forward-thinking enterprises, deserve forward-thinking solutions. and that's what we deliver. so bounce forward, with comcast business. romaine: get you caught up on where the financial markets stand because the rally besought monday had clearly faded now on wednesday. downs taking a bite out of equities. joe: "what'd you miss?" caroline: what we missed overall is the concern we have the push and pull occurring in the market. once again front and center is not only long-term optimism regarding the vaccine, but in

the short term we have concerns about what happens with the virus. new york shutting down when it comes to the schools. nevertheless, how can you sustain the entering -- opening of restaurants and bars on the back of concerns when schools have to close? the dilemma is front and center for the people operating government right now, and investors. can they look through it? joe: exactly right. still nothing to help out from d.c., no stimulus seeming to be imminent. and the economy is not rolling over yet, but i think it is surprising less to the upside. several times the data kept coming in soundly -- solidly better than exultation's. the big green area were all those data points that kept surprising to the upside. that is rolling over. what that means is not that the economy is sputtering, per se, but people are catching up to reality. of course we had retail sales

yesterday well below estimates. it is dawning on people, i guess everyone is getting more realistic, starting to mangy -- maybe virgin two downside territory. romaine: part of this reality is what is going on on the ground in states and cities. got news this morning about potentially 40% cuts to the subway service. how much it contributes to national gdp, look at this chart. on the far right of your screen, the last two bars shows you the drag, basically how much municipal and state expenditures contribute or subtract from national gdp. for the past two quarters you can see the drag. q3.in q2, .3% in as you get tax revenue falling for the states, they cut back on not only city services big and for structure projects. some estimates right now putting it at about $450 billion

shortfall for rado's -- a lot of state and local government. some higher than that of to around $900 billion. that is money not being contributed to economic growth. that is something you have to keep an eye on. caroline: and whether they will be recovery if we do not get taxpayers coming back. will it draw back people who will be paying most of the tax and sustaining most of the infrastructure? joe: might explain why we have indoor dining in new york city but not schools. for more on this we are joined by bloomberg congressional reporter and adjutant. -- anna edgerton. is there anything going on stimulus wise and d.c.? anna: no. they are not even having talks. we had nancy pelosi talking with steven mnuchin before the election and they have gone back and forth on some specific proposals but now the white house has really stepped back

from these negotiations and said it is up to mitch mcconnell to negotiate with pelosi. and they are not speaking. we have not reported on any conversations between pelosi and mcconnell, and they are the ones who need to go into a room and figure out how to move forward to get stimulus money. caroline: do we wait until the new administration? can people wait until the new administration? can we see some kind of stopgap being made? anna: next week being thanksgiving, running into december, it is definitely looking like it will be a next year kind of thing. the one date we are looking at is december 11, when the current funding for the government runs out. they will have to pass more spending bills to keep the government open. you have one train leaving the station, that could be an opportunity to attach some stimulus to it, but certainly not the trillions of dollars house democrats say are necessary to keep the economy up and running. romaine: but what is the game plan? with the next congress coming in, at least right now it does

not appear democrats will have a majority, or at least it is not certain. is there any sense that the situation is going to change, the dynamics, the calculus for getting this through congress would change once we get the january? anna: it is really hard to tell. as you alluded to, we are still waiting on control for the senate because there are two runoff races in georgia. there is still a lot of uncertainty for the balance of power in washington. that will determine who has leverage to insist on their demands, or their positions. i do not know that that is what pelosi is waiting for, but there is a lot of uncertainty in how much she is going to have to seed to mcconnell to get money out the door. you had mentioned the impacts on the economy, it is only going to get worse because you have provisions from the previous stimulus package running out. unemployment insurance, forbearance on loans. it is going to get increasingly dire and obvious to policymakers that there has to be some kind of action. joe: even if the democrats can

run the table with the georgia special elections and get 50-50, vice president elect kamala harris would break the tie, that is barely a majority. that is very difficult to work with. what do we know about what a biden administration will pursue aght off the bat with such small majority even in the best circumstances for democrats? anna: we heard from biden with his economic speech i believe on monday. he gave kind of a preview the approach he would take to the economy in general, focusing on his build back better program, using the pandemic and the climate emergency as a reason to build the economy back in a better and more efficient, more equal, more just kind of way. those are very big goals, but that is very hard to do in a concrete way, especially when you have as tight a margin as you have mentioned. policies some of the

