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Congress is far from sending more stimulus help as coronavirus cases surge and economic pain looms

Congress has failed to pass another coronavirus stimulus bill as infections rise and state and local governments implement new restrictions….

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The U.S. Capitol dome is reflected on an ambulance at sunset in Washington, November 10, 2020.

Erin Scott | Reuters

Congress appeared nowhere close to passing another coronavirus relief bill Tuesday as infections surge across the country and new public health restrictions threaten businesses and jobs.

Lawmakers have not passed new aid in months during the health and economic crisis. As the virus again overwhelms hospitals and forces state and local officials to restrict economic activity, Republicans and Democrats have not budged from their positions on stimulus.

On Monday, Senate Minority Leader Chuck Schumer said he and House Speaker Nancy Pelosi have not heard from Senate Majority Leader Mitch McConnell in about two weeks since the Kentucky Republican said he would take the lead for the GOP in the next round of talks. Democrats have pushed for a package that costs at least $2.2 trillion, while Republicans want a roughly $500 billion bill.

“If Leader McConnell and our Republican colleagues want to sit down and negotiate a bipartisan solution, with a bipartisan process, Democrats are ready and willing and able to do so,” said Schumer, D-N.Y.

Both McConnell and Pelosi have signaled they want to pass legislation this year, before President-elect Joe Biden takes office. But neither leader has showed willingness to yield ground, making it unclear what could get through the GOP-controlled Senate and Democratic-held House.

President Donald Trump has also devoted more of his energy in the last two weeks to fighting the 2020 election results than governing during a once-in-a-century crisis.

McConnell has insisted in recent days that the pace of economic recovery means Congress needs only to pass a targeted, narrow plan to get the country through the next few months. On Tuesday, he said Republicans “want to pass more coronavirus relief” but blamed Democrats for blocking bills the GOP tried to pass in recent weeks.

The legislation would include a $300 per week enhanced unemployment benefit, more Paycheck Protection Program loans for small businesses and liability protections for companies. It would not send a second direct payment to most Americans.

Pelosi, a California Democrat, has continued to push for a sweeping package after House Democrats passed a $2.2 trillion bill last month. She contended Biden’s election gives Democrats more leverage in legislative talks. Biden on Monday called on Congress to pass a bill similar to the Democrats’ Heroes Act before he takes office.

The House-passed bill would reinstate the $600 per week supplemental jobless benefit that expired earlier this year, give another $1,200 stimulus check to individuals, send more than $400 billion to state and local governments and authorize more small business loans, among other provisions.

Spokespeople for Pelosi and McConnell did not immediately respond to requests to comment on whether the surging infections make the leaders more likely to pass a bill immediately.

Congress has failed to break its stalemate as the U.S. loses control of its Covid-19 outbreak. The country recorded a seven-day average of more than 150,000 cases a day on Monday.

The virus has now killed more than 247,000 Americans.

State and local governments have started to reinstate shutdowns to slow infections. Even so, some policymakers have not moved as quickly as public health officials would like as they try to balance concerns about businesses failing and workers falling into poverty in the absence of federal help.

A measure allowing Americans to qualify for unemployment insurance for a longer period of time during the pandemic expires at the end of the year. So do a Trump administration order meant to curb evictions and relief for federal student loan borrowers.

Promising vaccine trial data have raised hopes for the world emerging from the pandemic’s shadow sooner than later. Even so, it will likely take until at least the middle of 2021 for most Americans to get vaccinated.

Getting people inoculated against Covid-19 will take more federal help, as well. GOP Sen. Rob Portman of Ohio, who like his party has called for a more narrow relief bill than Democrats want, urged Congress to pass legislation now in part to prepare vaccine distribution.

“That’s expensive and it’s important to make sure the resources are there for that,” he told CNBC on Tuesday.

