Business & Economy

On The Money: Biden ends infrastructure talks with Capito, pivots to bipartisan group | Some US billionaires had years where they paid no taxes: report | IRS to investigate leak

Happy Tuesday and welcome back to On The Money, where we plan exploiting the taco tax break as much as we can. 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—White House to end infrastructure talks with Capito, shift focus to bipartisan group: President Biden is cutting off infrastructure negotiations with a GOP group led by Sen. Shelley Moore Capito (R-W.Va.) after weeks of talks failed to produce a deal.

In a Tuesday statement, White House press secretary Jen Pskai said Biden “informed Senator Capito today that the latest offer from her group did not, in his view, meet the essential needs of our country to restore our roads and bridges, prepare us for our clean energy future, and create jobs.”

Biden will instead move forward on discussions with a bipartisan group of senators. The Hill’s Brett Samuels has the latest here.

How we got here: Talks between Biden and Capito seemed to be circling the drain for at least a week now, especially after a call between the two Friday yielded little progress.

  • Senate Majority Leader Charles Schumer (D-N.Y.) said earlier Tuesday that negotiations between the White House and Capito “seem to be running into a brick wall” after weeks of back-and-forth proposals. 
  • The Democratic leader also said he’s getting ready to move a reconciliation package on a parallel track to bypass a Republican filibuster in case bipartisan negotiations fail to produce a deal or in case any deal advances only a portion of President Biden’s $4 trillion infrastructure agenda.

The Hill’s Alexander Bolton brings us up to speed on Schumer’s plan here.

What comes next: 

  • Momentum has now shifted to the talks between Sens. Kyrsten Sinema (D-Ariz.), Rob Portman (R-Ohio), Jon Tester (D-Mont.) and Lisa Murkowski (R-Alaska), who are aiming to release a proposal by the end of the week. 
  • Psaki said Biden also spoke to Sinema, Sens. Joe Manchin (D-W.V.) and Bill Cassidy (R-La.) and “urged them to continue their work with other Democrats and Republicans to develop a bipartisan proposal that he hopes will be more responsive to the country’s pressing infrastructure needs.”

Read more: Bipartisan group prepping infrastructure plan as White House talks lag

LEADING THE DAY

Some US billionaires had years where they paid no taxes: report: Some of the richest people in America had years in which they did not pay anything in federal income taxes, according to a report from ProPublica published Tuesday.

  • The news outlet obtained IRS data, covering more than 15 years, about the tax returns of thousands of the wealthiest Americans. 
  • ProPublica said that it obtained the information from an anonymous source, that it doesn’t know the identity of the source and that it didn’t solicit the information provided.
  • The subjects of the data include Amazon founder Jeff Bezos, Tesla founder Elon Musk, former New York Mayor Michael Bloomberg and billionaire investors Carl Ichan and George Soros, ProPublica reported.

The political moment: ProPublica’s article comes as President Biden and congressional Democrats are pushing for higher taxes on the wealthy. Biden’s American Families Plan proposes raising taxes on high-income Americans in several ways, including by increasing the top rate on ordinary income from 37 percent to 39.6 percent, taxing capital gains at the same rate as ordinary income for the highest-income taxpayers and taxing capital gains at death. 

The IRS responds: IRS Commissioner Charles Rettig said at a previously scheduled Senate Finance Committee  hearing that he can’t talk about the ProPublica article but can confirm that there is an investigation “with respect to the allegations that the source of the information in that article came from the Internal Revenue Service.”

The Hill’s Naomi Jagoda breaks it down here.

Biden administration seeks to thread needle on inflation: President Biden’s top economic officials and the Federal Reserve are trying to sell the benefits of inflation while soothing concerns about the potential risks as the economy emerges from the coronavirus downturn.

  • Before the COVID-19 pandemic, economists fretted for years over the tepid pace of wage increases and the persistently low inflation that helped suppress workers’ salaries. 
  • But with the U.S. now seeing both prices and wages rise at much faster rates, policymakers are attempting to keep Americans patient with an economic recovery pushing inflation higher.

