News : How Biden's infrastructure plan crashed with corporate America — Wall Street CEOs to testify

Wednesday, April 7, 2021

How Biden's infrastructure plan crashed with corporate America — Wall Street CEOs to testify — Jobs come roaring back

Apr 07, 2021

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Quick Fix

Corporate America tears down Biden infrastructure plan — I write here about the almost complete lack of corporate support so far for President Biden's $2.5 trillion "American Jobs Plan" infrastructure spending package. And yes this includes Amazon CEO Jeff Bezos' non-committal and generally anodyne statement in support for the IDEA of infrastructure spending.

This comes after corporate America has loudly complained for years about the crumbling state of the U.S. infrastructure and demanded that Washington invest heavily to catch up to the rest of the developed world. …

Groups like the Chamber of Commerce and the Business Roundtable have largely rejected the plan, saying the tax hikes that Biden is proposing to pay for it would crush American competitiveness.

Why the don't like it — Neil Bradley, chief policy officer at the Chamber of Commerce, told me: "This plan would make America less competitive, which would mean less U.S. economic growth and less job creation …

"The benefits of infrastructure would be offset by punitive tax increases. And if they move ahead with only Democratic votes, the concept of doing anything on a bipartisan basis would be over and it would just reinforce the kind of gridlock that has prevented progress on every other issue."

White House push back — Administration officials note that many CEOs and business groups previously backed a 25 percent top corporate rate, just below where Biden wants to put it at 28 percent. And they reject the idea that they aren't reaching out to business and note that they are open to other ideas to fund infrastructure spending.

Deputy NEC director David Kamin told me: "We want to work across the aisle with briefings and discussion with GOP lawmakers …

"When it comes to corporate tax reform, the president put this forward and this is his idea of how it could be paid for, but he's really willing to hear other ideas." Kamin added that "if others have ideas they want to put forward, then those should be part of the discussion."

GOOD WEDNESDAY MORNING — Congrats to Ann White, aka my mom, who won the Morning Money friends and family pool thanks to some savvy upset picks in the early rounds. Steak knives on the way. (There are no steak knives.) … 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.

Driving the Day

President Biden at 1:45 p.m. delivers remarks at the Eisenhower Executive Office Building on the infrastructure spending plan … IMF/World Bank meetings continue. At 1:00 p.m. State Department Special Presidential Envoy for Climate John Kerry and IMF Managing Director Kristalina Georgieva participate in a discussion on "A Critical year for Climate Action"

ASSESSING TAX HIKE ODDS — Via Beacon Policy Advisors: "Likely but curtailed. … Democrats view international tax reform as critical for raising revenue to pay for the AJP as well as helping incentivize domestic investments.

"But it's also the most challenging and complex components of the AJP that depends not just on where Democrats land on the broader US corporate tax rate but how negotiations develop on the international stage for other countries to adopt a global minimum tax. … Whatever can get 50 votes in the Senate will be what is finalized, leaving moderates, who don't want to see US companies at a major disadvantage to foreign competitors, with increased sway."

HOW CONFIDNCE IS RECOVERING STATE BY STATE — Via Morning Consult: "Based on 2.6 million interviews conducted Jan 1, 2020-March 31, 2021, the analysis concludes that despite March's stimulus-induced gains, U.S. consumers are still 12% below their pre-pandemic sentiment toward their personal finances. …

"Consumers in the Northeast are closest to pre-pandemic personal finances. … Tourism-dependent states have the longest way to go. Consumers in Nevada and Hawaii remain significantly less positive than they were in January 2020, and 6 of the 15 most lagging states rely on tourism for at least 5 percent of their GDP."

WALL STREET CEOs CALLED TO TESTIFY — Our Zachary Warmbrodt: "Senate Banking Chair Sherrod Brown and House Financial Services Chair Maxine Waters have invited the CEOs of the nation's six largest banks to testify in back-to-back hearings that will put a microscope on how Wall Street is dealing with Covid-19, climate change and racial equity.

"The unannounced hearings, which the committees are looking to hold as soon as late May, would feature top executives from JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley, three sources briefed on the plans said."

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Markets

S&P 500 SLIPS, BUT CLOSES NEAR RECORD — Reuters' Chuck Mikolajczak: "The S&P 500 slipped on Tuesday but stayed near closing record highs posted in consecutive sessions, as investors weighed more strong U.S. economic data against nervousness about upcoming quarterly earnings reports. …

"But with an upcoming earnings season expected to show S&P profit growth of 24.2 percent from a year earlier, according to Refintiv data, investors may be waiting to see how strong the results will actually be."

