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The stock market is suffering huge losses amid global headwinds, higher interest rates and continued inflation fears. We’ll also look at Democrats’ struggles to raise taxes on the rich and why the Pentagon is running out of funds for Ukraine.   

But first, see why Kendrick Lamar and Will Smith were just trending on Twitter.   

Welcome to On The Money, your nightly guide to everything affecting your bills, bank account and bottom line. For The Hill, we’re Sylvan Lane, Aris Folley and Karl Evers-Hillstrom. Someone forward you this newsletter? Subscribe here.

Yellen to warn of continued volatility as stocks sink 

Treasury Secretary Janet Yellen is set to tell the Senate Banking Committee Tuesday to be ready for continuing market fluctuations after stocks dropped to fresh 52-week lows on renewed fears of inflation and worsening geopolitical conditions. 

“There is the potential for continued volatility and unevenness of global growth as countries continue to grapple with the pandemic. Russia’s unprovoked invasion of Ukraine has further increased economic uncertainty,” Yellen’s testimony, posted Monday, reads. 

  • The Dow Jones Industrial Average of major U.S. companies fell by nearly
    2 percent Monday, while the S&P 500 index fell more than 3 percent and the technology-heavy Nasdaq was down almost 4.3 percent 
  • The selloff comes after the Fed raised interest rates to fight inflation after consumer prices rose 8.5 percent on the year.  
  • Despite Monday’s sell-off and recent market volatility, Yellen will testify Tuesday that “the U.S. financial system has continued to function in an orderly manner.” 

The background: Global challenges could keep supply chains clogged and inflation high, even as rates drop and stocks tank.

China has continued its COVID-19 lockdowns, confining millions in their homes and adding to disruptions in one of the world’s leading economies. And the war in Ukraine, which has affected energy and global food prices, is entering its 12th week.

The Hill’s Tobias Burns has more here.

TAX THE RICH? 

Taxes on the wealthy struggle to find a foothold in Congress 

Increasing taxes on wealthy Americans is not controversial among much of the U.S. electorate, with polls consistently showing that a majority of both Democratic and Republican voters believe the richest Americans should be contributing more to public coffers. 

But despite an abundance of Democratic proposals to increase taxes on the rich, originating from both the White House and key congressional offices, experts say the chances of getting the rich to pay more in taxes over the long term are getting slimmer. 

  • Polling from agencies including Pew, Reuters-Ipsos, Data for Progress, The Hill-HarrisX and others all found a majority of voters believe the wealthy should pay more in taxes.  
  • But while linchpin Democrats like Sens. Kyrsten Sinema (D-Ariz.) and Joe Manchin (D-W.Va.) have proven the biggest obstacle to progressive taxation efforts during the current administration, experts say the impasse is part of a bigger economic picture. 

That picture, according to Vanessa Williamson, a senior fellow at the left-leaning Brookings Institution, shows what many have long felt intuitively, that wealthy people are both economically more conservative than regular Americans and hold more sway in the political system. 

“The fact is our political system is not responsive to the will of the majority on a very wide array of issues, including and perhaps especially tax policy,” Williamson said in an interview. “There’s an increasing amount of work in the field of political science demonstrating that extremely wealthy people are meaningfully more conservative than the average American on economic policy.” 

Read more here from Tobias. 

CLOCK IS TICKING 

Biden running out of money source for Ukraine 

The Biden administration has reached the end of its presidential drawdown authority funding, with about $100 million left, the Pentagon’s top spokesman said Monday.    

Between President Biden’s Friday announcement of a $150 million assistance package to Ukraine and the remaining $100 million, the United States will be able to provide weapons and equipment to Ukraine until “about the third week of this month,” press secretary John Kirby told reporters.  

  • Biden last week warned that the latest round of military assistance for Ukraine — a $150 million package to include artillery munitions, radars and other equipment — would nearly exhaust the military assistance that Congress has so far approved for the administration to deliver to Ukraine. 
  • At the time, he pressed Congress to quickly approve the $33 billion the White House has asked for in additional security, economic and humanitarian assistance for Kyiv — about $5 billion of which would go to additional presidential drawdown authority funding.   
  • Kirby on Monday echoed that thinking and said the administration continues “to urge Congress to pass the president’s supplemental request as soon as possible so that we can continue to provide aid to Ukraine uninterrupted.”  

The Hill’s Ellen Mitchell has more on this here

BABY FORMULA SHORTAGE 

Retailers placing limits on baby formula purchases as shortage worsens 

Several major retailers — including Walgreens, CVS, Target and Costco — are rationing the purchase of baby formula amid an ongoing national shortage. 

The limitations on purchases come after the Food and Drug Administration expanded its food recall for Abbott Nutrition’s baby food products earlier this year following a child’s death after consuming one of the company’s products. 

  • Abbott Nutrition had issued a voluntary recall of its Similac PM 60/40 powdered infant formula with the lot code 27032K800, which was distributed in the U.S. and Israel. 
  • Retail experts said the recalls exacerbated baby formula shortages, and volatility caused by supply chain disruptions and inflation that is impacting many consumer industries. 

Check out more here from The Hill’s Monique Beals. 

Good to Know

Microsoft founder Bill Gates said rising inflation and interest rates in Western economies would drive the world toward an economic slowdown “eventually.” 

“It comes on top of the pandemic where government debt levels were already very, very high and there were already some sort of supply chain problems,” Gates told CNN’s Fareed Zakaria.  

Here’s what else we have our eye on: 

  • Uber is planning to cut back on costs and slow hiring in response to a “seismic shift” in the market, CEO Dara Khosrowshahi told employees in an email. 
  • The United Nations released data reporting that food insecurity in parts of Afghanistan has reached “catastrophic” levels. 
  • The Securities and Exchange Commission extended how long the public will have to weigh in on a proposal that would require companies to reveal their vulnerabilities and contributions to climate change.  

That’s it for today. Thanks for reading and check out The Hill’s Finance page for the latest news and coverage. We’ll see you tomorrow. 

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Tags Biden Janet Yellen Kendrick Lamar Kyrsten Sinema Will Smith

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