Editor’s Note: Morning Money is a free version of POLITICO Pro Financial Services morning newsletter, which is delivered to our s each morning at 5:15 a.m. The POLITICO Pro platform combines the news you need with tools you can use to take action on the day’s biggest stories. Act on the news with POLITICO Pro. TAXING THE WEALTHY, TAKE 2 — President Joe Biden is set to unveil his annual budget proposal this morning, and it will include a revamped plan for a wealth tax that could revive the debate in Washington over taxing the 1 percent — or in this case, the top 0.01 percent. The details: The White House would require households worth more than $100 million to pay at least 20 percent in taxes on a combination of both their income and their unrealized gains in things like their stock portfolios, something that is not currently taxed, our Brian Faler reports. The administration says that would generate $360 billion over the next decade, with half of that coming from billionaires. “This minimum tax would make sure the wealthiest Americans no longer pay a tax rate lower than teachers and firefighters,” the White House said in a summary of the proposal. It may still be a tough sell: Rank-and-file Democrats have already rejected similar wealth tax proposals from Sens. Elizabeth Warren (D-Mass.) and Ron Wyden (D-Ore.). The latest plan would also amount to a major change in the tax system and would likely face a constitutional challenge. Looking ahead: The plan comes as Democrats are trying to jumpstart their stalled economic agenda, which initially included trillions in new spending on social programs, such as paid leave and early childhood education, as well as green energy investments. Those ambitions have been pared back significantly, but their success still depends upon rallying enough Democratic support for tax increases that will more than offset the new spending over the next decade. Today’s budget blueprint won’t offer details on what that agenda — which is still being negotiated — might look like, or exactly how it would be paid for. (The new wealth tax proposal is just the latest of many ideas for raising revenue that Democrats have been chewing over for the past year.) But the administration is leaning into one important message as it tries to woo Sen. Joe Manchin (D-W.Va.) — fiscal responsibility. “The Budget will show how the strongest economic growth in nearly 40 years, powered by the American Rescue Plan, has put the deficit on track to drop by more than $1.3 trillion this year—the largest-ever one-year decline,” one White House official said. “Through a new Billionaire Minimum Income Tax and other measures, budget policies will build on this progress and reduce deficits by a total of over $1 trillion over the next decade.” MM sidebar : It’s true that the robust recovery has led to much stronger tax receipts and lower spending on safety net programs such as jobless benefits, factors that are helping bring down deficits . But it’s also important to remember that much of this deficit decline was expected, as pandemic aid programs expired. (Even before Congress passed the American Rescue Plan, the Congressional Budget Office projected the annual deficit would shrink by $1.2 trillion in fiscal 2022, to roughly a third of what it was in 2020. Unfortunately, we won’t be getting a new CBO budget update until May.) Other priorities: The White House said the blueprint will put more cops on the beat for community policing, fighting gun crime and investing in crime prevention and community violence intervention, the official said. It will also make one of the largest investments in national security in U.S. history to help strengthen the military and meet pressing global challenges, and make other domestic investments to help cut costs for families and advance the agenda the president laid out in his State of the Union address. Obligatory reminder: White House budgets are aspirational and are almost never (literally never?) adopted whole cloth by Congress, even when the president’s own party controls both chambers. BIG DATA WEEK AHEAD — After Monday’s budget blitz, we have a string of important economic data releases that could nudge Federal Reserve officials closer to a super-sized interest-rate increase at their next policy meeting. The Labor Department will release its Job Openings and Labor Turnover Survey data for February on Tuesday, a key measure of labor-market tightness that has been flashing red for months now. We’ll also get an April Fools’ Day employment report on Friday, which is expected to show softer but still sizable payroll gains in March, along with rising wages and a slightly lower jobless rate. But the biggest headlines will likely come Thursday, when the Commerce Department releases its personal consumption expenditures index, the Fed’s preferred inflation gauge. A number of Fed officials last week, including Chair Jerome Powell, signaled they are open to increasing their benchmark federal funds rate by a half-percentage point at their May 3-4 policy meeting to help tamp down decades-high inflation. Economists surveyed by Bloomberg expect that PCE inflation climbed 6.4 percent last month from a year earlier, while core prices, excluding food and energy, rose 5.5 percent. Such a strong core reading “would no doubt reinforce the view of the hawks on the Committee who would like to speed the pace of policy normalization, and it may even cause some of the doves to lean in that direction as early as the May meeting,” Deutsche Bank economists Brett Ryan, Justin Weidner, Matthew Luzetti and analyst Amy Yang wrote in a note to clients. IT’S MONDAY — Apparently Mother Nature got the whole in-like-a-lion/out-like-a-lamb thing mixed up this month. Here’s hoping she makes up for it in April. Have tips, story ideas, feedback for us to close out March? Email us at kdavidson@politico.com or aweaver@politico.com, or find us on Twitter @katedavidson or @aubreeeweaver.
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