News of the Day

Democrats pushed their election-year economic package to Senate passage Sunday. The estimated $740 billion package heads next to the House.

The money would come from a 15% minimum tax on a handful of corporations with yearly profits above $1 billion, a 1% tax on companies that repurchase their own stock, bolstered IRS tax collections and government savings from lower drug costs.

The President urged the House to pass the bill as soon as possible. Speaker Nancy Pelosi said her chamber would “move swiftly to send this bill to the president’s desk.” House votes are expected Friday.

They’re not just racking up higher balances on their credit cards as sky-high inflation and rising interest rates hit household wallets, though. A study released Tuesday by the Federal Reserve Bank of New York’s Center for Microeconomic Data shows a 13% cumulative year-over-year increase in credit card balances. That’s the largest jump in 20 years, since 2002.

Credit card debt stands at $890 billion as of the end of the second quarter, according to the quarterly report on household debt and credit. While credit card balances typically rise during the second quarter, the $46 billion increase makes the second quarter one of the highest jumps on record since 1999. The last time total credit card balances were this high was the first quarter of 2020.

“Americans are borrowing more, but a big part of the increased borrowing is attributable to higher prices,” New York Fed researchers wrote Tuesday. Not only did balances increase, researchers note, but the number of new credit cards was up too.

Mortgages, auto loans, retail cards, and other consumer loans also rose at a fairly rapid clip. In total, non-housing debt grew by $103 billion during the second quarter, the largest increase recorded by the New York Fed since 2016.

Overall, Americans’ total household debt increased by 2% to $16.15 trillion during the second quarter, according to the New York Fed. That puts balances about $2 trillion higher than they were at the end of 2019, prior to the onset of the pandemic.

Yesterday, Wisconsin Attorney General Kaul announced that the State of Wisconsin is joining a nationwide Anti-Robocall Litigation Task Force of 50 attorneys general to investigate and take legal action against the telecommunications companies responsible for bringing a majority of foreign robocalls into the United States. This bipartisan nationwide Task Force has one goal:  to cut down on illegal robocalls.

“We have to reduce the number of illegal robocalls that folks receive,” said AG Kaul. “I’m proud to join this bipartisan group of AGs in working to crack down on the telecom companies that are failing to do their part to stop illegal scam calls.”

The Task Force has issued 20 civil investigative demands to 20 gateway providers and other entities that are allegedly responsible for a majority of foreign robocall traffic. Gateway providers that bring foreign traffic into the U.S. telephone network have a responsibility to ensure the traffic is legal, but these providers are not taking sufficient action to stop robocall traffic. In many cases, they appear to be intentionally turning a blind eye in return for steady revenue. The Task Force will focus on the bad actors throughout the telecommunications industry, to help reduce the number robocalls that Wisconsinites receive and benefit the companies that are following the rules.

According to the National Consumer Law Center and Electronic Privacy Information Center, over 33 million scam robocalls are made to Americans every day. These scam calls include Social Security Administration fraud against seniors, Amazon scams against consumers, and many other scams targeting all consumers, including some of our most vulnerable citizens. An estimated $29.8 billion dollars was stolen through scam calls in 2021. Most of this scam robocall traffic originates overseas. The Task Force is focused on shutting down the providers that profit from this illegal scam traffic and refuse to take steps to otherwise mitigate these scam calls.

Three new transmission lines that are estimated to cost around $2.2 billion will cross through Wisconsin under a large expansion approved by the Midwest grid operator that’s designed to facilitate the clean energy transition.

The board for the Midcontinent Independent System Operator signed off on a $10.3 billion portfolio of 18 transmission projects for the Upper Midwest on July 25. The lines are expected to support 53 gigawatts of renewable energy and provide between  $23 to $52 billion in benefits as utilities retire aging coal plants. Projects in Wisconsin are slated to start coming online as early as 2028.

