Friday, April 12, 2024

The new scorekeepers

Presented by Electronic Payments Coalition: Delivered daily by 8 a.m., Morning Money examines the latest news in finance politics and policy.
Apr 12, 2024 View in browser
 
POLITICO Morning Money

By Zachary Warmbrodt

Presented by 

Electronic Payments Coalition

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QUICK FIX

A team of economic heavy-hitters wants to shake up how Washington thinks about the budget, just in time for next year’s tax reform brawl. MM has a first look at what they’re launching today.

The new initiative, the Budget Lab at Yale, is an attempt to widen the aperture of how policymakers weigh proposals that could have a major impact on the government’s finances. It aims to go beyond what existing go-to sources like the Congressional Budget Office and the Joint Committee on Taxation can offer.

Spearheading the nonpartisan research center are Budget Lab president Natasha Sarin, a Yale Law School professor who served as a counselor to Treasury Secretary Janet Yellen; chief economist Danny Yagan, an associate professor of economics at UC Berkeley who was chief economist at OMB; and executive director Martha Gimbel, a former senior adviser at the White House Council of Economic Advisers. Their team also includes former CEA chief economist Ernie Tedeschi, Penn Wharton Budget Model and Treasury alum Rich Prisinzano, former PWBM and IMF analyst John Ricco and Harris Eppsteiner, formerly of the CEA.

The Budget Lab’s pitch is that it will look at issues not included in current budget policy assessment methods, in an attempt to account for a broader scope of costs and returns. Priority issues include the child tax credit, tax cuts, paid family leave, deficit reduction and universal pre-K. It’s aiming to deliver “rapid responses” as policy debates arise.

“If you care about thinking about investments in kids and parental leave and the child tax credit, we need to understand what those investments actually deliver to you over a period that’s longer than the budget window,” Sarin told MM. “This isn’t the fault of scorekeepers that they’re not doing this work. It’s actually not their mandate. They’re asked to produce something very precise which is produce cost estimates in the budget window.”

Sarin noted that the JCT, for example, is capacity constrained.

“If you’re not majority leader or one of the leaders of one of the tax-writing committees, trying to get your tax proposal in front of CBO and JCT with a score attached to them is just hard to do, and they acknowledge that,” she said. “They wish they had more people, they wish they had more infrastructure.”

Budget Lab is out with two initial reports looking at the impacts of potential reforms to the Tax Cut and Jobs Act, which has provisions that expire at the end of next year, and the Child Tax Credit. The scenarios for addressing TCJA — full extension, a Biden-esque partial extension and a deficit-reduction proposal from Sarin and Kimberly Clausing — include examinations of the effects on short- and long-term GDP, tax compliance and income inequality.

“Part of what we hope to develop the capacity to do is to really be able to say, if you take Trump at face value and he’s cutting the corporate rate and raising tariffs across the board by 10 percent, what does that mean and how do we quantify the impact of that?” Sarin said. “Similarly, if you are entering the 2025 tax debate with the Biden Greenbook as your framework, what does that mean?”

Budget Lab’s site features a “TCJA extension simulator” that allows users to see the impacts of extending or modifying provisions of the law. The group also plans to publicly share the code used to produce its analysis.

“Nothing we are doing is secret sauce,” Gimbel said. “We’re using publicly available models. We’re making our code available so other people can do it. We feel very strongly we do not have a secret sauce. We are not McDonald’s.”

Budget Lab is having a kick-off event at the National Press Club today that’s scheduled to feature remarks by OMB Director Shalanda Young, former Bush OMB director Joshua Bolten and former CBO director Douglas Holtz-Eakin.

Happy Friday — Send tips to zwarmbrodt@politico.com.

 

A message from Electronic Payments Coalition:

CRS: NO EVIDENCE THAT DURBIN-MARSHALL CREDIT CARD BILL WOULD HELP CONSUMERS OR SMALL BUSINESSES The independent Congressional Research Service (CRS) is the latest organization to release a report questioning whether the Durbin-Marshall Credit Card Bill would help consumers or small businesses. CRS echoed an earlier report by the Richmond Fed noting that consumers failed to see any meaningful cost savings because of similar legislation imposing routing mandates and price caps on debit card interchange. Learn more HERE.

 
Driving the day

The University of Michigan releases preliminary consumer sentiment data for April at 10 a.m.

