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Delivered daily by 8 a.m., Morning Money examines the latest news in finance politics and policy. | | | | | |  | | By Ben White and Aubree Eliza Weaver | 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 6 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. | | | Biden goes big (again) — President Joe Biden will head to Pittsburgh this afternoon to roll out his $2 trillion “American Jobs Plan” that makes very large infrastructure investments over the next eight years and would cover the cost largely by raising the top corporate tax rate from 21 percent (set by the 2017 tax cut bill) back to 28 percent. A White House official would not put a number on the jobs the administration hopes the plan would create but said it would be “millions and millions.” In a briefing call for reporters Tuesday night, the official said the plan makes “high value investments” in roads, bridges, broadband, clean energy and other areas. And the official said that over the “long term” it would reduce debt and deficits because the corporate rate change would be permanent and the investments would boost productivity. Real talk — Biden administration officials will not talk about their legislative strategy on the $2 trillion plan. But if they are going to pass a corporate tax hike, it’s going to have to come through reconciliation. Republicans in the Senate aren’t going to support it. And Democrats probably won’t wind up at 28 percent on the corporate rate. It’s a starting point with negotiating room down to around 25 percent, though that would reduce paid-for percentage. That increase — to 25 percent or so — will be hard for corporate America to lobby hard against. CEOs around the nation have bemoaned the lack of infrastructure spending for years now. Most in the center-right business world would have been pretty much fine with a 25 percent rate in the 2017 Trump tax cut. Going to 21 percent was a drastic move that even then-NEC Director Gary Cohn thought was too low. There is nothing close to done about this plan and it will get significantly altered on the Hill. But there is a path to 51-Senate votes over the next couple months. Nod to coal states — Our Tanya Snyder, Sarah Ferris, Zack Colman, and Laura Barrón-López: “Biden's [plan] … contains money for a smorgasbord of interests from roads to the power grid and will also include money for cleaning up abandoned mines — an obvious nod to coal state senators who could be the key to its passage. “Abandoned mine remediation would be particularly attractive for Sen. Joe Manchin , a Democrat whose support in a tightly locked Senate is key for movement on virtually any legislation, even under sped-up budget reconciliation procedures under which Republicans' votes largely wouldn't matter.” GOOD WEDNESDAY MORNING — Today is MM’s 29th birthday (for the 20th consecutive year!) so please don’t flame us on Twitter for the next few hours if you can help it. Email me on bwhite@politico.com and follow me on Twitter @morningmoneyben. Email Aubree Eliza Weaver on aweaver@politico.com and follow her on Twitter @AubreeEWeaver. | | | | JOIN THE CONVERSATION, SUBSCRIBE TO “THE RECAST” Power dynamics are shifting in Washington, and more people are demanding a seat at the table, insisting that all politics is personal and not all policy is equitable. “The Recast” is a new twice-weekly newsletter that breaks down how race and identity are recasting politics, policy and power in America. Get fresh insights, scoops and dispatches on this crucial intersection from across the country and hear from new voices that challenge business as usual. Don’t miss out on our latest newsletter, SUBSCRIBE NOW. Thank you to our sponsor, Intel. | | | | | | | | Biden will deliver remarks on the “American Jobs Plan” this afternoon at the Carpenters Pittsburgh Training Center … Treasury Secretary Janet L. Yellen will preside over a meeting of the Financial Stability Oversight Council via videoconference which will include a public portion examining climate change and financial stability … ADP private payrolls at 8:15 a.m. expected to show a gain of 550K … NO WARREN WEALTH TAX — Our Megan Cassella and Natasha Korecki: “Biden will not call for a wealth tax to help pay for his multitrillion-dollar Build Back Better initiative … In doing so, he will sidestep a proposal that progressive Democrats, led by Sen. Elizabeth Warren (D-Mass.), say would raise trillions of dollars in revenue and narrow income inequality. “The decision comes amid intense debate in Washington over how to fund the president’s sprawling package, which could top $3 trillion. Democrats are pushing for a variety of tax hikes to fund the legislation, while Republicans are vowing to oppose any package that relies on tax increases to raise revenue.” THE INFRASTRUCTURE GAP — Via S&P: “$1.5 Trillion: That’s how much was lost in infrastructure investments as state and local governments shifted expenditures in the decade following the Great Recession. … Bonus Number 75%: The amount state and local expenditures make up of national transportation infrastructure expenditures. SPACS UNDER THE MICROSCOPE — Our Kellie Mejdrich: “The shell companies that many private firms use to go public on the country’s stock exchanges have been all the rage on Wall Street for more than a year. Now, just as their explosive growth shows signs of waning, they are coming under scrutiny from lawmakers and regulators. “Special purpose acquisition companies, or SPACs, which have no business operations and whose only purpose is to acquire a private company to then list on an exchange, have become so popular that they have outstripped traditional initial public offerings. … Now, lawmakers and consumer advocates are increasingly raising alarms about the risks facing unwitting investors, particularly