Happy Monday and welcome back to On The Money, where we want to know what you think should be in the upcoming Amazon show about the Fed. 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—McConnell: No Senate Republicans will back Biden on $4T: Senate Minority Leader Mitch McConnell (R-Ky.) said on Monday that he expected no Republicans would support President Biden’s sweeping infrastructure package, indicating GOP lawmakers are open to a roughly $600 billion bill.
- Biden has proposed a roughly $4 trillion infrastructure package broken up into two pieces: A $2.3 trillion jobs package and a $1.8 trillion families package.
- While the package includes money for roads, bridges and broadband, it also expands into manufacturing, in-home care, housing, clean energy, public schools and manufacturing.
“I think it’s worth talking about but I don’t think there will be any Republican support — none, zero — for the $4.1 trillion grab bag which has infrastructure in it but a whole lot of other stuff,” McConnell said in a press conference in Kentucky. The Hill’s Jordain Carney has more here.
What it means: With no GOP support, Democrats are likely to have to go it alone under reconciliation — which allows them to bypass the 60-vote filibuster — to pass most, if not all, of Biden’s package. That said, there may be a window to strike a deal on some of it.
- A group of Senate Republicans, led by Sen. Shelley Moore Capito (R-W.Va.), have proposed a $568 billion package.
- Biden and Capito talked late last week, both expressing an interest to keep negotiating and potentially setting up another White House meeting.
Biden’s proposed tax hikes, however, are off the table for Republicans. “We’re not willing to pay for it by undoing the 2017 bill,” McConnell said.
Biden defends plan to raise taxes on the rich: In the face of GOP objections, President Biden on Monday defended his plan to raise taxes on wealthy Americans to pay for free preschool and community college and tax credits for middle- and low-income families.
Biden argued that his proposal would “balance” the economy and help the U.S. better compete with other nations.
“The choice is about who the economy serves,” Biden said in remarks at a community college in Norfolk, Va. “Is it more important to shield millionaires from paying their fair share or is it more important than every child gets a real opportunity to succeed from an early age, and ease the burden on families?”
Biden reiterated that he would not raise taxes on those making less than $400,000 and he said that his $1.8 trillion families plan would not add to the deficit “unlike the last gigantic tax cut which increased the deficit by $2 trillion.” The Hill’s Morgan Chalfant takes us there.
LEADING THE DAY
Five ways coronavirus relief laws may impact your taxes: The multiple coronavirus relief packages signed into law include a number of provisions related to taxes, including several that households should be aware of as they file their 2020 returns. Stimulus and aid legislation enacted last year by former President Trump and this year by President Biden included provisions that provide tax relief for 2020 in areas including stimulus payments, unemployment benefits and charitable contributions. The Hill’s Naomi Jagoda breaks it down here.
- Stimulus checks: People can use their 2020 tax returns to claim stimulus payment money that they are entitled to but have yet to receive.
- Unemployment benefits: The coronavirus relief law enacted in March exempts the first $10,200 individuals received in unemployment compensation in 2020 from federal income taxes for households with income of under $150,000.
- Charitable donations: Under COVID-19 relief legislation enacted last year, people who take the standard deduction can also deduct up to $300 in charitable contributions on their 2020 tax returns.
- Earned income tax credit and child tax credit: The COVID-19 package that Trump signed in late December includes a provision that allows taxpayers to use their 2019 income instead of their 2020 income when determining their amounts for the earned income tax credit and the child tax credit.
- Distributions from retirement accounts: Coronavirus relief legislation enacted last year provides tax relief for people who took withdrawals from certain retirement accounts in 2020, such as traditional Individual Retirement Accounts and 401(k) accounts, as a result of coronavirus-related hardships.
Is the US headed toward a new housing bubble? The staggering rise of U.S. home prices is forcing thousands of aspiring buyers into grueling, often risky bidding wars, raising questions about whether the torrid housing market could be in a bubble.
- For nearly a year, the combination of low mortgage rates, a flood of federal stimulus, lockdowns and teleworking — all sparked by the coronavirus pandemic — has fueled a rapid increase in demand for houses.
- At the same time, COVID-19 exacerbated an already severe housing shortfall by causing major delays in new home construction and kept some potential sellers on the sidelines because they were afraid to let strangers tour their homes during a pandemic.
“We really sort of exacerbated this imbalance where demand was really strong but supply was unbelievably constrained,” said Mike Fratantoni, chief economist for the Mortgage Bankers Association. “You get into this year of record low levels of inventory, and that really is what’s spurring the very rapid home price growth,” he added. I have more here.
GOOD TO KNOW
- States can seize third-round stimulus payments from those convicted of crimes in order to provide restitution for victims and their families, according to the Treasury Department.
- Former Consumer Financial Protection Bureau (CFPB) Director Richard Cordray will serve as head of the Education Department’s student loan office, Secretary Miguel Cardona announced Monday.
- The economic recovery from the COVID-19 pandemic has been slower for low earners and racial minorities, exacerbating inequality even as it gains steam, Federal Reserve Chairman Jerome Powell said Monday.
- Treasury Secretary Janet Yellen is reportedly planning to appoint a top supervisor from the Federal Reserve to become the next acting comptroller of the currency, a post responsible for overseeing the country’s national banks and federal savings associations.
- Manufacturing growth in April slowed unexpectedly, but remained positive in April, according to the Institute for Supply Management’s Manufacturing Purchasing Managers Index, an industry standard metric of the sector’s health.
ODDS AND ENDS
- Robinhood Financial blasted Berkshire Hathaway chairman Warren Buffett and vice chairman Charlie Munger on Monday after the industry titans criticized the online investment platform.
- Supermarket chain Kroger announced Monday that it will begin to test delivering groceries to some customers via drones.