Happy Thursday and welcome back to On The Money, where we’re encouraging every lawmaker to send us their mock draft before it’s too late. 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—US economy roars in first three months of 2021: The economy grew at an annualized rate of 6.4 percent in the first quarter of 2021, according to Commerce Department data released Thursday.
- The figure is up from 4.3 percent in the previous quarter and an early indication that the economy could reach annual growth levels this year not seen since the 1980s.
- It was also the largest first-quarter increase since 1984.
How did it happen? The economy was boosted by an increase in vaccinations, declining COVID-19 cases and massive levels of support from the government. Both the $900 billion COVID-19 relief bill signed by former President Trump in the waning days of December and early effects of President Biden’s $1.9 trillion relief bill pushed up the level of personal income and consumption in the first quarter.
- Personal income, which had dropped $351.4 billion, or 6.9 percent in the previous quarter, increased a whopping $2.4 trillion, a surge of 59 percent.
- Personal consumption pushed up at an annual rate of 10.7 percent, with goods up 23.6 percent and durable goods up 41.4 percent.
The Hill’s Niv Elis breaks it down here.
And that’s not the only strong economic data we got today:
- New applications for unemployment insurance fell by 13,000 to 553,000 last week as the U.S. economy continues to recover from the coronavirus recession, the Labor Department reported Thursday.
- Major stock indexes opened to new highs Thursday morning following strong earnings for tech giants and economic data pointing to a rapid recovery.
- Americans’ confidence in their finances has rebounded after dropping in 2020 amid the coronavirus pandemic, according to a new poll.
LEADING THE DAY
White House: Only couples making more than $509K would see tax hike: President Biden’s proposed top income tax bracket of 39.6 percent would impact single filers with income above about $453,000 and married couples with income above roughly $509,000, a White House official said.
- Biden is proposing as part of his American Families Plan to raise the top rate to 39.6 percent from 37 percent, bringing the rate back to where it was prior to the enactment of former President Trump’s tax law.
- The details about the income thresholds for the 39.6 percent bracket provide further clarity about how Biden’s pledge to not raise taxes on taxpayers making under $400,000 would work.
“Consistent with the President’s campaign proposal, we are proposing to reverse the tax cut for the top bracket by returning that top tax bracket to what it would’ve been under pre-2017 law,” a White House official said in a statement. “That applies to less than 1 percent of Americans — the very top earners.” The Hill’s Naomi Jagoda explains here.
The background: Biden repeatedly spoke about a $400,000 threshold for tax increases when he was running for president and has continued to emphasize it since taking office.
- The president has used varying language when talking about his pledge, not always being clear about whether the $400,000 threshold applied to single filers, married couples or both.
- In recent weeks, the White House has said that the $400,000 threshold applies both to single filers and married couples.
- That prompted some conservatives to argue that Biden has been misleading, since a couple whose combined income is above $400,000 could see tax increases even if each spouse’s individual income is under that amount.
SEC enforcement chief resigns just days after taking job: The head of the Securities and Exchange Commission (SEC) enforcement division resigned Wednesday following an order from a federal judge potentially raising questions about her previous legal representation of ExxonMobil.
Alex Oh stepped down as the SEC’s enforcement chief, the agency announced Wednesday afternoon, just six days after she took the post under heavy criticism from progressives and other financial sector critics.
So, what happened? Oh had been a partner at Paul, Weiss, Rifkind, Wharton & Garrison LLP before joining the SEC, co-chairing the law firm’s practice focused on corruption cases.
- She had been one of several attorneys at the firm defending ExxonMobil against a lawsuit filed by Indonesians who claimed they were beaten and tortured by guards hired to protect a company facility.
- Her resignation came two days after the judge presiding over the ExxonMobil case in the U.S. District Court for the District of Columbia ordered attorneys representing the oil company to back up claims it made about the legal team representing the victims.
The SEC impact:
- Oh will temporarily be replaced by Melissa Hodgman, who served as acting enforcement director before Oh was hired.
- But SEC Chairman Gary Gensler may have damaged his standing among progressives, who had been elated about his nomination.
Why? Democratic lawmakers and financial sector skeptics argue that the SEC has let off bad actors under the leadership of corporate attorneys who once represented such firms.
“The SEC has failed the American people by repeatedly selecting Wall Street defense lawyers as Directors of Enforcement. They come to the SEC with needless and unhelpful baggage, including crippling conflicts of interest regarding current and past clients as well as a mindset and milieu ill-suited to being an aggressive enforcer of the law against those past private sector clients,” said Dennis Kelleher, president and CEO of Better Markets, a nonprofit group that supports strict financial regulation and oversight.
GOOD TO KNOW
- President Biden on Wednesday night pitched his plan to hike taxes on the wealthy and corporations, saying “trickle-down economics has never worked.”
- Student loan forgiveness was notably absent from President Biden’s first address before a joint session of Congress on Wednesday, overlooking mounting pressure from progressives for him to act on the issue.
- Labor Secretary Marty Walsh weighed in on the debate over classification of gig workers for the first time Thursday, saying that “in a lot of cases” they should be full employees rather than independent contractors.
- Amazon announced Wednesday night that it will give over half a million of its workers a raise but maintain its $15 per hour minimum wage.
ODDS AND ENDS
- The Centers for Disease Control and Prevention (CDC) on Wednesday told cruise lines that they could resume sailing with passengers as early as mid-summer.
- The original copy of a photo that went viral in 2005 and became known as the “Disaster Girl” meme has been sold as a nonfungible token (NFT) for nearly $500,000.