we see house democrats holding onto, some deeper policies to reshape the way we think about fiscal policy. that is going to be really hard to do, even if they have controllers -- control of the senate but just one vote. there are conservative democrats like joe mansion of west virginia who will not necessarily be on board with transformative fiscal policy. caroline: we're looking at pictures of potential pix for the treasury secretary, janet yellen, many other potential cabinet names being thrown around. anything you are getting that is more of a certain pic, do you think? anna: do not have any specific intel on which of those are more likely, but just looking at the kinds of people that biden is looking out for his cabinet, you can definitely see an emphasis on diversity. more women, more people of color, and also experienced. news are people who come in having served in the federal reserve or other white houses, and have participated in the

policy response to other crises that can bring those skills to the table, which is certainly different than the trumpet ministration that had some people coming in with great experience, but other people coming in that were not familiar with how government works. and if you have to know how to play the game in order to be an effective policymaker, i think we have seen that in the negotiations between house democrats and the white house, for example. knowing how congress works. romaine: right now there are millions of americans who. have no idea how. congress is working. we are going to continue this conversation. millions of americans are facing the expiration of pandemic aid. we are talking forbearance on mortgages, student loan payments, breaks for renters, aid to gig workers. liz pancotti wrote a great report that breaks it down. she is going to be joining us next after the break.

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romaine: today we are focused on economic damage being done by the coronavirus, also being done by the lack of additional fiscal stimulus. joe, i guess i am not supposed editorialize, but i am. the clown college we have in washington is putting a lot of people at risk. joe: absolutely. we have already seen the cut off of some of the aid, the unemployment insurance expansion, but there is more to it than just that. in just a few weeks on december 26, a let of the pandemic unemployment assistance programs that are in place to give extra on clement for people -- extra

unemployment assistance for people are going to expire, leaving millions of workers potentially with major cuts to their income. all kinds of clips coming up. people did not seem to be understanding the pain on the ground at the moment. the stock market is not the economy. on the ground, people are hurting. that is going to do real long-term damage to the economy. joe: for more, let's bring in the co-author of this report. we are going to be speaking with liz pancotti. thank you so much for joining us. let's just start big picture. what are the big cliffs coming up at the end of december and how many people will be hit by the? liz: our report focuses specifically on pandemic and unemployment insurance extensions. obviously there are several other cliffs for different sorts of housing and food assistance programs, student loans. we focus specifically on

unemployment insurance. there are two main cliffs. one of those is the pandemic on employment assistance program which extended unemployment assistance benefits to gig workers, part-time workers, and people traditionally excluded from these programs. and we also focus on the pandemic unemployment emergency compensation program, a 13 week extension for people who have run out of state benefits. they vary from 12 to 30 weeks depending on the state. and another 13 weeks after that. we are facing both of those cliffs. in the paper we estimate that will affect 12 million workers the morning after christmas. which is a large number. and even before that, 4.4 million workers will exhaust those benefits prior to that. so there are a couple programs in place to keep 3 million workers on after the fact. there is the extended benefits program which will be turned on.

it is a trigger-related program. 3 million of those workers will be captured by that program. but not too many of the 12 million. romaine: do we have any idea of how much money gets removed from the pockets of some of these households if these programs are not renewed, and it does not look like they will be renewed? liz: unfortunately it is actually not that much. in july we had a big cliff where the $600 a week fell off. now these people are to fully of $350 perverage week. these families are losing $1500 per month, which is likely 40% of what they were making before the pandemic. but it is going to go down to zero. while the july cliff was very bad, this will make it worse. caroline: and you can only imagine with the pressure on things like food banks will be and the like.

do you think in the interim? seehere anything that you in the distant horizon that could be done to save these 12 million people that will lose their lifesavings? may has democrats a bill in and have adjusted it since then to extend on a play in insurance benefits for several months after this. it would be nice if they passed that bill. obviously there have been ongoing talks since then to extend on appointment insurance benefits among several other key provisions from the cares act. so far we have not seen much movement on those talks. it seems like those chances are much -- that would be step one. states are limited given their budget shortfalls, but states could try to extend unemployment programs within state law. it also seems unlikely given where state budgets and state unemployment is at. joe: let's go back, because at

the end of august obviously we saw the end of the ui expansion. a a lot of people predicted some sort of calamity in the economy with a withdrawal of that money. but arguably, that has not happened the way people expected. we continue to see decent retail sales. household balance still look ok. the urgency ofut this particular cliff, this next round, how is it similar and different to what we have already seen? liz: i would push back a little on the strength of that data, noting that the slope of those lines, the recovery, we were seeing maybe a u-shape rather than a v-shaped, but we were seeing stark lines in the months prior to the july cliff. now we are seeing those lines flatten. i think rather than just having a flatten the curve for the increase in consumer spending or real estate sales, etc., we will start to see declines we saw in

