The daily business briefing: April 28, 2021
Biden aims to bolster IRS to recoup unpaid taxes, the Fed is expected to keep interest rates near zero, and more
Biden wants more money for IRS crackdown on tax evaders
President Biden wants to provide the Internal Revenue Service with an extra $80 billion and added authority so it can help come up with more revenue to cover the costs of his economic plans, The New York Times reported Tuesday, citing two people familiar with the proposal. Biden reportedly wants the IRS to step up efforts to collect money owed by tax evaders, both individuals and corporations. The tax funds recouped could reach $700 billion over a decade to help pay for Biden's $1.8 trillion American Families Plan, which he will officially unveil to a joint session of Congress on Wednesday. The proposed legislation also is expected to call for raising the top marginal tax rate for wealthy Americans, and taxes on profits from stock sales made by people who earn more than $1 million per year.
Fed expected to leave interest rates unchanged
Federal Reserve officials are expected to leave interest rates unchanged when they conclude a two-day policy meeting on Wednesday. The central bank's leaders recently have said publicly that they plan to continue supporting the economy despite recent improvement on the hiring, spending, and inflation fronts. The Fed has kept its target short-term interest rates near zero since March 2020 to keep borrowing costs down for consumers and businesses struggling to stay afloat despite restrictions related to the pandemic. Fed officials have said they would keep overnight interest rates at historically low levels until the economy has recovered, and Fed Chair Jerome Powell has said the labor market and inflation won't reach the Fed's target levels this year.
Biden to order minimum wage hike to $15 hourly for federal contractors
President Biden is set to sign an executive order to raise the minimum wage to $15 an hour for federal contractors, an increase from the current $10.95 an hour. The order will give agencies until early 2022 to implement the new wage. The White House also said the executive order will eliminate the "tipped minimum wage" for federal contractors by 2024. This will affect "hundreds of thousands" of federal contractors, although a senior administration official noted to NBC the exact number who will benefit is not "static." The minimum wage for federal contractors was last raised in 2014. This comes after an effort by Democrats to raise the federal minimum wage to $15 an hour came to a halt in the Senate.
Biden to pitch $1.8 trillion American Families Plan to Congress
President Biden on Wednesday will unveil his $1.8 trillion American Families Plan when he makes his first address to a joint session of Congress. The proposal, which comes less than a month after Biden proposed spending more than $2 trillion on infrastructure and other projects over eight years, calls for a surge in federal investment in education, childcare, and paid family leave, senior administration officials said. Together, the proposals are designed to respond to urgent needs and help the economy bounce back from the damage done by the coronavirus pandemic. The American Families Plan includes $1 trillion in new spending — including $225 billion for childcare and the same amount for family- and medical leave — and $800 billion in tax credits that Biden plans to pay for partly by raising tax rates on the wealthiest Americans, according to the White House.
Stock futures mixed ahead of more earnings, Fed decision
U.S. stock index futures were mixed early Wednesday ahead of another flurry of corporate earnings and the Federal Reserve's statement after a two-day policy meeting. Futures for the Dow Jones Industrial Average and the tech-heavy Nasdaq were down by 0.1 percent several hours before the opening bell. Those of the S&P 500 were up by 0.1 percent. Google-parent Alphabet's shares rose by more than 5 percent in premarket trading after the company reported better-than expected earnings after the market closed on Tuesday. Software giant Microsoft's shares fell by 2 percent even though its earnings beat analysts' estimates. Starbucks raised its full-year outlook, boosting optimism about the economic recovery, but its shares still dipped in premarket trading.