WASHINGTON — At the center of the new climate and tax package that Democrats appear to be on the verge of passing is one of the most significant changes to America’s tax code in decades: a new corporate minimum tax that could reshape how the federal government collects revenue and alter how the nation’s most profitable companies invest in their businesses.
The proposal is one of the last remaining tax increases in the package that Democrats are aiming to pass along party lines in coming days. After months of intraparty disagreement over whether to raise taxes on the wealthy or roll back some of the 2017 Republican tax cuts to fund their agenda, they have settled on a longstanding political ambition to ensure that large and profitable companies pay more than $0 in federal taxes.
To accomplish this, Democrats have recreated a policy that was last employed in the 1980s: trying to capture tax revenue from companies that report a profit to shareholders on their financial statements while bulking up on deductions to whittle down their tax bills.
reduce their effective tax rates well below the statutory 21 percent. It was originally projected to raise $313 billion in tax revenue over a decade, though the final tally is likely to be $258 billion once the revised bill is finalized.
would eliminate this cap and extend the tax credit until 2032; used cars would also qualify for a credit of up to $4,000.
Energy industry. The bill would provide billions of dollars in rebates for Americans who buy energy efficient and electric appliances as well as tax credits for companies that build new sources of emissions-free electricity, such as wind turbines and solar panels. The package also sets aside $60 billion to encourage clean energy manufacturing in the United States. The bill also requires businesses to pay a financial penalty per metric ton for methane emissions that exceed federal limits starting in 2024.
Low-income communities. The bill would invest over $60 billion to support low-income communities and communities of color that are disproportionately burdened by effects of climate change. This includes grants for zero-emissions technology and vehicles, as well as money to mitigate the negative effects of highways, bus depots and other transportation facilities.
Fossil fuels industry. The bill would require the federal government to auction off more public lands and waters for oil drilling and expand tax credits for coal and gas-burning plants that rely on carbon capture technology. These provisions are among those that were added to gain the support of Senator Joe Manchin III, Democrat of West Virginia.
West Virginia. The bill would also bring big benefits to Mr. Manchin’s state, the nation’s second-largest producer of coal, making permanent a federal trust fund to support miners with black lung disease and offering new incentives for companies to build wind and solar farms in areas where coal mines or coal plants have recently closed.
Because of that complexity, the corporate minimum tax has faced substantial skepticism. It is less efficient than simply eliminating deductions or raising the corporate tax rate and could open the door for companies to find new ways to make their income appear lower to reduce their tax bills.
Similar versions of the idea have been floated by Mr. Biden during his presidential campaign and by Senator Elizabeth Warren, Democrat of Massachusetts. They have been promoted as a way to restore fairness to a tax system that has allowed major corporations to dramatically lower their tax bills through deductions and other accounting measures.
According to an early estimate from the nonpartisan Joint Committee on Taxation, the tax would most likely apply to about 150 companies annually, and the bulk of them would be manufacturers. That spurred an outcry from manufacturing companies and Republicans, who have been opposed to any policies that scale back the tax cuts that they enacted five years ago.
Although many Democrats acknowledge that the corporate minimum tax was not their first choice of tax hikes, they have embraced it as a political winner. Senator Ron Wyden of Oregon, the chairman of the Senate Finance Committee, shared Joint Committee on Taxation data on Thursday indicating that in 2019, about 100 to 125 corporations reported financial statement income greater than $1 billion, yet their effective tax rates were lower than 5 percent. The average income reported on financial statements to shareholders was nearly $9 billion, but they paid an average effective tax rate of just 1.1 percent.
“Companies are paying rock-bottom rates while reporting record profits to their shareholders,” Mr. Wyden said.
told the Senate Finance Committee last year. “This behavioral response poses serious risks for financial accounting and the capital markets.”
Other opponents of the new tax have expressed concerns that it would give more control over the U.S. tax base to the Financial Accounting Standards Board, an independent organization that sets accounting rules.
“The potential politicization of the F.A.S.B. will likely lead to lower-quality financial accounting standards and lower-quality financial accounting earnings,” Ms. Hanlon and Jeffrey L. Hoopes, a University of North Carolina professor, wrote in a letter to members of Congress last year that was signed by more than 260 accounting academics.
the chief economist of the manufacturing association. “Arizona’s manufacturing voters are clearly saying that this tax will hurt our economy.”
Ms. Sinema has expressed opposition to increasing tax rates and had reservations about a proposal to scale back the special tax treatment that hedge fund managers and private equity executives receive for “carried interest.” Democrats scrapped the proposal at her urging.
When an earlier version of a corporate minimum tax was proposed last October, Ms. Sinema issued an approving statement.
“This proposal represents a common sense step toward ensuring that highly profitable corporations — which sometimes can avoid the current corporate tax rate — pay a reasonable minimum corporate tax on their profits, just as everyday Arizonans and Arizona small businesses do,” she said. In announcing that she would back an amended version of the climate and tax bill on Thursday, Ms. Sinema noted that it would “protect advanced manufacturing.”
