Biden Ends Infrastructure Talks with Capito, Turns Focus to Bipartisan Group

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Vilsack comments on line-speed controversy | Senate clears ‘China competition’ bill

 


In Today’s Digital Newspaper


 

Market Focus:
• U.S. job openings reached record level this spring
• U.S. trade deficit narrowed in April from a record level in March
• Agriculture bucked overall trade trend in April
• World Bank upgraded its outlook for global growth this year

• Crypto prices slump as selloff picks up
• Global shipyards are flush with new orders
• Ag demand update

Rains for Northern Plains weigh on HRS wheat; corn and beans also under pressure
• ANEC expects a slowdown in Brazilian soybean exports this month
• Modest rise in French soft wheat stocks forecast
• Indian corn exports to Asian feedmakers on the rise
• China plans to rely more heavily on pork reserves to stabilize prices (see details below)
• JBS buys major Australian meat processor
• Poultry suppliers threaten to stop fattening chicks if BRF doesn’t raise prices
• Light cash cattle trade at mostly steady prices
• Strength building in CME lean hog index

Policy Focus:
• Biden personally ends infrastructure talks with Capito, starts new talks with others
• Senate approves $250 bill. bill to aid tech research amid rising competition from China

China Update:
• China’s producer prices rise at fastest pace in 13 years; soaring commodity prices
• China plans to rely more heavily on pork reserves to stabilize prices

Trade Policy:
Bloomberg: U.S., EU to end $18 billion tariff fight

Energy & Climate Change:
• CEO of hacked pipeline company apologizes
• National climate advisor McCarthy to host today’s oil-CEO summit  
• Unions press Biden on RFS mandate costs


Livestock, Food & Beverage Industry Update:
• Smithfield hog slaughter plant strike authorized
• Vilsack contradicts some reports, says no decision yet on appeal of line-speed ruling
• Vilsack: USDA may take second look at GIPSA, other regs to ensure fairness in ag markets


Coronavirus Update:
• Nearly 52% of Americans have gotten at least one Covid vaccine shot; Biden goal in doubt
• Millions of J&J Covid-19 vaccines at risk of expiring in June
• WTO TRIPS council agrees to text-based process to address Covid vaccine proposals

Politics & Elections:
• McAuliffe wins Democratic primary in Virginia governor's race
• New Jersey Republicans give gubernatorial nomination to Ciattarelli
• Florida Rep. Val Demings officially enters Senate race against Rubio

Congress:
• House panel to mark up Democrats’ $547 billion surface transportation bill
• EPA Administrator Michael Regan testifies before House panel today
• Senate panel vote on USDA counsel Thursday

Other Items of Note:
• IRS is investigating release of tax information of wealthy Americans
• Estate planners for wealthiest combing through Biden’s proposed tax increases
• Arkansas court alters dicamba deadline

 


MARKET FOCUS


 

Equities today: Global stock markets were mixed and mostly flat in overnight trading. U.S. stock indexes are pointed toward narrowly mixed openings. In Asia, the Shanghai Composite Index ticked up 0.3% by the close of trading, while Hong Kong’s Hang Seng Index edged down 0.1%. Japan’s Nikkei 225 slid 0.4%. European equities are under pressure in early action after opening lower. The Stoxx 600 was down 0.2% with most regional markets down 0.2% to 0.7%. Traders’ focus is on tomorrow’s Consumer Price Index report.

     U.S. equities yesterday: The Dow declined 30.42 points, 0.09%, at 34,599.82. The Nasdaq was up 32.19 points, 0.31%, at 13,924.91. The S&P 500 edged up 0.74 points, 0.02%, at 4,277.26.

     Stocks

On tap today:

     • Bank of Canada releases an interest-rate announcement at 10 a.m. ET.
     • U.S. wholesale inventories for April are expected to rise 0.8% from the prior month. (10 a.m. ET)
     • EPA budget: The Senate Appropriations Interior-Environment Subcommittee holds a hearing on the fiscal 2022 budget for the Environmental Protection Agency. EPA Administrator Michael Regan will testify.

U.S. job openings reached a record level this spring. Available jobs climbed to 9.3 million in April, the highest in records back to 2000, the Labor Department said. Open positions nearly matched the 9.8 million Americans who were unemployed and searching for work during the month. The rate at which workers quit their jobs, a sign of confidence in the labor market, also rose to a record high in April, and the rate at which workers were laid off fell to a record low.

