Hope you've had an enjoyable Monday. We're still trying to figure out what happened in Russia this past weekend, and shaking our heads at the Mets' epic collapse against the Phillies.
Here's what's happening on the fiscal front.
Biden Announces Billions for High-Speed Internet Infrastructure
Saying that high-speed internet access has become a necessity of modern life, President Joe Biden announced Monday that his administration will spend $42.5 billion to deliver broadband Internet to remote and rural areas by 2030.
The funding was provided by the Infrastructure Investment and Jobs Act, which Biden signed into law in 2021. Each state, along with the District of Columbia and Puerto Rico, will receive a minimum of $100 million over the next two years from the Broadband Equity, Access, and Deployment Program. On average, states will receive about $750 million. Some states will receive far more, according to allotments announced by the Commerce Department. Texas, for example, will receive about $3.3 billion, while Alabama will receive about $1.4 billion and Michigan more than $1.5 billion.
“What this announcement means for people across the country is that if you don’t have access to quality, affordable high-speed Internet service now – you will, thanks to President Biden and his commitment to investing in America,” Commerce Secretary Gina Raimondo said at an event at the White House.
More than 8.5 million households and small businesses in the U.S. lack access to high-speed internet, according to the Federal Communications Commission, which has defined a minimum standard of 25 megabits per second for downloads and 3 megabits per second for uploads.
White House adviser Mitch Landrieu, who is coordinating the administration’s infrastructure efforts, compared the high-speed internet effort to a famous infrastructure program from the New Deal era. “Just like President Franklin Delano Roosevelt’s Rural Electrification Act made a historic investment in rural areas bringing electricity to nearly every home in America, President Biden and Vice President Harris are committed to leaving no community behind as we connect everyone in America to high-speed Internet,” he said.
Commenting on claims that all Americans will now have internet access, Sen. Joe Manchin of West Virginia echoed the New Deal sentiment. “It's basically the same thing as rural electrification,” he said. “How did we get a hot wire up every road, nook and cranny in West Virginia so that everyone could have electricity? It was unimaginable ... That's the premise that we're working off of.” West Virginia, where more than 30% of homes and businesses lack access to high-speed internet, will receive more than $1.2 billion through the broadband program.
Looking ahead: The White House is kicking off a three-week blitz of events designed to highlight efforts by the Biden administration the improve American infrastructure, which they hope voters will notice when they go to the polls in 2024. As part of the blitz, the Department of Transportation highlighted another infrastructure program Monday, saying it would provide grants totaling nearly $1.7 billion to help state and local governments buy zero- and low-emission buses.
Supreme Court Case Could Strike a Blow Against Democrats’ Wealth Tax Plan
The Supreme Court will hear a case next term that could shape Democrats’ effort to impose a wealth tax on the nation’s richest households.
The case revolves around a provision in the 2017 Republican tax cut bill that imposed a one-time levy on people who own at least 10% of a foreign company, even if that company had not provided earnings for its American partners. A couple that partially owned a firm in India and paid the tax on that basis is suing for a refund, claiming that they should not have owed any tax under the 16th Amendment, since the Indian firm had not provided any income to them.
“The Constitution does not allow Congress to point at any pot of money and call it ‘income’ and then income-tax it,” said attorney Andrew Grossman, who is representing the couple, per The Wall Street Journal. “Income means the same thing now that it did when the 16th Amendment was ratified: gains that have been realized by the taxpayer.”
The case touches on the power of Congress to tax wealth – as some Democrats have proposed to do in their plan to tax unrealized capital gains for very high net-worth households. In an editorial published in the Journal in 2021, the couple’s attorneys made it clear that they intend to strike a constitutional blow against any such attempt. “[T]he couple’s constitutional challenge stands to slam shut the door on a federal wealth tax like the one Sen. Elizabeth Warren wants to enact,” they wrote. “The courts would do well to remind Congress at this opportune time that its taxing power is not without limits.”
Chart of the Day: Supply Chain Snaps Back
The supply chain crisis that produced shortages of everything from lawn chairs to automobiles during the Covid-19 pandemic has finally come to an end, according to an analysis by S&P Global and the supply-chain consult GEP. “Companies are no longer stockpiling resources the way households hoarded toilet paper,” says The Economist. “Transport costs have also come down and staff shortages are less severe. Firms largely report that they can get what they need. This is a global pattern: supply-chain stress has eased in Europe, Asia and North America alike.”
It’s still an open question, though, whether the inflationary pressure sparked by supply chain woes has run its course. The prices of many manufactured goods are falling, but some economists are worried that the rising cost of services could mean that elevated levels of inflation will be difficult to eliminate completely, at least in the near term.
Number of the Day: $377 Million
Insurance companies have reported an uptick in the number of elective procedures like hip replacements and knee surgeries, and according to a report from UBS Group highlighted by Bloomberg’s Joe Wiesenthal, there may be more to the story than just a return to pre-pandemic levels of health care utilization.
Andrew Mok, an analyst at UBS, says the increase may be related to the pickleball craze, which is particularly pronounced among older players, who are more likely to be inured. Working his way through some population numbers and medical reference works – including the intriguingly-titled “Non-fatal senior pickleball and tennis-related injuries treated in United States emergency departments, 2010-2019” – Mok concludes that more people playing pickleball could translate into an extra $377 million in spending on sports-related injuries.
“While we generally think of exercise as positively impacting health outcomes, the ‘can-do’ attitude of today's seniors can pose greater risk in other areas such as sports injuries, leading to a greater number of orthopedic procedures,” Mok writes.
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Fiscal News Roundup
- High-Speed Internet Is a Necessity, President Biden Says, Pledging All US Will Have Access by 2030 – Associated Press
- Supreme Court to Hear Case That Could Block Democrats’ Plans to Tax the Rich – Wall Street Journal
- Student Loan Debt: Borrowers Brace for Supreme Court Decision – The Hill
- A Debt Deal Twist Is Shifting Congress’ Shutdown Gameplan – Politico
- The Next President's $4 Trillion Problem – Axios
- Manchin Says Biden Broke Climate Deal. Others Say ‘There Was No Such Agreement’ – Politico
- How the Shortage of a $15 Cancer Drug Is Upending Treatment – New York Times
Views and Analysis
- Time Is Running Out to Avoid Cuts to Social Security Benefits – Suzanne Woolley, Bloomberg
- Kasich, Panetta: The Fiscal Responsibility Act Is Only a First Step Toward Truly Responsible Spending and Debt Reduction – John Kasich and Leon E. Panetta, The Hill
- It’s Almost Like the House GOP Never Cared About Deficits After All – Catherine Rampell, Washington Post
- The Supreme Court May Pre-Emptively Ban a Federal Wealth Tax – Matt Ford, New Republic
- State Tax Policy One Year After the Dobbs Ruling – Lillian Hunter, Tax Policy Centner
- Democrats, Wake the Hell Up! – Michael Tomasky, New Republic
- A 2% Inflation Rate Still Sounds About Right – Tyler Cowen, Bloomberg
- Trapped in the Crossfire of the U.S.-China Rivalry – Peter Goodman, New York Times