Connect with us


Child care is out, climate is in: Here’s what got axed—and didn’t—from Biden’s big bill, with Manchin and Simena’s sign-off



Child care is out, climate is in: Here's what got axed—and didn't—from Biden's big bill, with Manchin and Simena's sign-off

Last year, it seemed that President Joe Biden’s policy agenda would never come to pass after his multi trillion-dollar Build Back Better agenda failed to make it through Congress.

His original plan included sweeping provisions targeting climate change, healthcare expansion, and tax reform. With opposition from two centrist Democrats in an evenly divided Senate, the package could only move past the House.

On Sunday night, however, Senate Democrats passed a slimmed-down version of the bill, now known as the Inflation Reduction Act, sending it to the House for approval, expected this Friday before heading to Biden’s desk for a final signature. 

“Today, Senate Democrats sided with American families over special interests, voting to lower the cost of prescription drugs, health insurance, and everyday energy costs and reduce the deficit, while making the wealthiest corporations finally pay their fair share,” wrote Biden in a statement shared on Sunday.

Over $1 trillion less expensive than Build Back Better, the Inflation Reduction Act represents months of negotiations that stripped away many of the former package’s most progressive elements yet would still represent a shot in the arm for the Biden presidency after a trying 2022. While it delivers on some original targets, like climate, it skips others entirely—like extra support for families with children.

Here’s what’s still included, and what’s not.

Climate and clean energy at the forefront

When the White House outlined its plans for Build Back Better last year, its provisions relating to climate change were wide-ranging.  

They included tax credits meant to offset costs for middle class families shifting to clean energy, a revised framework to aid American manufacturing of clean energy components, and investments in climate-smart agriculture, and the creation of the Civilian Climate Corps, a New Deal-style coalition designed to simultaneously build jobs while protecting the environment.

These expansive climate provisions were a sticking point for Senator Joe Manchin (D-WV), whose decision not to sign off on the bill prevented it from passing last year. 

In its revised form, the Inflation Reduction Act is still a significant climate package, calling itself “the single biggest climate investment in U.S. history, by far.” Its focus, however, has shifted primarily to the financial benefits outlined in Build Back Better, with provisions to invest nearly $369 billion over a decade in climate change programs and clean power

The bill still has the potential to move the U.S. significantly closer to Biden’s goal of reducing greenhouse gas pollution to 50% of 2005 levels by 2030, which the administration announced last spring.

Childcare and other social supports are gone

Key to Biden’s original Build Back Better plan was an array of provisions that would have benefited millions of America’s most vulnerable citizens, along with bolstering investment in the country’s infrastructure. 

Most of these didn’t survive.

Notable in the original package was an extension of the Child Tax Credit, which families received throughout 2021 as part of the American Rescue Plan. The credits, which came in the form of monthly $200 or $300 checks depending on the age of the child, were credited with lifting millions of children out of poverty while in effect last year. 

The credit’s extension was not included in the Inflation Reduction Act. Neither were additional provisions to expand child care access in the U.S. Support for older Americans and people with disabilities, funding for affordable housing, an expanded free school meal program, and a plan for universal preschool also didn’t make it. 

Healthcare reform is preserved

The Inflation Reduction Act does, however, preserve some of Build Back Better’s attempt to expand and reform healthcare access in the U.S.

Most notably, it caps the out-of-pocket cost for prescription drugs for seniors on Medicaid at $2,000. It also includes a cap of $35 per month on the price of insulin for Americans on Medicaid, though not for those covered by private insurance, and allows for a limited amount of negotiation on the price of prescription drugs.

The bill does not expand Medicaid coverage, as Build Back Better intended to do, to approximately four million uninsured Americans currently left in a coverage gap. Nor does it extend Medicare to include hearing benefits, per the original plan. It does, however, include a three-year extension of Affordable Care Act subsidies.

A more complicated funding structure

In order to fund Build Back Better, the White House planned a major reversal of Trump-era tax cuts and levies on corporations and wealthy Americans. Senator Kyrsten Sinema (D-AZ), who joined Sen. Manchin in opposing Build Back Better, focused specifically on those wide-ranging tax increases on the wealthy. 

