It will fund an expansion of the child tax credit, the full $2,000 checks Biden pledged to secure, extended unemployment benefits, aid to state and local governments, and more spending on the pandemic response and vaccine rollout.
But a bid to reduce child poverty will be core to the package. The yet-to-be-finalized plan would offer $3,600 a year to families with one young child and $3,000 for those with older children, Jeff and Erica report. “Biden is also likely to seek to extend the existing child benefit to millions of poor families currently shut out of the program.”
The Biden team proposes to unleash the federal spending in two waves.
The first, what his economic advisers are calling the “rescue bucket,” would target emergency needs from the pandemic and its immediate economic fallout. The second, which the administration will seek to advance later this year, will focus on “recovery” items, meaning longer-term investments in healthcare and infrastructure aimed at Biden’s campaign pledge to “build back better.”
“We need an immediate rescue package that finishes the work that Congress took an important step on in December, but left a lot of work undone,” Brian Deese, who will lead Biden’s National Economic Council, said at an event hosted by Reuters on Wednesday. “We need to focus immediately again on underwriting the investments necessary to make a nationwide vaccination program work.”
The Biden team wants Republican support but doesn’t necessarily need it.
Deese said the officials with the incoming administration have started briefing senators from both parties on their plans. But Senate Democrats already are preparing to move ahead without their Republicans colleagues, soon to find themselves in the minority.
Sen. Bernie Sanders (I-Vt.), the incoming Senate Budget Committee chairman, told Politico earlier this week he is working with his staff on a reconciliation package that would allow Democrats to pass more relief with a simple majority.
That said, it’s not clear senators will split strictly on party lines. Sen. Joe Manchin (D-W.Va.), for one, has signaled he will be wary of adding much more to the deficit. And Sen. Marco Rubio (R-Fla.) wrote Biden on Wednesday urging him to back increasing the $600 stimulus checks signed into law last month to $2,000, a move already in Biden’s plan, though Rubio wants to advance such a measure as standalone legislation.
Senators will have their hands full.
Senate Majority Leader Mitch McConnell (R-Ky.) is putting off the start of Trump’s Senate impeachment trial until after Biden’s Jan. 20 swearing-in. That means the chamber will be preoccupied with the historically weighty burden of whether to convict Trump for inciting last week’s mob attack on the Capitol at the same time Biden tries to make headway with an ambitious agenda.
“This nation also remains in the grip of a deadly virus and a reeling economy,” Biden said in a Wednesday statement. “I hope that the Senate leadership will find a way to deal with their Constitutional responsibilities on impeachment while also working on the other urgent business of this nation.”
Trump becomes first president to be impeached twice.
All eyes are now on the Senate: “Unlike Trump’s first impeachment, which proceeded with almost no GOP support, Wednesday’s effort attracted 10 Republicans, including Rep. Liz Cheney, the No. 3 party leader in the House. The Senate now appears likely to hold a trial after Trump’s departure, an unprecedented scenario that could end with lawmakers barring him from holding the presidency again,” Mike DeBonis and Paul Kane report.
Mitch McConnell is undecided on convicting Trump: “[A] remarkable break between the two men who worked in lockstep for four years, even as the Senate majority leader continually deflected questions about Trump’s untoward conduct and rhetoric. It was also a dramatic shift from his position during Trump’s first impeachment a year ago, when he publicly stressed that he was ‘not an impartial juror’ and privately worked in concert with White House officials to map out the president’s eventual acquittal in the Senate,” Seung Min Kim and Paul Kane report.
House Minority Leader Kevin McCarthy (R-Calif.) is trying to do some damage control: “McCarthy convened a call about two hours after the impeachment vote with his top financial donors … He said that he called Biden on Tuesday and ‘pledged to work together’ with the new administration … McCarthy also tried to reassure the wealthy contributors that he rejected the conspiracy theory that antifa was responsible for last week’s violence and said Trump deserved ‘some of the responsibility’ for the attacks,” Mike and Paul write.
- Meanwhile, Home Depot co-founder and billionaire GOP donor Ken Langone went off: “Langone says he feels ‘betrayed’ by the Republicans who attempted to overturn the election … The billionaire said he is going to focus on supporting Biden in any way he can,” CNN Business’s Alexis Benveniste reports.
