Happy Monday and welcome back to On The Money, where we’re hopefully keeping the flu in the rear view mirror. 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—Manchin says he won’t support corporate tax hike to 28 percent: Centrist Sen. Joe Manchin (D-W.Va.), who has emerged as a powerbroker in the 50-50 Senate, said President Biden’s $2.25 trillion infrastructure proposal needs changes and that raising the corporate tax rate to 28 percent goes too far.
Manchin said Monday he would instead support raising the corporate tax rate to 25 percent from its current rate of 21 percent, a level he identified last month as something he could back.
- “As the bill exists today, it needs to be changed,” Manchin told Hoppy Kercheval, the host of West Virginia Metro News’s “Talkline” show.
- Manchin added that “six or seven” other Senate Democrats shared his concern about the proposed corporate tax hike.
“We have to be competitive, and we’re not going to throw caution to the wind,” Manchin said.
The Hill’s Alexander Bolton explains here.
The background: Manchin’s support is critical to Biden’s infrastructure plan because Senate Republican aides predict there won’t be a single GOP vote for the proposal in the upper chamber.
- Without bipartisan support, Democrats would need to pass the bill through budget reconciliation, which only requires simple majorities.
- But the slim Senate majority for Democrats means they can’t afford one defection.
White House press secretary Jen Psaki said Monday the president is ready to negotiate with Manchin and other senators on how to pay for his ambitious infrastructure proposal, but declined to comment specifically on Manchin’s proposal.
“[Biden] knows some will come forward with different ways to pay for this package, and some may have views that it shouldn’t be paid for at all,” Psaki said.
Zooming out: Biden said Friday that compromise and changes to his infrastructure plan were “certain,” so a little bit of Democratic resistance shouldn’t be a shock. Even so, it’s a bit of a hurdle for Biden’s bet that the American public is willing to look past higher taxes—at least on corporations and the wealthy.
The Hill’s Niall Stanage tells us more about Biden’s political angling here.
As Manchin and other centrist Democrats sought to curtail Biden’s tax ambitions, other key Democratic players were pushing for other updates and expansions.
- Treasury Secretary Janet Yellen on Monday pushed for a global minimum corporate tax rate during her first major speech in her new role.
- And a trio of Senate Democrats on Monday unveiled a proposal to raise taxes on U.S. multinational corporations.
LEADING THE DAY
Yellen calls on rich nations to boost COVID-19 aid, vaccines for developing countries:
Treasury Secretary Janet Yellen on Monday warned that a failure of rich nations to help developing countries respond to the coronavirus pandemic would trigger “a deeper and longer-lasting crisis” that could also harm the U.S. economy.
In a Monday speech, Yellen said that the developing world would be wracked by “mounting problems of indebtedness, more entrenched poverty, and growing inequality” without more medical and economic aid from well-off nations.
“Unless we act now, the world is susceptible to the emergence of a deepening global divergence between rich and poor countries,” Yellen said in prepared remarks before The Chicago Council on Global Affairs.
- While the U.S. is on track to vaccinate every adult before the end of summer, many developing nations may not be able to acquire sufficient doses to do so until 2023 or 2024.
- Yellen also warned Monday that the economic toll of the pandemic will push 150 million people into extreme poverty this year without a substantial increase in support for developing countries.
“This would be a profound economic tragedy for those countries, one we should care about. But, that’s obvious. What’s less obvious — but equally true — is that this divergence would also be a problem for America,” she said.
I explain here.
GOOD TO KNOW
- A closely watched gauge of U.S. service sector activity hit a record high in March as the recovery from the COVID-19 pandemic kicked into another gear, according to a report released Monday.
- Even after the pandemic ends, the retail sector is on track to close more than 80,000 stores, a 9-percent drop, as consumers continue their shift to online shopping, according to UBS.
- The corporate backlash against Georgia’s new voting law is putting other states on alert.
- The Atlantic: “Economists and policy makers are worried that the Vanguard model of passive investment is hurting markets.”
- Bloomberg Businessweek: “Despite high unemployment, a record share of small businesses say they have jobs they can’t fill.”
- The New York Times: “A year after the Paycheck Protection Program started, studies show how its design hurt Black- and other minority-owned businesses.”
ODDS AND ENDS
- Amazon illegally retaliated against two of its workers when it fired them after they publicly criticized the company’s climate policies and supported workers protesting warehouse conditions, the National Labor Relations Board (NLRB) found.
- Netflix saw its dominance of the U.S. streaming market slip during 2020 as new competitors emerged and the coronavirus pandemic forced many Americans to remain in their homes.