Happy Tuesday and welcome to On The Money, your nightly guide to everything affecting your bills, bank account and bottom line. Subscribe here.
Today’s Big Deal: The Russia-Ukraine conflict could lead to food shortages and drive prices ever higher. We’ll also look at Senate action on another Fed nominee, Biden’s estate tax overhaul and a FTC lawsuit accusing TurboTax of misleading consumers.
But first, see which states are taking Will Smith’s side.
For The Hill, we’re Sylvan Lane, Aris Folley and Karl Evers-Hillstrom. Reach us at slane@digital-release.thehill.com, afolley@digital-release.thehill.com and kevers@digital-release.thehill.com.
Let’s get to it.
Russia invasion ups fear of US food price hikes
Russia’s invasion of Ukraine is raising fears of a global food shortage that could hike prices for U.S. consumers and spark a humanitarian crisis in the Middle East.
Commodity prices have skyrocketed since Russia launched its invasion, with traders worried that Russia’s attacks on Ukrainian infrastructure and takeover of key ports will prevent Ukraine from exporting its crops for an extended period of time.
If the war rages on and prices remain elevated, the cost of bread, cereal, pizza, pasta and other foods in the U.S. could spike, hitting consumers again after grocery prices rose by 8.6 percent on the year, the largest annual increase in four decades.
“In the next few months, if Ukrainian farmers aren’t able to get their crops in the ground as we go into the springtime, and we’re looking at an entire year without a quarter of the world’s wheat supply, it’s going to have a significant impact on prices,” said Robb MacKie, president and CEO of the American Bakers Association.
- Ukraine is the world’s largest exporter of sunflower oil, the fifth-largest wheat exporter and a top corn exporter. Together, Russia and Ukraine account for 29 percent of global wheat sales and the bulk of wheat imports to Middle Eastern nations.
- The country recently exported relatively small supplies of grain by train for the first time since the conflict began. But with Russia controlling the country’s southern ports, Ukraine remains cut off from the Black Sea, its main trade channel.
- The consequences will be far worse for Middle Eastern countries like Afghanistan, Lebanon and Yemen that rely on Ukraine for the bulk of their wheat imports and are already struggling with widespread hunger.
The Biden administration is hopeful that American farmers will increase their wheat production to take advantage of higher prices. But that’s a risky bet with fertilizer, which is often imported from Russia and Belarus, growing more expensive than ever.
Karl details the potential food shortage here.
NOW WE’RE COOK-ING
Senate advances Fed nominee past committee deadlock
The Senate voted along party lines Tuesday to advance Michigan State University professor Lisa Cook’s nomination to the Federal Reserve Board after a committee deadlocked on her nomination earlier this month.
- Senators voted 50-49 to move Cook along to full consideration to be confirmed for a seat on the Fed board of governors.
- All 50 Democratic senators voted to advance Cook, a former member of the White House Council of Economic Advisers under former President Obama, while 49 Republican senators voted against her. Sen. John Kennedy (R-La.) did not vote.
The background: Cook’s nomination was held up in March after the Senate Banking Committee voted 12-12, also along party lines, on advancing her nomination to the full Senate. The panel approved Biden’s renomination of Fed Chair Jerome Powell, his nomination of Fed Governor Lael Brainard to be vice chair and the nomination of Davidson College professor Philip Jefferson to serve on the Fed board on March 16 but tied on Cook.
What comes next: Both Powell and Jefferson are almost certain to be confirmed, and Brainard has already drawn bipartisan support. Cook, however, faces a narrow margin for confirmation in the face of unanimous Republican opposition.
Sylvan explains here.
FILE FENIAL
FTC sues Intuit over TurboTax ‘free’ filing ad campaign
The Federal Trade Commission (FTC) on Tuesday announced it was suing Intuit, the owner of TurboTax, for allegedly deceiving consumers with “bogus” advertisements pitching free tax filings that millions of Americans do not qualify for.
The FTC is also asking a federal court to immediately halt “deceptive advertising” immediately, the agency said in a statement.
- The agency argues that TurboTax has for years published misleading advertisements leading consumers to believe they can file taxes for free through the company, when in actuality, two-thirds of filers in 2020 could not qualify for the free filing.
“TurboTax is bombarding consumers with ads for ‘free’ tax filing services, and then hitting them with charges when it’s time to file,” said Samuel Levine, the director of the Bureau of Consumer Protection, in a statement. “We are asking a court to immediately halt this bait-and-switch, and to protect taxpayers at the peak of filing season.”
The Hill’s Brad Dress has more here.
CLOSING LOOPHOLES
White House ‘billionaire tax’ shadows other more powerful tax changes
As the Biden administration touted its new proposal of a minimum income tax for households worth more than $100 million, estate lawyers Monday were paying attention to a more technical but also more powerful set of proposed revisions to estate and gift taxes that would go after inherited caches of wealth that have long stood beyond the reach of tax collectors.
The changes seek to downgrade sophisticated types of shelters available to the ultra-rich and their financial engineers that allow piles of money worth billions of dollars to go untaxed as they accrue over centuries.
“It’s very subtle in the green book, and it doesn’t seem to be what [the Biden administration] is promoting, but I’ve seen the language, and it’s serious,” said Daniel Hemel, a law professor at the University of Chicago. “These changes would take the juice out of estate tax planning.”
- The Biden proposal would limit the number of generations that can take advantage of a loophole that allows large sums of estate money to go untaxed forever, and crack down on another similar tax avoidance scheme.
- The budget is largely symbolic, but tax attorneys say Biden’s most recent proposals are much more expressly targeted than similar measures put forward last year.
The Hill’s Tobias Burns has more here.
Good to Know
Inflation, which is at its highest point in 40 years, topped the list of economic concerns among Americans in a new poll.
The Gallup survey released Tuesday found that 17 percent of respondents listed inflation as their top economic issue, rising from 8 percent in January and 10 percent last month. Almost 6 in 10 respondents — 59 percent — said they now worry about the cost of living a “great deal.”
Here’s what else we have our eye on:
- The U.S. will likely need to massively increase its reliance on imports of foreign metals if it is to meet the Biden administration’s goal of moving the country to mainly electric vehicles.
- Sen. Jeanne Shaheen (D-N.H.) said Tuesday that she has an “agreement in principle” with Sen. Susan Collins (R-Maine) on legislation aimed at lowering the cost of insulin.
- The Department of Justice sent letters to bipartisan lawmakers on the House and Senate Judiciary committees endorsing antitrust proposals that aim to block tech giants from giving preferential treatment to their own products.
That’s it for today. Thanks for reading and check out The Hill’s Finance page for the latest news and coverage. We’ll see you tomorrow.