That won plaudits from business groups on Friday.
“Taxing capital expenditures — investments in new buildings, factories, equipment, etc. — is one of the most economically destructive ways you can raise taxes,” Neil Bradley, chief policy officer of the U.S. Chamber of Commerce, said in a statement. He added, “While we look forward to reviewing the new proposed bill, Senator Sinema deserves credit for recognizing this and fighting for changes.”
ANNAPOLIS, Md.–(BUSINESS WIRE)–Thomas Park Investments closed the first half of 2022 with $75 million in medical office building (MOB) acquisitions, halfway toward the company’s goal of $150 million in acquisitions this year. The acquisitions include a purchase in Raleigh, North Carolina, signaling the company’s expansion into the southeast.
“These acquisitions add some of the most trusted names in health care to our roster of tenants, including Duke Health, UNC Physicians Network, Penn Medicine, University of Maryland Medical System, South Shore Health, and St. Luke’s,” says EJ Rumpke, Thomas Park’s Chief Executive Officer. “We’re pleased with the increased diversity of tenants and health systems these recent acquisitions bring to our portfolio.”
First half acquisitions include:
8300 Health Park in Raleigh, North Carolina. This 178,000-square foot MOB was acquired off-market and is anchored by Carolina Family Practice & Sports Medicine (Duke Health), Boylan Healthcare (UNC Physicians Network), Healthtrax, and Raleigh Endoscopy.
5000 Dearborn Circle in Mt. Laurel, New Jersey. This 56,000-square-foot MOB is anchored by Penn Medicine and was acquired in an off-market transaction. This core plus acquisition expands Thomas Park’s presence in the greater Philadelphia market.
8322 Bellona Avenue in Baltimore, Maryland. This 56,000-square-foot MOB was acquired off market in a partial sale-leaseback. The building is anchored by Towson Orthopaedic Associates, part of the University of Maryland St. Joseph Medical Center.
223 Chief Justice Cushing Parkway in Cohasset, Massachusetts. The 35,000-square-foot core plus purchase was acquired off market and is in a highly desirable and affluent submarket of Boston. It’s anchored by HealthCare South and South Shore Children’s Dentistry.
5325 Northgate Drive in Bethlehem, Pennsylvania. This 53,000-square-foot value-add purchase involves a partial sale-leaseback. Anchor tenants include Wills Eye Physicians (Mid Atlantic Retina), Radiology & MRI of Bethlehem, and Bethlehem Endoscopy.
“Our significant growth says a lot about the caliber of our team,” says Thomas Park’s Chief Operating Officer Gene Parker. “And our growth has fueled a hiring expansion, raising our headcount by 125% since the beginning of the year.”
According to Alex Kopicki, Thomas Park’s Chief Investment Officer, rising interest rates will not slow the company’s momentum. “We have a knack for finding good real estate that can weather the short-term volatility of the debt markets, as we predominantly have a long-term outlook on the health care real estate sector,” he said.
About Thomas Park Investments
Thomas Park Investments is a leading private equity real estate firm specializing in health care real estate. Founded in 2019, Thomas Park’s leadership has more than sixty years of commercial real estate experience and manages more than 825,000 square feet of commercial space. The Annapolis, Maryland based firm is on pace to have $1 billion of assets under management by 2025. For more information, visit thomas-park.com.
CAMBRIDGE, Mass.–(BUSINESS WIRE)–Cambridge Savings Bank (CSB), a full-service mutual bank with a customer-first approach and more than $5 billion in assets, today announced it has provided a $61.7 million construction loan to The Michaels Organization (Michaels), a national leader in residential real estate with more than 175,000 residents across 37 states, the District of Columbia and the U.S. Virgin Islands.
Michaels has broken ground on the construction of a 219-unit, modern apartment building in the Dorchester neighborhood located at 780 Morrissey Boulevard. The proposed project, which will feature both market-rate and affordable units, consists of a mix of studios, one-bedrooms, and two-bedrooms — with an average unit size of 622 square feet. The multifamily community will have harbor views with a rooftop deck, 24-hour fitness center, dog park, and a common area for work-from-home and entertainment purposes.
“Strategic growth into a new territory would not be successful without a reputable local partner, which is precisely why we partnered with Cambridge Savings Bank,” said Jay Russo, Vice President of Development of The Michaels Organization, and the lead developer for the project. “We are looking forward to growing alongside them on our first ground-up project in Boston with the construction of an affordable housing community featuring amenity-rich units in Dorchester.”
CSB was made aware of the subject project and contacted The Michaels Organization to inquire about financing opportunities. After initial introductions and in-depth discussions, it was apparent how committed each organization was to community-oriented investments and long-term relationships, and shared corporate values.