     Job openings

U.S. trade deficit narrowed in April from a record level in March as disruptions in global supply chains and a slowdown in consumer spending contributed to a drop in imports. The deficit in trade of goods and services shrank by 8.2% to a seasonally adjusted $68.9 billion in April, the Commerce Department said, compared with the record $75 billion gap in March. Imports declined among goods affected by a shortage of semiconductors, including home appliances and automotive vehicles, parts and engines. Consumer demand for imported goods, including apparel and toys, slowed from a torrid pace in March, when Americans got the biggest lift from the latest round of government stimulus payments.

     Trade deficit

Agriculture bucked overall trade trend in April. While U.S. exports in general gained against imports during April, trimming the overall U.S. trade deficit compared with March, U.S. agricultural exports declined in April to $14.5 billion from $15.3 billion in March. Imports, however, held nearly steady at $14.4 billion after being at $14.6 billion in March. That left agriculture with a surplus of $189 million, down from $774 million in March. That brings cumulative U.S. agricultural exports so far in fiscal year (FY) 2021 to $107 billion against imports of $91 billion for a surplus of $15.7 billion.

     For FY 2021, USDA forecasts U.S. agricultural exports to total $164 billion against imports of $141.8 and result in a surplus of $22.2 billion.

     Comments: If USDA’s forecast is on the mark, U.S. agricultural exports would have to average just $11.4 billion for the five remaining months of FY 2021 and imports $10.1 billion. A decline of that degree imports would be somewhat surprising since the value of imports has not been that small since September 2017 while U.S. agricultural exports were under $11 billion for the April-July period in 2020.   

World Bank upgraded its outlook for global growth this year, predicting that Covid-19 vaccinations and massive government stimulus in rich countries will power the fastest worldwide expansion in nearly five decades. In its latest Global Economic Prospects report (link), out Tuesday, the 189-country agency forecasts that the world economy will grow 5.6% this year, up from the 4.1% it forecast in January. The global economy last year shrank 3.5% as the coronavirus pandemic disrupted trade and forced businesses to close and people to stay home. The projected expansion would make 2021 the fastest year of growth since 1973’s 6.6 percent.

     But the 2021 rebound will be uneven, the bank predicts, led by rich countries such as the U.S. that could afford to spend vast amounts of taxpayer money to support their economies: 90% of advanced economies are expected to return to pre-pandemic levels next year — measured by income per person — versus just a third of developing countries.

     The bank expects the U.S. economy to expand 6.8% in 2021, up from the 3.5% it forecast in January; the world’s biggest economy shrank 3.5% last year as Covid-19 brought economic activity to a near standstill in the spring. But an aggressive vaccine rollout, along with low interest rates and massive government spending revived the economy.

     China is forecast to grow 8.5% in 2021 after expanding just 2.3% last year.

     The 19 European countries that share the euro currency are collectively expected to 4.2%, reversing last year’s 6.6% drop. A

     Japan is forecast to post 2.9% growth this year after registering a 4.7% drop in economic output last year.

     World Bank outlook

Market perspectives:

     • Outside markets: The U.S. dollar index is slightly weaker as the euro and British pound are firmer against the greenback. The yield on the 10-year US Treasury note has weakened to trade under 1.5%, tracking a decline in global government bond yields. Gold and silver futures are lower ahead of US trading, with gold around $1,892 per troy ounce and silver around $27.70 per troy ounce.

     • Crude oil has remained in positive territory ahead of US government inventory data due later this morning. U.S. crude is trading around $70.35 per barrel and Brent around $72.60 per barrel. Futures were higher in Asian action, with U.S. crude up 39 cents at $70.44 per barrel while Brent crude was up 40 cents at $72.62 per barrel.

     • Crypto prices slump as selloff picks up; higher values today. Selling in bitcoin, ether and dogecoin accelerated Tuesday, with concerns about heightened government intervention adding to recent pressure on cryptocurrencies. Cryptocurrencies, which trade almost completely on momentum, fell following the Justice Department’s recovery of bitcoin from a fuel pipeline hack. Today most crypto prices are higher.