- Charles Schwab is ditching its PAC. “The company, which cited a divided political climate for its decision, said it plans to donate all remaining funds in the PAC,” Reuters reports.
Lael Brainard says the unemployment rate is horrendous for the lowest-paid workers.
The Fed governor says it shows the economy remains unjust: “’The damage from covid-19 is concentrated among already challenged groups,” Brainard said in a speech,’ CNBC’s Jeff Cox reports. “‘The K-shaped recovery remains highly uneven, with certain sectors and groups experiencing substantial hardship.’”
“At a time when the national unemployment rate has come down from the pandemic peak of 14.7 percent to the current 6.7 percent, Fed economists estimate the jobless rate for the lowest quartile of earners is ‘likely above 20 percent,’ Brainard said. That comes as the Black unemployment rate is 9.9 percent and the Hispanic rate is at 9.3 percent while the rate for Whites is 6 percent.”
- Another 789,000 Americans likely filed jobless claims last week. That estimate, compiled by Bloomberg, would mean initial claims remained essentially unchanged from the week prior, which saw 787,000 new claims, Yahoo Finance’s Emily McCormick reports.
More from the U.S.:
- Another grim record: “The United States reported more than 4,200 deaths Tuesday, bringing the nation’s total to more than 381,000 deaths since the onset of the pandemic, according to Washington Post data,” Lateshia Beachum and Meryl Kornfield report.
- The budget deficit widened significantly: “The gap was $572.9 billion in the October-December period, a record for the fiscal year’s first quarter and up 61 percent from a year earlier, according to a Treasury Department report … December’s $143.6 billion deficit, also a record for that month, compared with $13.3 billion during the same month in 2019,” Bloomberg News’s Katia Dmitrieva reports.
From the corporate front:
- Dollar General will pay workers to get the vaccine: The company will rewarded workers who receive the vaccine with four hours of pay. “While such major brands as Walmart and CVS have key roles in the distribution of vaccines, most are encouraging employees to get vaccinated but not mandating it. But as doses become available to front-line workers outside of heath and long-term care, Dollar General wants to remove barriers — including transit and child-care costs — that might prevent its 157,000 employees from receiving the vaccine, the discount retailer said in a news release,” Taylor Telford reports.
- Nordstrom shares drop after holiday sales tumbled: “The company said reported a sales decline of 22 percent for the nine-week period ended Jan. 2, as the department store chain struggled to get shoppers to come into its stores for apparel, footwear and holiday gifts,” CNBC’s Lauren Thomas reports.
- Restaurant and hotel workers are reeling again: “This workforce is under renewed pressure amid a resurgence in coronavirus cases: 498,000 leisure and hospitality jobs disappeared last month, the Labor Department reported Friday. Restaurant and bar workers made up the bulk of those losses, roughly 3 in 4, an onslaught that disproportionately affected women and workers of color. Overall employment in the sector has fallen 23 percent during the pandemic, outpacing every other industry, federal data shows,” Abha Bhattarai and Laura Reiley report.
S&P 500 and Nasdaq eke out small gains.
The Dow closed down slightly: “The broader market index gained 0.2 percent to end the day at 3,809.84, and the tech-heavy Nasdaq advanced 0.4 percent to 13,128.95. The Dow Jones Industrial Average closed just 8.22 points lower, or 0.03 percent, at 31,060.47,” CNBC’s Fred Imbert and Pippa Stevens report.
“The moves came as U.S. Treasury rates eased from their March highs. The benchmark 10-year note yield fell more than 5 basis points to 1.092 percent. The 30-year bond yield also fell on Wednesday to 1.823 percent. On Tuesday, the benchmark rate traded as high as 1.187 percent.”
When superpowers collide
U.S. bans all Xinjiang cotton products.
Trump administration bans cotton and tomatoes from Xinjiang region: The prohibitions include products made with those materials, a move targeting “human rights violations and the widespread use of forced labor in the region,” the New York Times’s Ana Swanson reports.
“The measure could have sweeping implications for makers of apparel and food products, many of whom have sought to distance themselves from atrocities in Xinjiang but have struggled to ensure their supply chains are free of all raw materials from the region. The area is a major source of cotton, coal, chemicals, sugar, tomatoes and polysilicon, a component in solar panels, that are then fed into factories around China and the world.”