Source: https://www.cnbc.com/2020/11/17/coronavirus-stimulus-bill-mcconnell-schumer-pelosi-have-not-held-talks.html

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Biden has options beyond a corporate tax hike to pay for infrastructure, as negotiations get underway

As Biden tries to curry favor for a corporate tax hike, the administration has other ways it could fund a $2 trillion infrastructure plan.

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Wind turbines and power transmission lines at a wind farm near Highway 12 in Rio Vista, California, on Tuesday, March 30, 2021.

David Paul Morris | Bloomberg | Getty Images

As President Joe Biden attempts to curry favor for his proposed corporate tax hike, the administration still has other ways it could try to fund and finance its $2 trillion infrastructure legislation.

Biden could decide, for example, to return to a campaign promise to ask the country’s wealthiest households to contribute more in personal income taxes or lobby to increase the federal gasoline tax.

Other funding ideas include a so-called mileage tax and better monetization of the U.S. electrical grid. Democrats may ultimately lean on a special class of bonds to finance their spending plans despite objections from the GOP and concerns about the growing national debt.

While both parties agree that the U.S. is in dire need of infrastructure repair, the GOP has thus far opposed the Biden plan for funding too many projects beyond what they consider critical infrastructure.

Senate Minority Leader Mitch McConnell, R-Ky., has dubbed the American Jobs Plan a “Trojan horse” for liberal policies, while others have balked at the hundreds of billions of dollars earmarked for items other than improvements to roads, bridges, airports and public transit.

Those agenda items, coupled with the administration’s $1.9 trillion Covid-19 relief package signed in March, have convinced Republicans and some moderate Democrats that the White House should seek ways to pay for the plan upfront with new taxes.

Partially to quell funding concerns, Biden has offered a “Made In America” tax plan that includes hiking the corporate tax rate to 28% and removing incentives for corporations to send factories and profits offshore. Treasury Secretary Janet Yellen announced Wednesday that the tax plan would generate about $2.5 trillion over 15 years.

That proposal, however, amounts to a partial rollback of former President Donald Trump’s 2017 tax cuts and is already opposed by Republicans and Democratic Sen. Joe Manchin of West Virginia.

Those concerned about a corporate tax hike say increasing the rate could hinder a fragile economic recovery and make the U.S. a less attractive place for businesses to build factories and hire workers.

Biden, in a speech addressing infrastructure Wednesday, rejected those concerns but said he was open to negotiating on the corporate tax rate. He will meet with Republican and Democratic lawmakers on Monday to kick off infrastructure negotiations in earnest.

“We’ve got to pay for this,” Biden said Wednesday, noting that there are “many other ways we can do it.”

Debt financing

To Tony Fratto, opposition to an infrastructure plan based on cost concerns doesn’t make much sense.

Infrastructure “generates an economic return, and so why exactly are we constraining ourselves with the concept of putting pain on certain segments of the economy?” Fratto, a Treasury official in the George W. Bush administration, said Friday.

With U.S. interest rates still historically low, Fratto argued that it would not take long for the economic benefits generated by faster, more efficient transit to pay for the government’s initial spending.

“You can make a very strong case to borrow the money and pay it back over time on the expected returns,” he added. “We have failed to invest in all of the infrastructure needs that this country has by this fictional argument that it must be paid for for us to do it.”

A study published by the Wharton School this week found that Biden’s infrastructure plan would actually reduce U.S. debt by 6.4% in 2050 relative to current law.

If lawmakers ultimately develop an appetite for debt, the White House could try to resurrect a class of special municipal bonds known as Build America Bonds that allow states and counties to float debt with interest costs subsidized by the federal government.

Income tax

A possible alternative to a corporate tax hike would be adjustments to individual income taxes, as Biden proposed during his 2020 campaign.

Then-candidate Biden proposed raising the top individual income tax rate to 39.6% from its current level of 37%. He also called for the capital gains rate to rise to 39.6% for taxpayers with income over $1 million. Currently, wealthy investors face long-term capital gains rates of up to 20%.

