Yesterday the Senate passed the Conference Report on the Trade Facilitation and Enforcement Act and the Internet Tax Forever Freedom Act, sending the bill to the president’s desk. For some, the primary attraction of the bill is the customs and trade enforcement provisions that made up the base bill. However, much of the legislative negotiations and interest centered on the Internet Tax Forever Freedom Act.
The Supreme Court, in a 5-4 decision, blocked implementation of the president's Clean Power Plan until its ultimate legality is decided. This is a very important decision that has real implications. First and foremost, it changes the conditions in the electricity sector where states and utilities can stand down and not comply with the rules' limits on carbon emissions; limits that spelled doom for older and coal-powered facilities.
Yesterday the Office of Management and Budget (OMB) released the president’s fiscal 2017 budget proposals. As discussed yesterday, the budget was dead on arrival, but is of interest as a “vision statement” of a progressive president no longer bound by any pretense of legislative viability. Given that, what do we learn by looking at the budget? (Gordon Gray has a nice summary here.)
President Obama will release his final budget today, andPolitico is reporting “...that Congress, in a break with tradition, said it won’t even hold hearings on this year’s budget request. That’s because the request 'will continue to focus on new spending proposals instead of tackling 'our $19 trillion in debt,’ Senate Budget Committee Chairman Mike Enzi (R-Wyo.) said last week.” Personally, I think there should always be a place for any administration to explain its proposals to Congress and that the traditional hearing fills that part of the process. Not inviting OMB Director Shaun Donovan to testify runs the risk of appearing petty and dismissive.
The president's budget will be out Tuesday, and the White House has leaked that it will propose a $10 per barrel tax on U.S. oil producers. As Politico reported, it "will propose more than $300 billion worth of investments over the next decade in mass transit, high-speed rail, self-driving cars, and other transportation approaches designed to reduce carbon emissions and congestion. To pay for it all, Obama will call for a $10 “fee” on every barrel of oil, a surcharge that would be paid by oil companies but would presumably be passed along to consumers.”
Today the Department of Labor provides the first read of 2016 on the state of the U.S. labor market. Recall that in December, payroll employment rose by 292,000, while the unemployment rate remained unchanged at 5.0 percent. What can one expect in the January report?
At the time of the announcement of the Iranian nuclear deal, the administration claimed it would provide Iran access to about $50 billion in frozen assets. Weeks ago, Secretary of State john Kerry labelled as “fictional” the notion that Iran would gain access to $100 billion due to the Iran nuclear deal. Suddenly, the State Department has changed its tune; spokesman John Kirby said the U.S. would be releasing about $100 billion to Iran. (The humorous footnote to this episode is the State Department’s attempt to convince reporters that because Iran would have to repay $45 billion in debts, it was really only “getting” $55 billion. Conveniently, this is closer to the original number but it is the same as asserting your paycheck is misleading because you have to pay student loans, mortgages, car loans or other expenses. It makes no sense.)
The Hill newspaper is reporting that White House Press Secretary Josh Earnest "said [Speaker Ryan, Majority Leader McConnell and President Obama] will probably discuss the Trans-Pacific Partnership, earned income tax credit, and heroin addiction problem.” It is a healthy development for there to be good communication between these three leaders. And there may be room for some agreement on enhancing the Earned Income Tax Credit, (EITC) a shared commitment to the Trans-Pacific Partnership, and concern over the scourge of addiction. But that is a far thing from constituting a “to do” list for the Congress.
The Earned Income Tax Credit (EITC) is the most successful federal anti-poverty program. It uses the tax system — in the form of a refundable tax credit — to subsidize the wage earnings of those low-income Americans who choose to work. To date, however, the focus of the program has been on families with children, especially single mothers. However, with labor force participation at 30-year lows and poverty rising during the recovery from the Great Recession, it is quite timely for House Speaker Paul Ryan’s plan to expand the EITC for childless adults.
Friday’s report on growth in Gross Domestic Product (GDP) during the fourth quarter of 2015 checked in at a paltry 0.7 percent annual rate. The weak GDP report, coupled with a disastrous start to 2016 in equity markets, has raised considerable chatter about an impending U.S. recession. For what it’s worth, that is far from the consensus in the economics profession. The Financial Times reports that "Leading global economists now see a 20 percent chance of the US falling into recession this year”. Still slowing global growth and financial market turbulence have taken their toll; the same group previously put the probability of recession at 15 percent over the next two years.