Government Funding Bills, Falling Gas Prices, Big Tech

Tax Policy:

July 7: Democrats Propose Raising Taxes on Some High Earners to Bolster Medicare

Senate Democrats will push to raise taxes on some high-earning Americans and steer the money to improving the solvency of Medicare, according to officials briefed on the plan, as they cobble together a modest version of President Biden's stalled tax and spending package. In December, Mr. Manchin torpedoed efforts to pass Mr. Biden's $2.2 trillion social safety net, climate, and tax package because of concerns over its cost and impact on the economy at a time of rising inflation.

Mr. Manchin has repeatedly said such legislation should focus on tax reform and drug pricing, as well as efforts to lower the national debt. The prescription drug legislation has been submitted to the parliamentarian, and Democrats plan to submit the tax increase and Medicare piece in the coming days.

The Democrats' plan would extend an existing 3.8 percent net investment income tax to so-called pass-through income, earned from businesses that distribute profits to their owners.

While Mr. Manchin has said he would support additional tax increases, any changes to the tax code must also win the support of Senator Kyrsten Sinema of Arizona, a centrist who opposed many of her party's initial tax proposals. The heart of the climate plan is expected to be approximately $300 billion in tax credits to expand the development of clean energy like wind, solar and battery storage, a significantly smaller plan that reflects concessions to Mr. Manchin, according to several people familiar with the negotiations.

July 7: IRS audited former FBI directors Comey and McCabe

The audit of Comey's 2017 taxes under the IRS's National Research Program began in 2019, after Trump appointed Charles Rettig as IRS commissioner, while the audit of McCabe's 2019 taxes began in 2021, during the Biden administration. The audit of Comey and his wife Patrice's taxes lasted for over a year and cost the couple $5,000 in fees to their accountant, who needed to drive for hours to meet with an IRS agent face to face.

"I don't know whether anything improper happened, but after learning how unusual this audit was and how badly Trump wanted to hurt me during that time, it made sense to try to figure it out," Comey said in a statement to the Times.

"Maybe it's a coincidence or maybe somebody misused the IRS to get at a political enemy. Given the role Trump wants to continue to play in our country, we should know the answer to that question." After the audit concluded, the Comeys received a $347 tax refund from the IRS. Both McCabe and Comey were surprised to learn from the Times that both of them had been audited by the IRS. The McCabe audit found that he and his wife Jill owed a small sum of money to the IRS, and they paid it.

"Audits are handled by career civil servants, and the IRS has strong safeguards in place to protect the exam process - and against politically motivated audits. It's ludicrous and untrue to suggest that senior IRS officials somehow targeted specific individuals for National Research Program audits. The IRS has referred the matter to the Treasury Inspector General for Tax Administration for review. IRS Commissioner Rettig personally reached out to TIGTA after receiving a press inquiry." The IRS denied that Rettig had any hand in the audits, according to the Washington Post, which also reported on the Comey and McCabe audits.

"As IRS commissioner, he has never been in contact with the White House - in either administration - on IRS enforcement or individual taxpayer matters," said the IRS. "He has been committed to running the IRS in an impartial, unbiased manner from top to bottom." However, Rep. Bill Pascrell, D-New Jersey, chairman of the House Ways and Means Oversight Subcommittee, reiterated earlier demands that Rettig is fired, although Rettig's term as IRS commissioner will end in November.

"The recent news report that not just one, but two of former President Trump's foes were subject to rare, invasive audits under his IRS is an unlikely coincidence, and reeks of political targeting," Neal said in a statement.

Reconciliation Bill:

July 11: Schumer making a last-ditch bid to pass reconciliation bill this summer

Senate Majority Leader Charles Schumer is making a last-ditch effort to pass a budget reconciliation bill during the July and early August work period. Sam Runyon, a spokesperson for Manchin, said her boss is glad that Democrats have agreed on a prescription drug proposal that they could pass with a simple majority vote under special budget rules.

The Manchin aide waved off speculation that Schumer and Manchin are close to a deal on a broader reconciliation package that would include bold proposals to tackle global warming, a top priority of Sen. Sheldon Whitehouse and other Senate Democrats. One big question is whether Schumer and Manchin can agree to a package of provisions to fight climate change, including clean energy manufacturing tax credits, a fee on methane emissions, and a fee on carbon-intensive imports, such as steel.