A comprehensive due diligence process culminated in the CSB approval to finance the construction of the 780 Morrissey project with the loan closing in the fourth quarter of 2021. Demolition and site preparation commenced in October 2021 with project construction anticipated to take approximately 22 months, reaching completion in July 2023.
Headquartered in Camden, New Jersey, Michaels is the largest private sector owned affordable housing in the United States. While this is their first new construction development in Massachusetts, Michaels has a significant rehabilitation project underway in Springfield, in collaboration with MassHousing.
Michael’s regional presence in Massachusetts includes Development professionals as well as a property management team, and Boston is a primary market for the organization for both affordable and market-rate developments. As they build in the Boston community, Michaels will look toward CSB to deepen their partnership as they navigate a multitude of potential deals in the pipeline in the Massachusetts real estate market.
“We’re proud to help establish The Michaels Organization in the Greater Boston area and are eager to support a community that will be transformed by the 780 Morrissey project,” said David Ault, SVP – Senior CRE Loan Officer at CSB. “CSB’s relationship-centric approach to the partnership with Michaels means we’re not only looking forward to executing alongside them on this project, but on potential new opportunities for years to come.”
For more information on CSB’s commercial real estate lending team, please visit cambridgesavings.comor contact Aidan Hume at firstname.lastname@example.org.
About Cambridge Savings Bank
Cambridge Savings Bank is a full-service banking institution with over $5 billion in assets. As a mutual bank, CSB is committed to improving the quality of life of our employees, customers, and the communities we serve. One of the oldest and largest community banks in Massachusetts, Cambridge Savings Bank offers a full line of individual and business banking services and has branches located in Arlington, Bedford, Belmont, Burlington, Cambridge, Charlestown, Concord, Lexington, Melrose, Newton, Somerville, and Watertown. To learn more about how we can meet your needs, visit us at cambridgesavings.com, or better yet, stop by one of our branches. Member FDIC. Equal Housing Lender. NMLS ID# 543370
About The Michaels Organization
The Michaels Organization is a national leader in residential real estate, offering full-service capabilities in development, property management, construction, and investment management. Serving more than 175,000 residents in more than 440 communities across 37 states, the District of Columbia, and the U.S. Virgin Islands, Michaels is committed to crafting housing solutions that jumpstart education, civic engagement, and neighborhood prosperity and to creating Communities That Lift Lives. For more information, please visit: Michaels.com.
DEVENS, Mass. — The machines stand 20 feet high, weigh 60,000 pounds and represent the technological frontier of 3-D printing.
Each machine deploys 150 laser beams, projected from a gantry and moving quickly back and forth, making high-tech parts for corporate customers in fields including aerospace, semiconductors, defense and medical implants.
The parts of titanium and other materials are created layer by layer, each about as thin as a human hair, up to 20,000 layers, depending on a part’s design. The machines are hermetically sealed. Inside, the atmosphere is mainly argon, the least reactive of gases, reducing the chance of impurities that cause defects in a part.
“The Mainstreaming of Additive Manufacturing.”
a report by Hubs, a marketplace for manufacturing services.
The Biden administration is looking to 3-D printing to help lead a resurgence of American manufacturing. Additive technology will be one of “the foundations of modern manufacturing in the 21st century,” along with robotics and artificial intelligence, said Elisabeth Reynolds, special assistant to the president for manufacturing and economic development.
Additive Manufacturing Forward, an initiative coordinated by the White House in collaboration with major manufacturers. The five initial corporate members — GE Aviation, Honeywell, Siemens Energy, Raytheon and Lockheed Martin — are increasing their use of additive manufacturing and pledged to help their small and medium-size American suppliers adopt the technology.
VulcanForms was founded in 2015 by Dr. Hart and one of his graduate students, Martin Feldmann. They pursued a fresh approach for 3-D printing that uses an array of many more laser beams than existing systems. It would require innovations in laser optics, sensors and software to choreograph the intricate dance of laser beams.
By 2017, they had made enough progress to think they could build a machine, but would need money to do it. The pair, joined by Anupam Ghildyal, a serial start-up veteran who had become part of the VulcanForms team, went to Silicon Valley. They secured a seed round of $2 million from Eclipse Ventures.
The VulcanForms technology, recalled Greg Reichow, a partner at Eclipse, was trying to address the three shortcomings of 3-D printing: too slow, too expensive and too ridden with defects.
Arwood Machine this year.
Arwood is a modern machine shop that mostly does work for the Pentagon, making parts for fighter jets, underwater drones and missiles. Under VulcanForms, the plan over the next few years is for Arwood to triple its investment and work force, currently 90 people.
VulcanForms, a private company, does not disclose its revenue. But it said sales were climbing rapidly, while orders were rising tenfold quarter by quarter.
Cerebras, which makes specialized semiconductor systems for artificial intelligence applications. Cerebras sought out VulcanForms last year for help making a complex part for water-cooling its powerful computer processors.
