| | | | | |  | | By Ben White and Aubree Eliza Weaver | Presented by |  | | | 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. | | | Corporate America thinks it can kill most Biden tax hikes — I write here about the level of confidence coursing through executive suites and lobby shops that most of President Joe Biden's proposed tax hikes will not find their way into law. These people could be wrong, of course. But the consensus that Biden will be lucky to get just a corporate tax bump is pretty overwhelming. And lobbyists and execs think progressive Democrats don't really care about the costs of new programs and will be happy to push through as much spending as they can and then run on tax hikes in 2022 rather than actually pass them this year. Interviews with over a dozen executives, lobbyists and business group officials turned up a similar theme: While Democrats might be able to push through a slightly higher top corporate rate, when it comes to higher taxes on the rich, on capital gains, on financial transactions or private equity profits, forget it. It's not happening. "Jaw-dropping" — "With business-minded and more centrist members on the Democratic side in both the House and Senate, they look at the scope and breadth of these tax increases for the infrastructure and families plans and they just find them jaw-dropping," said Neil Bradley, chief policy officer at the U.S. Chamber of Commerce. "You are talking about tax hikes that could hit millions of small businesses across the country and taxes that could kill investment. From a raw political perspective, it would be a really funky decision for these moderates to say they would be willing to put this much of a wet blanket on an economy that is really poised to take off." What it means — If the executives are right, Biden will have to either break his pledge to pay for his massive spending agenda and further swell the deficit or he'll have to sharply scale back his plans. And slashing them in any significant way would anger the progressive wing of his party, which sees this as the president's only chance to fundamentally tilt the economy back toward workers and make it more equitable. GOOD MONDAY MORNING — Welcome back, all. 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. | | | | A message from Altria: Moving beyond smoking. Altria's companies are leading the way in moving adult smokers away from cigarettes – by taking action to transition millions toward less harmful choices. We are investing in a diverse mix of businesses to broaden options beyond traditional, combustible cigarettes. See how we're moving. | | | | | | President Biden will make news on the expanded, refundable Child Tax Credit this morning … In the afternoon, Biden will deliver remarks on Covid-19 in the East Room. … Biden heads to Dearborn, Mich. on Tuesday to visit the Ford Rouge Electric Vehicle Center … On Wednesday, Biden delivers the keynote address at the Coast Guard Academy commencement … On Friday, Biden meets with Korean president H.E. Moon Jae-in and the pair will hold a joint presser … Senate Finance on Tuesday at 10 a.m. holds a hearing on 'Funding and Financing Options to Bolster American Infrastructure' … Senate Banking on Tuesday at 10 a.m. holds a hearing on "Reauthorization of the National Flood Insurance Program, Part I" … MIDDLE EAST VIOLENCE GETS WORSE — Via AP in Gaza City: "Israeli warplanes unleashed a series of heavy airstrikes at several locations of Gaza City early Monday, hours after Israeli Prime Minister Benjamin Netanyahu signaled the fourth war with Gaza's Hamas rulers would rage on. "Explosions rocked the city from north to south for 10 minutes in an attack that was heavier, on a wider area and lasted longer than a series of air raids 24 hours earlier in which 42 Palestinians were killed — the deadliest single attack in the latest round of violence between Israel and the Hamas militant group that rules Gaza. The earlier Israeli airstrikes flattened three buildings." BULLISH ON 2021 — Via Morgan Stanley: "A meaningful acceleration in 2021 growth is under way: We remain above consensus on 2021 GDP growth at 8.0% 4Q/4Q (7.1%Y). We are raising our GDP forecast for 2022 by 0.4pp, to 3.2% 4Q/4Q (4.9%Y), on the passage of the 'Build Back Better' plan in 4Q21. "Faster growth creates space for new entrants as the labor force participation rate rises. Jobs gains have been off to a disappointing start this year, but we expect the pace to pick up as health concerns diminish, schools reopen, and unemployment benefits fade. On net, this brings the unemployment rate down to 5.0% in 4Q21 and 3.9% in 4Q22." | | | |   | | | | | | INEQUALITIES WOULD WIDEN IF POLICIES SPUR SUSTAINED INFLATION —WSJ's Jon Hilsenrath: "Federal Reserve and Biden administration officials say economic inequality is bad and they aim their policies in part at helping to reduce it. In the short run, at least, those policies might be widening inequality, not shrinking it. "In recent months, inflationary pressures have caused the cost of living to rise faster than paychecks, meaning a paycheck hasn't been going as far as it did before. Consumer price inflation in April rose 4.2 percent from a year earlier, while hourly pay for production workers rose 1.2 percent, the Labor Department reported last week." EVEN SHORT-TERM INFLATION WILL TEST THE FED — WSJ's James Mackintosh: "Just how much inflation would it take for the Federal Reserve to abandon its commitment to super-easy money and begin to talk about tightening? "Markets think the answer is that the Fed will accept far more than consumers would like, and the market is probably right: Inflation could easily be at 5 percent early next year without prompting any change of strategy. So long as the Fed expects inflation to come back down and investors and workers have faith, it is under no pressure to move. The danger is that high inflation shakes that faith." ICYMI: RETIRING MEN LIFTED WOMEN TO RECORD SHARE OF S&P 500 BANK BOARDS — Bloomberg's Jeff Green: "Women gained a larger share of board seats last month at five companies in the Standard & Poor's 500 Banks Index as four men retired or stepped down, and Zions Bancorp expanded its board to include a new female director. "The shift, which increased the average number of women on bank boards to 4.5 from 4.4, highlights a tactic many companies are using to add seats for diverse members when male members depart, said Keith Meyer, the co-head of board and chief executive recruiting at Allegis Partners." | | | | A message from Altria: Moving beyond smoking. Altria's companies are leading the way in moving adult smokers away from cigarettes. Today, we are taking action to transition millions toward less harmful choices.