Freed, of Third Way, said Schumer and Manchin need to work out how much money to raise for climate programs and how long to set tax breaks for renewable energy technologies.

Another obstacle is getting a deal on a broader tax reform proposal along the lines of what the White House negotiated with Manchin and fellow centrist Sen. Kyrsten Sinema last year. Senate Minority Leader Mitch McConnell threatened to hold up the bill if Democrats move ahead with plans to pass a budget reconciliation bill without any Republican support.

July 11: House to vote on sweeping government funding bills next week

The House will vote next week on more than half a trillion dollars in proposed spending to keep the government running as leaders work to pass their annual funding bills before lawmakers are set for recess next month. The lower chamber is scheduled to take up six of its dozen annual spending bills next week to fund a list of agencies for fiscal 2023, including the departments of Housing and Urban Development, Transportation, Agriculture, Energy, and Veterans Affairs as well as the Food and Drug Administration.

It's unclear when the remaining six bills will be brought up for a vote as leaders lock down timing, but House Majority Leader Steny Hoyer said last month that the plan is to "Put bills on the floor in July.".

The legislation, which House negotiators spent the last few weeks marking up before sending out of committee, is expected to pass the Democratic-led House.

The bills - approved largely along party lines in committee - will likely look different after House and Senate leaders hash out an overall compromise on fiscal 2023 funding in the months ahead. In a statement on Monday, House Appropriations Committee Chairwoman Rosa DeLauro touted the bills as measures that would "Help the middle class, working families, small businesses, and the vulnerable who work hard."

The Senate has yet to introduce any of its annual spending bills for fiscal 2023 as leaders struggle to agree on top-line numbers and defense spending, raising questions about when Congress will finish its messy appropriations work this year - if it does. If lawmakers are unable to pass their appropriations bills by the cutoff date in late September, when current government funding is set to lapse, Congress can pass a continuing resolution allowing the government to temporarily remain funded at the prior year's fiscal levels to buy time for a deal.

Economic News/Policy: 

July 10: Economy Week Ahead: Inflation and Retail Sales in Focus

Tuesday: The National Federation of Independent Business will release data from its monthly survey that gauges optimism among small businesses. Economists surveyed by The Wall Street Journal expect to see that the survey’s index declined slightly in June. The survey’s reading on near-term expectations for future business conditions fell in May to its lowest point on record.

Wednesday: The U.S. consumer-price index for June will offer a key inflation reading before the Federal Reserve’s July 26-27 meeting. Economists surveyed estimated that inflation picked up in June, both from the month before and from June of last year. The CPI rose 8.6% in the year ended in May, the fastest pace in more than four decades.

The Fed’s periodic compilation of business anecdotes from around the country, known as the Beige Book, will offer details about the latest effects of high inflation, labor-market tightness, and uncertainty regarding the economy through the early summer.

Figures to be released by the U.K.’s statistics agency are expected to show that the economy contracted for a third straight month in May, underlining the blow the economy has suffered as surging energy prices weaken household spending power.

Thursday: New applications for unemployment benefits, a proxy for layoffs, have trended higher in recent weeks, hitting the highest level since January, but remain near historic lows. Economists expect the Labor Department to report a slight decrease for the week ended July 9.

The Labor Department’s producer-price index, which measures what suppliers are charging businesses and other customers, is forecast to have increased 0.8% in June from the prior month, the same pace as in May.

Friday: Economists expect the Commerce Department to report that Americans’ retail spending rose in June, after declining in May. U.S. industrial production—which measures factory, mining, and utility output—is estimated to have grown more slowly in June than in May.

The University of Michigan will publish an initial reading of its consumer survey for July. Economists expect the report to show that there was a slight uptick in consumer sentiment in July from June’s final reading when it fell to its lowest point on record.

Economists expect the Commerce Department to report that U.S. business inventories increased in May at the same pace as the prior month.

China’s National Bureau of Statistics is set to release second-quarter gross domestic product data. Economists polled by The Wall Street Journal expect to see 0.9% growth from a year earlier, a slower pace than the 4.8% growth in the first quarter of the year.

