Overdraft Fees, Artificial Intelligence Models, and FEMA
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Tax Policy/News:
January 19: $78B business and child tax-break bill advances in House
Congress has advanced a $78 billion tax breaks bill, facing potential hurdles due to election-year politics.
The House tax-writing committee approved the bipartisan bill with a 40 to 3 vote, benefiting companies like Boeing, General Motors, Amazon, and Apple.
The legislation restores expired tax breaks for domestic research and development, business loan interest, and equipment investment.
A double taxation agreement with Taiwan is included, causing tension with Beijing. Despite lobbying efforts, election-year considerations may delay the bill's enactment.
Republicans express concerns about tax refunds benefiting working poor parents, while Democrats argue the bill falls short in addressing child poverty.
Some lawmakers seek to raise the state and local tax deduction cap. Advocates claim bipartisan support for policies revitalizing communities and the economy.
The bill faces criticism from progressive Democrats for not fully restoring the temporary child tax credit expansion during the pandemic.
The legislation, paid for by curtailing a COVID-era employee retention tax credit, aims to lift 400,000 children out of poverty. The political landscape adds uncertainty to the bill's timeline.
Economic News/Policy:
January 22: Two important events this week could determine the future of Fed rate policy
Markets are uncertain about the Federal Reserve's stance on interest rate cuts, a critical factor influencing the economy and stocks.
Two key economic reports this week will likely shape the central bank's direction: the Commerce Department's fourth-quarter GDP estimate, expected to show a 1.7% growth, and the December reading on the personal consumption expenditures price index, with a consensus expectation of 0.2% growth for the month and 3% for the full year.
Chicago Fed President Austan Goolsbee emphasizes the importance of these data points in determining the Fed's rate path.
Despite recent strong economic indicators, the market's expectation of a rate cut in March has decreased from 81% to 47.2%, reflecting changing sentiment.
Factors such as housing inflation, geopolitical tensions, and unexpected economic growth could influence the Fed's decisions on monetary policy.
Some analysts predict inflation to persist, potentially delaying rate cuts until at least June.
The evolving market expectations for monetary policy continue to impact overall market outcomes.
January 21: Shutdown averted, lawmakers fret about next looming deadline
Lawmakers express concerns about the next government funding deadline despite averting the latest shutdown threat.
While an agreement on the topline for the 12 annual government funding bills for fiscal year 2024 was reached, the allocation of dollars among these measures remains uncertain.
Lawmakers, including Sen. Susan Collins, are worried about the prolonged lack of resolution on allocations, hindering the crafting of individual bills.
Potential sticking points, such as funding for the Department of Homeland Security (DHS), are identified in ongoing spending talks. Rep. Tom Cole notes a potential dispute over DHS and Labor-Health and Human Services (HHS) funding bills.
Senators negotiating a major border policy and foreign package anticipate impacts on Homeland Security funding.
The stopgap measure passed by Congress extends funding temporarily, pushing the next target dates into March. Lawmakers acknowledge a time crunch for finalizing the 12 annual funding bills and express concerns about automatic cuts in April if funding work is not completed on time.
January 19: Biden administration plans to slash overdraft fees at big banks: ‘I call it exploitation,’ president says
The Consumer Financial Protection Bureau (CFPB) has proposed new rules to significantly reduce overdraft fees charged by banks, aiming to address the estimated $280 billion Americans have paid in such fees since 2000.
President Biden criticized banks for exploiting vulnerable Americans with exorbitant fees.
While the CFPB anticipates annual savings of $3.5 billion for consumers, banking groups and some lawmakers argue that the rules may limit a service relied upon by financially vulnerable individuals.
The proposal, part of the Biden administration's broader initiative against "junk" fees, faces regulatory approval and is set to take effect in October 2025.
The new rules, applicable to banks with $10 billion or more in assets, aim to treat overdraft coverage similarly to credit cards, providing clear disclosures, and limiting fees in the first year.
Critics suggest that eliminating overdraft services may negatively impact those using it as a form of credit in emergencies.
Technology:
January 22: New Theory Suggests Chatbots Can Understand Text
Large language models (LLMs), exemplified by chatbots like Bard and ChatGPT, have raised questions about whether they truly comprehend the content they produce or merely act as "stochastic parrots" imitating patterns from their training data.
Recent research by Sanjeev Arora and Anirudh Goyal introduces a theoretical framework employing random graph theory to elucidate the emergence of unexpected abilities in LLMs.
The theory posits that as LLMs increase in size and undergo training with more data, they acquire new skills by combining existing ones, suggesting a form of understanding beyond mere imitation.
Arora and Goyal's mathematical arguments and experiments support their claim, contending that models like GPT-4 exhibit compositional generalization, generating text with skills and combinations not present in their training data.
This challenges the conventional view of them as stochastic parrots and is deemed rigorous by experts like Geoff Hinton, who have stressed the urgency of gauging the depth of these models' understanding.