For the Fed, the jump in prices is far from unexpected or even unwelcome. The central bank last summer adopted a new approach that called for letting inflation run slightly above the annual 2 percent goal long enough to make up for tepid wage growth and pre-pandemic underemployment. The Biden administration has also embraced the upward pressure on wages, dismissing the rate of price increases as a fleeting quirk of the COVID-19 recovery.

Even so, the recent rise poses considerable political challenges for both Biden and Federal Reserve Chairman Jerome Powell that could lead to policy obstacles.

“Even if you don’t think it’s a problem, and I don’t think it’s a problem for the economy, it creates problems for the Fed and pressure on the Fed,” said Adam Ozimek, chief economist at Upwork.

I explain why here.

ON TAP TOMORROW:

  • The Urban-Brookings Tax Policy Center hosts a webinar entitled “What Are the Effects of the Biden Administration’s Corporate Tax Proposals?” at 9:30 a.m.
  • Acting Office of Management and Budget Director Shalanda Young testifies before the House Budget Committee on President Biden’s fiscal 2022 budget proposal at 11 a.m.
  • The House Financial Services Committee holds a hearing entitled “Universal Vouchers: Ending Homelessness and Expanding Economic Opportunity in America” at 12 p.m.
  • A Senate Banking subcommittee holds a hearing on central bank digital currency at 2:30 p.m.
  • The Joint Economic Committee holds a hearing on the gender wage gap at 2:30 p.m.

GOOD TO KNOW

  • Sen. Lindsey Graham (R-S.C.) pressed the acting White House budget chief Tuesday on the impact of expanded unemployment benefits on the labor force, saying he has family members who refuse to work because of them.
  • Ireland, one of the countries that poses a major obstacle in the push toward a global minimum tax rate, has deep ties to President Biden.
  • IRS Commissioner Charles Rettig said Tuesday that the agency needs more authority from Congress to issue regulations relating to information reporting about cryptocurrency.
  • The U.S. trade deficit fell by 8.2 percent in April after reaching a record high the month before, according to data the Department of Commerce released Tuesday. 
  • The World Bank is projecting global growth of 5.6 percent this year, the strongest post-recession recovery seen in 80 years.

ODDS AND ENDS

  • Ohio Attorney General Dave Yost (R) on Tuesday filed a lawsuit asking the court to declare Google a public utility, which would subject the Silicon Valley giant to greater regulation. 
  • Five key parts of the Senate’s sweeping China competitiveness bill
Tags Bill Cassidy Chuck Schumer Elon Musk Jeff Bezos Joe Biden Joe Manchin Jon Tester Kyrsten Sinema Lindsey Graham Lisa Murkowski Michael Bloomberg Rob Portman Shelley Moore Capito

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File - A Chevrolet Bolt is displayed at the Philadelphia Auto Show, Jan. 27, 2023, in Philadelphia. Electric vehicles are far less reliable than gasoline-powered cars, trucks and SUVs, mainly because most automakers are still learning how to build a completely new power system, according to this year's auto reliability survey by Consumer Reports.(AP Photo/Matt Rourke, File)
File - A Chevrolet Bolt is displayed at the Philadelphia Auto Show, Jan. 27, 2023, in Philadelphia. Electric vehicles are far less reliable than gasoline-powered cars, trucks and SUVs, mainly because most automakers are still learning how to build a completely new power system, according to this year's auto reliability survey by Consumer Reports.(AP Photo/Matt Rourke, File)

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In this photo released by the Governor of Sevastopol, Mikhail Razvozhayev telegram channel, a rescuer gestures as he helps people during an evacuation after storm and flooding in Sevastopol, Crimea, Monday, Nov. 27, 2023. A storm in the Black Sea took down power grids and left almost half a million people without power after it flooded roads, ripped up trees and damaged buildings in Crimea, Russian state news agency Tass said. (Governor of Sevastopol Mikhail Razvozhayev's telegram channel via AP)
In this photo released by the Governor of Sevastopol, Mikhail Razvozhayev telegram channel, a rescuer gestures as he helps people during an evacuation after storm and flooding in Sevastopol, Crimea, Monday, Nov. 27, 2023. A storm in the Black Sea took down power grids and left almost half a million people without power after it flooded roads, ripped up trees and damaged buildings in Crimea, Russian state news agency Tass said. (Governor of Sevastopol Mikhail Razvozhayev's telegram channel via AP)

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