News: CEOs ice cold on Biden plan — GOP has its own corporate problems

Tuesday, April 6, 2021

CEOs ice cold on Biden plan — GOP has its own corporate problems — PPP hits new wall

Apr 06, 2021

Editor's Note: Morning Money is a free version of POLITICO Pro Financial Services' morning newsletter, which is delivered to our subscribers 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.

Quick Fix

CEOs go ice cold on Biden plan — The Biden White House did some outreach to the business community ahead of the launch of the $2 trillion-plus "American Jobs Plan." But not a ton. And thus far it hasn't done any good as the corporate world – despite years of complaining about America's broken infrastructure – is pretty resolute in its opposition mostly because of proposed changes to the tax code below the headline top rate proposal of 28 percent.

As MM has said, CEOs could mostly live with a rate of around 25 percent (up from 21). But they are absolutely and energetically opposed to many of the other tax hike proposals including the global minimum tax.

Here's what one Fortune 100 CEO told MM on Monday : "I didn't think 21 percent was the right number when we did tax reform. And 25 percent is a spot where you could probably get a lot of consensus. It's not that rate, it's all the other stuff that would make us less competitive around the world. And jobs will go if we do this stuff. …

"And there is a lot of stuff in the bill that's good and necessary and lot that isn't and that make it a New Great Society bill modeled on The New Deal. A lot of it just isn't infrastructure. It's also pretty absurd that we spent $1.9 trillion on stimulus ahead of this and are now spending $2.3 trillion more. It's going too far, too fast. You really can't get enough revenue to cover this. …

"And it really does matter if this is totally partisan. Sounds cliché but business people really do want to sit in the middle and get behind stuff that has bipartisan support. Biden made a lot of promises to do this stuff differently. But while it has a shinier veneer, a lot of it seems just like Trump doing everything his way."

Speaking of business groups, the Business Roundtable last night came out against the global minimum tax talked up by Treasury Secretary Janet Yellen. Per President and CEO Josh Bolten: "The Administration's proposed global minimum corporate tax rate … threatens to subject the U.S. to a major competitive disadvantage.

"U.S. companies already face a global minimum tax on their income, known as GILTI. No other country has followed the U.S. lead in enacting such a tax. The Administration proposes now to double the rate of the minimum tax on U.S. companies, believing other countries will follow suit." (The GOP has its own big problems with corporate America, more on which below.)

GOOD TUESDAY MORNING — 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 AN IMPORTANT CONVERSATION, SUBSCRIBE TO "THE RECAST" NEWSLETTER: Power dynamics are shifting in Washington and across the country, 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 our 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 important new voices that challenge business as usual. Don't miss out, SUBSCRIBE . Thank you to our sponsor, Intel.

Driving the Day

GOP LASHES OUT AT "WOKE" COMPANIES — While corporate America battles Democrats on taxes, many big companies are also now at odds with the GOP over social issues like the Georgia voting rights legislation. Via our Gabby Orr and Meridith McGraw: "Livid at what they see as corporate America's progressive posturing on cultural issues, top Republicans are pushing for swift retribution and targeting those companies' bottom lines.

"In recent days, GOP leaders have encouraged boycotts against a group of companies that have condemned or pulled business from states that have passed more restrictive voting laws.

"The appetite for punitive measures hasn't ended there. Republicans are also encouraging state and federal officials to utilize the tax code as a means of hitting back at, what they deem to be, 'woke capitalism.' And they're targeting some of the most iconic American brands — from Delta and Coca Cola to Major League Baseball — in the process."

HOT CLICK: HOW CORONA CHANGED THE WORKFORCE — NBC News this week "will feature in-depth coverage on how the coronavirus forever changed the country's workforce.

"With reporting across TODAY, NBC Nightly News, MSNBC & Nbcnews.com, the series will examine the devastating economic impact of Covid-19 on the American workforce, including the staggering loss of jobs, how women have been disproportionately impacted and the widening pay gaps."

DEMS GET ANOTHER RECONCILLIATION SHOT — Speaking of slamming through a giant infrastructure/tax bill with no GOP votes … Our Caitlin Emma: "Democrats can pass another major piece of legislation — such as … Biden's $2 trillion-plus infrastructure plan — by revisiting the budget process they used to approve his coronavirus relief package without Republican support, a spokesperson for Senate Majority Leader Chuck Schumer (D-N.Y.) said

"The interpretation of the ruling from the Senate parliamentarian … could give Democrats significantly more opportunities to push their legislative priorities past a filibuster. But ... [a]ll 50 Democratic senators will have to go along with the approach, which moderates like Sens. Joe Manchin (D-W.V.) and Kyrsten Sinema (D-Ariz.) have advised against using a second time"

PPP HITS NEW WALL — Our Zachary Warmbrodt: "Washington's nearly $1 trillion small business rescue … is about to slam into a new obstacle — it's already running out of money.