        Crypto prices

     • Global shipyards are flush with new orders, boosted by efforts by shipping lines to add capacity to meet resurgent consumer demand in Western economies, the Wall Street Journal reports (link). Orders for new container ships in the first five months of this year were nearly double the orders for all of both 2019 and 2020, according to London-based maritime data provider VesselsValue, with the biggest gains going to shipyards in South Korea and China. The order tally has been so strong that some yards have stopped giving quotes for new vessels and are trying to renegotiate existing orders as the price of steel plates used to build vessels has doubled since the end of 2020.

     Ship orders

     • Ag demand: Algeria bought between 420,000 MT and 500,000 MT of milling wheat from optional origins in an international tender. Jordan tendered to buy 120,000 MT of barley. Ethiopia issued a new tender to buy 400,000 MT of milling wheat; the tender is being undertaken in cooperation with United Nations agencies.

     • Weather update: Locally significant flash flooding expected to continue for portions of Arkansas and Mississippi today. Persistent heat for much of the Great Plains along with threats for severe thunderstorms across the northern High Plains into eastern Montana.

        Weather

Items in Pro Farmer's First Thing Today include:

Rains for Northern Plains weigh on HRS wheat; corn and beans also under pressure
• ANEC expects a slowdown in Brazilian soybean exports this month
• Modest rise in French soft wheat stocks forecast
• Indian corn exports to Asian feedmakers on the rise
• China plans to rely more heavily on pork reserves to stabilize prices (see details below)
• JBS buys major Australian meat processor
• Poultry suppliers threaten to stop fattening chicks if BRF doesn’t raise prices
• Light cash cattle trade at mostly steady prices
• Strength building in CME lean hog index

 


POLICY FOCUS


 

— Biden personally ends infrastructure talks with Capito, starts new talks with others. President Biden ended talks with a group of Republican senators on a big infrastructure package on Tuesday and started reaching out to senators from both parties in a new effort toward bipartisan compromise, setting a summer deadline for Congress to pass his top legislative priority.

     The president walked away from talks with lead Republican negotiator Sen. Shelley Moore Capito (R-W.Va.) after the two spoke Tuesday, but would welcome her in the new bipartisan group, according to an administrative official.  Meanwhile, Democrats are laying the groundwork to pass some or all of the ambitious package on their own.

     Next steps: Biden conferred Tuesday with House Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Chuck Schumer (D-N.Y.) about launching the budget resolution process for Senate votes in July, the White House said. “The President is committed to moving his economic legislation through Congress this summer, and is pursuing multiple paths to get this done,” White House Press Secretary Jen Psaki said in a statement.

     Under the now-failed talks with Capito, GOP senators offered a $928-billion proposal, which included about $330 billion in new spending — well short of Biden’s $1.7-trillion investment proposal for rebuilding the nation’s roads, bridges, highways and other infrastructure, including Veterans Affairs hospitals and care centers. Biden has proposed raising the corporate tax rate from 21% to 28%, a nonstarter for Republicans, and initially rejected the GOP senators’ suggestion of tapping unspent Covid-19 aid money to fund the new infrastructure spending — Biden eventually offered to use some of the unsent Covid aid funding announced by former President Donald Trump, but the level was far below the level GOP pushed for this pay-for.

     Biden is now reaching out to other senators, including Republican Sen. Bill Cassidy of Louisiana and two key centrist Democrats, Joe Manchin of West Virginia and Sen. Kyrsten Sinema of Arizona, whose votes will be crucial in the evenly split Senate. Meanwhile, a bipartisan group with Sen. Mitt Romney (R-Utah) met later Tuesday at the Capitol to negotiate a fresh proposal.

     Schumer said Democrats are pursuing “a two-path approach.” The bipartisan talks led by Sinema with the other senators are underway, Schumer said, while the budget committee is preparing the legislation that would allow passage through the reconciliation process. “It may well be that part of the bill that is passed will be bipartisan, and part of it will be in reconciliation,” he said. “But we’re not going to sacrifice bigness and boldness.”

     The president is expected to engage with lawmakers while he sets out on his first foreign trip for an economic summit of the Group of 7 industrialized nations in Europe.

     Meanwhile, the 58-member bipartisan House Problem Solvers Caucus has put together a $1.25 trillion infrastructure spending framework, including $761.8 billion in new spending over eight years, to help salvage faltering bipartisan negotiations.

