SEC, Federal Reserve Interest Rates, and State AI Laws
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Tax Policy/News:
April 2: IRS claws back money given to businesses under fraud-ridden COVID-era tax credit program
The IRS reports progress in reclaiming funds distributed improperly through the Employee Retention Credit (ERC), a program aimed at aiding businesses in retaining employees during pandemic-related closures but prone to fraud.
The agency received $225 million through a voluntary disclosure program, allowing small businesses to return funds received in error and keep 20%.
Another ongoing program has led to the withdrawal of $251 million in unprocessed claims by 1,800 businesses.
Additionally, audits have resulted in $572 million assessed from over 12,000 businesses with improper claims. IRS Commissioner Danny Werfel expresses concern over widespread abuse of the program but notes encouraging results from initiatives to assist affected businesses.
While the IRS halted processing new claims in September, it plans to resume processing this spring, with $3 billion in claims currently under review by IRS Criminal Investigation.
Economic News/Policy:
April 8: Fed rate cut expectations for 2024 fall to lowest since October
Futures traders have scaled back expectations for Federal Reserve rate cuts this year, reflecting confidence in the continued strength of the U.S. economy.
Fed funds futures contracts for December now suggest around 60 basis points in rate cuts, significantly lower than the 150 basis points initially anticipated at the start of 2024.
The likelihood of a 25 basis point cut in June has decreased to 49%, down from 57% a week ago. Investor uncertainty regarding the depth and timing of rate cuts has grown, particularly amid concerns of sparking inflation in a robust economy.
The Fed, which had projected a 75 basis point cut this year, faces pressure to balance economic growth with inflation concerns. Treasury yields have risen accordingly, with the benchmark 10-year yield hitting its highest level since November.
Strong economic data, including unexpected strength in the labor market, has reinforced calls for patience among Fed officials, including Chair Jerome Powell, regarding rate decisions. Investors await the release of the Consumer Price Index for March to further evaluate the likelihood of rate cuts this year.
Technology:
April 9: A patchwork of state AI laws is creating 'a mess' for US businesses
The United States is witnessing a patchwork of state laws governing artificial intelligence (AI), reflecting the lack of direct federal regulation on the technology.
While initiatives are ongoing at the state level to regulate AI, there's a growing confusion among businesses. Utah and Connecticut are among the states deliberating legislation regarding AI interaction with consumers and transparency in high-risk AI systems, respectively.
However, the differences in these state laws pose challenges for businesses aiming to comply. Unlike the U.S., the European Union and China have implemented comprehensive AI laws. While these state laws align with federal priorities, they exhibit variations in approach, making compliance complex.
These laws often address consumer protection, automated decision-making, and data processing, with nuances in definitions and requirements across states.
The increasing single-party control in state legislatures contributes to the enactment of such laws, indicating a trend towards tighter AI regulation in the U.S.
April 7: How AI risks creating a ‘black box’ at the heart of US legal system
Artificial intelligence (AI) is increasingly employed in the American legal system, particularly in criminal investigations, yet defendants often lack the ability to challenge or even know about its role in their cases due to a lack of disclosure requirements.
While AI and machine learning tools aid law enforcement in various tasks, such as facial recognition and crime forecasting, the secrecy surrounding their workings poses a challenge to transparency and fairness in the justice system.
Concerns about biases in AI algorithms, particularly in facial recognition, further exacerbate these issues. Efforts to regulate AI use in criminal justice have faced challenges, with debates over trade secrets, standards, and disclosure persisting.
Legislation proposed by Rep. Mark Takano aims to address these issues by requiring transparency and testing of AI tools used in law enforcement.
However, despite various governmental initiatives aimed at managing AI risks, concrete regulatory measures are still lacking, leaving significant gaps in accountability and fairness within the legal system.
