Happy Tuesday and welcome back to On The Money, where we’re perplexed by Mega Virginia. I’m Sylvan Lane, and here’s your nightly guide to everything affecting your bills, bank account and bottom line.
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THE BIG DEAL—Yellen defends raising taxes ‘in a fair way’ to fund infrastructure plan:
Treasury Secretary Janet Yellen on Tuesday defended President Biden’s expected push to raise taxes for corporations and high-earning individuals to help fund a massive infrastructure spending package as the economy recovers from COVID-19.
During an appearance before the House Financial Services Committee, Yellen said it’s essential for the U.S. “to raise revenues in a fair way to support the spending that this economy needs to be competitive and productive.”
“A package that consists of investments in people, investments in infrastructure will help to create good jobs in the American economy and changes to the tax structure will help to pay for those programs,” she told lawmakers.
I’ll take you to the hearing here.
The background:
- Biden is planning to propose roughly $3 trillion in spending focused on revamping U.S. infrastructure, creating more domestic manufacturing jobs, adapting the U.S. to climate-related risks and expanding education and job training.
- The proposal will likely be paired with increases to the corporate income tax rate, the top individual income tax rate and taxes on capital gains.
The political divide: While Democrats are eager to make a massive investment in the U.S. economy, Republicans have fiercely criticized them for pursuing trillions more in spending after just passing a $1.9 trillion COVID-19 relief bill along partisan lines. GOP lawmakers also argue that raising taxes as the economy works to rebound from the pandemic will disrupt the recovery.
“We know that raising the corporate tax rate results in higher costs for small businesses, schools and American households,” said. Rep. Ann Wagner (R-Mo.).
“Then why, as this country begins to reopen and recover economically, would the Biden administration be proposing tax policy which would in the end hurt the American family and millions of struggling small businesses?” she continued.
The implication: Biden and Democrats are unlikely to find much — if any — support from Republicans for their proposal and are expected to use budget reconciliation to pass the measure with just 51 votes in the Senate. Under this process, Biden could not afford a single defection from a Senate Democrat.
Read more on Biden’s infrastructure plan:
- A massive White House spending proposal on infrastructure and other domestic priorities is setting the stage for a potential lobbying blitz on Capitol Hill, particularly as more lawmakers embrace a return to earmarks, per The Hill’s Alex Gangitano.
- A group of nearly 200 businesses worth a combined $539 billion is urging Congress to expand access to paid family and medical leave in the next spending package, reports The Hill’s Jonathan Easley.
LEADING THE DAY
Senate confirms Young as deputy budget director: The Senate on Tuesday confirmed Shalanda Young as the White House’s deputy budget director, even as plans to fill the top spot at the Office of Management and Budget (OMB) remain on hold.
- Young, a former staff director for the House Appropriations Committee, was confirmed by a vote of 63-37.
- Many Republicans who initially supported Young’s confirmation as the No. 2 at OMB withdrew their support after an initial round of confirmation hearings, citing objections to her support for repealing the Hyde Amendment, which bars government funds from being used for abortions, in her written responses.
Young’s confirmation comes as the White House struggles to name a nominee to fill the top budget spot, which plays a central role in overseeing the executive branch.
The Hill’s Niv Elis explains here.
Who’s in the running? Since Tanden’s withdrawal, top House Democrats including Speaker Nancy Pelosi (D-Calif.) have made a public push for Biden to offer Young the top budget job, but he’s been slow to name a new nominee.
- Gene Sperling, a former director of the National Economic Council, had been floated for the job. Biden instead offered him a position in the administration overseeing the implementation of the $1.9 trillion COVID-19 relief law signed earlier in the month.
- Ann O’Leary, another potential nominee who was most recently chief of staff to California Gov. Gavin Newsom (D), took herself out of the running earlier this week.
Some Asian American Pacific Islander (AAPI) advocacy groups are making a push for Biden to pick Nani Coloretti, who was deputy secretary of Housing and Urban Development in the Obama administration and is of Filipino descent. Her stock could rise after Sens. Tammy Duckworth (D-Ill.) and Mazie Hirono (D-Hawaii) said on Tuesday that they would oppose Biden’s future nominees on the Senate floor over a lack of AAPI representation in his Cabinet.
Fed to form committee focused on climate risks to financial system: The Federal Reserve will create a committee dedicated to understanding the ways climate change could upend the global financial system, a top official announced Tuesday.
Fed Governor Lael Brainard said in a Tuesday speech that the central bank’s new Financial Stability Climate Committee (FSCC) will focus on the potential threats climate change can pose to the broader financial world.
While the Fed had already created a Supervision Climate Committee (SCC) to study the climate risks facing specific firms and the banking industry generally, Brainard said the new panel will focus on how climate-related disruptions could ripple through credit markets and other industries within the financial sector, causing a broader crisis.
The takeaway: The Fed’s new committee will dramatically expand the scope of its efforts to monitor and prepare for climate-related financial risks. While Democrats have praised the Fed for stepping up its climate oversight, Republicans have criticized the bank and warned officials against taking actions that could impede the oil and gas industry.
ON TAP TOMORROW:
- Treasury Secretary Janet Yellen and Federal Reserve Chairman Jerome Powell testify before the Senate Banking Committee on the federal response to the coronavirus recession at 10 a.m.
- The House Oversight Committee holds a hearing on gender pay equity at 10 a.m.
- A House Financial Services subcommittee holds a hearing on public housing and COVID-19 at 12 p.m.
- The Senate Small Business Committee holds a hearing on oversight of the SBA’s pandemic economic relief programs at 2 p.m.
- A House Agriculture subcommittee holds a hearing on the rural economy at 2 p.m.
- The American Enterprise Institute hosts an event entitled “The Biden stimulus, the Federal Reserve, and the everything bubble” at 2 p.m.
GOOD TO KNOW
- Financial services company Charles Schwab terminated its membership with the U.S. Chamber of Commerce, the company said on Tuesday.
- Sales of new homes plunged in February as harsh winter weather and supply issues interrupted a scorching hot housing market, according to data released Tuesday by the Commerce Department.
- House Majority Whip Jim Clyburn (D-S.C.) said that Democrats are going to run on the passage of the American Rescue Plan in the 2022 midterm elections.
ODDS AND ENDS
- A bipartisan group of lawmakers on Tuesday introduced a bill that seeks to give states more money to address aging water infrastructure, putting funds toward reducing lead levels and projects to address the impacts of climate change.