Following negotiations on the Inflation Reduction Act, the final bill instead includes a 15% minimum tax on the profits corporations report to shareholders, applying to companies that report more than $1 billion annually in their financial statements.

Also due to Sinema’s negotiations, the package does not include a measure that would have limited a tax break for hedge funds and private equity companies. Instead, it includes a 1% excise tax on stock buybacks to make up for that lost revenue.

The package also includes an $80 billion investment in the International Revenue Service in order to bolster its efforts to rein in tax evasion. 

What could it mean for midterms?

Prior to Sen. Manchin and Sen. Sinema’s cooperation on the Inflation Reduction Act, their opposition to Build Back Better spelled disaster for Biden’s policy prospects for the rest of his term. 

Historically, the incumbent president’s party does not do well during midterm election season. If Democrats were to lose their narrow control in Congress this fall, passing significant legislation in the future would become even less likely.

By passing the Senate on Sunday, then, the Inflation Reduction Act will likely leave a major mark on Biden’s presidential legacy.“This bill is far from perfect,” said Biden at a press conference at the end of last month. “It’s a compromise.”

Sign up for the Fortune Features email list so you don’t miss our biggest features, exclusive interviews, and investigations.


Coinbase’s near-term outlook is ‘still grim’, JPMorgan says, while BofA is more positive about firm’s ability to face crypto winter



Coinbase's near-term outlook is 'still grim', JPMorgan says, while BofA is more positive about firm's ability to face crypto winter

Coinbase is well positioned to successfully navigate this crypto winter and take market share, Bank of America said in a research report Tuesday. It maintained its buy recommendation following the exchange’s second-quarter results.

The results warrant “a muted stock reaction,” the report said. Net revenue of $803 million was below the bank’s and consensus estimates, while its adjusted $151 million loss before interest, tax, depreciation and amortization was better than the street expected. Importantly, the company remains “cautiously optimistic” it can reach its goal of no more than $500 million of adjusted EBITDA loss for the full year, the report added.

Coinbase shares fell almost 8% in premarket trading to $80.74.

Bank of America notes that Coinbase had no counterparty exposure to the crypto insolvencies witnessed in the second quarter. The company also has a “history of no credit losses from financing activities, holds customer assets 1:1, and any lending activity of customer crypto is at the discretion of the customer, with 100%+ collateral required.” These rigorous risk-management practices will be a “positive long-term differentiator” for the stock, the bank said.

JPMorgan said Coinbase had endured another challenging quarter, while noting some positives.

Trading volume and revenue were down materially. Subscription revenue was also lower, but would have been much worse were it not for higher interest rates, it said in a research report Wednesday.

The company is taking steps on expense management, and in addition to the June headcount reductions, is scaling back marketing and pausing some product investments, the note said.

The bank says the company’s near-term outlook is “still grim,” noting that the exchange expects a continued decline in 3Q 2022 monthly transacting users (MTUs) and trading volumes, but says Coinbase could take more “cost actions” if crypto prices fall further.

JPMorgan is less optimistic than Bank of America about the company in the near term, saying pressure on revenue from falling crypto markets will have a negative impact on the stock price. Still, it sees positives including higher interest rates, from which the firm will generate revenue. It also sees opportunities for the exchange to grow its user base, leveraging almost $6 billion of cash. The surge in crypto prices in July, and the forthcoming Ethereum Merge are also seen as positive catalysts, it added.

The bank maintained its neutral rating on the stock and raised its price target to $64 from $61.

Sign up for the Fortune Features email list so you don’t miss our biggest features, exclusive interviews, and investigations.

Continue Reading


Elon Musk sold $6.9B in Tesla stock in case he’s forced to buy Twitter



Elon Musk sold $6.9B in Tesla stock in case he's forced to buy Twitter

Elon Musk sold $6.9 billion of his shares in Tesla Inc., the billionaire’s biggest sale on record, saying he needed cash in case he is forced to go ahead with his aborted deal to buy Twitter Inc.

“In the (hopefully unlikely) event that Twitter forces this deal to close *and* some equity partners don’t come through, it is important to avoid an emergency sale of Tesla stock,” Musk tweeted late Tuesday after the sales were disclosed in a series of regulatory filings. 

Asked by followers if he was done selling and would buy Tesla stock again if the $44 billion deal doesn’t close, Musk responded: “Yes.”