Bill to meet China tech challenge gets easy, bipartisan Senate approval. The Senate on Tuesday approved, 68-32, a bipartisan, $250 billion, 2,400-page bill boosting government spending on technology research and development amid rising competition from China and other nations. The bill, known as the U.S. Innovation and Competition Act, still needs approval in the House, which has been weighing somewhat different approaches (it’s version is called the Eagle Act).

     What the bill would do: The major aim of the measure is to fortify the nation’s ability to compete with China’s economic and political ambitions by investing billions of dollars in scientific research and American manufacturing across several industries, including artificial intelligence, robotics and wireless service. It earmarks $52 billion to address the domestic manufacturing shortage of semiconductors, which has slowed the production of cars, laptops and video game consoles. The Senate bill includes $195 billion in funding for scientific research and development. It provides $10 billion to create 10 technology hubs across the country to connect researchers to develop ideas with manufacturing sectors for products. Senate Majority Leader Chuck Schumer (D-N.Y.), who led the push for the package, said it would help the U.S. halt a gradual decline as the world’s leader in scientific research and innovation. By some estimates, federal R&D spending in recent years has totaled less than 1% of U.S. GDP — and less than 3% of total federal spending, the lowest since before the space race of the 1960s. The bill aims to overhaul U.S. government support for science by expanding the government’s role in technological research, including through the National Science Foundation. It would authorize about $190 billion in spending to strengthen U.S. advanced technologies to better compete globally, although not all of that money would represent new spending. The bill also has become a vehicle for several other tech-related initiatives. One would authorize about $52 billion for encouraging more semiconductor production in the U.S.

     Another provision would ban downloads of the Chinese-owned social media app TikTok on all government phones. One provision would bar government agencies from buying drones manufactured by Chinese companies, including DJI, the world’s largest commercial drone maker. It bans American officials from attending the 2022 Beijing Winter Olympics over human rights concerns and declares Beijing’s policies in China’s far-west Xinjiang region a genocide, echoing the position of the U.S. State Department and multiple parliaments around the world. It contains a range of provisions meant to strengthen US ties with Taiwan and U.S. military alliances in the Pacific, including the Quad, a pact between the U.S., Australia, India and Japan – and still others to crack down on Chinese influence on U.S. campuses, in international organizations and online. The bill would require the State department and the intelligence community to provide Congress with a report on Chinese influence at international institutions including the World Bank, IMF, the UN and the World Trade Organization. Federal agencies would be prohibited from hosting certain Chinese visitors and many agencies would have to take steps to ensure data, such as intellectual property or biomedical research involving the human genome, are safe from national security risks. The federal government could deny U.S. entry to foreign nationals if it is determined they are trying to spy on sensitive or emerging technologies.

     Chinese lawmakers urged Congress to “immediately stop” progress on the bill, the official Xinhua News Agency reported, citing a statement from a National People’s Congress committee that handles foreign affairs. The bill “smears China’s development path and domestic and foreign policies,” the statement said, and “interferes in China’s internal affairs under the banner of innovation and competition.”

     Several extraneous measures made their way into the debate, including funding for NASA, a ban on the sale of some shark fins and labeling requirements for king crab important to Alaskans.
 


CHINA UPDATE


 

— China’s producer prices rise at fastest pace in 13 years; soaring commodity prices drive PPI up 9% in May, stoking global inflation concerns. China’s producer price index (PPI) added 9% in May, data from the National Bureau of Statistics showed today, its biggest year-on-year increase since September 2008 and higher than economists’ forecasts. Chinese PPI has been pushed higher by commodities and raw materials, which form a core part of the index. NBS data showed that prices in the ferrous metal smelting industry rose 38% year on year, while those for coal mining added 30%. Since May, China’s cabinet has cautioned repeatedly against the economic impact of rapidly rising commodities prices and called for clampdowns on hoarding and speculation.

     Consumer prices in China rose 1.3% in May, the most since September, but fell 0.2% month on month, the NBS said. Pork prices, which have risen sharply in recent years on widespread culling because of African swine fever, dropped 24% year on year.

     China data

— China plans to rely more heavily on pork reserves to stabilize prices. China’s state planner today announced it plans to use state reserves to stabilize hog production and prices. Since the start of the year, pork and cash hog prices have fallen more than 50% amid a rise in production and an increase in slaughter related to the spread of African swine fever in some areas. China’s National Development and Reform Commission says it will significantly increase its reserve stocks of pork, though details were lacking. "The key purpose is to send a signal to the market that the government will not let prices fall further," said Pan Chenjun, senior analyst at Rabobank.