Retail sales in China, a key gauge of consumption, are estimated to have fallen 1% in June from a year earlier, narrowing from the 6.7% loss in May.

Industrial production in China is forecast to have increased 4.4% last month, after a 0.7% advance in May.

Fixed-asset investment in China is estimated to have risen 6% in the first half of the year, compared with a 6.2% increase in the January-to-May period, according to a poll of economists.

July 8: U.S. Economy Added 372,000 Jobs in June, Defying Slowdown Fears

Strong demand for workers is also evident in the 11.3 million jobs that employers had open in May, a number that remains close to record highs and leaves nearly two jobs available for every person looking for work. The Labor Department's broadest measure of labor force underutilization - which includes part-time workers who want more hours and people who have been discouraged from job hunting - sank to its lowest rate since the household survey took its current form in 1994, a sign that employers are maximizing their existing workforce as hiring remains difficult.

The labor force remains constrained by aging demographics, low levels of immigration, and barriers to work - such as the availability of care for children and older family members - that keep many people on the sidelines.

In one concerning signal, the share of people in the prime of their careers - from 25 to 54 years old - who are either working or looking for work dropped in June to 82.3 percent from 82.6 percent, well below the prepandemic high of 83.1 percent. The report contained signs that Covid-19 is still a lingering worry, with 2.1 million people saying they couldn't work in June because their employer closed or lost business as a result of the pandemic, compared with 1.8 million the previous month.

As inflation remains high, some people may be retreating from the job market simply because it's too expensive to keep working. "A lot of our customers are still working off backlogs, and no new work is coming in the front door," Mr. Wernick said.

July 8: Economy gives Federal Reserve little reason to halt rate hikes

The economy is giving the Federal Reserve little reason to shift its strategy of raising interest rates to lower inflation. A small move in the direction of lower inflation is unlikely to convince Fed officials to ease up on rate hikes and risk losing their chance to bring down prices without triggering a recession - a careful balancing act known as a "Soft landing."

After holding off on rate hikes as inflation rose in 2021, the Fed has sprinted to make up for its mistakes with a series of rapid increases over the past four months. Fed Chairman Jerome Powell and other top Fed officials say the bank will not stop raising rates until they see signs of inflation moving steadily toward their annual target of 2 percent.

Experts have pointed to signs inflation is slowing, as the effect of temporary disruptions, such as supply chain issues and the coronavirus pandemic, have eased the economy.

While the Fed often runs point when it comes to fighting inflation, Sahm and other economists say Congress and the White House could be doing more to provide help, noting the central bank has "No tool to deal with" high energy and food inflation squeezing consumer budgets. Though higher Fed rates are likely on the way, the resilience of the economy so far may give the bank more room to ramp up pressure on inflation.

July 6: Corporations’ thirst for profits isn’t to blame for inflation, economists say

There's growing agreement among economists that companies have become more powerful and more profitable over the past several decades - a fact they say pokes a hole in some lawmakers' arguments that greed for profits is what's behind spiking inflation.

The logic among lawmakers about the causes of inflation falls largely along party lines. Most Republicans blame inflation on fiscal stimulus sent out during the early days of the pandemic.

"Democrats' $2 trillion in so-called COVID 'stimulus' spending fueled inflation long before Russia invaded Ukraine," House Ways and Means Committee ranking member Kevin Brady said in a Thursday statement.

Most Democrats - and a few Republicans - say inflation is due to a lack of competition and an out-of-control drive for profits among corporations.

"The CEOs of some of the biggest companies have been bragging to their investors that inflation has created a terrific opportunity for them to raise prices and boost profits," Sen. Elizabeth Warren said in a statement earlier this year.

Inflation since 1980 has remained mostly at low levels, and experts say that the notion higher profits would have suddenly contributed to spiking inflation following the pandemic is a tough pill to swallow.

