To Pay for Infrastructure, Most Voters Are Fine With Raising Taxes on Corporations

Most everyone likes the idea of infrastructure, but few want to be the first one to raise their hand or point the finger when it comes time to pay for it. 

Under President Joe Biden’s proposal, 15 years of higher taxes on corporations would fund infrastructure improvements — an idea supported by 65 percent of voters in a new Morning Consult/Politico poll. Unlike the broadly popular stimulus bill, a 47 percent plurality of Republicans oppose the corporate tax hike to pay for infrastructure, although 42 percent of GOP voters support it. 

Read more from me on the public’s appetite for increasing corporate taxes to fund the infrastructure bill here

And check out my colleague Lisa Martine Jenkins’ story on the popularity of specific measures in Biden’s plan here.

Top Stories

  • The International Monetary Fund anticipates that the world economy will grow 6 percent this year, the fastest pace since 1980 when the IMF began tracking data on a comparable set of countries. The group updated its prediction from January that the economy would grow at a rate of 5.5 percent, as vaccine rollouts pick up and advanced economies pursue large spending packages to boost growth. (The Wall Street Journal
  • Treasury Secretary Janet Yellen said that the Biden administration will “encourage financial institutions to credibly align their portfolios and strategies with the objectives of the Paris Agreement,” boosting the international accord that aims to reduce greenhouse gas emissions at a time when Republican lawmakers have increasingly argued against connecting financial regulation with fighting climate change. Yellen also said that the Treasury will look to align tax policy with climate goals, including one that relies more on carbon-free power sources. (Bloomberg
  • The U.S. Office of Special Counsel fined Lynne Patton, a former Housing and Urban Development regional administrator for New York and New Jersey under the Trump administration, $1,000 and barred her from federal employment for four years. The office said that Patton produced a video with New York City Housing Authority residents to air at the 2020 Republican National Convention, violating a law that restricts executive branch employees from engaging in political activity while serving in that capacity. (Politico)
  • JPMorgan Chase & Co. Chief Executive Jamie Dimon said in his annual shareholder letter that an economic boom fueled by government spending and vaccine rollouts could “easily run into 2023.” Dimon also argued that nonbank competitors to banks should be more tightly regulated, citing fintech companies, “shadow banks” and large corporations such as Amazon.com Inc. and Walmart Inc. (CNBC)

Chart Review

Events Calendar (All Times Local)

04/07/2021
World Health Day: Global Perspectives on the Social Determinants of Health
Global Capital Markets & the US Securities Laws 2021 9:00 am
Tax Policy Center: “Can the Internal Revenue Service Administer a Complicated Tax System on Its Budget?” 12:00 pm
The Economic Club of Washington D.C.: Gregory Hayes 12:30 pm
04/08/2021
International Monetary Fund Debate on the Global Economy event with Jay Powell 12:00 pm
Economic Club of New York event: Neel Kashkari, Federal Reserve Bank of Minneapolis 2:00 pm
04/12/2021
AEI event: “Government policies reshape the banking industry: Changes, consequences, and policy issues” 10:00 am
View full calendar

Fintech: How the Public Views the Future of Finance

Now more than ever, the average consumer is playing a larger role in finance, investing and banking. As the Fintech industry looks towards the future, it will be important to make sure that new technologies meet the mark and exceed the public’s expectations.

A new special report from Morning Consult takes a deep dive into public opinion on financial technology, an issue that’s likely to transform both the banking industry and how Washington regulates the finance industry. Download the report.

General

A K-Shaped Recovery, This Time on a Global Scale
Alan Rappeport and Jeanna Smialek, The New York Times

 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.

Millions Are Tumbling Out of the Global Middle Class in an Historic Setback
Shawn Donnan et al., Bloomberg Businessweek

One of the most economically significant trends of the past few decades has been the emergence of a global middle class. The expectation that this cohort of consumers would continue to grow relentlessly, as rising incomes in developing countries lifted millions out of poverty each year, has been a central assumption in multinationals’ business plans and the portfolio strategies of professional investors.

Biden Ramps Up Pressure on GOP, Some Democrats in Spending Pitch
Nancy Cook, Bloomberg

President Joe Biden is ramping up pressure on Republicans to support his $2.25 trillion infrastructure plan, appealing directly to GOP voters while lawmakers are in their home districts during the current congressional recess. Biden will deliver his second major sales pitch in a week for the “American jobs plan” with a White House speech Wednesday, as he and his team reach out to governors, mayors and the broader public through phone calls, briefings and local TV appearances to make their case.