 


TRADE POLICY



Bloomberg: U.S., EU to end $18 billion tariff fight. European Union leaders and President Joe Biden will commit to ending outstanding trade battles when they meet at the summit in Brussels on June 15, according to a draft of the conclusions seen by Bloomberg News. The Americans and Europeans will pledge to finding a solution to the aircraft issue — which involves illegal government aid provided to Boeing and Airbus — before July 11, according to the draft, which is still subject to changes. The U.S. and the EU will also announce a partnership aimed at reinforcing the supply of semiconductors in both regions. The efforts by the EU and U.S. aim to reduce reliance on manufacturers in Asia as a global chip shortage has highlighted the world’s dependence on the region for critical components that power everything from smartphones to connected cars.

 


ENERGY & CLIMATE CHANGE


 

CEO of hacked pipeline company apologizes. The chief executive officer of the pipeline company hit by a ransomware attack last month apologized to a U.S. Senate panel for the incident that paralyzed the East Coast’s flow of gasoline, diesel and jet fuel, while defending his company’s response and offering tips for future hacking victims. “We’re deeply sorry for the impact that this attack had but are also heartened by the resilience of our country and of our company,” Colonial Pipeline CEO Joseph Blount Jr. said.

     Blount may face harsher talk from House Homeland Security lawmakers at a hearing today. Ranking member John Katko (R-N.Y.) will ask “If your pipeline provides fuel to 45% of the east coast, why are you only hardening systems after an attack?” according to his prepared remarks provided to Bloomberg Government.

— National climate advisor McCarthy to host today’s oil-CEO summit. Chief executives of some of the largest U.S. oil companies are set to meet with White House National Climate Adviser Gina McCarthy today as the Biden administration nears decisions on drilling and auto emissions. The session will be at least the second meeting this year between top oil executives and McCarthy, who is coordinating the Biden administration’s efforts to clamp down on greenhouse gas emissions from burning the industry’s core products. The meeting is set to involve McCarthy and members of the American Petroleum Institute’s executive committee, according to reports. The administration is also asking Congress to impose a clean electricity mandate as part of a goal for a carbon-free grid by 2035, which could edge natural gas out of the nation’s power system.

— Unions press Biden on biofuel mandate costs. Labor leaders are pressing President Biden to waive a U.S. mandate to blend ethanol with gasoline in response to requests from governors, mayors and others. “Action is urgently needed to reduce the skyrocketing cost” of biofuel compliance credits “and preserve American union jobs,” labor union heads wrote in a June 2 letter (link) to Biden. High costs for ethanol credits used to track blending compliance are slowing refinery upgrade projects, they said. The credits, known as RINs, have more than doubled since the start of the year, and credits tracking ethanol blending traded Tuesday at all-time highs of $1.97, according to Jordan Fife, trading manager at BioUrja Trading LLC in Texas. Biofuel advocates say refiners have option to invest in more blending infrastructure and generate their own RINs.
 


LIVESTOCK, FOOD & BEVERAGE INDUSTRY


 

Smithfield hog slaughter plant strike authorized.  Union workers overwhelmingly voted to go on strike at a Smithfield Foods hog slaughter plant in Sioux Falls if a new contract is not reached; the plant produces 5% of U.S. pork. Link to Associated Press item.

— Vilsack contradicts some reports, says no decision yet on appeal of line-speed ruling. USDA Secretary Tom Vilsack clearly distanced himself from litigation over line speeds at swine slaughter plants, which a judge said in March need to be slowed at six plants operating under the New Swine Inspection System. U.S. pork industry groups are urging USDA to appeal the decision. Last month, USDA’s Food Safety and Inspection Service (FSIS) said the six facilities should prepare to revert to their old speeds of 1,106 animals per hour at the end of this month, when the decision goes into effect. But on Tuesday, Vilsack said no decision on whether to appeal has been made, and that in any case, that decision is up to the Solicitor General. “I think the parties are talking, which I think is a good thing,” Vilsack added.

     Lawmakers know an issue when they see and hear one, and this topic is a one example. Sen. Chuck Grassley (R-Iowa) is seeking signatures on a letter asking the Justice Department to appeal a court decision that will require pork processors to slow line speeds. Grassley said the loss of processing capacity would have a large negative economic impact on pork producers. “It will create a surplus of hogs on the market,” Grassley said. “Iowa State University is saying dropping the price by $23 an animal. The total economic loss of this decision to hog farmers is estimated to be $80 million for this year.” Reps. Jim Hagedorn from Minnesota and Dusty Johnson from South Dakota are co-signing letters with Grassley addressing the issue.