Energy and Environmental Policy/News:

July 9: Fears of Another Gas Shock Drive Biden to Seek Price Cap on Russian Oil

While Mr. Biden pushed Europe to cut off Russian oil as punishment for its invasion of Ukraine, some forecasters, along with top economic aides to the president, now fear that such policies could result in huge quantities of Russian oil - which accounts for just under a tenth of the world's supply - suddenly taken off the global market. The potential for another oil shock to puncture the global economy, and perhaps Mr. Biden's re-election prospects, has driven the administration's attempts to persuade government and business leaders around the world to sign on to a global price cap on Russian oil.

Administration officials say privately that there are signs in oil markets that even in its infant stages, the cap proposal is already helping to reassure traders that the world could avoid abruptly losing millions of barrels of Russian oil per day at the year's end.

In some ways, the price-cap proposal is an acknowledgment that those penalties have not worked as intended: Russia has continued to sell oil at elevated prices - even accounting for the discounts it is giving to buyers like India and China, which did not join in the oil sanctions - while Western drivers pay a premium.

At its core, the cap proposal is an attempt to use the West's influence over Russian oil shipments to dictate the price Moscow can command for its oil exports. Russia could still ship its oil with Western backing if that oil is sold for no more than a price set by the cap. Negotiators are working to set that price, which would be high enough to ensure Moscow would still profit off its oil sales but lower than the price it is commanding now, of about $30 below the global price.

July 6: the US is on ‘cusp’ of falling gas prices

Gasoline futures fell more than 10 percent Tuesday and are down more than 22 percent since June, raising hopes that the high price of gas across the country might soon fall. "We're on the cusp of seeing more savings," said Patrick De Haan, head of petroleum analysis at gas price tracking site GasBuddy.

Any drop in gasoline prices may also provide some political respite for the Biden administration since even though presidents have little control over gasoline prices, they still face blame from voters and their political foes.

Earlier Wednesday, Brent prices briefly dipped below $100, the first time since April prices have been under $100 for the commodity.

Marianne Kah, an adjunct senior research scholar at Columbia University's Center on Global Energy Policy, said she expects the current drop in crude oil prices to translate to about a 12 percent decline - or about 60 cents - in gasoline prices from their peak level last month.

"I think you'll see gas prices come down," Phil Flynn, energy markets analyst with the PRICE Futures Group, said in an interview with The Hill.

The signs that inflation may have hit a peak and that prices could soon start falling across a range of sectors and categories are beginning to pile up, with commodity prices, in particular, taking a hit in the last few days.

ICYMI: 

July 10: As the BA.5 variant spreads, the risk of coronavirus reinfection grows

Antibodies from vaccines and previous coronavirus infections offer limited protection against BA.5, leading Topol to call it "The worst version of the virus that we've seen." Few people remain immunologically naive to the virus.

Many experts concerned about ongoing transmission have also pushed back against online fearmongering and apocalyptic warnings about the virus; people are not routinely getting infected every two or three weeks, Rasmussen said.

Vaccination remains an important, if still underused, a weapon against the virus - even if it's not that effective at stopping new infections. Vaccines are based on the original strain of the virus that emerged in Wuhan, China in late 2019.

"We are in a very difficult position about the choice of vaccine for the fall because we're dealing with a notoriously moving target," Anthony S. Fauci, President Biden's top adviser for the pandemic, told The Post in June, a few days before he, too, announced that he was sick with the virus.

It's also unclear if these new variants will alter the risk of a person contracting the long-duration symptoms generally known as "Long covid." The percentage of people with severely debilitating symptoms is probably between 1 and 5 percent - amounting to millions of people in this country, according to Harlan Krumholz, a Yale University professor of medicine.

July 7: Boris Johnson resigns as party leader

Moments after publicly announcing plans to step down as Prime Minister speculation is already swirling about who could replace Boris Johnson. Ben Wallace - The defense secretary and Russia critic tweeted Thursday that Johnson should go, but Wallace has not stepped down, citing an "Obligation to keep this country safe, no matter who is PM." When asked during a Washington Post Live event in May about polling that showed him as the "People's favorite" to replace Johnson, Wallace said: "I'm so uninterested in a pitch for leadership I doubt I'd want to be prime minister, but I am a politician, so you can read that answer as you'd like."

Jeremy Hunt - The former foreign and health minister was relegated to the backbenches of Parliament after he lost to Johnson in a 2019 bid to lead the Conservative Party.