CREDIT SUISSE TAKES $4.7B HIT ON ARCHEGOS MELTDOWN — WSJ's Margot Patrick: "Credit Suisse Group AG reported a $4.7 billion hit from the meltdown of Archegos Capital Management, slashed its dividend and said its investment banking and risk chiefs would leave the bank.

"The Swiss lender has been the hardest hit by the collapse late last month of Archegos, a U.S. family investment firm, suffering a major loss in its unit that services hedge funds. The Archegos crisis emerged just weeks after Greensill Capital, a U.K. finance firm that was deeply entangled with Credit Suisse, filed for insolvency and left the bank on the hook for losses."

Fly Around

TEXAS STORM IS WINDWALL FOR SOME WALL STREET FIRMS — WSJ's Juliet Chung and Katherine Blunt: "A handful of Wall Street firms that bet big on the power sector in recent years made millions in paper profits when the winter storm in Texas boosted demand for the electricity generated by plants they own.

SoftBank Group Corp.'s Fortress Investment Group LLC and Kennedy Lewis Investment Management LLC, a $3 billion credit hedge fund in New York, were two of the biggest winners in the trade. Other significant investors include Avenue Capital Group, Guggenheim Partners LLC, JPMorgan Chase & Co.'s asset-management arm and Pacific Investment Management Co."

IMF UPGRADES FORECAST FOR 021 GLOBAL GROWTH — AP's Paul Wiseman: "The rollout of COVID-19 vaccines and vast sums of government aid will accelerate global economic growth to a record high this year in a powerful rebound from the pandemic recession, the International Monetary Fund says in its latest forecast.

"The 190-country lending agency said Tuesday that it expects the world economy to expand 6 percent in 2021, up from the 5.5 percent it had forecast in January. It would be the fastest expansion for the global economy in IMF records dating back to 1980. In 2022, the IMF predicts, international economic growth will decelerate to a still strong 4.4 percent, up from its January forecast of 4.2 percent."

A K-SHAPED RECOVERY, THIS TIME ON A GLOBAL SCALE — NYT's Alan Rappeport and Jeanna Smialek: "The global economy is rebounding from the coronavirus pandemic faster than previously expected, largely thanks to the strength of the United States. But the International Monetary Fund warned on Tuesday that an uneven rollout of vaccines posed a threat to the recovery, as the fortunes of rich and poor countries diverge.

"The global dynamic echoes the 'K-shaped' recoveries that are playing out worldwide. While many wealthy nations are poised for a major economic expansion this year, other nations' struggles could reverse decades of progress in fighting poverty. Top international economic officials warned this week that this divergence, which is being amplified by sluggish deployment of vaccines in developing countries, is a threat to stability and long-term growth."

BIDEN, TOUTING FED INDEPENDENCE, HAS YET TO SPEAK WITH POWELL — Bloomberg's Jennifer Jacobs and Saleha Mohsin: "President Joe Biden said he hasn't spoken with Federal Reserve Chair Jerome Powell since taking office more than two months ago, citing respect for the central bank's independence and marking a sharp turn from his predecessor, Donald Trump.

"'The Federal Reserve is an independent operation and, starting off my presidency, I want to be real clear that I'm not going to do the kinds of things that have been done in the last administration,' Biden said on Tuesday in response to a question. 'I've been very fastidious about not talking to them, but I do talk to the secretary of the Treasury,' Janet Yellen, he said."

IS BIG BUSINESS THE NEW BEST FRIEND OF DEMS? Via NYT's Andrew Ross Sorkin on the "woke" government debate.

THREAT OF MILLIONAIRES TAX HAS SOME NEW YORK BANKERS, MANAGERS EYEING EXITS — Reuters' Svea Herbst-Bayliss: "For decades New York's bankers and fund managers have accepted the city's high tax rates as a part of working in the world's premier financial capital.

"But with plans afoot to raise rates as part of a New York state budget agreement, some financiers are exploring exits, emboldened by a pandemic that has illustrated how working on Wall Street may no longer mean working from Wall Street. 'I'm already looking for an apartment in Florida,' said one highly paid person at a top-tier bank who asked not to be identified because his employer does not yet know of his plans to move."

JOBS COME ROARING BACK, SURPRISING EMPLOYERS AND ECONOMISTS — Bloomberg's Michael Sasso and Leslie Patton: "A resurgent job market is creating more opportunities at a faster clip than many economists and employers expected. What's more, too few people are applying for positions that are reopening, and that's setting up a battle for talent. Restaurants and hotels are raising wages, offering bonuses for worker referrals or luring people from other states to cope with the shortage.

"Many data watchers have been caught off guard as improving weather, stimulus and a surge in vaccinations converge to boost the economy. Nonfarm payrolls rose by 916,000 last month, blowing away economists' median estimate of a 660,000-job gain."

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.