4-Point Economic Rescue Plan and Russian Invasion of Ukraine
Tax Policy:
February 23: Lawmakers want to close ‘revolving door’ between big accounting firms and Treasury, IRS
Sen. Elizabeth Warren, D-Massachusetts, and Rep. Pramila Jayapal, D-Washington, have sent a letter to the Treasury Department's acting inspector general and the Treasury Inspector General for Tax Administration asking them to open an investigation into what they call a "Revolving door" between the five largest accounting firms and the upper echelons of the Treasury Department and Internal Revenue Service. The letter comes in response to an article last September in The New York Times that described how some attorneys at the higher levels of the IRS and the Treasury Department came from the Big Four accounting firms - PwC, Deloitte, KPMG, and EY - as well as RSM US, who helped them draft tax regulations.
"As Acting Treasury Inspector General and Treasury Inspector General for Tax Administration, you each already have the statutory power and responsibility to investigate allegations of misconduct with respect to the administration of programs at the Treasury Department and the IRS, including through access to any relevant records and subpoena power," Warren and Jayapal wrote in a letter last Friday that was released Tuesday.
"The questions raised by giant accounting firms' use of the revolving door to benefit their clients falls squarely within your missions to 'promote economy, efficiency, and effectiveness and 'prevent and detect fraud and abuse' in the programs and operations of the Treasury Department and IRS." Sen. Elizabeth Warren, D-Mass.Daniel Acker/Bloomberg They also released new results from their own investigation into this behavior by the accounting firms, the Treasury Department, and the IRS after they sent letters after the article appeared last year.
In response to their inquiry, the accounting firms confirmed that since 2001, at least 24 of their employees left to take senior tax-policy positions in the federal government, including at Treasury and IRS, and returned to their firms after government work, often receiving large promotions and raises.
"Collectively, the five firms did tell us that, since January 1, 2001, at least 24 employees left their companies to take tax-policy positions in the federal government and returned to the companies afterward, with many receiving promotions, raises, or both upon their return," they wrote.
They called on the inspectors general to open inquiries into these practices and asked them to investigate the extent to which accounting firms and their clients are taking advantage of the "Revolving door" and to examine how effective the ethics policies and codes of conduct at the Treasury, the IRS and accounting firms are at preventing potential conflicts of interest.
Upcoming Policy News:
February 28: In State of the Union, Biden Will Focus on Economy and Global Response to Russia
President Biden will use his first State of the Union address on Tuesday to claim credit for a robust economy and a unified global response to Russia's invasion of Ukraine, even as he acknowledges the pain of inflation and the struggle between "Democracy and autocracy" around the world, administration officials said on Monday.
The war in Europe that erupted last week has forced the White House to ensure that Mr. Biden's address "Reflects a moment in time," as Jen Psaki, the press secretary, put it Monday afternoon. White House officials and their allies on Capitol Hill fear they could lose control of both chambers if Mr. Biden is unable to turn those numbers around.
Mr. Biden will urge Congress to embrace parts of his Build Back Better legislation, which passed in the House last year but stalled in the Senate amid opposition from two key moderate Democrats. Mr. Biden will urge Congress to pass legislation, approved by the House in December, to increase the Federal Maritime Commission's oversight of the shipping industry.
While the White House is working on a detailed coronavirus response strategy for the next phase of the pandemic, Mr. Biden is not likely to unveil it during his speech.
A White House official, speaking on the condition of anonymity to preview the president's remarks, said Mr. Biden would "Highlight that the country has made tremendous progress" over the past 13 months, and remind Americans that the nation has tools - including vaccines and treatments - to prevent severe disease and to treat those who do get sick.
Build Back Better Act/Spending Bill:
February 28: Biden to Shift From Build Back Better Bill to 4-Point Economic Rescue Plan
U.S. President Joe Biden will shift emphasis away from his Build Back Better spending plan when he delivers his State of the Union address on Tuesday, focusing instead on a four-point plan to save the U.S. economy, administration officials said.
"It's about the ideas. It's about lowering costs for families." Dominating the news is Russia's invasion of Ukraine, a crisis that has redirected Biden's attention from the administration's effort to revive his domestic economic agenda ahead of the Nov. 8 congressional elections.
With his approval ratings wilting, Biden is retooling his push for broad tax-and-spending changes in a new way. Manchin's opposition tanked a package of Biden economic reforms that were aimed at working women and families, paring down the country's massive income inequality and meeting climate goals.
Biden's speech will call for many of the reforms on housing, education, and climate to be passed under the rubric of a four-point plan: moving goods cheaper and faster; reducing everyday costs; promoting competition; and eliminating barriers to jobs. Biden will commit to a number of initiatives related to his $1 trillion bipartisan infrastructure bill, including repairing 65,000 miles of roads and 1,500 bridges. Rising costs have threatened the economic recovery from the coronavirus pandemic and undermined Biden's favorability with voters as a steward of the economy.
Economic News/Policy:
February 25: Russian Invasion Of Ukraine Could Send Surging U.S. Economy On A Wild Ride
A few weeks ago, the coronavirus's fading omicron variant, falling gas prices, and a newly buoyant stock market set the table for what many felt could be a surging U.S. economy in 2022. But those rosy scenarios are suddenly in doubt, as rampant geopolitical uncertainty has helped drive up energy prices and send global markets on a roller-coaster ride.