The semiconductor company sent VulcanForms a computer-design drawing of the concept, an intricate web of tiny titanium tubes. Within 48 hours VulcanForms had come back with a part, recalled Andrew Feldman, chief executive of Cerebras. Engineers for both companies worked on further refinements, and the cooling system is now in use.
Accelerating the pace of experimentation and innovation is one promise of additive manufacturing. But modern 3-D printing, Mr. Feldman said, also allows engineers to make new, complex designs that improve performance. “We couldn’t have made that water-cooling part any other way,” Mr. Feldman said.
“Additive manufacturing lets us rethink how we build things,” he said. “That’s where we are now, and that’s a big change.”
June 26 (Reuters) – The largest U.S. law firms did not take a public stance following the U.S. Supreme Court’s reversal of Roe v. Wade on Friday, diverging from the approach of some major companies that have made statements on the closely watched abortion case.
The high court’s 6-3 Dobbs decision upheld a Republican-backed Mississippi law that bans abortion after 15 weeks of pregnancy. Many states are expected to further restrict or ban abortions following the ruling.
Reuters on Friday asked more than 30 U.S. law firms, including the 20 largest by total number of lawyers, for comments on the Dobbs ruling and whether they would cover travel costs for employees seeking an abortion.
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The vast majority did not respond by Saturday afternoon, and only two, Ropes & Gray and Morrison & Foerster, said they would implement such a travel policy.
Morrison & Foerster, with nearly 1,000 attorneys, was the only large firm to issue a public statement by Saturday afternoon.
The firm’s chair, Larren Nashelsky, said Morrison & Foerster would “redouble our efforts to protect abortion and other reproductive rights.”
The Dobbs decision has been expected since a draft opinion was leaked in May.
Several major U.S. corporations, including The Walt Disney Co (DIS.N) and Meta Platforms (META.O) said on Friday they will cover travel costs for employees seeking abortions. read more
Industry experts say law firms could speak out on Dobbs in the future if employees and clients push them to take a public stance. For now, firm leaders appear to be carefully weighing the advantages and disadvantages of commenting, including the possibility of alienating clients, experts said.
“This is a tightrope to walk for firms,” said Kent Zimmermann, a law firm consultant with the Zeughauser Group. “They have a diversity of views among their talent and clients.”
Some firms have issued internal communications to employees about the decision. Ropes & Gray Chair Julie Jones said in an internal memo viewed by Reuters that the firm will hold several community gatherings to discuss the ruling and offer “comfort.”
“As a leader of Ropes & Gray, I am concerned about the effect of this decision on our community,” Jones wrote, while acknowledging that her memo may cause “offense to portions of our community.”
A Ropes & Gray spokesperson told Reuters Friday that employees enrolled in its medical plan are eligible for financial assistance to travel out of state for an abortion.
Another large U.S. law firm, Steptoe & Johnson, offered its U.S. workforce the day off on Friday, a spokesperson confirmed. The spokesperson did not immediately respond to further requests for comment.
Despite a dearth of public statements, a number of law firms publicly signaled ahead of the ruling that they planned to provide free legal support to women seeking abortions if Roe was overturned.
Both the New York Attorney General Leticia James and the San Francisco City Attorney David Chiu, with the Bar Association of San Francisco, have convened pro bono initiatives that rely on law firm volunteers. Paul Weiss, Gibson Dunn & Crutcher and O’Melveny & Myers are among the participants.
Paul Weiss Chair Brad Karp called the Dobbs decision a “crushing loss” in an internal message to the firm on Friday provided to Reuters. Paul Weiss and O’Melveny, which both represented Jackson Women’s Health Organization, respondents in the Dobbs case, deferred comment on the ruling to their co-counsel, the Center for Reproductive Rights.
The center said in a statement that the court had “hit a new low by taking away – for the first time ever – a constitutionally guaranteed personal liberty.”
Gibson Dunn did not respond to request for comment.
Robert Kamins, a consultant with Vertex Advisors who works with law firms, said firms will be “very cautious” about taking early positions on the ruling.
“They have to make sure that they are being thoughtful about it,” he said. “What is the business impact? What is the client impact? What is the recruiting impact? There are lots of things to think about.”
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Reporting by Karen Sloan in Sacramento, California, and Jacqueline Thomsen in Swampscott, Massachusetts; Additional reporting by Mike Scarcella in Silver Spring, Maryland; Editing by Rebekah Mintzer, Noeleen Walder and Leslie Adler
Our Standards: The Thomson Reuters Trust Principles.
BERLIN — Russia’s invasion of Ukraine seemed like an unexpected opportunity for environmentalists, who had struggled to focus the world’s attention on the kind of energy independence that renewable resources can offer. With the West trying to wean itself from Russian oil and gas, the argument for solar and wind power seemed stronger than ever.