     Vilsack revealed that no decision has been made yet by the Department of Justice (DOJ) on whether to appeal a federal district court ruling that struck down a Trump-era rule allowing unlimited line speeds at certain pork processing facilities. The ruling is set to take effect at the end of June, with USDA announcing last month it would enforce the decision. Vilsack explained that the six facilities that had been allowed unlimited line speeds under the New Swine Inspection System (NSIS) rule “will have to decide whether or not they want to go back to the 1,106 [head per hour] line speed, or whether they want to make adjustments in terms of adding additional hours, or additional workdays to be able to process the same number of animals that they [currently] process during the course of a day.” He lamented that the case put the department “in a very difficult position,” forced to balance worker safety, food safety and farmer income interests. “Frankly, I don't think USDA should be put in that position,” he remarked, saying his hope is that parties in the case “will figure out a way to move forward with this.” As for an appeal, Vilsack stressed that the decision rests with the Solicitor General at DOJ, not USDA, adding that the ruling itself does not become final until months’ end.

— Vilsack: USDA may take second look at GIPSA, other regulations to ensure fairness in ag markets. Addressing fairness in markets is a key topic for USDA. “Many socially disadvantaged and small and mid-sized producers do not have equitable access to markets,” USDA said. “USDA will support new and expanded access to markets for a diversity of growers while helping eaters access healthy foods.” Vilsack in remarks Tuesday indicated the effort could include a new look at regulations under the Packers and Stockyards Act, which might include the Undue Preferences rule promulgated under the Trump administration. “There are a number of rules that were pending during the Trump administration that are being reviewed, and there were a number of rules that were that were promulgated at the end of the Obama administration that I think deserve a refresh and a relook,” Vilsack said. “The expectation would be over the course of the next several months we will do just that.”

     Vilsack said the objective is to ensure “producers have a fair shake in the market.” Part of that effort, he said, has to be a “clear line and a clear understanding, if you will, of what constitutes fair, fair practice and what doesn't.” USDA also announced a $4 billion initiative to strengthen the food supply chain, a portion of which will be devoted to addressing a shortage of meat-processing facilities in the country, Vilsack said. The $4 billion will come from funds Congress approved in December and March. During a press call, Vilsack said it will take more than money to build resilience into the food system after the Covid-19 pandemic disrupted markets for those who sold to farmers markets and food service clients and led to temporary closings or slowdowns at major regional meatpacking plants. “We have a very efficient system, but that efficiency comes at a price. That price is a lack of resilience when you have a major disruption. What we’re learning and what we’ll have to learn is how to better balance the need for efficiency and productivity with the need for resilience,” he said.  

     Cattle producers are increasingly upset as the cost of hamburgers and steaks have surged in grocery stores while prices they received for livestock barely budged, a pattern they argue is now all-too-familiar. Six cattle and farm groups last month united behind demands for action to help level the playing field.

     What’s next: USDA will consider new regulations under the Packers and Stockyards Act, a 1921 law Congress passed to protect farmers and ranchers from unfair trade practices. That will include reopening consideration of stronger protections that the Obama administration proposed in 2016, which were scuttled under Donald Trump and replaced by less aggressive rules. The Obama rules made it easier for farmers to show they were the victims of unfair trade practices. Vilsack said the consideration will also include a review of rules issued under Trump in 2020.

 


CORONAVIRUS UPDATE


 

Summary: Global cases of Covid-19 are at 174,029,957 with 3,748,630 deaths, according to data compiled by the Center for Systems Science and Engineering at Johns Hopkins University. The US case count is at 33,393.238 with 598,326 deaths. The Johns Hopkins University Coronavirus Resource Center said that there have been 303,923,667 doses administered, 140,441,957 have been fully vaccinated, or 42.8% of the entire U.S. population.

— Nearly 52% of Americans have gotten at least one Covid vaccine shot, but the country may not meet President Biden's goal of vaccinating 70% of adults with at least one dose by July 4. Rates are plunging in certain states.