President Biden has said he would consider measures to blunt the impact of rising oil prices on Americans, including the sale of more oil from the Strategic Petroleum Reserve. He warned energy companies not to opportunistically jack up prices while acknowledging that the economic consequences of Russia's invasion of Ukraine would be felt by Americans.
The price of Brent crude oil, the global benchmark, jumped about 8 percent to more than $101 a barrel on Thursday - the first time it's been in the triple digits since 2014 - while U.S. oil spiked 8.3 percent to $99.70.
Average prices at the pump reached $3.54 per gallon on Thursday, almost a dollar more than they were at the same time last year, according to AAA. Benchmark prices of other exports from Russia and Ukraine, such as wheat and corn, climbed to multiyear highs.
For many Americans, those price increases are piling onto inflation that has already skyrocketed to 40-year highs. Inflation has proved to be a key litmus test for how Americans perceive the economy, with energy and gas prices as a major factor.
February 25: Fed’s Preferred Inflation Measure Reaches Fastest Pace Since 1983
The Federal Reserve's preferred measure of inflation hit a new 38-year high in January, as strong consumer demand and pandemic-related supply constraints propelled price gains.
The Commerce Department's personal-consumption-expenditures index measure of core inflation, which excludes volatile food and energy costs, rose 5.2% in January from a year ago, up from 4.9% in December.
That marks the sharpest 12-month increase since April 1983.
February 25: A Key Inflation Gauge Is Still Rising, and War Could Make It Worse
The data, released on Friday by the Commerce Department, was a fresh reminder that inflation remains stubbornly high as Russia's invasion of Ukraine sends oil and other commodity prices higher and promises to continue to boost inflation.
Rapid price increases have hit a wide array of products and services, including used cars, beef, chicken, restaurant meals, and home furnishings, and several trends risk keeping inflation elevated.
Stock prices rose on Friday as traders pared back expectations that the Federal Open Market Committee will make a large, half-percentage-point rate increase in March in an effort to decisively tamp down inflation.
Rising energy prices in the 1970s helped exacerbate inflation, causing rapid price increases to become a lasting feature of the economy, one that faded only after a painful response from the Fed.
The central bank pushed interest rates - and unemployment - to double digits to bring price increases to heel during what is now known as the Great Inflation. Annual inflation should start to slow down mechanically sometime in the coming months, as prices are measured against stronger readings from last spring when inflation first started to pick up.
While the Fed has primary responsibility for controlling inflation by guiding economic demand, the White House is trying to roll out policies to help supply catch up and has pledged to do what it can to keep oil and gas prices from rising to untenable levels during the Russian conflict.
February 25: Inflation held firm in January as omicron raged
Prices for consumer goods rose 0.6 percent in January and 6.1 percent in the preceding 12 months, according to data released Friday by the Commerce Department. The PCE index without food and energy prices rose 0.5 percent in January and 5.2 percent during the year.
"Consumers were in a spending mood in January despite Omicron and the highest inflation in four decades. Omicron led US consumers to pare back their spending on high-contact services, but this was largely offset by more purchases of durable goods, especially autos," wrote Lydia Boussour of Oxford Economics in a Friday analysis.
Personal consumption expenditures grew 2.1 percent last month after falling 0.8 percent in December, and by 1.5 percent when adjusted for inflation.
The takeaway: The steady march of inflation and a likely jump in energy prices driven by the Russian invasion of Ukraine will keep the Federal Reserve on track to raise interest rates next month.
The Biden administration will sanction the Russian President and other top officials in Moscow in response to the Russian invasion of Ukraine, the White House press secretary confirmed Friday.
Biden announced Tuesday sanctions on multiple Russian financial institutions and Russian oligarchs.
For Fun:
February 28: Scientists propose Tyrannosaurus had three species, not just 'rex'
A group of researchers is proposing that Tyrannosaurus, the most famous of all dinosaurs and the ultimate apex predator, actually includes three species and not just the single T. rex, based on thighbone and tooth variations among dozens of its fossils. T. rex, meaning "Tyrant lizard king," has been the sole species of the genus Tyrannosaurus recognized since the dinosaur was first described in 1905.
A team of three researchers led by Baltimore-based independent paleontologist and paleoartist Gregory Paul on Monday said variations they spotted in an examination of about three dozen Tyrannosaurus fossils warranted the recognition of two additional species: T. imperator, meaning "Tyrant lizard emperor," and T. Regina, meaning "Tyrant lizard queen."
"After over a century of all specimens being placed into one species without the issue being carefully examined, the first and only analysis finds that the variation in Tyrannosaurus is beyond the norms for dinosaurs, and is distributed over time in a manner that indicates that Darwinian speciation from one to two new species had occurred before the final dinosaur extinction cut off further evolution," Paul said.
"It's hard to define a species, even for animals today, and these fossils have no genetic evidence that can test whether there were truly separate populations. Until I see much stronger evidence, these are all still T. rex to me, and that's what I'll be calling them," Brusatte added.
The scale of the differences among the three proposed Tyrannosaurus species, Paul said, is akin to the differences between a lion - scientific name Panthera leo - and a tiger, scientific name Panthera tigris. Paleontologist Thomas Carr of Carthage College in Wisconsin, whose 2020 study of variation in T. rex found no evidence of multiple species, also differed with the new study.