Happy Friday and welcome back to On The Money, where we’re dreading getting our first post-pandemic headshots taken. 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—Biden $1.5T budget proposes major hike in social programs: President Biden on Friday proposed a $1.5 trillion annual budget for fiscal 2022, $118 billion higher than the regular 2020 appropriations, featuring a significant 16 percent boost in nondefense spending.
- The $769 billion nondefense budget, which covers government departments such as Transportation, Health and Human Services, Justice and Education, is a $105.7 billion increase from the current level.
- Administration officials, who say that the government has underinvested in domestic spending for years, noted that it would be roughly in line with the 30-year nondefense average of 3.3 percent of gross domestic product.
- Defense spending, which some budget watchers expected to stay flat in the proposal, would increase by $12.3 billion, or 1.7 percent, to $753 billion.
In a stark reversal from four years of budget requests from President Trump, which sought to slash funding for major agencies but were routinely dismissed by Congress, the Biden proposal beefs up government agencies. The Hill’s Niv Elis breaks it down here.
What happens now: As veteran readers of this newsletter likely know, the president’s annual budget request is never enacted into law verbatim. While Biden’s will have more sway over a Democratic House and Senate, the proposals are useful for insights into the administration’s priorities and not much else.
Biden’s request, however, kicks off the annual appropriations process in Congress, which requires both chambers to pass 12 spending bills to fund the government before the new fiscal year begins on Oct. 1. Without spending bills or a stopgap measure, the government shuts down. The road ahead is expected to be long and contentious.
- Republicans, whose votes are needed to pass appropriations bills in the Senate, have already begun raising alarms over spending levels on the $1.9 trillion COVID-19 relief bill and Biden’s proposed $2.3 trillion infrastructure bill.
- Conservatives are likely to howl at Biden’s proposal to zero out funding for Trump’s border wall and claw back previously appropriated funds, his focus on civil rights enforcement and police reform, and proposals on gun safety and increases to Title X family planning.
- Progressives, such as Senate Budget Committee Chairman Bernie Sanders (I-Vt.) are also frustrated with Biden’s proposed defense spending increases.
Read more about Biden’s budget proposal:
- Biden budget adds $111 million to battle domestic terrorism
- Biden proposes $1.2B increase in IRS budget
- Biden hopes to boost climate spending by $14 billion
LEADING THE DAY
Producer prices rise at fastest annual rate since 2011: Prices charged by producers rose 4.2 percent over the past 12 months, the fastest increase since 2011, as the recovery from the coronavirus pandemic drives a surge in demand, according to data released Friday by the Bureau of Labor Statistics.
The producer price index (PPI) rose at its fastest annual rate in a decade due largely to the massive and abrupt economic impact of the COVID-19 pandemic.
What happened:
- Prices fell sharply about a year ago as the pandemic derailed the global economy but have risen from those lows as companies prepare for a return to normal activity.
- The PPI without prices for food, energy and trade services — which are typically more volatile — rose 3.1 percent over the past 12 months, the fastest rate since 2018.
Why it matters: Inflation has been below the Fed’s target range for decades, and Fed officials have expressed confidence that price increases will settle down before spiraling out of control.
President Biden’s economic team has also expressed confidence that a brief surge in inflation would settle before the end of the year amid growing pressure from Republicans over the issue.
I explain here.
ON TAP NEXT WEEK
Tuesday:
- The Senate Banking Committee holds a hearing on the legacy of racial discrimination in housing at 10 a.m.
- The House Rules Committee holds a hearing on the Paycheck Fairness Act and other bills at 1 p.m.
- A Senate Banking subcommittee holds a hearing on the federal student debt burden at 2:30 p.m.
Wednesday:
- The House Financial Services Committee holds a hearing entitled investing in housing and infrastructure at 10 a.m.
- Federal Reserve Chairman Jerome Powell participates in a discussion with the Economic Club of Washington, D.C., at 12 p.m.
- The Joint Economic Committee holds a hearing on COVID-19 vaccinations and the economic recovery at 2:30 p.m.
Thursday:
- The U.S.-China Economic and Security Review Commission holds a hearing entitled “An Assessment of the CCP’s Economic Ambitions, Plans, and Metrics of Success” at 9:30 a.m.
- A House Financial Services subcommittee holds a hearing on trends in financial institution charters at 10 a.m.
- The Senate Banking Committee holds a hearing on transportation infrastructure investments at 10 a.m.
- A House Financial Services subcommittee holds a hearing on the transition from LIBOR at 2 p.m.
NEXT WEEK’S NEWS, NOW
- Lawmakers will be back in Washington, D.C. after an Easter recess, so we may get some more headway, or at least headlines, regarding negotiations over Biden’s infrastructure plan.
- The Senate will be voting on Gary Gensler’s nomination to lead the Securities and Exchange Commission at some point next week. He’ll be confirmed with some bipartisan support, but not a ton, after being approved 14-10 for a confirmation vote.
- Powell’s Wednesday interview follows an appearance on “60 Minutes,” both of which will feature plenty of questions about the Fed’s view on the path of the economy and the risks of inflation.
- The Senate Banking subcommittee hearing on student loan debt will be chaired by Sen. Elizabeth Warren (D-Mass.), one of the Senate’s most vocal advocates for $50,000 of debt forgiveness for every borrower with federal student loans. We’ll see if the hearing—and her questioning of Navient’s CEO—make any waves.
GOOD TO KNOW
- President Biden is proposing a massive investment in affordable housing through his infrastructure plan as the coronavirus pandemic pushes home prices to record highs.
- McDonald’s is set to close hundreds of locations inside Walmart stores as more and more consumers are beginning to shop online and get food orders to go via drive-thru windows.
- Workers at Amazon’s Bessemer, Ala.,warehouse have voted not to unionize, a major victory for the e-commerce giant but not the end of the fight for labor organizers.
Recap the week with On The Money:
- Monday: Manchin says he won’t support corporate tax hike to 28 percent | Yellen calls for global minimum corporate tax
- Tuesday: Five ways an obscure Senate ruling could change Washington | IMF sees record global economic growth in 2021
- Wednesday: Biden says compromise ‘inevitable’ on infrastructure plan | Chance for bipartisan breakthrough? | Democrats mull tax hikes
- Thursday: Pelosi wants infrastructure done by August | Powell warns US is reopening to a ‘different economy’ | McConnell vs. Big Business