Despite demanding during the campaign that the wealthiest Americans pay more as a percentage of their income, Biden has yet to say when he plans to increase income tax rates.

However, the president doubled down on a red line in his speech Wednesday.

“I will not impose any tax increases on people making less than $400,000 a year,” Biden said. “If others have ideas out there on how to pay for this investment without violating that rule, they should come forward. There’s all kinds of opportunities.”

Gas tax

Another possible revenue generator could be an increase in the federal government’s gas tax. That tax was last raised in late 1993 and is not indexed to inflation, meaning that its effective value has eroded over the last 27-plus years.

The federal government currently collects 18.4 cents per gallon of gasoline sold in the U.S. and 24.4 cents per gallon of diesel fuel. That revenue, which totaled $36.4 billion in fiscal 2016, is used by the Federal Highway Trust Fund, which funds road construction and other surface transportation projects.

Transportation Secretary Pete Buttigieg told CNBC last month that the gasoline tax may soon be an outdated mechanism to raise significant revenue as more Americans switch to electric vehicles and fuel-efficient cars.

Republican Sen. Roy Blunt of Missouri, a supporter of a far-smaller infrastructure bill, told “Fox News Sunday” that funding for repairs to the nation’s roads and bridges needs to evolve over time.

“As we have more electric vehicles, we’re going to have to figure out some way that those electric vehicles pay their fair share,” he said Sunday. “We may even have to figure out a different way that driverless vehicles pay for the increased kind of monitoring that needs to happen with the highway system itself you have with that.”

States, too, have for years imposed their own taxes on the sale of gasoline.

In 2019, the Republican governors of Ohio, Alabama and Arkansas signed fuel tax hikes in an effort to help fund road repair, and in 2018, Michigan’s Democratic governor, Gretchen Whitmer, won election after campaigning on the slogan “Fix the Damn Roads.”

However, several Republican senators opposed increasing the gas tax when former President Donald Trump sought to make a push on infrastructure.

As of Jan. 1, total state taxes and fees on gasoline averaged 30.06 cents per gallon, according to the U.S. Energy Information Administration.

Mileage tax

Buttigieg said a mileage tax could be a more attractive option than a gas tax for lawmakers who support the idea that consumers should pay for infrastructure based on how often they use it.

“I’m hearing a lot of appetite to make sure that there are sustainable funding streams,” the Transportation secretary said in March. A mileage tax “shows a lot of promise if we believe in that so-called user-pays principle: The idea that part of how we pay for roads is you pay based on how much you drive.”

The mileage tax is a relatively new idea, and so there are a few barriers to it becoming a reality in the near term. Questions remain over how to record the distances individuals travel, how and where fees would be collected, and whether the introduction of such a tax would disproportionately impact low-income or rural communities that rely on cars to get to work.

Still, a vehicle miles tax, or VMT, does enjoy bipartisan support on the key House Transportation and Infrastructure committee. Both Chairman Peter DeFazio, D-Ore., and Ranking Member Sam Graves, R-Mo., have voiced support for VMT measures in the past.

“It’s become abundantly clear that we need to move on from the gas tax and diesel tax as the primary means of building infrastructure,” Graves wrote in March. “Although critics will say that we’re not ready for VMT, we’ve heard that same argument for too long. The Highway Trust Fund continues to lose more and more revenue because not all users are paying their fair share given increased fuel efficiency and electric vehicle technology.”

Monetizing the electrical grid

Fratto suggested the federal government could look to tax Americans’ electricity consumption as a greater percentage of the U.S. population switches to electric vehicles.

That could take the form of at-home grid use or fees levied at charging stations akin to a gas tax for petroleum-powered cars. That may be an appealing option in the future, Fratto said, since utility companies have already established and installed ways to keep track of and charge for the energy consumed by each household.

“There are lots of other user fees that we have across all these systems that we could use, including the electricity sector,” the former Treasury official said. “We can take some fee off the use of the grid in order to pay back the federal government for its investment in those areas.”

