Is it time for an exceptional tax on oil companies?

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Welcome to the weekend! As the war in Ukraine continues, President Biden warned the Chinese president on Friday Xi
Jinping against aid to Russia. Closer to home, lawmakers are pressuring oil companies to reduce driver breaks. And the Spring Training baseball games have begun!

Reuters

Democrats split on how to cut gas prices — or at least show they’re trying

With inflation at its highest level in 40 years, Democrats have touted measures to aggressively fight price hikes in a number of areas, from gas prices to prescription drugs to childcare. children. But these efforts have often been suspended by intra-party divisions on various levels.

Let’s focus on gas prices for today.

“House Democrats, including many vulnerable party incumbents, are pushing to ease consumers’ pain at the gas pump through rebates or tax cuts,” Roll Call’s Lindsey McPherson
reports. “But some admit the proposals are going nowhere and would amount to little more than political messaging bills.”

Perhaps the latest example: a proposed windfall tax on big oil companies. Sen. Sheldon Whitehouse (D-RI) and Rep. Ro Khanna (D-CA) last week outlined a plan to curb the profits of big oil companies by taxing them on the difference between the current price of oil and the price pre-pandemic average from 2015 to 2019, $66 a barrel. Money raised from the tax would be sent to consumers via rebate checks to individuals earning up to $75,000 a year or couples earning up to $150,000.

Lawmakers said the new tax would raise about $45 billion and single filers would get about $240 a year, while couples would get about $360. These projections were based on an oil price of $120 a barrel, a level reached earlier this month. Prices have since fallen but remain above $100 a barrel.

Call for big oil: President Joe Biden argued this week that gas prices should fall as oil prices do. “Last time oil was $96 a barrel, gas was $3.62 a gallon. Now it’s $4.31,” he tweeted. “Oil and gas companies shouldn’t not increase their profits at the expense of American workers.” And Senate Majority Leader Chuck Schumer (D-NY) announced this week that Congress would call oil and gas executives to testify what he called an “alarming spike” in energy prices and why their companies are buying back shares instead of giving drivers a break at the gas pump. “The baffling incongruity between falling oil prices and rising Gasoline prices look like a price hike and are deeply detrimental to American workers,” Schumer said.

A windfall tax, however, may face a difficult path. Sen. Joe Manchin (D-WV), who chairs the Senate Energy and Natural Resources Committee, is unconvinced by the idea, Alexander Bolton of The Hill
reports, adding that Republicans don’t think he would get a “yes” on that. Manchin told The Hill he wanted to hold a hearing on the plan.

Even if Manchin were to support the idea, Republicans won’t, meaning it would likely stall in the Senate. “I don’t see any Republicans supporting him,” Sen. Lisa Murkowski (R-AK) told The Hill. “I don’t see this getting traction and for a lot of good reasons. If you want to send a positive signal to producers that they might want to do more, the worst thing you can do is threaten them with a tax. exceptional.

Other plans to lower gas prices: Other Democrats are still pushing alternative plans to relieve drivers.
“There are conflicting ideas in caucus,” the chairman of the House Ways and Means Committee said. Richard Neal
(D-MA) says News this week.

• The gas tax exemption proposed by some Democratic senators and approved by several Democratic governors is rejected by lawmakers who fear it will reduce funding for vital infrastructure.

• Punchbowl reported Thursday that some Democrats have pushed to send direct payments to Americans for gas and even create a website where drivers can apply for such payments. Rep. Earl Blumenauer (D-OR) said
The Washington Post that it promotes direct discounts to low-income drivers. “We’ve sent direct checks before,” he said. “We can do that. We know who those people are. And if that’s what you want to do, do it in a targeted way. Make sure it gets to them and doesn’t get bogged down in machinations. oil companies and supply chain issues.

• House Speaker Nancy Pelosi (D-CA) on Thursday endorsed the idea of ​​forcing oil companies to use drilling permits or lose them. “There are 6,000 permits out there that people could drill, industry could drill,” Pelosi told reporters. “So they don’t need to disrupt our initiatives to save the planet from the climate crisis. If they want to drill, they have places to drill. Use it or lose it.”

Larry Summers warns that interest rates need to go much higher

Former US Treasury Secretary Lawrence Summers has been warning of the dangers of an inflationary spiral in the US economy for more than a year, largely due to what he sees as excessive relief spending in the event of a pandemic under the Biden administration. Now he predicts that the Federal Reserve will have to raise rates more drastically to deal with the problem.

“At the end of the day, we’re going to need 4% to 5% interest rates, levels that they don’t even consider conceivable,” Summers said.
told Bloomberg Television Friday. “They recognize that they are behind the curve. They still have a long way to go. »

The problem is simple, says Summers: To beat inflation, the Fed must raise interest rates above the rate of inflation, which he says will persist at levels above the Fed’s 2% target rate. Fed.

“If you want to tighten policy, you need to raise interest rates more than inflation has gone up,” Summers said. “We need to raise interest rates more than 4 percentage points, we need to raise them 4% to stay neutral and we probably need to raise them more than that.”

Unlike Federal Reserve Chairman Jerome Powell, Summers doesn’t think inflation will subside on its own, at least not in the near term. “I don’t think we can count on the transitory view of inflation,” he said.

And Summers is confident that more inflation is on the horizon. “Maybe we’re headed in the right direction,” he said, “but I think there’s still a long way to go, and I don’t think the Fed has really done all that will be necessary to preserve its credibility in the face of the substantial inflation that I believe is likely to befall us.

Fed officials call for bigger hikes: St. Louis Federal Reserve Chairman James Bullard, the only dissenting vote in this week’s decision to raise short-term rates by a quarter point, pushed the central bank to act more aggressively on the ‘inflation. On Friday, he said he believed the Fed should raise its interest rate target for the year.

“I recommended to the Committee to try to achieve a policy rate level above 3% this year,” he said in a
declaration. “This would quickly adjust the policy rate to a level more appropriate to current circumstances.”

Bullard also wants the bank to raise rates faster, half a percentage point at a time, at least initially. Federal Reserve Governor Christopher Waller backed that view on Friday,
tell CNBC that while he voted for the smaller quarter-point hike this week based on geopolitical concerns, bigger hikes should be on the table in future meetings.

“The data is basically screaming at us to go 50,” Waller said. “I’m really supportive of the anticipation of our rate hikes, that we need to do more hosting withdrawals now if we’re going to have an impact on inflation later this year and next year. So in this meaning, the way to preload it is to push forward some rate hikes, which would involve 50 basis points at one or more meetings in the near future.

Number of the day: 94%

mRNA vaccines from Pfizer-BioNTech and Moderna remained highly effective in protecting against the worst outcomes of the omicron variant of Covid-19, a study
released Friday by the Centers for Disease Control and Prevention showed. Adults who received two doses of vaccines were 79% less likely to be put on a ventilator or die from Covid, while those who also received a booster saw a 94% reduction in risk.

“Anyone who’s skeptical really needs to look at that number and think, ‘Okay, maybe I’ll catch a cold and feel sick, but 94% of the time I’m not going to be put on a ventilator or die’ , said Jeanne Marrazzo, director of the Division of Infectious Diseases at the University of Alabama at Birmingham.
The Washington Post.

Pfizer and Moderna have now asked the Food and Drug Administration to consider allowing a second booster shot.

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