The regional grid operator plans to begin issuing requests for proposals this fall. All projects approved would be built in MISO’s Midwest subregion that includes Michigan, Minnesota, and Wisconsin. Utilities building the transmission lines would still need the approval of state regulators. The cost would be paid for by customers in that region.

The largest proposal in Wisconsin is a $1 billion transmission line that would run through the central region of the state. Xcel said the utility and other partners expect to replace existing lines with 345-kilovolt lines as part of that project, although some lower-voltage lines may remain in place. American Transmission Company and other local transmission owners also have lines in the region.

While renewable advocates and utilities welcome word of the investment, groups representing industrial energy customers filed a complaint with the Federal Energy Regulatory Commission over the plans. The Wisconsin Industrial Energy Group, or WIEG, and others argue that MISO’s plan to exclude around $5.5 billion in projects from a competitive bidding process will lead to customers paying more for transmission lines, including in Wisconsin.

Todd Stuart, executive director of WIEG, said the way MISO defines work as “upgrades” to transmission lines also blocks competition. The grid operator plans to assign projects to existing owners of transmission lines if at least 80 percent of the costs are due to upgrading the system, arguing that competition on small pieces of projects could delay their construction.

“I don’t think Wisconsin families and businesses can afford this burden. We need all tools for reducing rates or mitigating rates,” said Stuart, adding that includes competitive bidding.

Wisconsin Public Service Commission data shows transmission expenses among the state’s largest investor-owned utilities increased from $263.1 million to $684.5 million from 2005 to 2020, representing an increasing share of their total operating expenses. Even so, the PSC said expenses paid by customers have remained “comparatively stable” as costs ranged from $3.9 to $4.5 billion each year between 2008 and 2019.

Just one day after the Federal Reserve raised its benchmark rate, mortgage rates took a sharp turn lower.

The average rate on the popular 30-year fixed mortgage fell to 5.22% on Thursday from 5.54% on Wednesday, when the Fed announced its latest rate hike, according to Mortgage News Daily. The rate fell even further Friday to 5.13%. Rates hadn’t moved much in the days leading up to the Fed meeting earlier this week, but they had been slowly coming off their most recent high in mid-June, when the 30-year fixed briefly crossed 6%.

Senate Majority Leader Chuck Schumer, D-N.Y., and Sen. Joe Manchin, D-W.Va., unveiled the outline of a new tax, climate and health care proposal on Wednesday.

The reconciliation bill — repackaged by Democrats as the Inflation Reduction Act of 2022 — would raise an estimated $739 billion over the next decade, with the revenues going toward initiatives designed to combat climate change and curb pharmaceutical prices, as well as efforts to reduce the nation’s $30 trillion debt. It includes about $433 billion in new spending, while roughly $300 billion of the new revenue raised would go toward paying down the nation’s deficit.

Here is a closer look at the tax increases and other items included in the latest legislation:

The legislation would impose a 15% minimum tax on the book income of corporations. The tax would hit the profit that corporations publicly report on their financial statements to shareholders. Democrats said the levy would affect around 200 of the country’s largest corporations — with profits exceeding $1 billion — that pay less than the current 21% rate for businesses.

Under the bill, the government would have the power to negotiate with drug makers in order to lower prices for certain prescription drugs. The proposal would cap what seniors on Medicare pay out of pocket for drugs each year at $2,000. If pharmaceutical companies raise the prices of their drugs more than the rate of inflation, pharmaceutical companies would be required to rebate Medicare.

The Internal Revenue Service would receive $80 billion in order to enhance tax enforcement by hiring more agents and introducing new technology to pursue tax dodgers. Democrats expect a beefed-up IRS to add an extra $124 billion in revenue by cracking down on tax evasion by wealthy individuals and corporations.

The plan would repeal the break for carried interest, which allows private equity fund managers to pay lower taxes on their earnings than they would for regular income. The loophole allowed for part of an investment manager’s income to be taxed as a capital gain — a 23.8% levy — rather than regular income.