Energy and Environmental Policy/News:
April 4: SEC pauses climate disclosure rule pending court challenge
The U.S. Securities and Exchange Commission (SEC) has decided to postpone the implementation of its final rule requiring companies to disclose climate-related risks, citing ongoing legal challenges from Republican-led states.
While the SEC emphasized that the stay doesn't signify abandonment of the rule and they will vigorously defend it in court, the decision comes amidst a legal battle initiated by nine Republican attorneys general who argue that the rule exceeds the agency's authority.
Meanwhile, a coalition of 18 Democratic attorneys general seeks to intervene in defense of the rule, emphasizing the importance of providing investors with reliable information about climate risks.
Additionally, a three-judge panel of the 5th U.S. Circuit Court of Appeals recently ruled in favor of fracking companies opposing the rule, prompting criticism from Republican representatives who view the mandate as excessive and harmful to businesses.
April 3: Texas, California dominated wind and solar power generation in 2023: Report
In 2023, oil-producing states such as Texas and Oklahoma emerged as leaders in wind energy generation, with Texas also making significant strides in solar energy production, according to a report by Climate Central.
Solar power generation in the U.S. surged to nearly 240,000 gigawatt-hours (GWh), with California leading at almost 69,000 GWh, followed closely by Texas at over 31,700 GWh.
Solar capacity in both states notably increased, with California experiencing a 15 percent rise and Texas a remarkable 37 percent growth from 2022. Similarly, wind power production reached approximately 425,000 GWh, with Texas generating the most wind power at 119,836 GWh, followed by Iowa and Oklahoma.
Despite a slight national decrease, Texas saw a 4 percent increase in wind power generation. Collectively, wind and solar energy met the needs of 61 million American households in 2023, a promising trend given projections that solar and wind will surpass coal-fired electricity production this year.
Beyond oil-producing regions, wind power dominates the electricity mix in states like Iowa and South Dakota, accounting for around 60 percent and 55 percent respectively.
ICYMI:
A Washington state judge presiding over a triple murder case has made a groundbreaking ruling by prohibiting the use of video enhanced by artificial intelligence as evidence, which experts believe to be a first in a U.S. criminal court.
Judge Leroy McCullogh, in his decision, described the technology as novel and expressed concerns over its opaque methods, potential to confuse jurors, and the possibility of a trial within a trial regarding the AI model's process.
The case involves a man accused of a fatal shooting outside a Seattle-area bar in 2021, with his defense seeking to introduce cellphone video enhanced by machine learning software.
Prosecutors argued against its use, highlighting the lack of legal precedent and raising doubts about the accuracy and reliability of the enhanced video.
Despite the defense's claims, forensic video analysts expressed skepticism about the technology's reliability and noted the absence of established methodologies or peer-reviewed research.
This ruling underscores the evolving legal challenges posed by emerging technologies like AI in the criminal justice system, signaling the need for further scrutiny and research before their widespread adoption in legal proceedings.
For Fun:
April 3: NASA wants to come up with a new clock for the moon, where seconds tick away faster
NASA aims to establish a unique timekeeping system for the moon due to its different gravitational conditions, which cause time to pass slightly faster compared to Earth—about 58.7 microseconds per day.
The White House has instructed NASA and other U.S. agencies to collaborate with international counterparts in developing this moon-centric time reference system.
Kevin Coggins, NASA's communications and navigation official, explains that an atomic clock on the moon will tick at a different rate, necessitating a distinct time framework for lunar operations.
As technology becomes more sophisticated, precise timing becomes crucial, especially for GPS, satellites, and communication systems, highlighting the significance of synchronizing lunar time with Earth's standards.
The European Space Agency has also emphasized the need for a unified time system for the moon. While the International Space Station will continue to use coordinated universal time (UTC), NASA must determine when the transition to the new lunar time occurs.
The White House expects a preliminary concept by the end of the year and a finalized plan by 2026, aligning with NASA's timeline to send astronauts around the moon in September 2025 and establish a lunar landing mission by the following year.