"The Small Business Administration is warning lawmakers that funds for the Paycheck Protection Program, which offers forgivable loans to small businesses, will likely dry up later this month, well before the May 31 deadline for firms to request aid. As of last week, it had about $66 billion remaining out of the nearly $292 billion appropriated by Congress since December."

HOW COVID CHANGED EXPECTATIONS FOR WORK — Via Aubree: "Looking ahead to the idea of a post-Covid future, many workers are looking for ways to incorporate their beloved remote work into their regular schedules. According to Prudential's latest American worker survey, 87 percent of workers who have been working remotely during the pandemic want to continue to work remotely, at least one day a week, even after the pandemic abates.

"And more than two-thirds of workers — 68 percent — say that their ideal workplace model involves having the option of working both remotely and at the office. In fact, 1 in 3 employees say they would not want to work for an employer that required them to be on-site full time."

STEP INSIDE THE WEST WING: It actually is infrastructure week ... and it will be for a while. What is the administration's plan to get its top legislative priority through Congress? Add Transition Playbook to your daily reads for details you won't find anywhere else about the state of play of the administration's top priorities and biggest challenges. Track the people, policies and power centers of the Biden administration. Subscribe today.

Markets

STOCKS CLOSE BROADLY HIGHER FOLLOWING BIG JOB GAINS IN MARCH — AP's Damian J. Troise and Alex Veiga: "Stocks closed broadly higher on Wall Street Monday as the economy showed more signs that it's continuing to recover. The S&P 500 rose 1.4 percent to another record high.

"The gains came after the government reported last week that employers went on a hiring spree in March, adding 916,000 jobs, the most since August. Investors had a delayed reaction to the encouraging jobs reports, which was released on Friday when stock trading was closed."

ARCHEGOS SAGA NOT SO TRAGIC FOR WALL STREET'S BIG BROKERS — WSJ's Telis Demos: "The saga of Archegos Capital Management has put the spotlight on a little-known but vital business for Wall Street: Prime brokerage. The resulting scrutiny could impact this engine of trading, but it might also wind up playing into the hands of the biggest banks.

"The biggest source of banks' equities-trading revenue was once cash trading, or the relatively straightforward business of helping clients execute trades. But while commissions narrowed over the last decade or so, prime brokerage revenue grew. Prime brokers provide financing for trading clients like hedge funds, leading to both lending income and trading activity."

And Archegos-linked stocks continue to slide as markets eye more unwinding — Reuters' Sinead Carew and Matt Scuffham: "Archegos Capital Management's ill-fated bets weighed on ViacomCBS, Discovery Inc and other media stocks on Monday, and at least one analyst said it remained unclear when banks exposed to the troubled family office would be done selling off their positions in the shares."

GAMESTOP TO SELL 3.5M SHARES AFTER STOCK FRENZY BOOSTS PRICE — AP's Michelle Chapman and Alex Veiga: "Two months after a market phenomenon took shares of GameStop to the moon, the video game retailer said Monday that it will sell up to 3.5 million of its shares.

"The shares will be sold through an 'at-the-market' offering, which lets companies place their stock on the market over a period of time. The announcement sent shares of GameStop, up 850 percent this year, down 8 percent at the opening bell."

YIELD SCARE THAT SHOCKED STOCKS IN FEBRUARY BARELY REGISTERS NOW — Bloomberg's Katherine Greifeld: "Stock bulls rattled by rising yields six weeks ago have come to embrace the economic signal the latest spike is sending.

"While Wall Street has worried that Treasuries — fresh off their worst quarter since 1980 — could derail the stock market's rally, there's little that seems to be backing up those concerns. The S&P 500 opened at a record Monday following Friday's blowout March jobs report, even as benchmark Treasury yields flirted with their pre-pandemic highs."

Fly Around

NEW PROPOSAL WOULD BAN MOST FORECLOSURES UNTIL 2022 — NYT's Stacy Cowley: "A wave of foreclosures and evictions threatens to arrive when pandemic-related pauses expire later this year, and the Consumer Financial Protection Bureau is considering restrictions on mortgage servicers that would spread the hit into 2022.

"More than 3 million households are behind on their mortgage payments, and nearly 1.7 million will run out their forbearance periods in September, according to the bureau."

CHINA CREATES ITS OWN DIGITAL CURRENCY — WSJ's James T. Areddy: "A thousand years ago, when money meant coins, China invented paper currency. Now the Chinese government is minting cash digitally, in a re-imagination of money that could shake a pillar of American power.

"It might seem money is already virtual, as credit cards and payment apps such as Apple Pay in the U.S. and WeChat in China eliminate the need for bills or coins. But those are just ways to move money electronically. China is turning legal tender itself into computer code."

NEW FINTECH CHARTER VIDEO — NAFCU has a new video up "inform[ing] policymakers and the public on what they need to know about fintech companies applying for a bank charter"

Follow us on Twitter