The Federal Reserve on Wednesday raised its benchmark interest rate by a hefty three-quarters of a point for a second straight time in its most aggressive drive in more than three decades to tame high inflation.

The Fed’s move will raise its key rate, which affects many consumer and business loans, to a range of 2.25% to 2.5%, its highest level since 2018.

Speaking at a news conference after the Fed’s latest policy meeting, Chair Jerome Powell offered mixed signals about the central bank’s likely next moves. He stressed that the Fed remains committed to defeating chronically high inflation, while holding out the possibility that it may soon downshift to smaller rate hikes.

Powell also stood by a forecast Fed officials made last month that their benchmark rate will reach a range of 3.25% to 3.5 % by year’s end and roughly a half-percentage point more in 2023. That forecast, if it holds, would mean a slowdown in the Fed’s hikes. The central bank would reach its year-end target if it were to raise its key rate by a half-point when it meets in September and by a quarter-point at each of its meetings in November and December.

The United States became the world’s largest liquefied natural gas (LNG) exporter during the first half of 2022, according to data from CEDIGAZ. Compared with the second half of 2021, U.S. LNG exports increased by 12% in the first half of 2022, averaging 11.2 billion cubic feet per day (Bcf/d). U.S. LNG exports continued to grow for three reasons—increased LNG export capacity, increased international natural gas and LNG prices, and increased global demand, particularly in Europe.

Since the end of last year, countries in Europe have increasingly imported more LNG to compensate for lower pipeline imports from Russia and to fill historically low natural gas storage inventories. LNG imports in the EU and UK increased by 63% during the first half of 2022 to average 14.8 Bcf/d.

Most U.S. LNG exports went to the EU and the UK during the first five months of this year, accounting for 71%, or 8.2 Bcf/d, of the total U.S. LNG exports. Similar to 2021, the United States sent the most LNG to the EU and UK during the first half of the year, providing 47% of the 14.8 Bcf/d of Europe’s total LNG imports, followed by Qatar at 15%, and Russia at 14%, and four African countries combined at 17%.

A new report on Wisconsin employment shows the state is just about where it was before the coronavirus pandemic hit, but that the recovery has been uneven.

Total employment is down about 2.4%, or about 69,500 jobs from December 2019, according to the analysis from the non-partisan Wisconsin Policy Forum.

Employment in clothing stores decreased 20% statewide; gambling and recreation are down 15%; the food services industry declined 9%.

The report shows one sector that is thriving — transportation and warehousing, which grew 6.3% during the last two years.

“Since June 2015, more than 16,000 (warehouse jobs) have been added,” according to the report. “Of those, nearly 10,000 are in Kenosha and Milwaukee counties alone, and large increases in each of those counties occurred in the first few months following the opening of the (Amazon) fulfillment centers.”

The unemployment rate has hovered around 3% the last several months and businesses are still struggling to find workers for their vacant positions.

“Wisconsin’s aging population, low birth rate and lackluster net migration figures have led to a reduction in the working-age population,” according to the report. “The Wisconsin Department of Administration projects the state’s working-age population will remain roughly the same size, if not decline slightly, until at least 2040.”

On Wednesday, the Mortgage Bankers Association (MBA) released its weekly mortgage applications survey that found the Market Composite Index, which measures the volume of loan applications, decreased by 6.3% last week when adjusted to a seasonal basis.

“Mortgage applications declined for the third week in a row, reaching the lowest level since 2000. Similarly, with most mortgage rates more than two percentage points higher than a year ago, demand for refinances continues to plummet, with MBA’s refinance index also falling to a 22-year low,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting.

“Purchase activity declined for both conventional and government loans, as the weakening economic outlook, high inflation, and persistent affordability challenges are impacting buyer demand. The decline in recent purchase applications aligns with slower homebuilding activity due to reduced buyer traffic and ongoing building material shortages and higher costs.”

The survey covered over 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990.