— Millions of J&J Covid-19 vaccines are at risk of expiring in June. Hospitals, state health departments and the federal government are racing to decide how to use up Johnson & Johnson doses that are set to expire this month. There are few practical solutions, according to those involved in the vaccination drive.

— WTO TRIPS council agrees to text-based process to address Covid vaccine proposals. The Trade Related Intellectual Property Rights (TRIPs) Council at the WTO met this week on the sensitive issue of intellectual property rights relative to Covid vaccines, agreeing to embarks on a “text-based process” to address the proposals put forth and issues surrounding Covi vaccines. WTO members committed to trying to come up with a report for the July 21-22 General Council meeting. South Africa explained and defended its altered plan for a TRIPS waiver that would last three years.

     But the European Union, U.K., Switzerland and Korea remained opposed to waiving the TRIPS provisions as a Covid response, with the EU calling on countries to support a plan they offered June 4 that would expand Covid vaccine production and facilitate the use of licensing provisions in the TRIPS agreement. While stating that intellectual property rights should not prevent the use of existing capacity or expanding vaccine production capacity, the EU said there needs to be protections in place to incentivize technology transfer and investment for innovation to help WTO members battle new Covid strains or future diseases.
 


POLITICS & ELECTIONS


— McAuliffe wins Democratic primary in Virginia governor's race. Former Virginia Gov. Terry McAuliffe (D) won his party’s gubernatorial nomination on Tuesday, advancing in his bid to serve a second term in the governor’s mansion. McAuliffe continuously led the five-person field in polling and fundraising throughout the primary.

— New Jersey Republicans give gubernatorial nomination to Ciattarelli. Former New Jersey state Assemblyman Jack Ciattarelli (R) won the Republican nomination for governor on Tuesday as voters sided with his argument that he had the best shot at unseating first-term Gov. Phil Murphy (D).

— Florida Rep. Val Demings officially enters Senate race against Rubio. Rep. Val Demings (D-Fla.) officially launched her Senate campaign in Florida today, becoming the highest-profile Democrat yet to announce a challenge to Sen. Marco Rubio (R-Fla.). “Unlike some in Washington, I never tired of standing up for what I believe is right, because no one is above the law,” Demings said in a video announcing her candidacy. “But it turns out, there are some in Washington who prefer the same old tired ways of doing business.”

 


CONGRESS  


— House Transportation and Infrastructure Committee will mark up Democrats’ $547 billion surface transportation bill (HR 3684) today. The panel will hear hundreds of amendments from both sides of the aisle, ranging from more funding for electrification to banning the transport of horses for slaughter and consumption. The $547 billion bill is expected to be opposed by Republicans on the committee at the hearing. Ranking member Sam Graves (R-Mo.) plans to say that the minority made attempts to move toward the majority’s position, including introducing a $400 billion highway bill, but the efforts “were not reciprocated in any meaningful way… In fact, instead of showing a willingness to move toward the middle, the Majority moved even further away from us to accommodate the most progressive members of their conference,” he said in advanced remarks.

— Senate panel vote on USDA counsel Thursday. The Senate Ag Committee will vote on the nomination of Janie Hipp to be USDA general counsel, its top lawyer, on Thursday.
 


OTHER ITEMS OF NOTE     


— IRS is investigating the release of tax information of wealthy Americans, including Jeff Bezos and Warren Buffett. U.S. officials said Tuesday that the Treasury Department has asked law enforcement authorities to investigate the disclosure of tax records cited in a media report that showed that some of America’s richest people paid little to no income taxes. ProPublica (link) said it obtained “a vast trove of Internal Revenue Service data on the tax returns of thousands of the nation’s wealthiest people, covering more than 15 years.” The data “indicated that billionaires including Amazon founder Jeff Bezos and Tesla founder Elon Musk paid no federal income taxes during some years.” White House Press Secretary Jen Psaki said that “any unauthorized disclosure of confidential government information” is illegal, and Treasury spokesperson Lily Adams said in an emailed statement that the matter has been referred to the FBI, federal prosecutors and two internal Treasury Department watchdogs, “all of whom have independent authority to investigate.”