“You could easily attach a fee that power companies would have to pay, and the same goes for the availability of electricity,” he added.

Smaller corporate tax hike

Ultimately, how Biden finances his plan and the degree to which he relies on a corporate tax hike will depend on how much he wants bipartisan support from a Republican Party that is calling for him to scale back his ambitions and focus on a package closer to $600 billion.

The president and the Democratic leadership in Congress could opt to use the reconciliation process, as they did for the Covid relief bill, which would allow them to pass the legislation with a simple majority in the evenly divided Senate.

In that case, Biden could bypass Republican objections and he would play largely to an audience of one in the Senate — Sen. Joe Manchin.

Though the conservative West Virginia Democrat opposes raising the corporate rate to 28%, he might be willing to meet Biden in the middle.

“As the bill exists today, it needs to be changed,” Manchin told Hoppy Kercheval, the host of West Virginia Metro News’ “Talkline” show. “I think [the corporate rate] should have never been under 25%, that’s the worldwide average. And that’s what basically every corporation would have told you was fair.”

Source: https://www.cnbc.com/2021/04/09/biden-has-options-beyond-a-corporate-tax-hike-to-pay-for-infrastructure.html

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Levi’s shares rise as denim retailer boosts outlook for first half of 2021

Levi Strauss & Co. reported a double-digit sales decline for its fiscal first quarter, as ongoing store closures in Europe weighed on results.

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An employee holds a shopping bag while ringing up a customer at the Levi Strauss & Co. flagship store in San Francisco, March 18, 2019.

David Paul Morris | Bloomberg | Getty Images

Levi Strauss & Co. on Thursday reported a double-digit sales decline for its fiscal first quarter, as ongoing store closures in Europe and lightened foot traffic in the U.S. due to the Covid pandemic weighed on results.

But the denim maker boosted its sales and profit outlook for the first half of the year, assuming the global health crisis doesn’t become worse from here. CFO Harmit Singh said in an interview with CNBC that the company is anticipating sales will return to 2019, pre-pandemic levels by the fourth quarter.

Its shares jumped more than 6% in after-hours trading.

“These results point to really good evidence that we will emerge from the pandemic a stronger company,” CEO Chip Bergh told CNBC. “We beat our own expectations internally [and] beat external expectations, despite having a third of our stores closed in Europe over the entire quarter.”

Here’s how the company did for its quarter ended Feb. 28, compared with what analysts were anticipating, based on a survey by Refinitiv:

  • Earnings per share: 34 cents adjusted vs. 25 cents expected
  • Revenue: $1.31 billion vs. $1.25 billion expected

Levi’s net income declined slightly to $142.5 million, or 35 cents per share, from $152.7 million, or 37 cents per share, a year earlier. Excluding one-time charges, the company earned 34 cents per share, better than the 25 cents forecast by analysts, according to Refinitiv.

Total revenue fell about 13% to $1.31 billion from $1.51 billion a year earlier. That came in better than the $1.25 billion forecast by analysts.

The retailer said the double-digit drop in sales year over year was primarily due to the reduced foot traffic in its stores during the pandemic, as well as ongoing store closures in some markets where Covid restrictions have remained in place. In Europe, for example, more than 40% of Levi’s stores currently are closed, with others operating on reduced hours, the company said.

Levi’s wholesale revenue fell 4% during the latest quarter, marking an improvement from the prior period.

Direct-to-consumer sales were down 26%, due to fewer customers visiting Levi’s stores and especially in markets that rely on tourism. The decline was partially offset by a 25% increase in the company’s owned e-commerce sales during the quarter, Levi’s said. Total online revenue, which includes digital sales from wholesale partners, was up 41%.

Though trends in the business are improving, earnings and sales are expected to continue to be “significantly adversely impacted” at least through the second quarter of 2021, Levi’s said.

