Happy Wednesday and welcome to On The Money, your nightly guide to everything affecting your bills, bank account and bottom line. Subscribe here: thehill.com/newsletter-signup.
Today’s Big Deal: Inflation rose sharply in October and the White House is on defense. We’ll also look at Democratic infighting over the SALT deduction and vaccine mandate limbo.
But first, find out why Billie Eilish and Ricky Gervais are getting active in the turkey pardoning discourse.
For The Hill, I’m Sylvan Lane. Write me at firstname.lastname@example.org or @SylvanLane. You can reach my colleagues on the Finance team Naomi Jagoda at email@example.com or @NJagoda and Aris Folley at firstname.lastname@example.org or @ArisFolley.
Let’s get to it.
Biden gets inflation gut-punch
White House officials are scrambling to show Americans that they’re paying close attention to rising prices after federal data released Wednesday showed inflation rising far above expectations in October.
- The consumer price index (CPI), which tracks inflation in a range of staple goods and services, rose 0.9 percent last month and 6.2 percent in the 12 months leading into October, the highest annual inflation rate since November 1990.
- Most of October’s inflation was driven by soaring energy and food prices — a gut punch for cash-strapped families and a political nightmare for the Biden administration.
- The broadening of high inflation beyond goods and services hit hardest by the pandemic is also raising concerns about how much longer inflation will continue to increase.
“The costs for low-wage households to cover their commuting costs, grocery bills and rents are eating into the jump they have seen in wages,” wrote Diane Swonk, chief economist at Grant Thornton, in a Wednesday analysis. “The public is angry.”
What Biden’s doing: Biden officials and allies, who had largely brushed off the threat of inflation this spring, are now bracing for deeper political backlash. Republicans have spent months blaming Biden’s economic agenda for high inflation and have pledged to make it a deciding issue in the midterm elections.
LEADING THE DAY
Democrats at odds over SALT changes
Democrats in the House and Senate are clashing over how to address a tax break that has a disproportionate impact on a number of blue states.
Democratic lawmakers in both chambers want to make changes to the $10,000 state and local tax (SALT) deduction cap, a GOP creation, as part of their sweeping social spending and climate change legislation, but they have chosen different tactics:
- The House proposes substantially raising the level of the cap
- But key senators back exempting taxpayers under a certain income level.
Reaching a resolution will be necessary before Democrats get a version of the budget reconciliation package to President BidenJoe BidenBiden to provide update Monday on US response to omicron variant Restless progressives eye 2024 Emhoff lights first candle in National Menorah-lighting ceremony MORE’s desk. The cap has long been disliked by politicians in high-tax states such as New York, New Jersey and California, who argue that the limit hurts their residents as well as the states’ abilities to provide services.
But the cap is a tricky issue for Democrats because analysts across the ideological spectrum have estimated that fully repealing it would cost hundreds of billions of dollars and largely benefit high-income households. Naomi explains here.
THEY'VE GOT A BRIDGE TO SELL YOU
Democrats start blitz to sell infrastructure
Democrats are readying a full court press to sell President Biden’s bipartisan infrastructure package to voters and protect their most vulnerable members in next year’s midterms.
- On Tuesday, Biden participated in a virtual grassroots event with Democratic National Committee Chairman Jaime HarrisonJaime HarrisonOn The Money — Biden's battle with inflation Democrats start blitz to sell infrastructure Media narrative got education's role in Virginia election backwards MORE where the two discussed infrastructure legislation.
- The committee projected images highlighting the infrastructure plan on a hotel in downtown Baltimore ahead of Biden’s visit to the Port of Baltimore on Wednesday.
- State parties are also getting in on the action, promoting the package and targeting Republicans who voted against it.
Julia Manchester and Tal Axelrod tell us more about it here.
HOW LOW CAN YOU GO?
Businesses left in limbo on COVID-19 mandate
Businesses are in limbo after a federal court halted the Biden administration’s vaccine-or-test mandate for private employers.
Employers are preparing to enforce the Occupational Safety and Health Administration’s (OSHA) rule, which would require businesses with 100 or more employees to mandate COVID-19 vaccinations or weekly testing by Jan. 4.
But it’s now unclear whether the requirement will survive legal challenges after the 5th U.S. Circuit Court of Appeals temporarily blocked the rule over the weekend, creating confusion among companies on how to move forward. Labor lawyers are urging businesses to continue preparing for key OSHA deadlines, given that the court’s stay, for now, is only temporary.
Karl Evers-Hillsrom breaks it down here.
Good to Know
Senate GOP Leader Mitch McConnellAddison (Mitch) Mitchell McConnellFive issues that will define the months until the midterms Key senators to watch on Democrats' social spending bill Republicans seem set to win the midterms — unless they defeat themselves MORE (Ky.) is upping pressure on Sens. Joe Manchin (D-W.Va.) and Kyrsten Sinema (D-Ariz.) to scuttle President Biden's social and climate spending bill.
Here’s what else have our eye on:
- The IRS on Wednesday announced inflation adjustments for 2022 pertaining to a host of features in the tax code, including the standard deduction and tax brackets.
The Congressional Budget Office (CBO) has begun releasing new estimates of portions of Democrats’ sweeping trillion-dollar social spending package after House leadership recently held off on voting on the plan amid pushback from moderates who called for the information.
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 Thursday.