Billionaires club grew by nearly a third, to 2,755, during pandemic
Hannah Denham, The Washington Post

The number of newly minted and reissued billionaires soared last year, Forbes reported Tuesday in its annual ranking, a staggering accumulation of personal wealth that stands in sharp contrast with the widespread economic struggles unleashed by the coronavirus pandemic. The number of billionaires on Forbes’ 35th annual ranking swelled by 660 to 2,755 — a roughly 30 percent jump from a year ago — and 493 of them are first-timers.

Corporate America tears down Biden’s infrastructure plan
Ben White, Politico 

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. But now that President Joe Biden has proposed a massive $2 trillion-plus spending package, the collective response from big business is basically: “No thanks, try again.”

Corporate America isn’t welcoming former Trump Cabinet officials with open arms, headhunters say
Tory Newmyer, The Washington Post

Before she joined the Trump administration as transportation secretary, Elaine Chao earned millions of dollars over the past decade by serving on the boards of big public companies such as Dole Foods, Protective Life and Wells Fargo, according to corporate filings. She offered sterling credentials to businesses eager to keep current with the Republican leadership: A former banking executive, she became the first Asian American woman to serve in a Cabinet when President George W. Bush tapped her to serve as labor secretary. 

Biden’s Infrastructure Plan Faces New Hurdle in Senate Rules
Andrew Duehren, The Wall Street Journal

Some Democratic policy goals in President Biden’s wide-ranging $2.3 trillion infrastructure plan could soon face a familiar obstacle: arcane Senate rules that limit what type of legislation lawmakers can approve along party lines. While Mr. Biden and top Democrats have said they are hoping to approve the legislation with bipartisan support, many Republicans have sharply criticized the plan’s proposed tax increases on companies.

Fed’s Kaplan Says the Economy Still Needs Central Bank Support
Michael S. Derby, The Wall Street Journal

Federal Reserve Bank of Dallas President Robert Kaplan said it isn’t time for the central bank to pull back on its support of the economy, but paring stimulus when it becomes clear the coronavirus pandemic is abating and the economy is meeting the Fed’s goals will be important to keep the recovery on track. “When we’re in the middle of a crisis, we should be aggressively using our tools, so I agree with what we’re doing now in terms of asset purchases and stance of policy generally,” Mr. Kaplan said in a Wall Street Journal interview Tuesday. 

Job Training That’s Free Until You’re Hired Is a Blueprint for Biden
Steve Lohr, The New York Times

Bill Barber saw an ad on Facebook last year for American Diesel Training Centers, a school in Ohio that prepares people for careers as diesel mechanics. It came with an unusual pitch: He would pay for the schooling only if it landed him a job, thanks to a nonprofit called Social Finance.

Amazon Is the Target of Small-Business Antitrust Campaign
Ryan Tracy, The Wall Street Journal

Merchant groups are forming a national coalition to campaign for stricter antitrust laws, including measures they hope could force Amazon.com Inc. to spin off some of its business lines. The effort is being launched Tuesday by trade groups that represent small hardware stores, office suppliers, booksellers, grocers and others, along with business groups from 12 cities, organizers say.

Stocks Hover Around Record; Bond Yields Decline: Markets Wrap
Robert Brand, Bloomberg

Markets settled into a holding pattern on Wednesday, with global stocks hovering around all-time highs as investors awaited details of the Federal Reserve’s most recent meeting. Bond yields fell.

Banking

How Credit Suisse got tangled in the Archegos Wall Street chaos
Taylor Telford and Hamza Shaban, The Washington Post

Credit Suisse announced Tuesday that two top executives would resign and that the Swiss bank would take a $4.7 billion loss as the fallout from the collapse of a large hedge fund continues to wreak havoc on Wall Street. Credit Suisse, which is based in Zurich, said it expects to record a $960 million (900 million Swiss francs) loss this quarter after exiting positions with an unnamed U.S. hedge fund.

Morgan Stanley Sold Part of Archegos Holdings Before Most Rivals
Crystal Tse, Bloomberg

Morgan Stanley sold $5 billion of shares owned by Archegos Capital Management a day before a deluge of block trades sent shockwaves across capital markets. The sale of the basket of shares on March 25 was completed at a fixed discount, according to a person with knowledge of the matter, who asked not to be identified discussing private transactions.

The FDIC wants to make it easier for millions of ‘unbanked’ Americans to get their stimulus payments
Michelle Singletary, The Washington Post

One thing is clear after multiple rounds of pandemic-related stimulus payments: having a bank account helps deliver the money faster. People who provided current bank account information to the IRS were among the first to receive direct deposit payments, which began arriving a year ago this month.

