President Biden doubled down on big spending and higher taxes.Credit…Pool photo by Melina Mara/EPA, via Shutterstock
The next 100 days
Today is President Biden’s 100th day in office, and yesterday he delivered his first address to a joint session of Congress. In his speech, he laid out an agenda that, The Times’s Peter Baker writes, represents “a fundamental reorientation of the role of government not seen since the days of Lyndon B. Johnson’s Great Society and Roosevelt’s New Deal.” The centerpiece of his address was a plan for some $4 trillion in spending, split into two bills, on top of the $1.9 billion in economic aid already passed earlier in his term.
“Doing nothing is not an option. Look, we can’t be so busy competing with one another that we forget the competition that we have with the rest of the world.”
Although the Democrats’ narrow control of Congress means that they can pass spending bills without Republican support, they also need to keep their own group united. Even before the speech, Biden faced a skeptic in Senator Joe Manchin, the moderate West Virginia Democrat who is a key vote in the upper chamber. The cost of the president’s plans “makes me uncomfortable,” Manchin said. Senator Mark Kelly, the recently elected Democrat from Arizona, added, “We’ve got to get back to managing the size of our debt compared to the size of our economy.”
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For their part, Republicans all but rejected the premise of the president’s plans. Senator Tim Scott, the South Carolina Republican who gave his party’s official response, put it bluntly: “Our best future will not come from Washington schemes or socialist dreams,” he said, accusing Biden of abandoning compromise.
“There is simply no reason why the blades for wind turbines can’t be built in Pittsburgh instead of Beijing.”
Biden said that bolstering America’s international competitiveness is a major reason for his ambitious spending plans, invoking China specifically as the country’s biggest rival. In a hawkish tone, he dismissed the belief that he ascribed to President Xi Jinping that “democracy can’t compete in the 21st century with autocracies, because it takes too long to get consensus.” And by calling out green infrastructure as crucial to competing with China, he also made a patriotic pitch for climate-linked spending as a way to “buy American products, made in America, to create American jobs” in fast-growing sectors like electric vehicles, batteries and renewable energy.
“I think you should be able to become a billionaire or a millionaire. But pay your fair share.”
Biden made clear he wants to pay for his ambitious plans by taxing the wealthy, including through higher income and capital gains levies. But this met with a mixed reaction even from fellow Democrats: Manchin called the proposed capital gains hike “a heavy lift,” while others, like Senator Jon Tester of Montana, suggested a mix of higher taxes and deficit spending.
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The private equity and hedge fund industries are pushing back against ending the carried-interest tax loophole, arguing that Biden should focus on promoting private investment instead of taxing it.
Here’s how to spend $4 trillion: The Upshot team compiled a handy pie chart that shows the scale of all the initiatives in Biden’s proposed spending plans, from tax credits to universal prekindergarten, airport upgrades and broadband rollouts. (Be sure to follow the link to see the graphic in its full glory.) As lawmakers pick this over in the next 100 days and beyond, the resulting pie is likely to look a lot different than it does today.
Read the full transcript of Biden’s speech, and The Times’s fact check and analysis.
HERE’S WHAT’S HAPPENING
The Fed leaves interest rates unchanged as the economy begins to heal. The central bank’s chairman, Jay Powell, said he wanted to see more progress before he thinks about lifting interest rates and slowing repurchases of government bonds.
Apple and Facebook join the parade of stellar tech earnings reports. Apple more than doubled its first-quarter profits, as iPhone sales boomed. And Facebook reported similar gains as its online ad business grew during the pandemic, while its user base grew to 3.5 billion. (Facebook’s ad sales may suffer from new privacy features rolled out by Apple, however.) Amazon rounds out the Big Tech earnings bonanza later today.
The S.E.C.’s new enforcement chief resigns unexpectedly. Days into her new job, Alex Oh, a former partner at Paul, Weiss, stepped down after a federal court ruling involving one of her former clients, Exxon Mobil. In a case involving claims of human rights abuses in Indonesia, the presiding judge rebuked Exxon’s legal team for derogatory comments about opposing counsel.
Endeavor will finally go public. The entertainment giant co-founded by Ari Emanuel, which owns the WME talent agency and the UFC mixed martial arts league, raised $511 million in its I.P.O. at a $10 billion valuation, the top of its expected price range. Its successful offering comes two years after it called off an I.P.O. amid a lukewarm reception from investors.
Verizon considers selling its old-guard internet media business. The telecom giant is exploring the sale of assets like AOL and Yahoo, according to The Wall Street Journal. Potential buyers include Apollo Global Management, and the WSJ reports that a deal could be valued at up to $5 billion. Verizon spent $9 billion buying the once-dominant web giants.