But four months into the war, the scramble to replace Russian fossil fuels has triggered the exact opposite. As the heads of the Group of 7 industrialized nations gather in the Bavarian Alps for a meeting that was supposed to cement their commitment to the fight against climate change, fossil fuels are having a wartime resurgence, with the leaders more focused on bringing down the price of oil and gas than immediately reducing their emissions.
Nations are reversing plans to stop burning coal. They are scrambling for more oil and are committing billions to building terminals for liquefied natural gas, known as L.N.G.
coal plants that had been shuttered or were scheduled to be phased out.
as top economic officials in Ukraine, say it would serve two key purposes: increasing the global supply of oil to put downward pressure on oil and gasoline prices, while reducing Russia’s oil revenue.
Proponents say it is likely that Russia would continue to produce and sell oil even at a discount because it would be easier and more economical than capping wells to cut production. Simon Johnson, an economist at the Massachusetts Institute of Technology, estimates that it could be in Russia’s economic interest to continue selling oil with a price cap as low as $10 a barrel.
Some proponents say it is possible that China and India would also insist on paying the discounted price, further driving down Russian revenues.
Critics charge that building all 12 terminals would produce an excess capacity. But even half that number would produce three-quarters of the carbon emissions Germany is allowed under international agreements, according to a recent report published by a German environmental watchdog. The terminals would be in use until 2043, far too long for Germany to become carbon neutral by 2045, as pledged by Mr. Scholz’s government.
And countries are not just investing in infrastructure at home.
Last month, Mr. Scholz was in Senegal, one of the developing countries invited to the Group of 7 summit, to discuss cooperating not just on renewables but also on gas extraction and L.N.G. production.
In promoting the Senegal gas project, analysts say, Berlin is violating its own Group of 7 commitment not to offer public financing guarantees for fossil fuel projects abroad.
These contradictions have not gone unnoticed by poorer nations, which are wondering how Group of 7 countries can push for commitments to climate targets while also investing in gas production and distribution.
One explanation is a level of lobbying among fossil fuel companies not seen for years, activists say.
“It looks to me like an attempt by the oil and gas industry to end-run the Paris Agreement,” said Bill Hare of Climate Analytics, an advisory group in Berlin, referring to the landmark 2015 international treaty on climate change. “And I’m very worried they might succeed.”
Ms. Morgan in the German Foreign Ministry shares some of these concerns. “They’re doing everything that they can to move it forward, also in Africa,” she said of the industry. “They want to lock it in. Not just gas, but oil and gas and coal.”
But she and others are still hopeful that the Group of 7 can become a platform for tying climate goals to energy security.
Environmental and foreign policy analysts argue that the Group of 7 could support investments in renewable energy and energy efficiency, while pledging funds for poorer nations hit with the brunt of climate disasters.
Above all, activists warn, rich countries need to resist the temptation to react to the short-term energy shortages by once again betting on fossil fuel infrastructure.
“All the arguments are on the table now,” said Ms. Neubauer, the Fridays for Future activist. “We know exactly what fossil fuels do to the climate. We also know very well that Putin is not the only autocrat in the world. We know that no democracy can be truly free and secure as long as it depends on fossil fuel imports.”
Katrin Bennhold Bennhold reported from Berlin, and Jim Tankersley from Telfs, Austria. Erika Solomon and Christopher F. Schuetze contributed reporting from Berlin.
Justin Nelson’s letter, one of the thousands that arrived at the White House this month, said he was proud to vote for President Biden back in 2020. Now he had a request: Would the president please honor a campaign promise and use the enclosed pen to wipe out thousands of dollars he owes in student loans?
The letter-writing campaign — #PensForBiden — is the latest attempt to sway Mr. Biden on a high-stakes dilemma as the midterm elections approach and much of his domestic agenda remains stalled: What to do about the $1.6 trillion that more than 45 million people owe the government?
So far, Mr. Biden has extended the pandemic pause on student loan payments four times, most recently until Aug. 31. Payments have now been on hold for more than two years, over two presidential administrations.
But all that time poses problems. Many of the issues that have long bedeviled the loan system have only grown more complicated during the pause, and receiving bills again will infuriate and frustrate millions of people who feel trapped by a broken system and crushing debt.
progressive wing of his Democratic Party. He backed the idea on the campaign trail in 2020. “I’m going to make sure that everybody in this generation gets $10,000 knocked off of their student debt as we try to get out of this God-awful pandemic,” he told an audience in Miami.
Senate Democrats lack the votes to help make good on that promise, leaving executive action as the only possible pathway. But close allies say some influential members of Mr. Biden’s team have been reluctant for him to do it — some because they disagree with the idea of forgiveness and some because they don’t believe he has the authority.
“He’s got lawyers telling him he shouldn’t,” said Representative James E. Clyburn of South Carolina, the third-ranking House Democrat and a key supporter of Mr. Biden. But Mr. Clyburn, the most senior Black lawmaker in Congress, said presidential actions had brought sweeping changes before, including Abraham Lincoln’s Emancipation Proclamation and Harry Truman’s order banning segregation in the military.