Credit Suisse Scandal Toll Goes Ever Higher as Rivals Thrive
Marion Halftermeyer and Patrick Winters, Bloomberg

In an era of prosperity for investment banks, Credit Suisse Group AG is careening from one crisis to another and then another — this time, with a $4.7 billion writedown tied to billionaire investor Bill Hwang’s trading blowout. The staggering hit — the largest yet linked to market-shaking losses run up by Hwang’s Archegos Capital Management — prompted sweeping management changes at the Swiss bank Tuesday and cast fresh doubt on its checkered record of managing risks. 

Credit Suisse May Let Fund Clients Take Hit on Greensill Losses
Patrick Winters, Bloomberg

Credit Suisse Group AG is leaning toward letting clients foot the bill for eventual losses in funds that the bank ran with former billionaire Lex Greensill’s company, according to a person familiar with the matter. The bank considers that the risks around Greensill were known and the funds were only marketed to investors able to assess such risks, the person said, declining to be identified discussing private matters. 

Financial Products and Investments

BlackRock Must Hit ESG Targets or Pay More to Borrow Money
Dawn Lim, The Wall Street Journal

Investment giant BlackRock Inc. will need to hit its staff-diversity targets and other sustainable-business goals to keep its corporate borrowing costs down. The firm struck a financing deal with a group of banks that links its lending costs for a $4.4 billion credit facility to its ability to achieve certain goals, like meeting targets for women in senior leadership and Black and Latino employees in its workforce.

How Ken Griffin rebuilt Citadel’s ramparts
Robin Wigglesworth et al., Financial Times

The Chicago-based hedge fund manager has rebounded from the brink of collapse during the last financial crisis.

Housing and GSEs

The appraisal gap is complicating deals across the country
James Keimann and Alex Roha, HousingWire

The home checked off every box on Linda’s list. It had a large, fenced-in yard, modern appliances in an updated kitchen, a “man cave” for her husband, beamed ceilings, a massive master suite and was located in a good school district. The house, in the Nashville area, was listed at $405,000. Linda (who asked that her real name not be used) beat out a dozen other prospective buyers in a bidding war by offering $445,000 and waiving all contingencies. 

Taxes

Jeff Bezos Backs Corporate Tax-Rate Increase and Infrastructure Plan
Sebastian Herrera, The Wall Street Journal

Amazon.com Inc. Chief Executive Jeff Bezos said he supports a rise in the corporate tax rate and supports President Biden’s focus on major U.S. infrastructure spending. Mr. Bezos made his support public in a memo Tuesday.

Global corporate tax deal edges closer after US backs minimum rate
Chris Giles et al., Financial Times

Any agreement should include taxing tech giants’ global profits, say European countries.

Financial Technology

Coinbase Earned More in First Quarter Than in All of 2020
Paul Vigna, The Wall Street Journal

Coinbase Global Inc. profited handsomely off bitcoin’s first-quarter rally, bringing in more earnings and revenue in the first three months of 2021 than it did in all of 2020. The company, which provides a variety of financial services focused on bitcoin and other cryptocurrencies, released estimated results for the first quarter ahead of next week’s highly anticipated direct listing.

The Robinhood Generation Is Debating Old School Investors on Trading Stocks
Misyrlena Egkolfopoulou and Katharine Gemmell, Bloomberg

In the Before Times, those seeking thrills, excitement and drama pursued the arts, or perhaps joined the armed forces. Anything, really, except the decidedly uncool prospect of spending one’s days tied to a desk and looking at a bunch of numbers. Not anymore. Now, getting a Robinhood trading account, checking the price of GameStop Corp. or Tesla Inc., analyzing market data on Excel sheets and buying shares for no reason other than “we like the stock” is considered not only hip, but also a mark of rebellion against the establishment.

Opinions, Editorials and Perspectives

Biden Aims at Profit, Hits Workers
Phil Gramm and Mike Solon, The Wall Street Journal

The Biden administration has proposed an array of corporate tax increases with a goal of raising some $1.33 trillion over the next 10 years. That’s three times the $409 billion that the Congressional Budget Office estimated was the cost of the 2017 corporate tax cut. 

Should PayPal Be Worried About Your Country’s Central Bank?
Andy Mukherjee, Bloomberg

The world of money is about to leap into the great unknown of central bank digital currencies. Will it land in a utopia of universal financial inclusion or crash into a dystopia of instability? 

Research Reports

Do People View Housing as a Good Investment and Why?
Andrew Haughwout et al., Liberty Street Economics

Housing represents the largest asset owned by most households and is a major means of wealth accumulation, particularly for the middle class. Yet there is limited understanding of how households view housing as an investment relative to financial assets, in part because of their differences beyond the usual risk and return trade-off. 

Morning Consult