A Bitcoin E.T.F. dream deferred
For many cryptocurrency supporters and investors, U.S. regulatory approval of a Bitcoin exchange-traded fund represents the holy grail. It would allow the crypto-curious to get exposure to Bitcoin without having to buy the tokens themselves, signifying that digital assets are really, truly mainstream. But it’s not meant to be — yet. Yesterday, the S.E.C. delayed a decision on a Bitcoin E.T.F. proposal from the investment manager VanEck, saying it needs more time but offering no other explanation.
Delay is not denial, and it may be a good sign,Todd Cipperman, the founder of the compliance services firm CCS, told DealBook. When considering the concept of a crypto E.T.F. in 2018, the S.E.C. raised questions about investor protection issues and put a “wet blanket on the whole idea,” he said. Now crypto is much bigger, and Gary Gensler, who taught courses about blockchain technology at M.I.T., is chair of the S.E.C. His expertise doesn’t guarantee success for crypto E.T.F.s, but it will be easier for an expert in the field to approve them, Cipperman suggested.
The deadline can be extended again. The S.E.C. gave itself until mid-June, with the option to take more time, but it must decide before year’s end. The regulator has rejected every proposal to date, starting with the first Bitcoin E.T.F. pitch in 2013, presented by the Winklevoss twins, which was eventually rejected in 2017 (and again in 2018). There are several E.T.F. proposals on the table now, including one from the traditional finance giant Fidelity.
Canada, meanwhile, is approving all kinds of crypto E.T.F.s, after allowing its first Bitcoin E.T.F. in February. Hester Peirce, an S.E.C. commissioner and vocal crypto champion, told DealBook earlier this month that she has been “mystified” by her agency’s response to some prior applications, which met the standards in her view. With more players now engaging in the process, approval could be looming — eventually.
“This isn’t an opportunistic profit-taking by companies; this is a reset of the market.”
— Greg Portell, a partner at the consulting firm Kearney, on the coming price hikes for a range of products, from diapers to cereal to toilet paper.
Watch this space
Michael Lynton, the chairman of Snap and Warner Music (and former C.E.O. of Sony Entertainment), quietly put together a venture capital firm, 25madison, that has largely remained under the radar for the past three years. However, today it is likely to start getting a lot more attention: Apollo Global Management and the entertainment giant Endeavor will back the firm with new funding.
Lynton created the firm with Steven Price, a longtime private equity investor in media; Matt Fremont-Smith, a former Goldman Sachs partner; and Gary Ginsburg,the former head of communications for SoftBank, Time Warner and News Corp., among others.
Given their connections and track record, we expect to be hearing more from them soon.
A diversity and inclusion “crisis” at companies
Money can’t buy happiness, but pay and promotion disparities can make employees dissatisfied and give them a negative view of company culture. That is why Andrew Chamberlain, the chief economist at the job website Glassdoor, will argue today at a Congressional hearing on pay equity that businesses can’t improve their workplace cultures, especially when it comes to diversity and inclusion, while ignoring the economics.
The state of companies’ efforts to be more inclusive depends on who you ask, according to a Glassdoor survey released today. In the poll of more than 12,000 employees across industries, Black workers rated their companies well below the overall average on diversity and inclusion efforts, signifying perhaps that talk is cheap and that perceptions reflect the realities of racial pay gaps.
“This study is a flashing warning light,” Chamberlain said in a statement to DealBook. Disagreement among employees about company culture signifies a “crisis” in workplace inclusivity, he added. “These gaps in workplace culture are related to pay gaps.”
THE SPEED READ
Deals
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Big Chinese investors, including the country’s sovereign wealth fund and state-owned energy companies, are reportedly in talks to buy a stake in Saudi Aramco. (Reuters)
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Lionsgate is said to have sought to buy Showtime from ViacomCBS to combine it with its Starz channel, but was rejected. (Insider)
Politics and policy
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A federal court may consider a lawsuit by Amazon claiming that President Donald Trump interfered in the Pentagon’s $10 billion cloud-computing contract, which went to Microsoft. (NYT)
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New York City is suing Chipotle for $150 million, accusing the fast-food giant of “complete disregard” of a law governing workweeks. (NYT)
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Chinese internet giants are undermining one another amid pressure from regulators, potentially bolstering Beijing’s grip over their industry. (NYT)
Tech
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Amazon will raise the pay of 500,000 warehouse and delivery workers between 50 cents and $3 an hour, amid scrutiny into its labor practices. (NYT)
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Basecamp, the software company that recently banned political discussions in the workplace, is offering severance packages to employees who disagree with the new policy. (Insider)
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Tesla has angered rooftop solar panel customers with big price increases, its latest misstep in a business it once dominated. (NYT)
Best of the rest
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Is this Jamie Dimon’s secret Instagram account? (Trashberg)
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“Want a Peek at Post-Covid Life? Check Out Gibraltar” (WSJ)
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Chuck Strum, a longtime New York Times editor known for his unflappability (and who gave some of us much help and guidance over the years), died on Tuesday. He was 73. (NYT)
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