The study prompts reflections on the rapid advancements observed, such as the significant improvement of GPT-4 over its predecessor GPT-3.5 within a year.
January 19: Zuckerberg says Meta training next generation of AI models
Meta CEO Mark Zuckerberg revealed plans to train the next generation of AI models, aiming for artificial general intelligence (AGI) accessible to everyone through products like AI smart glasses.
Combining the FAIR and GenAI research efforts, Meta is developing Llama 3 and building a massive infrastructure with 600,000 GPUs by year-end.
Zuckerberg emphasizes responsible AI advancement and open-sourcing to benefit a wide audience.
The vision includes AI integration into daily life through devices like Ray-Ban Meta smart glasses.
Meta's AI initiatives align with broader industry trends, with the company already gaining traction in this space.
The announcement follows Meta's launch of an AI rival to ChatGPT in collaboration with Microsoft, coinciding with President Biden's executive order on AI risks in October.
Energy and Environmental Policy/News:
January 19: Ford cuts F-150 Lightning production as EV demand softens
Ford Motor announced on Friday that it will reduce production of its F-150 Lightning pickup truck due to lower-than-expected demand for electric vehicles (EVs).
The No. 2 U.S. automaker will cut production at its Michigan Rouge Electric Vehicle Center to one shift starting April 1, citing manufacturing flexibility to balance growth and profitability.
The move comes amid signs of slowing demand for EV trucks, with General Motors postponing the opening of a $4 billion electric truck plant in Michigan.
Ford had previously planned to produce about 3,200 F-150 Lightning EV trucks per week but reduced it to 1,600 per week starting in January.
The production cut will impact 1,400 workers at the plant, with some transferring to other facilities or taking advantage of a special retirement program.
Ford shares were up 1% in mid-day Friday trading. The decision follows a broader industry trend as legacy car manufacturers focus on hybrid models in response to market preferences.
January 19: New Biden guidance makes EV charger tax credits available where most Americans live
The Biden administration has expanded the eligibility criteria for electric vehicle (EV) charger projects to qualify for new tax credits under the Democrats' climate, tax, and health care bill.
The tax credits, intended for chargers in low-income communities or non-urban areas, now have a broad interpretation of "non-urban."
According to new guidance, this includes any census tract where at least 10 percent of blocks are not designated as urban, making the credits accessible to about two-thirds of Americans.
Environmental groups applaud the move, anticipating accelerated infrastructure buildout for climate-friendly vehicles.
The administration's approach aligns with its broader strategy to boost EV adoption and combat climate change.
Additionally, the White House announced $325 million in new investments to repair broken chargers, highlighting a 70 percent growth in publicly available chargers to 170,000 since President Biden took office three years ago, along with a more than 20 percent decrease in EV prices from last year.
ICYMI:
January 19: FEMA overhauls disaster assistance program as climate crisis fuels more destructive extreme weather
FEMA has announced significant changes to its response to natural disasters, aiming to address criticisms of delays and inequities in assistance.
The measures, effective from March 22, include providing immediate $750 payments per person affected by extreme weather events such as storms, hurricanes, fires, and tornadoes.
FEMA Administrator Deanne Criswell emphasized the need for a faster and streamlined assistance program due to the increasing frequency and severity of extreme weather events driven by the climate crisis.
The overhaul eliminates hurdles for survivors to access aid, expands eligibility for one-time $750 payments, establishes a fund for immediate housing, and removes requirements for Small Business Administration loans before receiving funds.
FEMA also plans to simplify the appeals process and introduce user-friendly websites. The changes respond to the growing impact of the human-caused climate crisis on disaster frequency and severity.
Funding for these programs will be sourced from FEMA's disaster relief fund, which faced challenges in 2023 amid a surge in billion-dollar disasters.
Last year alone, the US experienced 28 such disasters, including wildfires in Maui and historic floods in New England.
For Fun:
January 19: Japan's SLIM moon craft short on power after successful lunar landing
Japan's Smart Lander for Investigating Moon (SLIM) successfully landed on the moon, making Japan the fifth country to achieve a soft landing on the lunar surface.
However, the mission faced challenges as its solar panels were unable to generate electricity, potentially due to incorrect angling.
The Japan Aerospace Exploration Agency (JAXA) prioritized data transfer as the probe relied on its battery, lasting only "a few hours."
JAXA opted for a cautious approach, maintaining the status quo and hoping a change in the sunlight's angle would restore the solar panels' functionality.
Despite the setback, SLIM aimed for a precision landing within 100 meters of its target, showcasing technology for future exploration of moon poles.
Japan, looking to expand its role in space, has faced recent setbacks in rocket development. The success of SLIM adds to Japan's efforts in space exploration, with plans to collaborate with the United States and send an astronaut to the moon as part of NASA's Artemis program.