, generating taxable capital gains. The $100 billion California Comeback Plan, which Newsom signed in July, is a Christmas tree of Democratic priorities, including stimulus checks for two out of every three Californians, renter assistance, housing for the homeless, tax relief and grants to small businesses, universal pre-K, college savings accounts for low-income students and investments in infrastructure and wildfire resilience.I bounced this optimistic line of thought off Joel Kotkin, a professor at Chapman University in Orange, Calif., who is an expert on cities. He was more pessimistic. “The way our economy is structured, there’s an incredible amount of wealth being minted for a small number of people,” he said. “We have the worst overcrowding. The schools are terrible and they’re going to get worse.” He added, “Used to be a young, ambitious person went to California. I don’t think that’s happening anymore.”It’s hard to argue with a veteran observer of California like Kotkin, who began writing about Silicon Valley in 1975. On the other hand, the bearishness can be overdone. Matthew A. Winkler, editor in chief emeritus of Bloomberg News, observed earlier this year that people love to declare California “doomed.” It ain’t.The readers writeHow you describe a bill depends upon what you are talking about. If you are concerned about too much fiscal stimulus, then taking note of the tax increases and spending cuts makes sense. If you are concerned with the size of government, taking note of spending cuts makes sense, but it does not make sense to reduce the size of the bill by the amount of the tax increases. Same way with a Republican tax cut. If they cut taxes by $1.5 trillion and fully offset it with $1.5 trillion in spending cuts, that is a $1.5 trillion tax cut and that is how it should be described. Only offsetting tax increases should be taken into account.Paul PecorinoTuscaloosa, Ala.The writer is a professor of economics at the University of Alabama.Quote of the day“According to Wittgenstein’s ruler: Unless you have confidence in the ruler’s reliability, if you use a ruler to measure a table you may also be using the table to measure the ruler. The less you trust the ruler’s reliability, the more information you are getting about the ruler and the less about the table.”— Nassim Nicholas Taleb, “Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets” (2004)Have feedback? Send a note to coy-newsletter@nytimes.com. More

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      Senate Begins Budget Political Theater With $3.5 Trillion at Stake

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      Once again, the Senate will begin a marathon “vote-a-rama,” dealing with dozens of nonbinding amendments before the one vote that counts, passage of a $3.5 trillion budget blueprint.WASHINGTON — Some senators have tried to ban the process. Others simply say it’s the worst part of their jobs.Even Senator Robert C. Byrd, a West Virginia Democrat who created and fortified some of the chamber’s most complex rules before his death, warned the so-called vote-a-rama process could “send some old men to their deaths.”Still on Tuesday, as the Senate turned to a $3.5 trillion budget blueprint that begins the Democrats’ push to expand the social safety net, the tradition of considering hours upon hours of nonbinding budget amendments will once again get underway — with senators forcing politically sensitive votes on their rivals as campaign operatives compile a record for possible attack ads.Only one vote really matters: If all 50 Democrats and Democratic-leaning independents give final approval to the blueprint, Senate committees can begin work this fall on the most significant expansion of the safety net since the 1960s, knowing that legislation cannot be filibustered under the Senate’s complicated budget rules.But before that final vote, which looked set to come either late Tuesday or early Wednesday, senators were having to deal with a blizzard of advisory amendments, and like every vote-a-rama that preceded it, it was painful.“It’s a little bit like an extended visit to a dentist,” said Ross K. Baker, a professor of political science at Rutgers University. “The whole process is an exercise in ‘gotchas.’”The Budget Act limits Senate debate to 50 hours on a budget resolution, but over time the Senate has developed its vote-a-rama custom, which allows for an accelerated voting procedure on amendments even after the 50 hours have expired. In recent years, the practice has allowed just minutes of debate for each amendment followed by a short vote.In practice, any senator can prolong the process by offering new amendments for votes until he or she runs out of steam. The result is a procedural food fight with a silly name that does little other than keep Capitol