“If executive orders can free slaves and integrate the armed services, it can eliminate debt,” Mr. Clyburn said.
analysis released by the Federal Reserve Bank of New York last week. A separate study by the bank found that surveyed borrowers reported a 16 percent chance of quickly missing a payment if the moratorium ended.
Mr. Nelson, a 32-year-old bank operations associate in Minneapolis, said the pause had freed up $120 a month for home repairs and other expenses.
recent Morning Consult poll found that more than 60 percent of registered voters were in favor of some level of student debt cancellation. But despite Mr. Biden’s campaign promise, his advisers have been divided, three people with knowledge of the discussions said.
Some view debt cancellation as relief for critical constituencies, said the people, who spoke on the condition of anonymity because they were not authorized to speak publicly. Others oppose it as bad policy or because they fear the economic effects of putting more money in consumers’ pockets when inflation is soaring.
But the pressure on Mr. Biden to act has only grown.
Senator Elizabeth Warren of Massachusetts, whose pledge to cancel up to $50,000 per borrower was a centerpiece of her 2020 presidential primary bid, and Senator Chuck Schumer of New York, the majority leader, led more than 90 congressional Democrats in sending Mr. Biden a letter last month asking him to “provide meaningful student debt cancellation.”
voting rights protections and Mr. Biden’s Build Back Better agenda, as reason for the president to take matters into his own hands.
The New Georgia Project, a group focusing on voter registration founded by the gubernatorial candidate Stacey Abrams, has cast debt relief as an action that would serve Mr. Biden’s pledge to put racial equity at the forefront of his presidency.
“Much of your administration’s legislative priorities have been stymied by obstructionist legislators,” the group wrote in a joint letter with the advocacy group the Debt Collective that was reviewed by The New York Times. “Student debt cancellation is a popular campaign promise that you, President Biden, have the executive power to deliver on your own.”
announcing the latest pause extension last month, Mr. Biden’s press secretary, Jen Psaki, said he “hasn’t ruled out” the idea.
But Mr. Biden’s power to act unilaterally remains an open legal question.
Last April, at Mr. Biden’s request, the Education Department’s acting general counsel wrote an analysis of the legality of canceling debt via executive action. The analysis has not been released; a version provided in response to public records requests was fully redacted.
Proponents of forgiveness say the education secretary has broad powers to modify or cancel debt, which both the Trump and Biden administrations have leaned on to carry out the payment freeze that started in March 2020.
Legal challenges would be likely, although who would have standing is unclear. A Virginia Law Review article this month argued that the answer might be no one: States, for example, have little say in the operation of a federal loan system.
scathing criticism from government auditors and watchdogs, with even basic functions sometimes breaking down.
Some problems are being addressed. The Biden administration has wiped out $17 billion in debt for 725,000 borrowers by expanding and streamlining forgiveness programs for public servants and those who were defrauded by their schools, among others. Last week, it offered millions of borrowers added credit toward forgiveness because of previous payment-counting problems.
But there’s much still to do. The Education Department was deluged by applicants after it expanded eligibility for millions of public servants. And settlement talks in a class-action suit by nearly 200,000 borrowers who say they were defrauded by their schools recently broke down, setting up a trial this summer.
will be restored to good standing.
Canceling debt could make addressing all this easier, advocates say. Forgiving $10,000 per borrower would wipe out the debts of 10 million or more people, according to different analyses, which would free up resources to deal with structural flaws, proponents argue.
“We’ve known for years that the system is broken,” said Sarah Sattelmeyer, a higher-education project director at New America, a think tank. “Having an opportunity, during this timeout, to start fixing some of those major issues feels like a place where the Education Department should be focusing its attention.”
Voters like Ashleigh A. Mosley will be watching. Ms. Mosley, 21, a political science major at Albany State University in Georgia, said she had been swayed to vote for Mr. Biden because of his support for debt cancellation.
Ms. Mosley, who also attended Alabama A&M University, has already borrowed $52,000 and expects her balance to grow to $100,000 by the time she graduates. The debt already hangs over her head.
“I don’t think I’m going to even have enough money to start a family or buy a house because of the loans,” she said. “It’s just not designed for us to win.”
The pandemic’s grip on the economy appears to be loosening. Job growth and retail spending were strong in January, even as coronavirus cases hit a record. New York, Massachusetts and other states have begun to lift indoor mask mandates. California on Thursday unveiled a public health approach that will treat the coronavirus as a manageable long-term risk.
Yet the economy remains far from normal. Patterns of work, socializing and spending, disrupted by the pandemic, have been slow to readjust. Prices are rising at their fastest pace in four decades, and there are signs that inflation is creeping into a broader range of products and services. In surveys, Americans report feeling gloomier about the economy now than at the height of the lockdowns and job losses in the first weeks of the crisis.