march and april. and that is scary for a lot of folks at the household level, but for the broader macro economic recovery. we made all these gains in the last six months and those can be completely wiped out. romaine: with regard to the job gains we have been making, and we have been seeing progress, is there a sense now that if we get a stall out over the next couple of months, that that would actually change the trajectory of that job recovery? the general sense was eventually we would get back to something similar to full employment, at lease prior to covid, in short order. is that put a much off the table? liz: we are going to see a lot of discouraged workers who will just never reenter the workforce. just from what we know of the damaging effects of long-term on clement. another thing i'm watching is the resurgence in pieces. we are seeing businesses close, schools are closing, people have childcare issues. not only is this an issue for a

lot of labor market conditions, the surging of the virus with no real plan. a vaccine is on the way but still six-plus months away for the general population. given where we are at with the virus, it's unlikely that we will see the sort of rebound, or the continuance of the rebound that we were seeing. the projections that we would be back up for the unemployment, back to full employment are probably far off. joe: liz pancotti, great stuff, great research. i encourage everyone to check out the report. really appreciate you coming on. coming up, as we hear about more of these year-end fiscal cliffs, we discussed the pressure that this is all being put on cities and local governments struggling with a collapsed tax revenue. this is bloomberg. ♪ this is bloomberg. ♪

caroline: today we are focused on the economic damage being done by the coronavirus and of course at the moment the impact on federal stimulus. last segment we discussed the 12 million americans facing a fiscal cliff as aid runs out inlet -- out in late december. our previous guest was talking about it is worrying the amount we are going to be short. the state's inability to help. joe: it is kind of crazy. because there is this potential vaccine that could return things to normal in several months. but if something is not done now to arrest the slide and tax revenues and other revenues that public authorities bring in, it could mean major pain.

we heard from the mta in new york city today talking about what it could mean without more aid. public service reductions of up to 40% to 50%. that would be massive in terms of being able to get around the city. over 9000 potential jobs lost. the changes would begin in the spring. so what that could mean is you have a situation where things are not returning to normal with basic infrastructure to keep the system going is degraded. romaine: for folks who did not live in a major city to understand how vital the subway system is to a functioning economy here, to see a 50% reduction is jarring. joe: that is exactly right. for more on this and what it means for this and other cities, let's bring in city layout reporter linda poon. thank you so much for joining us. obviously we got the dire warning from the mta today, but in your reporting and in your work, how big of a problem is this for cities all around the

world, or all around the country at least, in terms of having to make cutbacks to the infrastructure that could have lasting damage? linda: yeah. arecities are facing, some facing tens of millions to hundreds of millions of budget shortfall. that is cutting back on what services they can provide. we know the economic effects of a pandemic has not hit society equally. it is the low income communities that are hit the hardest and they are the ones who often rely on these services that are seeing got. so what the mta in new york city -- we know that low income communities and essential workers are the ones who rely a lot on public transit. to have these cuts, it is not equal effect. romaine: and cities and states, they are having to do a lot to

juggle all of this and make sure not only are they able to keep their cities up and running, but also to help their citizens continue to do business and live. we heard a little earlier from the mayor of atlanta speaking about this issue. that's take a listen to what she had to say. >> we have tried to put ituctures in place to make easier for people to access grants, to access small loan funds so that they are not dependent just upon the federal government and all the bureaucracy that that entails. and that there is someone in a place locally that they can contact and be able to navigate resources to help their theiesses and in anyways, householdsr, to be able to survive covid-19. romaine: so i am curious as to what moves some of these cities and states can make on their own without this federal assistance that i think for a while we all

assumed these localities would need. linda: yeah. so, atlanta is a good example. they launched an economic mobility plan right before covid hit, so they are putting more attention on communities that need the most. they are able to invest in public private partnerships. but i think when it comes to solving the larger issues that cities,emic has given some issues really do on having federal aid. so, in some ways they are handling it, but in other ways they have to tap into partnerships. caroline: linda poon, thank you very much. at this time we usually make some pithy comment and joke around, but it feels pretty bleak. sadly i am not-

going on the subway. my car driver said it is super quiet right now. joe: it feels extremely quiet. going to be a lot of cold months ahead. caroline: that is all for us. joe: bloomberg technology is next. ♪ next. ♪ businesses today are looking to tomorrow.

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