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Corporate America believes it can kill most of the tax increases in Biden – I am writing here about the level of confidence in the executive suites and lobby shops that most of President Joe Biden’s proposed tax increases will not find their way into law. These people could of course be wrong. But the consensus that Biden will be lucky enough to get just a corporate tax hike is pretty overwhelming.
And lobbyists and leaders believe that progressive Democrats don’t really care about the cost of new programs and are happy to push through as much spending as possible and then go ahead and run tax hikes in 2022 instead of actually getting them passed this year.
Interviews with over a dozen executivesLobbyists and corporate group representatives raised a similar issue: while Democrats may be able to impose a slightly higher peak corporate rate, forget about it when it comes to higher taxes on the rich, on capital gains, on financial transactions, or on private equity. It’s going to win. It doesn’t happen.
“Drop your jaw” – “With enterprising and more centrist Democrats in both the House and Senate, they are examining the size and breadth of these infrastructural and family plan tax increases and they are simply stunning,” said Neil Bradley, chief policy officer at the US Chamber of Commerce.
“They talk about tax hikes that could hit millions of small businesses across the country and taxes that could kill investment. From a crude political perspective, it would be a really insane decision for these moderates to say that they would be willing to give so much of a damp blanket to an economy that is really on the rise. “
What it means – If executives are right, Biden will either have to break his promise to pay for his massive spending agenda and continue to increase the deficit, or he has to drastically cut his plans. And cutting them up in significant ways would anger the progressive wing of his party, who see this as the president’s only chance to fundamentally turn the economy back to the workers and make them fairer.
Good Monday morning – welcome back everyone. Send me an email [email protected] and follow me on Twitter @morningmoneyben. Email Aubree to Eliza Weaver [email protected] and follow her on Twitter @AubreeEWeaver.
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President Biden will be reporting on the expanded, refundable child tax credit this morning. In the afternoon, Biden will be making comments on Covid-19 in the East Room. … Biden is going to Dearborn, Michigan on Tuesday to visit the Ford Rouge Electric Vehicle Center …
On Wednesday, Biden will deliver the keynote address at the start of the Coast Guard Academy … On Friday, Biden will meet with Korean President HE Moon Jae-in and the couple will hold a joint press session …
The Senate Finance Department will hold a hearing on Tuesday at 10:00 am on “Financing and Financing Options to Strengthen American Infrastructure.” A hearing on “Re-authorization of the National Flood Insurance Program, Part I” will take place on Tuesday at 10 a.m.
Violence in the Middle East is getting worse – About the AP in Gaza City: “Israeli warplanes unleashed a series of heavy air strikes in several locations in Gaza City early Monday, hours after Israeli Prime Minister Benjamin Netanyahu launched the fourth war with Hamas. Announced to those in power in the Gaza Strip.
“Explosions rocked the city from north to south for 10 minutes in an attack that was heavier, over a larger area, and lasted longer than a series of air strikes 24 hours earlier that killed 42 Palestinians – the deadliest single attack in the last round the violence between Israel and the Hamas militant group that rules Gaza. Previous Israeli air strikes flattened three buildings. ”
BULLISH ON 2021 – Via Morgan Stanley: “A significant acceleration in growth is underway in 2021: We remain above consensus on GDP growth at 8.0% in Q4 / Q4 (7.1% YoY) in 2021. We are raising our GDP forecast for 2022 by 0.4 percentage points to 3.2% in the fourth quarter / fourth quarter (4.9% year-on-year) after the “Better Downsize” plan was passed in Q4 21 .
“Faster growth creates room for newcomers when participation increases. Job gains started this year disappointingly, but we expect the pace to pick up as health concerns subside, schools reopen and unemployment benefits wear off. The net unemployment rate falls to 5.0% in the fourth quarter of 21 and to 3.9% in the fourth quarter of 22. ”
Inequalities would widen if policies led to sustained inflation – WSJ Jon Hilsenrath: “Federal Reserve and Biden Administration officials say economic inequality is bad, and some of their policies are aimed at: to help reduce this inequality. At least in the short term, these measures could increase inequality, not decrease it.