In other words, it may no longer be that “the virus is the boss” — as Austan Goolsbee, a University of Chicago economist, has put it. But the changes that it set in motion have proved both more persistent and more pervasive than economists once expected.
“I — totally naïvely — thought that once a vaccine was available, that we were six months away from a complete re-evaluation of the economy, and instead we’re just grinding it out,” said Wendy Edelberg, director of the Hamilton Project, an economic policy arm of the Brookings Institution. “A switch didn’t get flipped, and I thought it was going to.”
computer chips, lumber and even garage doors have held up production of items from cars to houses, while a lack of shipping containers has led to delays in almost anything transported from overseas. Some bottlenecks have let up in recent months, but logistics experts expect it to take months if not years for supply chains to run smoothly again.
disproportionate share of them women — have not.
Diahann Thomas was at work at a Brooklyn call center in January when she got a call from her son’s school: Her 11-year-old had been exposed to a classmate who had tested positive for Covid-19, and she needed to pick him up.
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In New York. The New York health commissioner announced that the state would not enforce a booster-shot requirement for health care workers set to take effect on Feb. 21. Too many workers were refusing to comply, leading to worries that the health care system would be disrupted with a mandate in place.
“There are all these moving parts now with Covid — one moment, they’re at school, the next moment they’re at home,” she said.
Ms. Thomas, 50, said her employer declined to provide flexibility while her son was in quarantine. So she quit — a decision she said was made easier by the knowledge that employers are eager to hire.
“It did boost my confidence to know that at the end of this, it’s not going to be difficult for me to pick up the pieces, and I have more bargaining power now,” she said. “There is this whole entire shift in terms of employee-employer relationship.”
Ms. Thomas expects to return to work once school schedules become more reliable. But the pandemic has shown her the value of being at home with her three children, she said, and she wants a job where she can work from home.
Whether and how people like Ms. Thomas return to work will be crucial to the economy’s path in coming months. If workers flood back to the job market as school and child care becomes more dependable and health risks recede, it will be easier for manufacturers and shipping companies to ramp up production and deliveries, giving supply a chance to catch up to demand. That in turn could allow inflation to cool without losing the economy’s progress over the past year.
care for children may not go back to work right away, or may choose to work part time. And other changes may be similarly slow to reverse: Companies that were burned by shortages may maintain larger inventories or rely on shorter supply chains, driving up costs. Workers who enjoyed flexibility from employers during the pandemic may demand it in the future. Rates of entrepreneurship, automation and, of course, remote work all increased during the pandemic, perhaps permanently.
Some of those changes could lead to higher inflation or slower growth. Others could make the economy more dynamic and productive. All make it harder for forecasters and policymakers to get a clear picture of the postpandemic economy.
“In almost every respect, economic ripple effects that we might have expected to be temporary or short-lived are proving to be more long-lasting,” said Luke Pardue, an economist for Gusto, a payroll platform for small businesses. “The new normal is looking a lot different.”
“Companies are doing all they can not to bake in any gains that are difficult to claw back,” Dr. Schneider said. “Workers’ labor market power is so far not yielding durable dividends.”
The changes that make work lower paying, less stable and generally more precarious date back to the 1960s and ’70s, when the labor market evolved in two key ways. First, companies began pushing more work outside the firm — relying increasingly on contractors, temps and franchisees, a practice known as “fissuring.”
Second, many businesses that continued to employ workers directly began hiring them to part-time positions, rather than full-time roles, particularly in the retail and hospitality industries.
According to the scholars Chris Tilly of the University of California, Los Angeles, and Françoise Carré of the University of Massachusetts Boston, the initial impetus for the shift to part-time work was the mass entry of women into the work force, including many who preferred part-time positions so they could be home when children returned from school.
Before long, however, employers saw an advantage in hiring part-timers and deliberately added more. “A light bulb went on one day,” Dr. Tilly said. “‘If we’re expanding part-time schedules, we don’t have to offer benefits, we can offer a lower wage rate.’”
By the late 1980s, employers had begun using scheduling software to forecast customer demand and staffed accordingly. Having a large portion of part-time workers, who could be given more hours when stores got busy and fewer hours when business slowed, helped enable this practice, known as just-in-time scheduling.
But the arrangement subjected workers to fluctuating schedules and unreliable hours, disrupting their personal lives, their sleep, even their children’s brain development.
The price increases bedeviling consumers, businesses and policymakers worldwide have prompted a heated debate in Washington about how much of today’s rapid inflation is a result of policy choices in the United States and how much stems from global factors tied to the pandemic, like snarled supply chains.
At a moment when stubbornly rapid price gains are weighing on consumer confidence and creating a political liability for President Biden, White House officials have repeatedly blamed international forces for high inflation, including factory shutdowns in Asia and overtaxed shipping routes that are causing shortages and pushing up prices everywhere. The officials increasingly cite high inflation in places including the euro area, where prices are climbing at the fastest pace on record, as a sign that the world is experiencing a shared moment of price pain, deflecting the blame away from U.S. policy.