- Trump team tries to clarify divestment order. The administration issued an order Wednesday aimed at clearing up questions about its requirement American investors back out of Chinese companies with ties to that country’s military. It “appeared to clarify that investors have until November 2021 to dump any securities in those firms and others considered threats by the U.S.,” Bloomberg’s Benjamin Bain writes.
Meanwhile, China’s economy surges ahead while the world reels: “While the U.S. and Europe wait for vaccine rollouts to get fully back on track, China is the only major economy expected to report growth for 2020, helping it close the gap with the U.S,” the WSJ’s Stella Yifan Xie, Eun-Young Jeong and Mike Cherney report.
“It has expanded its role in global trade and shored up its position as the world’s factory floor, despite years of U.S. efforts to persuade companies to invest elsewhere. China’s consumer market—lifted by its quick recovery from covid-19—keeps gaining momentum, making it a bigger driver of global companies’ earnings. And the country has solidified its standing as a force in global financial markets, with a record share of initial public offerings and secondary listings in 2020, large capital inflows into stocks and bonds, and indexes that far outperformed even the U.S.’s strong showing.”
Intel ousts CEO.
Bob Swan is out after a rocky two years: “The chipmaker recruited it’s new CEO, Pat Gelsinger, from software firm VMWare, calling him a ‘highly respected CEO and industry veteran’ in a release. Gelsinger, who has been VMWare’s CEO for about the past decade, will take the helm at Intel on February 15,” CNN Business’s Jordan Valinsky and Clare Duffy report.
“Intel shares rose nearly 8 percent following the news, while VMWare shares slipped almost 8 percent … Under Swan, the company has struggled, losing market share to competitors in key business segments and dealing with manufacturing delays.”
GameStop stop shares surge after board overhaul: “Shares were up more than 57 percent to $31.40 on Wednesday, marking a steep climb from a year earlier, when the stock was valued at just $4.61 a share,” the WSJ’s Micah Maidenberg reports.
“That recovery—fueled in part by the company’s announcement two days ago that it would add Chewy Inc. co-founder Ryan Cohen and two of his former colleagues to its board—created a so-called short squeeze that drove share prices sharply higher, according to some analysts … As of the end of last year, short interest in the stock—expressed as a percentage of GameStop shares available for trading—exceeded 138%, making it the second-most shorted company by that metric with a market value of at least $1 billion, according to data from FactSet.”
WeWork CEO says the company is on track to end 2021 in the black: “Sandeep Mathrani took the helm at WeWork in February to turn around the company after a disastrous period in which WeWork scrapped its initial public offering, fired its founder Adam Neumann and faced bankruptcy,” Reuters’s Sheila Dang and Abhijith G report.
“WeWork locations in China ‘are back to virtually 90 percent of pre-covid levels from an occupancy perspective and leasing and demand perspective,’ Mathrani said. He added that WeWork currently has $3 billion of liquidity on its balance sheet, which is enough to carry the company through 2022.”
Brian Brooks is infuriating Wall Street banks on his way out.
The outgoing Comptroller of the Currency is forcing through a last-minute rule. “Were history a guide, Brian Brooks would be spending the last days of the Trump administration enjoying the Washington view from his spacious government office and contemplating his next career move. Instead, the chief overseer of the largest U.S. banks is infuriating Wall Street,” Bloomberg’s Robert Schmidt and Jesse Hamilton report.
“As acting head of the Office of the Comptroller of the Currency, Brooks is expected to pass a rule Thursday that would force banks to lend to gun manufacturers, oil drillers and other controversial industries that some have refused to do business with. Brooks, who plans to step down after he finishes the regulation, has also angered banks by granting federal banking licenses to technology firms, potentially creating a new flock of competitors.”
- The Labor Department reports weekly jobless claims
- Former Treasury secretary Robert Rubin, former OMB director Peter Orszag and Nobel laureate Joseph Stiglitz unveil their budget framework for an uncertain world during a PIIE event
- Delta Air Lines, BlackRock and Taiwan Semiconductor are among the notable companies reporting their earnings
- The Census Bureau releases estimates of retail and food sales for December
- JPMorgan Chase, Citigroup and Wells Fargo are among the notable companies reporting their earnings