Dems look to tax high earners
Proposal would have those making more than $400K a year pay more to keep program solvent
Senate Democrats want to boost taxes on some high earners and use the money to extend the solvency of Medicare, the latest step in the party's election-year attempt to craft a scaled-back version of the economic package that collapsed last year, Democratic aides told The Associated Press.
Democrats expect to submit legislative language on their Medicare plan to the Senate's parliamentarian in the next few days, the aides said. It was yet another sign that Majority Leader Chuck Schumer, D-N.Y., and Sen. Joe Manchin, D-W.Va., could be edging toward a compromise the party hopes to push through Congress this summer over solid Republican opposition. Manchin scuttled last year's bill.
Under the latest proposal, people earning more than $400,000 a year and couples making more than $500,000 would have to pay a 3.8% tax on their earnings from tax-advantaged businesses called pass-throughs. Until now, many of them have been using a loophole to avoid paying that levy.
That would raise an estimated $203 billion over a decade, which Democrats say would be used to delay until 2031 a shortfall in the Medicare trust fund that pays for hospital care. That fund is currently projected to start running out of money in 2028, three years earlier.
Most U.S. businesses are passthroughs, which include partnerships and sole proprietorships and range from one-person law practices to some large companies. Owners count the profits as income when they pay individual income taxes, but such companies do not pay corporate taxes — meaning they avoid paying two levels of taxation.
Democrats this week also sent the parliamentarian a separate 190-page piece of the emerging Schumer-Manchin compromise aimed at lowering prescription drug costs for patients and the government. Provisions include requiring Medicare to negotiate drug prices, limiting beneficiaries' out-of-pocket costs to $2,000 annually and increasing federal subsidies for copays and premiums for some low-income people.
With November elections for control of Congress approaching, Democrats hope the two proposals will be a remedy for a campaign season that so far looks bleak. Republicans are favored to win a majority in the House and could do the same in the Senate.
Democrats say both plans will show voters they are battling to curb health care costs and protect the widely popular Medicare program, positions they say will be dangerous for Republicans to oppose.
Polls show widespread public alarm over recent months' historically high inflation rates, supply chain problems and other economic issues that along with President Joe Biden's dismal popularity ratings are pushing voters Republicans' way, the GOP said.
Medicare has 64 million beneficiaries. Its trust fund covering hospital services is financed largely from taxes deducted from peoples' paychecks.
That trust fund gained two years of solvency, until 2028, in last month's report by the program's board of trustees.
Mortgage rates drop to 5.3%, biggest one-week decline since 2008
Mortgage rates in the U.S. posted the biggest one-week decline since 2008.
The average for a 30-year loan fell to 5.3%, the lowest in a month and down from 5.7% last week, Freddie Mac said in a statement Thursday.
Buyers are getting a slight reprieve from this year's massive rise in rates that has started to cool parts of the U.S. housing market. The jump in costs has pushed more buyers out of the real estate hunt, causing inventory to increase. Sellers have started to cut prices in certain areas.
“While the drop provides minor relief to buyers, the housing market will continue to normalize if homeprice growth materially slows due to the combination of low housing affordability and an expected economic slowdown,” said Sam Khater, Freddie Mac's chief economist.
Even as price gains start to decelerate slightly, the market is the least affordable it's been since the mid-1980s, according to mortgage data provider Black Knight.
At the current 30-year average, a borrower with a $300,000 mortgage would pay roughly $1,665 a month, about $383 more than at the end of last year, when rates hovered around 3.11%.
Home prices kept climbing in May, even as sales slowed. The national median home price jumped 14.8% in May from a year earlier to $407,600 — an all-time high according to NAR data going back to 1999.
Mortgage applications have declined 17% from last year and refinancings are down 78%, the Mortgage Bankers Association reported this week. Those numbers are unlikely to improve much with more Fed rate increases a near certainty.
GameStop falls on report CFO leaving, job cuts
GameStop fired Chief Financial Officer Mike Recupero, sending the shares tumbling 9% in extended trading amid reports of companywide job cuts.
The company said in a securities filing that Diana Jajeh, the current chief accounting officer, will replace Recupero immediately. Recupero isn't entitled to any severance payments beyond what is outlined in his offer letter from the company, according to the filing.
The struggling video game retailer is making a “number of reductions” to staff, according to a company memo obtained by Axios reporter Stephen Totilo. The cuts will be felt across the parent company and Game Informer, an online magazine.
GameStop didn't immediately reply to a request for comment.
Wall Street rallies despite bond market signals
Stocks on Wall Street rallied again Thursday, extending the market's winning streak to a fourth day and placing the major indexes on pace for weekly gains.
The S&P 500 rose 57.54 points to 3,902.62, as roughly three-fourths of the stocks in the index rose. The Dow rose 346.87 points to 31,384.55 and the Nasdaq rose 259.49 points to 11,621.35. The Russell 2000 gained 42.06 points to 1,769.60.
Apple rose 2.4%. The energy sector also rose as U.S. crude oil prices climbed 4.3% after falling the last few days. Exxon Mobil rose 3.2%.
Despite this week's rally in the stock market, bond investors continue to signal anxiety over a potential recession. New data Thursday showed that the number of Americans applying for unemployment benefits topped the 230,000 mark for the fifth consecutive week. While claims remain low, last week was the highest level of claims in almost six months.
The yield on the 10-year Treasury rose to 3% from 2.91% late Wednesday. The yield on the two-year Treasury is above the 10-year yield, a relatively rare thing seen by some investors as an ominous sign.