        The New York Times reports (link) the ProPublica analysis “showed that the nation’s richest executives paid just a fraction of their wealth in taxes — $13.6 billion in federal income taxes on $401 billion of their wealth, which was tabulated by Forbes.” According to the NYT, “The documents reveal the stark inequity in the American tax system, as plutocrats... were able to benefit from a complex web of loopholes in the tax code.” The NYT says “the rare window into the tactics of the nation’s top billionaires comes as President Biden is trying to overhaul the tax code so that corporations and the rich pay more. ... But the documents and the conclusions of the analysis could renew calls for Biden to consider a wealth tax, given that a higher marginal tax rate would do little to raise the tax bills of the 25 richest Americans.” (The news outlet obtained tax records for the nation’s 25 richest people, which show that they paid $13.6 billion in federal income taxes between 2014 and 2018, or about 16% of their reported income over that period — and a very, very small sliver of their wealth.)

     Politico says (link) “the revelations by ProPublica will undoubtedly put a sharp focus on the debate in Congress over raising taxes on wealthy people and revive calls for a “wealth tax” that supporters say would capture a greater amount of the assets held by the rich. Senate Finance Chair Ron Wyden (D-Ore.) said the revelations “shine a fresh spotlight on the wealthy not paying their fair share” and said he’d release a proposal to change that — an apparent reference to his plan to tax investment gains annually.  But Politico says Wyden “also expressed concern about the leak,” and “said it’s incumbent on the IRS to figure it out given the agency’s responsibility to protect taxpayer data.”

     The information provides never-before-seen details of specific billionaires’ tax bills, or lack thereof. Some of the jaw-droppers in the report:

  • Jeff Bezos claimed a $4,000 tax credit for his children in 2011.
  • Warren Buffett, who has called for tougher tax rules for the wealthy, paid under $24 million in taxes between 2014 and 2018.
  • Mike Bloomberg paid $70.7 million in income tax in 2018, despite reporting $1.9 billion in net income, after claiming deductions, charitable donations and foreign tax offsets.
  • Carl Icahn and Elon Musk took advantage of rules regarding debt. Icahn deducted interest payments on his companies’ debt, helping him pay no federal income tax in 2016 and 2017. Musk regularly borrows tens of billions against his stock holdings: those loans aren’t taxed, and the interest paid can often be deducted. (He paid no federal income tax in 2018.)
  • George Soros paid no federal income tax between 2016 and 2018, after claiming investment losses.

     There are changes to the tax code that could arguably capture a larger share of taxes from the ultrarich than a wealth tax. The New York Times’ DealBook lists the following:

  • “Eliminating the ‘step-up’ basis of assets in estates when they are transferred after someone dies, which effectively resets the value of assets for capital-gains purposes. This would also reduce the incentive for the wealthy to borrow against their assets — and there should probably be a greater limit on the deductions for interest expenses anyway.”
  • “Speaking of capital gains, higher rates for the wealthiest would capture more tax and would somewhat address the ‘carried interest’ provision of the tax code that investment managers use to treat much of their pay as capital gains rather than income, which is one of the most egregious and persistent loopholes in its own right.”
  • “The ‘like-kind exchange’ of properties allows real estate executives to depreciate the value of their investments for tax purposes, even when the actual value of a property appreciates. The Biden administration is looking at closing this loophole, which it says would raise nearly $20 billion over 10 years.”
  • “Is it acceptable for the wealthy to take deductions when they move money to their own philanthropic foundations? Perhaps the deduction should only happen when the money is spent.”

     The Wall Street Journal is an opinion item (link) wrote: “The story arrives amid the Biden Administration’s effort to pass the largest tax increase as a share of the economy since 1968. The main Democratic argument for a tax hike is that the rich should pay their “fair share.” The ProPublica story is a long argument that somehow the rich don’t pay enough. The timing here is no coincidence, comrade. Someone at the IRS — or someone who hacked the IRS — leaked the documents to influence the debate in Congress. And right on time, Ron Wyden, the Senate’s chief tax writer, opened a Finance Committee hearing Tuesday by mentioning the ProPublica data dump. ‘What this data reveals is that the country’s wealthiest—who profited immensely during the pandemic — have not been paying their fair share,’ Mr. Wyden said. ‘I’ll have a proposal to change that.’ You can bet he will.”

— Estate planners for the wealthiest Americans are combing through the Biden administration’s proposed tax increases, hunting for ways to sidestep the potential hit. Link to WSJ article.

— Arkansas court alters dicamba deadline. Soybean and cotton growers in Arkansas are free to spray the weedkiller dicamba on their crops until June 30 under an order from the Arkansas Supreme Court on Tuesday.


 

 

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