“The cost of living has risen faster than paychecks in recent months due to inflationary pressures, which means a paycheck hasn’t gone as far as it did before. Consumer price inflation rose 4.2 percent in April year over year, while hourly wages for production workers rose 1.2 percent, the Labor Department reported last week. ”
SHORT-TERM INFLATION WILL ALSO TEST THE FED – James Mackintosh of WSJ: “How much inflation would it take for the Federal Reserve to abandon its super easy money commitment and talk about tightening?
“Markets believe the answer is that the Fed will accept far more than consumers would like, and the market is likely right: inflation could easily reach 5 percent early next year without strategy changing. As long as the Fed expects inflation to decline and investors and workers have confidence, the Fed is under no pressure to move. The danger is that high inflation will shake that belief. ”
ICYMI: PENSION MEN RAISED WOMEN TO TRACK STOCKS IN S&P 500 BANK BOARDS – Jeff Green of Bloomberg: “Women received a larger proportion of directorships at five companies in the Standard & Poor’s 500 Banks Index than four men did last month retired or resigned Zions Bancorp added a new director to its board of directors.
“The shift, which increased the average number of women on bank boards from 4.4 to 4.5, underscores a tactic many companies are using to add seats for different members when male members depart,” said Keith Meyer, co- CEO and Managing Director recruitment at Allegis Partners. ”
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JOB fears, price spikes mean heartburn for the bidding white house – Jarrett Renshaw and Howard Schneider from Reuters: “High unemployment. Rising prices. Gas pipes. They’re a bad reminder for Americans old enough to remember the 1970s – but they’re also likely to cause a few sleepless nights at the White House as the United States economic recovery from the unprecedented coronavirus recession struggled Has.
“The shocks dampen consumer confidence, heighten fears of inflation, and help Republicans stand up to President Joe Biden and his ambitious plans to revamp the US economy with trillions of new spending. As the 1970s show, high unemployment and rising prices in the US in April can be a powerful political force. ”
ECONOMIC REBOUND PROVEN MORE THAN A BOOM – Bloomberg’s Shawn Donnan and Cecile Daurat: “The prevailing scenario for the US recovery on Wall Street and Washington has until recently been centered on a boom triggered by consumers who are with All power brought back to life were vaccine-induced reopening of the economy.
“The reality that emerges from the latest data is a bumpy rebound that is prone to surprise. Whatever you think of whether unemployment benefits are keeping Americans back to work or how worrying the recent price hikes are – not much, the Federal Reserve says – the economy is blinking messy signals. ”
CENTRAL BANKS JUMP INTO THE CLIMATE CHANGE SPRAY – Simon Clark from WSJ: “The central banks, the most powerful financial institutions in the world, also want to be the guardians of the environment. Central banks say climate change is a financial and economic risk. They believe rising sea levels, more forest fires, and larger storms could create bottlenecks that fuel inflation, the traditional nemesis of regulators.
“The banks that dig deepest are trying to limit climate change by diverting their financial systems away from fossil fuels. Your regulations could affect US companies operating overseas. The Bank of England’s remit now expressly includes environmental sustainability and maintaining price stability. ”
WILL THE SHAREHOLDERS KEEP THE UNSTOPABLE RISE OF THE CEO PAYING? – The Economist: “The last year has been a terrible year for travel of any kind. You wouldn’t know from the way some American business executives kept up the pay. Annual filings show that Larry Culp, head of GE, whose jet engine business stalled as a nosedive in aviation, earned $ 73 million, nearly three times his total wages in 2019.
“Christopher Nassetta, CEO of Hilton, a hotel chain, saw a 161 percent raise and received $ 55.9 million. Norwegian Cruise Line, which called 2020 the toughest year in its history, has CEO Frank Del Rio’s compensation more than doubled All three were among those corporate titans who made huge cuts to their base salaries and / or bonuses during the pandemic. They pocketed far more than they gave up. “