The company raised its outlook for both revenue and profit in the first half of the year, assuming that the pandemic doesn’t worsen.

Sales are now expected to grow 24% to 25%, and adjusted earnings are forecast to be in a range of 41 cents to 42 cents, which implies earnings of 7 cents to 8 cents during the fiscal second quarter. Analysts had been calling for second-quarter earnings of 5 cents a share.

Levi’s shares are up nearly 25% year to date. The company has a market cap of $10 billion.

Find the full press release from Levi’s here.

Its shares jumped more than 6% in after-hours trading.

Source: https://www.cnbc.com/2021/04/08/levis-levi-reports-q1-2021-earnings.html

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Biden open to negotiating on corporate tax hike, but says U.S. must take bold action on infrastructure

“I’m willing to listen to that,” Biden said when asked if he would consider a lower corporate tax rate than 28%, as his plan currently calls for.

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President Joe Biden said Wednesday that he is willing to negotiate on the proposed corporate tax rate hike in his $2 trillion infrastructure plan.

“I’m willing to listen to that,” Biden said at the White House when asked if he would consider a lower corporate tax rate than 28%, as his plan currently calls for.

“We’ve got to pay for this,” Biden added, noting that there are “many other ways we can do it.”

“But I’m willing to negotiate that,” he said.

The president’s remark about the corporate tax rate came after he delivered a sweeping defense of the size and scope of his proposed infrastructure overhaul.

Republicans have been quick to criticize the plan for funding too many projects that, in their view, fall outside the definition of infrastructure. Senate Minority Leader Mitch McConnell, R-Ky., has tried to brand the plan a “Trojan Horse” for liberal policies, and other GOP lawmakers have claimed that only a small fraction of the massive bill goes toward “real infrastructure.”

But Biden argued Wednesday afternoon that “the idea of infrastructure has always evolved to meet the aspirations of the American people and their needs. And it is evolving again today.”

The president said he welcomes debate about the specifics of the bill, and said “any Republican who wants to get this done” is invited to the White House.

But he noted that his own view is that infrastructure reform should be crafted with the future in mind, rather than focused on repairing existing structures.

“We don’t just fix for today. We build for tomorrow,” Biden said.

“It’s not a plan that tinkers around the edges. It’s a once-in-a-generation investment in America, unlike anything we’ve done since we built the interstate highway system and won the Space Race decades ago,” the president said.

“It’s a plan that puts millions of Americans to work to fix what’s broken in our country: Tens of thousands of miles of roads and highways, thousands of bridges in desperate need of repair. It’s also a blueprint of infrastructure needed for tomorrow,” he added.

Biden’s proposal, dubbed the American Jobs Plan, includes roughly $2 trillion in spending over eight years. The White House offered a 15-year path to funding the plan, in part by hiking the corporate tax rate to 28%. Republicans had slashed the levy to 21% from 35% as part of former President Donald Trump’s 2017 tax law.

The infrastructure plan would also implement other measures, such as boosting the global minimum tax for multinational corporations and closing so-called offshoring loopholes, for funding.

“Building the infrastructure of tomorrow requires major investments today,” Biden said. “The divisions of the moment shouldn’t stop us from doing the right thing for the future.”

The ambitious, expensive push to update U.S. infrastructure kicked off just weeks after Biden signed a $1.9 trillion coronavirus relief bill into law. That package passed through Congress without any GOP support, and it’s likely to be even tougher for the White House to convince Republicans to back another huge bill that also includes tax increases.

But Biden also faces pressure from Democratic Sen. Joe Manchin of West Virginia, who has already come out against a 28% corporate rate. In a Senate split 50-50 between the two parties, Manchin’s vote could make all the difference.

“But I’m willing to negotiate that,” he said.

Source: https://www.cnbc.com/2021/04/07/biden-willing-to-negotiate-on-corporate-tax-rate-but-says-inaction-not-an-option-on-infrastructure-.html

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