Overnight Finance

On The Money: Five questions for Democrats on their $3.5T budget | Retail sales rebound in June despite rising prices

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Happy Friday and welcome back to On The Money. I’m Sylvan Lane, and here’s your nightly guide to everything affecting your bills, bank account and bottom line.

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THE BIG DEAL—Five questions for Democrats on their $3.5T budget: Key Senate Democrats this week reached an agreement on a $3.5 trillion budget resolution that would facilitate a wide-ranging spending package, but many details about what the spending measure will look like remain to be seen.

  • Democrats are seeking to pass a budget resolution that would pave the way for a separate bill that would include spending in areas such as education, climate and health care.
  • Democrats intend to offset the cost of the spending through tax increases on the wealthy and corporations and savings from lower prescription drug prices, and also suggested that some of the package could be financed through increased long-term economic growth.

There are still many steps that Democrats need to take before a spending package becomes law. Here are five unanswered questions about the Democrats’ plans for a spending package, in light of this week’s budget deal from The Hill’s Naomi Jagoda.

  • How do major spending programs take shape? Many of the items Democrats want to include in their spending package have also been part of proposals that President Biden has offered earlier this year, but details still need to be fleshed out and the ultimate bill could have some differences from past proposals.
  • Which taxes would increase, and by how much? Democrats want to pay for much of their package through tax increases on corporations and high-income households, and have said they won’t raise taxes on families making less than $400,000 annually. Exactly how they raise taxes on their target groups has yet to be determined.
  • What would be the length of extensions of expanded tax credits? The $1.9 trillion coronavirus relief law that Biden signed in March included one-year expansions of the earned income tax credit, the child tax credit and the child and dependent care tax credit. Democrats ideally would like to make the expansions of all three credits permanent, but doing so would be expensive.
  • Does the Senate parliamentarian strip out any of Democrats’ priorities? The Senate parliamentarian, Elizabeth MacDonough, will be tasked with determining whether provisions in any future Democratic reconciliation bill meet the rules. Provisions that don’t follow the rules would likely be removed from legislation.
  • Do Democrats get full consensus on $3.5 trillion in new spending? Centrists could still try to shape the contents of a spending bill. Some moderate Democrats may be wary of large additional amounts of federal spending amid concerns about inflation.

 

LEADING THE DAY

Retail sales rebound in June despite rising prices: Retail sales rebounded sharply in June in the face of high inflation, according to data released Friday by the Census Bureau, defying expectations of another monthly decline.

  • U.S. restaurants, bars and retailers brought in a seasonally adjusted $623.3 billion in sales last month, the Census Bureau reported, rising 0.6 percent from May. 
  • Economists largely expected retail sales to decline again after falling 1.7 percent in May, but spending sprees across other sectors of the economy offset a sharp drop in automobile sales.

I break it down here.

TurboTax leaving IRS Free File Program: Intuit, the financial software company behind TurboTax, announced Thursday that it will no longer be participating in the IRS Free File Program that allows Americans to use brand-name products to file their tax returns for free.

  • The company said in a blog post that while it has partnered with the IRS for the program for nearly 20 years, it was “not able to continue in the program and deliver all of the benefits that can help consumers make more money, save more, and invest for the future.” 
  • The program has become the subject of increased scrutiny in recent years, especially after ProPublica reported in April 2019 that TurboTax hid its Free File page from search engines, effectively pushing users to pay for the products that would otherwise be free under the IRS program. 
  • The investigative report prompted the New York State Department of Financial Services to open an investigation into Intuit, as well as other tax prep companies H&R Block, TaxSlayer, TaxHawk and Drake Enterprises. 

The Hill’s Celine Castronuovo breaks it down here.

ON TAP NEXT WEEK

Tuesday:

  • Housing and Urban Development Secretary Marcia Fudge testifies before the House Financial Services Committee on the Biden administration’s infrastructure proposal at 10 a.m.
  • The House Small Business Committee holds a hearing entitled “Strengthening the Cybersecurity Posture of America’s Small Business Community” at 10 a.m.
  • The Senate Banking Committee holds a hearing on climate change and insurance at 10 a.m.
  • The House Energy and Commerce Committee holds a hearing on ransomware at 10:30 a.m.
  • A Senate Banking subcommittee holds a hearing on federally assisted housing at 2 p.m.

Wednesday:

  • A House Financial Services subcommittee holds a hearing on expanding access to the banking system at 10 a.m. 
  • A House Small Business subcommittee holds a hearing on the SBA’s role in climate change solutions at 10 a.m.
  • A House Ways and Means subcommittee holds a hearing on forced labor in supply chains at 10 a.m.
  • The House Financial Services subcommittee holds a hearing on statistical rating organizations at 2 p.m.

Thursday:

  • The Senate Health, Education, Labor, Pension (HELP) Committee holds a hearing “The Right to Organize: Empowering American Workers in a 21st Century Economy” at 10 a.m.
Tags Joe Biden Marcia Fudge
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