Happy Friday 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: Democrats aren’t united over how to address surging inflation. We’ll also look at a proposal to take away tax credit for U.S. companies operating in Russia and Fed officials previewing higher rates.
For The Hill, we’re Sylvan Lane, Aris Folley and Karl Evers-Hillstrom. Reach us at slane@digital-stage.thehill.com, afolley@digital-stage.thehill.com and kevers@digital-stage.thehill.com.
Let’s get to it.
Democrats divided over how to deal with inflation
Democrats’ efforts to combat inflation are stuck in limbo because of internal divisions over a range of proposals aimed at lowering the cost of gas, health care and child care.
The latest idea that some Democrats are rallying around is a proposed tax on the windfall profits of major oil companies that would raise an estimated $45 billion to be returned to consumers in the form of energy rebates.
Senate Majority Leader Charles Schumer (D-N.Y.) highlighted oil companies’ profits on the Senate floor Thursday and announced that oil and gas company executives will be called to testify about why they are buying back stocks instead of keeping prices lower for average Americans.
“It is nothing short of repugnant for oil companies to be touting what are truly dizzying profit margins, while soaking American families with these exorbitant prices,” Schumer said.
- On the other hand, Senate Energy and Natural Resources Committee Chairman Joe Manchin (D-W.Va.) isn’t sold on the idea.
- Manchin told The Hill that he wants to have a hearing on the idea to “find out the facts.”
- Other key Democrats, such as Senate Environment and Public Works Committee Chairman Tom Carper (Del.), haven’t taken a position on the proposal either.
Another proposal to soften the impact of rising gas prices — suspending the 18.4 cent per gallon federal gas tax until next January — has also divided Democratic senators. And lawmakers haven’t rallied behind President Biden’s Build Back Better agenda, which the White House argues would help fight inflation by lowering families’ costs.
Alexander Bolton explains the situation here.
NOT AT THIS RATE
Top Senate Democrats mull bill to nix credits for companies paying Russian taxes
Two top Senate Democrats are mulling legislation to nix the credits American companies currently get for paying taxes in Russia, after Koch Industries said it would continue its operations in the country.
- Senate Majority Leader Charles Schumer (D-N.Y.) and Finance Committee Chairman Ron Wyden (D-Ore.) said Thursday that they were “exploring legislation” to eliminate the tax credits that U.S. companies get for paying taxes in Russia.
- That would put Russia on a list with Iran, North Korea, Sudan and Syria—countries with much smaller economies with far fewer ties to international commerce.
The background: The announcement came after Dave Robertson, president and COO of Koch Industries, released a statement Wednesday explaining the company’s decision to stay in Russia and its business ties there while noting they would also comply with applicable sanctions.
- Koch owns a company called Guardian Industries that will continue its operations in Russia as it employs 600 people across two glass manufacturing facilities. Outside of that company, Koch Industries employs another 15 people in Russia.
- Robertson said the multinational corporation denounced the “horrific and abhorrent aggression against Ukraine,” but that they would not “walk away from our employees there or hand over these manufacturing facilities to the Russian government so it can operate and benefit from them.”
Jordain Carney has more here.
The burgers can stay
The president of the company that owns Burger King on Thursday said a Russian franchise owner is refusing to close stores in Russia despite pressure to shut down operations.
David Shear, the president of Restaurant Brands International, wrote in a press release that the owner of the Russian Burger Kings has rebuffed calls to close, putting the company in a precarious spot because it has limited power to force him to do so.
“Would we like to suspend all Burger King operations immediately in Russia? Yes. Are we able to enforce a suspension of operations today? No,” Shear wrote in the release.
- Shear said that contracts between the corporate entity and franchisees involve “extensive commitments to long-term investments,” resulting in a “complicated legal process” to close any franchisee-owned business.
- Restaurant Brands International entered the Russian market 10 years ago, and now has about 800 Burger Kings in the country controlled by a local businessman named Alexander Kolobov.
The Hill’s Brad Dress has more here.
NIFTY FIFTY
Fed governor calls for half-point rate hikes
Federal Reserve Governor Christopher Waller said Friday that the central bank should hike interest rates at a more aggressive pace to get in front of rising inflation.
- In an interview with CNBC’s “Squawk Box” Friday morning, Waller said he favors raising the Fed’s baseline interest rate range by 0.5 percentage points “at one or multiple meetings in the near future.”
- “I really favor front-loading our rate hikes, that we need to do more withdrawal of accommodation now if we want to have an impact on inflation later this year and next year,” Waller said.
Waller was among eight of nine members of the Federal Open Market Committee — the Fed panel responsible for setting monetary policy — who voted to hike rates by 0.25 percentage points Wednesday, the first hike since 2018. The Fed’s baseline interest rate range had been set between 0 and 0.25 percent since March 2020, when the bank slashed rates and began buying billions of dollars in bonds each month to stimulate the economy.
Sylvan explains here.
Good to Know
Sen. John Barrasso (R-Wyo.) and several other Republican senators introduced legislation on Thursday that would ban imports of Russian uranium as an additional way to economically isolate Russia over its invasion of Ukraine.
The legislation would further steps already taken by the U.S. to prohibit Russian energy imports after President Biden last week announced a ban on imports of oil, natural gas and coal from the country.
Here’s what else we have our eye on:
- India’s state-run oil company purchased 3 million barrels of Russian crude this week as numerous other nations bar such imports due to Moscow’s invasion of Ukraine, The Associated Press reported on Friday.
- California officials on Friday announced a reduction of the state’s allocation of water, dropping distribution from 15 percent to 5 percent as the Golden State enters its third year of a severe drought.
- Toyota and other semiconductor-using companies are suspending operations in Japan after a massive earthquake hit the country this week.
- American Airlines confirmed on Friday that it is set to resume sales of alcoholic beverages on flights in its domestic coach cabins almost two years after it first halted the service.
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 Monday.