From cigarettes to innovative alternatives. By investing in a diverse mix of businesses, Altria is working to further broaden options. Our companies are encouraging adult smokers to transition to a range of choices that go beyond traditional, combustible cigarettes.
From tobacco company to tobacco harm reduction company. And while Altria is moving forward to reduce harm, we are not moving alone. We are working closely with FDA and other regulatory bodies, and will work strictly under their framework.
See how we're moving. | | | | | | JOB FEARS, PRICE SPIKES MEAN HEARTBURN FOR BIDEN WHITE HOUSE — Reuters' Jarrett Renshaw and Howard Schneider: "High unemployment. Rising prices. Gas lines. They're a bad memory for Americans old enough to remember the 1970s — but they're also likely causing a few sleepless nights in the White House, as the United States' economic recovery from the unprecedented coronavirus recession hits some bumps. "The jolts are dampening consumer confidence, ramping up inflation fears, and helping Republicans build their case against President Joe Biden and his ambitious plans to revamp the U.S. economy with trillions in new spending. As the 1970s show, high joblessness and rising prices the United States saw in April can be a potent political force." ECONOMIC REBOUND PROVES MORE A GRIND THAN A BOOM — Bloomberg's Shawn Donnan and Cecile Daurat: "The prevailing scenario for the U.S. recovery on Wall Street and in Washington has until recently focused on a boom fueled by consumers roaring back to life with a vengeance in a vaccine-induced reopening of the economy. "The reality emerging from the latest data is a bumpy rebound vulnerable to surprises. Whatever your take is on whether unemployment benefits are discouraging Americans from returning to work or how worrisome recent price hikes are — not very, says the Federal Reserve — the economy is flashing messy signals." | | | | SUBSCRIBE TO WEST WING PLAYBOOK: Add West Wing Playbook to keep up with the power players, latest policy developments and intriguing whispers percolating inside the West Wing and across the highest levels of the Cabinet. For buzzy nuggets and details you won't find anywhere else, subscribe today. | | | | | CENTRAL BANKS JUMP INTO CLIMATE-CHANGE POLICY FRAY — WSJ's Simon Clark: "Central banks, the most powerful financial institutions in the world, want to become the guardians of the environment as well. The central banks say climate change is a financial and economic risk. They believe rising sea levels, more wildfires and bigger storms could cause shortages that spur inflation, the regulators' traditional nemesis. "The banks that are deepest into the issue are trying to limit climate change by steering their financial systems away from fossil fuels. Their regulations could hit U.S. companies operating overseas. The Bank of England's remit now explicitly includes environmental sustainability as well as maintaining price stability." WILL SHAREHOLDERS HALT THE UNSTOPPABLE RISE OF CEO PAY? — The Economist: "Last year was a terrible one for travel of any sort. You would not know it from the way some American chief executives trousered pay. Annual filings show that Larry Culp, boss of GE, whose jet-engine business stalled as aviation nosedived, earned $73m, almost triple his total pay in 2019. "Christopher Nassetta, CEO of Hilton, a hotel chain, enjoyed a 161 percent pay boost, receiving $55.9m. Norwegian Cruise Line, which described 2020 as the hardest year in its history, more than doubled the compensation of its CEO, Frank Del Rio, to $36.4m. All three were among the corporate titans who grandly took cuts in their basic pay and/or bonuses during the pandemic. They pocketed far more than they gave up." | | | | SUBSCRIBE TO "THE RECAST" TODAY: Power is shifting in Washington and in communities across the country. More people are demanding a seat at the table, insisting that politics is personal and not all policy is equitable. The Recast is a twice-weekly newsletter that explores the changing power dynamics in Washington and breaks down how race and identity are recasting politics and policy in America. Get fresh insights, scoops and dispatches on this crucial intersection from across the country and hear critical new voices that challenge business as usual. Don't miss out, SUBSCRIBE . Thank you to our sponsor, Intel. | | | | | | | | | Follow us on Twitter | | | | Follow us | | | | |
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