But a chorus of economists point to government policies as a big part of the reason U.S. inflation is at a 40-year high. While they agree that prices are rising as a result of shutdowns and supply chain woes, they say that America’s decision to flood the economy with stimulus money helped to send consumer spending into overdrive, exacerbating those global trends.
The world’s trade machine is producing, shipping and delivering more goods to American consumers than it ever has, as people flush with cash buy couches, cars and home office equipment, but supply chains just haven’t been able to keep up with that supercharged demand.
by 7 percent in the year through December, its fastest pace since 1982. But in recent months, it has also moved up sharply across many countries, a fact administration officials have emphasized.
“The inflation has everything to do with the supply chain,” President Biden said during a news conference on Wednesday. “While there are differences country by country, this is a global phenomenon and driven by these global issues,” Jen Psaki, the White House press secretary, said after the latest inflation data were released.
the euro area. Data released in the United Kingdom and in Canada on Wednesday showed prices accelerating at their fastest rate in 30 years in both countries. Inflation in the eurozone, which is measured differently from how the U.S. calculates it, climbed to an annual rate of 5 percent in December, according to an initial estimate by the European Union statistics office.
“The U.S. is hardly an island amidst this storm of supply disruptions and rising demand, especially for goods and commodities,” said Eswar Prasad, a professor of trade policy at Cornell University and a senior fellow at the Brookings Institution.
But some economists point out that even as inflation proves pervasive around the globe, it has been more pronounced in America than elsewhere.
“The United States has had much more inflation than almost any other advanced economy in the world,” said Jason Furman, an economist at Harvard University and former Obama administration economic adviser, who used comparable methodologies to look across areas and concluded that U.S. price increases have been consistently faster.
The difference, he said, comes because “the United States’ stimulus is in a category of its own.”
White House officials have argued that differences in “core” inflation — which excludes food and fuel — have been small between the United States and other major economies over the past six months. And the gaps all but disappear if you strip out car prices, which are up sharply and have a bigger impact in the United States, where consumers buy more automobiles. (Mr. Furman argued that people who didn’t buy cars would have spent their money on something else and that simply eliminating them from the U.S. consumption basket is not fair.)
Administration officials have also noted that the United States has seen a robust rebound in economic growth. The International Monetary Fund said in October that it expected U.S. output to climb by 6 percent in 2021 and 5.2 percent in 2022, compared with 5 percent growth last year in the euro area and 4.3 percent growth projected for this year.
“To the extent that we got more heat, we got a lot more growth for it,” said Jared Bernstein, a member of the White House Council of Economic Advisers.
$5 trillion in spending in 2020 and 2021. That outstripped the response in other major economies as a share of the nation’s output, according to data compiled by the International Monetary Fund.
Many economists supported protecting workers and businesses early in the pandemic, but some took issue with the size of the $1.9 trillion package last March under the Biden administration. They argued that sending households another round of stimulus, including $1,400 checks, further fueled demand when the economy was already healing.
Consumer spending seemed to react: Retail sales, for instance, jumped after the checks went out.
loss of purchasing power over time, meaning your dollar will not go as far tomorrow as it did today. It is typically expressed as the annual change in prices for everyday goods and services such as food, furniture, apparel, transportation costs and toys.
What causes inflation? It can be the result of rising consumer demand. But inflation can also rise and fall based on developments that have little to do with economic conditions, such as limited oil production and supply chain problems.
Is inflation bad? It depends on the circumstances. Fast price increases spell trouble, but moderate price gains could also lead to higher wages and job growth.
Can inflation affect the stock market? Rapid inflation typically spells trouble for stocks. Financial assets in general have historically fared badly during inflation booms, while tangible assets like houses have held their value better.
Americans found themselves with a lot of money in the bank, and as they spent that money on goods, demand collided with a global supply chain that was too fragile to catch up.
Virus outbreaks shut down factories, ports faced backlogs and a dearth of truckers roiled transit routes. Americans still managed to buy more goods than ever before in 2021, and foreign factories sent a record sum of products to U.S. shops and doorsteps. But all that shopping wasn’t enough to satisfy consumer demand.
stop spending at the start of the pandemic helped to swell savings stockpiles.
And the Federal Reserve’s interest rates are at rock bottom, which has bolstered demand for big purchases made on credit, from houses and cars to business investments like machinery and computers. Families have been taking on more housing and auto debt, data from the Federal Reserve Bank of New York shows, helping to pump up those sectors.
But if stimulus-driven demand is fueling inflation, the diagnosis could come with a silver lining. It may be easier to temper consumer spending than to rapidly reorient tangled supply lines.
People may naturally begin to buy less as government help fades. Spending could shift away from goods and back toward services if the pandemic abates. And the Fed’s policies work on demand — not supply.