The Week in Business: Biden’s Safety Net Package Clears One Hurdle
What’s Up? (Nov. 14-20)
One Down, One to Go
On Monday, President Biden signed a $1.2 trillion bipartisan infrastructure bill into law. Though not as ambitious as the $2.3 trillion plan he proposed, it provides billions for improvements to roads, ports and power lines and to increase access to broadband internet and replace hazardous lead drinking pipes. The fate of a separate $2 trillion spending package focused on climate change, early childhood education and a wide range of social policy initiatives remains in flux. Opponents say it will worsen inflation. (The Biden administration has argued it will reduce inflation by making businesses and workers more productive.) And the Congressional Budget Office said on Thursday that the package would increase the federal budget deficit by $160 billion over the next 10 years. On Friday, the social safety net bill narrowly passed the House but now faces a difficult path ahead in the Senate.
Retail Is Up, ‘Stay-at-Home’ Stocks Are Down
Americans are shopping. According to new government data released last week, retail sales in October jumped 1.7 percent from September (adjusted for inflation, which in October reached a three-decade high, sales were still up 0.7 percent). The shift in consumer spending from services to goods during the pandemic does not seem to have reversed itself even as more people are returning to entertainment outside their homes. But signs of less time at home can be read elsewhere: Shares in some companies that saw sales soar during the pandemic, like the exercise bike company Peloton and Zoom Video, the online conference software, have collapsed as the economy reopens.
A shortage of computer chips has forced automakers to halt production several times this year amid booming demand for their vehicles. On Thursday, Ford announced that it would tackle the problem by bringing chip production closer to home. It said that it had signed a nonbinding agreement with a U.S.-based semiconductor supplier called GlobalFoundries to develop chips for Ford vehicles and that the companies would explore expanding domestic chip production. General Motors said it was also looking to take a more active role in chip production, working with chip companies to develop three types of microprocessors that meet all of its computing needs.
What’s Next? (Nov. 21-27)
Any Day Now
President Biden is expected this week to announce his nominee to be Federal Reserve chair. Jerome H. Powell’s term as chair ends in February. A Republican who was appointed as a Fed governor by President Barack Obama, he has a good chance of being reappointed, according to people familiar with the administration’s internal discussions. But it’s also possible that the job will go to Lael Brainard, a Fed governor who has pushed for the Fed to take a more active role in climate finance policy and has a more favorable stance toward digital currency. Mr. Biden’s decision comes at a crucial time for the Fed, which is still grappling with the fallout from an ethics scandal. The Fed is also dealing with rapidly rising inflation that has stuck around longer than it once expected, and a labor market that has yet to fully recover millions of jobs lost at the start of the pandemic.
The Holiday Shopping Season Begins
It’s been a tough year for retailers, as the pandemic not only changed shopping habits but has also led to labor shortages and supply chain disruptions. But perhaps the worst is past. Walmart and Home Depot both reported earnings above Wall Street expectations last week, and Macy’s raised its full-year outlook after strong third-quarter sales. Retailers are expecting a record holiday shopping season, though its traditional kickoff on Black Friday may not feel exceptional to their customers. With demand outpacing supply, the deals aren’t likely to be stellar.
Apple’s New Repair Program
After years of resisting making its devices easy to repair, Apple will begin selling parts, tools and guides to repair its devices starting early next year, the company announced last week. For decades, it has been impractical for consumers to repair their own devices, which meant it was simpler to buy new products. But that was out of step with Apple’s commitments to climate action. Apple’s change of heart may also have been encouraged by a Federal Trade Commission announcement in July that the agency would crack down on companies that made their devices difficult to repair.
Biden’s Social Policy Bill at a Glance
A narrow vote. The House passed President Biden’s social safety net and climate bill on Nov. 19. Democratic leaders must now coax the $2 trillion spending plan through the 50-50 Senate and navigate a tortuous budget process. Here’s a look at some key provisions:
Child care. The proposal would provide universal pre-K for all children ages 3 and 4 and subsidized child care for many families. The bill also extends an expanded tax credit for parents through 2022.
Paid leave. The proposal would provide workers with four weeks of paid family and medical leave, which would allow the United States to exit the group of only six countries in the world without any national paid leave.
Drug prices. The plan includes a provision that would, for the first time, allow the government to negotiate prices for some prescription drugs covered by Medicare.
Climate change. The single largest piece of the bill is $555 billion in climate programs. The centerpiece of the climate spending is about $300 billion in tax incentives for low-emission sources of energy.
Taxes. The plan calls for nearly $2 trillion in tax increases on corporations and the rich. The bill would also suspend a $10,000 cap on the SALT deduction, mostly to the benefit of wealthy Americans in liberal states.
Kenneth Griffin, the head of the hedge fund Citadel, paid $42.3 million at an auction for a rare copy of the U.S. Constitution, beating out a hastily organized group of cryptocurrency fans who had raised about $40 million in less than a week. Miramax is suing Quentin Tarantino over his plans to sell “Pulp Fiction” NFTs. John Deere, on the third try, finally reached a deal with striking workers. And the home of the Los Angeles Lakers will soon be known as Crypto.com Arena.