Tesla’s chief executive officer offloaded about 7.92 million shares on Aug. 5, according to the new filings. The sale comes just four months after the world’s richest person said he had no further plans to sell Tesla shares after disposing of $8.5 billion of stock in the wake of his initial offer to buy Twitter.  

Musk last month said he was terminating the agreement to buy the social network where he has more than 102 million followers and take it private, claiming the company has made “misleading representations” over the number of spam bots on the service. Twitter has since sued to force Musk to consummate the deal, and a trial in the Delaware Chancery Court has been set for October. 

In May, Musk dropped plans to partially fund the purchase with a margin loan tied to his Tesla stake and increased the size of the equity component of the deal to $33.5 billion. He had previously announced that he secured $7.1 billion of equity commitments from investors including billionaire Larry Ellison, Sequoia Capital, and Binance. 

“I’ll put the odds at 75% that he’s buying Twitter. I’m shocked,” said Gene Munster, a former technology analyst who’s now a managing partner at venture-capital firm Loup Ventures. “This is going to be a headwind for Tesla in the near term. In the long term, all that matters is deliveries and gross margin.”

At the weekend, Musk tweeted that if Twitter provided its method of sampling accounts to determine the number of bots and how they are confirmed to be real, “the deal should proceed on original terms.” 

Musk, 51, has now sold around $32 billion worth of stock in Tesla over the past 10 months. The disposals started in November after Musk, a prolific Twitter user, polled users of the platform on whether he should trim his stake. The purpose of the latest sales wasn’t immediately clear.  

Tesla shares have risen about 35% from recent lows reached in May, though are still down about 20% this year. 

With a $250.2 billion fortune, Musk is the world’s richest person, according to the Bloomberg Billionaires Index, but his wealth has fallen around $20 billion this year as Tesla shares declined.    

Sign up for the Fortune Features email list so you don’t miss our biggest features, exclusive interviews, and investigations.

Continue Reading


The rent is too d*mn high for Gen Z: Younger generations are ‘squeezed the most’ by higher rents, BofA says



The rent is too d*mn high for Gen Z: Younger generations are 'squeezed the most' by higher rents, BofA says

Most of Gen Z is too young to remember the 2010 New York gubernatorial candidate Jimmy McMillan.

But over a decade later, they would probably agree with his signature issue (and catchphrase): the rent is too damn high.

This July, median rent payments were 7.4% higher than during the same period last year, according to a Bank of America report released Tuesday. 

The national median price for a one-bedroom apartment has been hitting new highs nearly every month this summer. It was $1,450 for July, according to rental platform Zumper. In the country’s largest city, New York, average rent exceeded a shocking $5,000 a month for the first time ever in June. 

But inflation in the rental market hasn’t hit each generation equally, and no one is getting squeezed harder by the higher monthly payments as Gen Z. Those born after 1996 have seen their median rent payment go up 16% since last July, compared to just a 3% increase for Baby Boomers, BofA internal data shows. 
“Younger consumers are getting squeezed the most by higher rent inflation,” BofA wrote.

The great rent comeback

Early in the pandemic, landlords slashed rents and gave significant COVID discounts to entice tenants to stay instead of leaving urban areas. Once those deals started expiring in 2021, many landlords suddenly raised payments once again, sometimes asking for over double their pandemic value. 

Young people across the board have been hit hard, and rent burdens compared to age can be seen even within a single generation. Younger millennials had their median rent payment grow 11% from last year, while the median payment for older millennials rose 7%. Gen X experienced a 5% median rent increase, according to BofA. 

It’s not a surprise, then, that Gen Z feels so strapped for cash. The majority of young people, 61%, said they want to receive their wages daily instead of twice a week, a practice typically reserved for workers living paycheck to paycheck, according to a report from the Center for Generational Kinetics, which specializes in research across the generations. Rising rent inflation has even priced nearly a third of Gen Zers out of the apartment search altogether. Around 29% of them have resorted to living at home as a “long-term housing solution,” according to a June survey from personal finance company Credit Karma.

It’s no wonder—the rent really is too high.

Sign up for the Fortune Features email list so you don’t miss our biggest features, exclusive interviews, and investigations.

Continue Reading

Copyright © 2021 Seminole Press.