retail buyers … And the SEC, which has been pressed by investor advocates for months to take steps to protect investors, is moving in.” JOB INSECURITY DROPS — Via Morning Consult economist John Leer’s latest analysis: “In March, 17% of adults lacked adequate savings to pay their basic expenses for a full month, down from 22% in February. Job insecurity is also at its lowest point in the last year: 15% of employed Americans expect to experience loss of pay or income in the next four weeks, down from 17% in February.” OLDER ASIAN AMERICAN-OWNED BUSINESSES HIT HARDEST — Our Victoria Guida: “Businesses owned by older Asian Americans have been the hardest hit during the coronavirus pandemic, according to a report from the Federal Reserve Bank of New York, which found that active company ownership in that population has dropped markedly in the past year. “Among people over the age of 45, who represent 80 percent of all small business owners, Asian American entrepreneurs saw the largest drop in business ownership in 2020 — a 19 percent decrease, compared to 11 percent for Hispanic Americans, 16 percent for Black Americans and 8 percent for white Americans.” QUARLES SKEPTICAL OF BANK CAPITAL LEVELS — Also via Victoria: “Federal Reserve Vice Chair of Supervision Randal Quarles … said the economic effects of the coronavirus pandemic have made him skeptical of a bank capital requirement designed to ensure that banks lend during a downturn.” | | | STOCKS SLIP IN MIXED TRADING AS RATE PRESSURE RAMPS UP — AP’s Stan Choe, Damian J. Troise and Alex Veiga: “Rising Treasury yields put pressure once more on big technology companies Tuesday, pulling U.S. stock indexes further below their recent all-time highs. The S&P 500 lost 0.3 percent. Health care stocks also dragged down the market, outweighing gains by banks, industrial stocks and companies that rely on consumer spending. Smaller companies bucked the downward trend, powering the Russell 2000 index to a 1.7 percent gain.” TREASURY YEILDS WHIPSAW AHEAD OF BIDEN PLAN — WSJ’s Sebastian Pellejero: “Yields on U.S. government bonds marked new territory in their recent climb on Tuesday before quickly retreating, as investors focused on President Biden’s next big spending push and prepared for the end of the quarter.” | | | IMF SEES BRIGHTER OUTLOOK FOR GLOBAL ECONOMY — WSJ’s Paul Kiernan: “The International Monetary Fund is preparing to raise its forecasts for the global economy in 2021 and 2022 thanks to recent fiscal stimulus in the U.S. and increasing vaccination against Covid-19, Managing Director Kristalina Georgieva said” FED’S BOSTIC: SUMMER MONTHS COULD SEE MILLIONS REHIRED — Reuters’ Howard Schneider: “The coming summer could see millions of Americans rehired if current trends hold and progress against the pandemic continues, Federal Reserve president Raphael Bostic said … describing that as one of the ‘upside risks’ he is watching.” INVESTORS PRESS COMPANIES ON HUMAN RIGHTS IN XINJIANG — Reuters’ Ross Kerber and Victoria Waldersee: “A group of religious and socially conscious investors and other funds are ramping up pressure on Western companies over alleged human rights abuses in China’s Xinjiang region, highlighting the challenges for brands trying to maintain their business ties amid rising tensions.” ARCHEGOES LOSSES TALLIED UP, INDUSTRY REGULATORY SCRUNITY GROWS — Reuters’ Brenna Hughes Neghaiwi and Matt Scuffham: “Wall Street was counting the cost of the Archegos meltdown … with pressure piling up on Credit Suisse, while attention was turning to regulatory scrutiny that might result from banks unwinding the fund’s positions. The unwind of Archegos, a $10 billion family office run by former Tiger Asia manager Bill Hwang, may result in global lenders losing more than $6 billion, sources familiar with trades have told Reuters.” JPMorgan says banks’ Archegos hit could be up to $10B — Bloomberg’s Jan-Patrick Barnert and Marion Halftermeyer: “Banks roiled by the Archegos Capital fallout may see total losses in the range of $5 billion to $10 billion, according to JPMorgan” And in case you missed it, Bloomberg has a glossary to understand the entire Archegos saga. HOME PRICES RISE AT FASTEST PACE IN 15 YEARS — WSJ’s Nicole Friedman: “U.S. home prices are rising at the fastest pace in 15 years, reflecting how fiercely buyers are competing for a limited supply of homes in nearly every corner of the country. From small cities like Bridgeport, Conn., to large ones like Seattle, prices have been steadily moving higher. Two closely-watched house-price indicators released Tuesday posted double-digit national price growth, demonstrating the widespread strength of the market.” | | | | THE LATEST FROM INSIDE THE WEST WING : A lot happened in the first two months of the Biden presidency. From a growing crisis at the border to increased mass shootings across the country while navigating the pandemic and ongoing economic challenges. Add Transition Playbook to your daily reads to find out what actions are on the table and the internal state of play inside the West Wing and across the administration. Track the people, policies and emerging power centers of the Biden administration. Don’t miss out. Subscribe today. | | | | | | | | FSOC PREP — Center for American Progress has a new report out this a.m. looking at
“5 Priorities for the Financial Stability Oversight Council”. TRANSITIONS — Per email: “Kelly Cameron has joined Natixis Investment Managers as VP of Public Relations” … Amazon's Virginia Boney, Facebook's Catherine Eng, Asia Group's Jennifer Schuch-Page, McKinsey’s Dale Swartz, Hamilton Place Strategies' Patrice Smith and Bloomberg's Alyza Sebenius among others, have been selected to be part of the class of 2021 for Aspen Strategy Group's Rising Leaders Program. The full list | | | | Follow us on Twitter | | | | Follow us | | | | |  |