Liz Truss - The foreign secretary has won applause for her handling of the Ukraine war and would be the Conservative Party's third female prime minister if she got the job, following in the footsteps of Theresa May and Margaret Thatcher.

Truss, who remains in office, reportedly cut short a working visit in Indonesia on Thursday to return to Britain and tweeted Johnson had "Made the right decision," stepping down.

Javid told Johnson and other lawmakers in Parliament on Wednesday that "At some point, we have to conclude that enough is enough. I believe that point is now."

Other names being touted for the premiership include the current chancellor, Nadhim Zahawi, recently fired minister and longtime Johnson frenemy Michael Gove, outspoken backbencher Tom Tugendhat, and Trade Minister Penny Mordaunt.

July 5: Battle over Big Tech bills goes down to the wire

Lobbying both for and against legislation to crack down on U.S. tech giants is intensifying as the Senate enters a critical month for the antitrust bills. In an effort to run out the clock, the big four tech firms and their Washington allies are warning Senate Democrats that their voters expect progress on other pressing issues entering November's elections.

“When we meet with them, we’re often talking about really basic things about how we’re being affected,” said Kate McInnis, senior public policy manager at the search engine DuckDuckGo. "Then we get to the bills and they often are very, very surprised and interested to learn how we and other tech companies like ours have been affected by Big Tech's encumbrances to competition and user choice."

Big Tech allies argue that the bills would harm data security and privacy, limit access to popular features such as Amazon Prime, constrain content moderation efforts and undermine U.S. competitiveness and national security by weakening the nation's tech giants.

A recent poll from the Coalition for App Fairness found that 79 percent of swing-state voters support the Open App Markets Act, and 68 percent said that Big Tech firms have too much power.

Sen. Amy Klobuchar, a top proponent of tech regulation, has said that both bills would win the support of 60 senators if they were to receive a floor vote. Dozens of Washington advocacy groups and think tanks that receive funding from tech giants, including liberal and conservative organizations, have spoken out against the antitrust bills.

For Fun: 

July 12: Far out: NASA space telescope’s 1st cosmic view goes deep

Our view of the universe just expanded: The first image from NASA's new space telescope unveiled Monday is brimming with galaxies and offers the deepest look of the cosmos ever captured.

The first image from the $10 billion James Webb Space Telescope is the farthest humanity has ever seen in both time and distance, closer to the dawn of time and the edge of the universe.

The "Deep field" image released during a brief White House event is filled with lots of stars, with massive galaxies in the foreground and faint and extremely distant galaxies peeking through here and there.

President Joe Biden marveled at the image that he said showed "The oldest documented light in the history of the universe from over 13 billion - let me say that again - 13 billion years ago. It's hard to fathom."

The pictures on tap include a view of a giant gaseous planet outside our solar system, two images of a nebula where stars are born and die in spectacular beauty, and an update of a classic image of five tightly clustered galaxies that dance around each other.

How far back past 13 billion years did that first image look? NASA didn't provide any estimate Monday.

Outside scientists said those calculations will take time, but they are fairly certain somewhere in the busy image is a galaxy older than humanity has ever seen, probably back to 500 million or 600 million years after the Big Bang."It takes a little bit of time to dig out those galaxies," University of California, Santa Cruz, astrophysicist Garth Illingworth said.

July 5: 76 million-year-old dinosaur skeleton to be auctioned in NYC

The fossilized skeleton of a T. rex relative that roamed the earth about 76 million years ago will be auctioned in New York this month, Sotheby's announced Tuesday.

The Gorgosaurus skeleton will highlight Sotheby's natural history auction on July 28, the auction house said.

It predated its relative the Tyrannosaurus rex by 10 million years. The specimen being sold was discovered in 2018 in the Judith River Formation near Havre, Montana, Sotheby's said. All of the other known Gorgosaurus skeletons are in museum collections, making this one the only specimen available for private ownership, the auction house said.

"In my career, I have had the privilege of handling and selling many exceptional and unique objects, but few can inspire wonder and capture imaginations quite like this unbelievable Gorgosaurus skeleton," Cassandra Hatton, Sotheby's global head of science and popular culture, said. Sotheby's presale estimate for the fossil is $5 million to $8 million.