denizens up past their bedtimes and cause twinges of political pain. (Vote-a-RAHM-a? Vote-a-RAM-a? Depends on the senator.)The amendments can range from the serious to the absurd. During a debate over health care in 2010, Senator Tom Coburn, Republican of Oklahoma, forced a vote banning coverage of erectile dysfunction drugs for convicted sex offenders as a way to try to embarrass Democrats who supported the legislation. That prompted Senator Max Baucus, Democrat of Montana, to condemn the amendment as a “mockery of this Senate.”But the power of the political “gotcha” is diminishing with overuse. This is the third vote-a-rama this year alone. During the last episode in March — the longest open vote in modern Senate history — the Senate entertained 37 votes on amendments. During February’s vote-a-rama, there were 41.Should Democrats successfully pass the blueprint and draft a multi-trillion-dollar package, a fourth vote-a-rama is expected in the fall.“The budget resolution is usually the platform for political theater, and both sides having votes that are designed to make a statement because none of it is binding,” said Senator Patrick J. Toomey, Republican of Pennsylvania, who plans to retire next year.Both parties have historically lamented the vote-a-rama process, but neither wants to give it up. Typically, the party in the minority — in this case, the Republicans — revels in the uncomfortable votes it can force upon the majority party that typically controls the chamber, its floor time and what gets voted on.Republicans hammered Democrats on Tuesday over the size of the spending package, the planned tax increases to pay for it and liberal proposals to rein in climate change, which they deride as part of the “Green New Deal.”Senator Bernie Sanders, who is in charge of the Senate Budget Committee, said his plan was simply “to defeat all of the poison pill amendments.”T.J. Kirkpatrick for The New York TimesSenators filed hundreds of amendments, including a list from Senator Josh Hawley, Republican of Missouri, setting up votes to, among other things, add to the budget 100,000 police officers and promote a “patriotic education in K-12 schools” that teaches “students to love America.”Senator Lindsey Graham of South Carolina, the top Republican on the Senate Budget Committee, had previously vowed “to ferociously attack” the Democrats’ plans. Senator Mitch McConnell of Kentucky, the minority leader, said on Tuesday that Senate staff members had processed hundreds of amendments and pledged that “every single senator will be going on the record over and over and over.”Democrats largely appeared sanguine before the whole exercise. Senator Bernie Sanders, the Vermont independent in charge of the Senate Budget Committee, said his plan was simply “to defeat all of the poison pill amendments.”“That’s the whole point,” said Senator Elizabeth Warren, Democrat of Massachusetts. “They want to try to make us take what they think will be votes that they can use in television ads. This isn’t about legislating. This is just about jockeying for political advantage.”“We’ll have to endure a certain amount of that,” she added, “but we’ll get the budget resolution passed.”Even Republicans acknowledged that, at least with the budget blueprint, it would ultimately be a fruitless endeavor to derail a proposal that Democrats said they had the votes for.“We just continue to have conversations with colleagues on the other side of the aisle, encourage them not to support it, but I just think we’re going to get rolled,” said Senator Joni Ernst, Republican of Iowa. “They’ll wipe the slate clean at the end of the process.”Occasionally, though, a binding vote can take place. Republicans, for instance, could try to insist the Judiciary Committee be cut out of the budget reconciliation process, thus blocking the inclusion of a pathway to citizenship for millions of undocumented immigrants. (But the committee’s inclusion also meant a wider array of amendments could be considered under Senate rules, given the committee’s expansive jurisdiction.)The votes also occasionally produce a moment of truth for politicians. After many Democrats hemmed and hawed over stating their views on a $15 minimum wage this year, a forced vote on an amendment during the vote-a-rama in March revealed seven of the chamber’s more centrist Democrats opposed the increase.Despite the political risks, Mr. Baker said the votes during a vote-a-rama did not typically end up substantially hurting political candidates. Constituents tend to judge their senators on major policy issues, not votes that fly by, often after midnight.“Those kinds of votes can prove to be problematic but in a torrent of amendments, I think it becomes part of the noise,” he said. “That doesn’t mean they’re not going to be scared about it.” More