Crypto leaders take on Warren — More than half a dozen crypto executives and prominent enthusiasts are putting money behind John Deaton’s longshot bid to unseat Sen. Elizabeth Warren, our Lisa Kashinsky, Jasper Goodman and Kelly Garrity scoop.

Deaton gained notoriety in the digital asset community for battling the SEC in a landmark crypto case. He moved to Massachusetts in January to take on Warren, who is the industry’s top Capitol Hill critic.

Deaton's backers include crypto boosters Anthony Scaramucci, the Winklevoss twins and executives at the crypto firm Ripple.

“We’re going to work our hardest to spend as much money as we can and raise as much money as we can to defeat her,” Scaramucci said.

A bleak view from the IMF — IMF managing director Kristalina Georgieva is warning that the global economy faces a decade of “tepid growth” and “popular discontent,” the FT reports.

In a speech ahead of next week’s IMF-World Bank spring meetings, Georgieva said “inflation is not fully defeated, fiscal buffers have been depleted and debt is up, posing a major challenge to public finances in many countries”.

In other economic news, CNBC reports that the producer price index, which measures inflation at the wholesale level, increased less than expected in March. But on a 12-month basis, PPI saw its biggest increase since April 2023.

SBF appeals — CoinDesk reports that FTX founder Sam Bankman-Fried filed to appeal his conviction and sentence for fraud and conspiracy charges.

 

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On the Hill

Crypto and cannabis flying high? — Eleanor Mueller reports that House Financial Services Chair Patrick McHenry, ranking member Maxine Waters and Senate Majority Leader Chuck Schumer discussed combining stablecoin and cannabis banking legislation with the upcoming FAA reauthorization, according to two aides familiar with the matter. Punchbowl first reported that they talked about packaging FAA and the stablecoin bill.

Senate Banking Chair Sherrod Brown isn’t ruling out supporting stablecoin legislation, but said Thursday he’s waiting to see what kind of agreement McHenry and Waters may have.

“I’m waiting for McHenry and Waters to come up with something, as they said they would,” Brown told reporters. “And then we’ll figure out what we do from that point. I’m not going to negotiate against myself — or even with them — until I see what they’re proposing. I’m interested in that and SAFER Banking and RECOUP and doing a real package.” (SAFER is cannabis banking legislation and RECOUP is a bank executive accountability bill.)

Brown reiterated that he won’t support “an industry crypto bill.”

Republicans press CFPB on arbitration — Rep. Andy Barr and Sen. Thom Tillis will send a letter to the CFPB today warning the agency against proposing a new mandatory arbitration rule because lawmakers used the Congressional Review Act to undo a previous version, Eleanor reports. The CFPB declined to comment.

 

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Regulatory Corner

Morgan Stanley faces heat — The WSJ reports that federal regulators including the SEC, OCC and FinCEN are investigating how Morgan Stanley shields its wealth-management division from clients at risk of money laundering.

The SEC has raised questions about customers including a Russia-linked billionaire sanctioned by the U.K. The bank has also received an administrative subpoena from Treasury’s Office of Foreign Assets Control about its sanctions policies.

 

A message from Electronic Payments Coalition:

CRS QUESTIONS WHETHER DURBIN-MARSHALL CREDIT CARD BILL WOULD HELP ANYONE AT ALL Every member of Congress should read the CRS analysis which discusses the impact the Durbin-Marshall Credit Card Bill could have on small businesses and American families. Report after report has plainly demonstrated that consumers and small businesses did NOT save any money when Congress passed the 2010 Durbin Amendment, imposing new mandates on debit cards. Now, a decade later, why would anyone assume a monumental restructuring of our nation’s secure, worry-free credit card system would yield different results? After considering the facts, the only logical solution would be to strongly OPPOSE the Durbin-Marshall Credit Card Bill. Click HERE to learn more.

 
Climate

What Larry Fink’s reading — Bloomberg reports that Texas Lieutenant Governor Dan Patrick is asking lawmakers to review how a financial firm can be removed from the state’s list of so-called energy boycotters, which includes BlackRock. Patrick appeared with BlackRock CEO Larry Fink two months ago at a Houston power grid investment summit.

 

Access New York bill updates and Congressional activity in areas that matter to you, and use our exclusive insights to see what’s on the Albany agenda. Learn more.

 
 
 

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