US ECONOMY & POLITICS

Biden’s Budget Calls for Increase in Defense Spending, Aiding Ukraine – Wall Street Journal, 3/28/2022

• President Biden on Monday released a $5.8 trillion budget that envisions a substantial increase in U.S. defense spending, a sign of the administration’s willingness to devote additional resources to military programs, including aiding Ukraine in its fight against Russian aggression.
• The Biden administration is seeking $813 billion for defense spending in fiscal year 2023, which begins Oct. 1, a roughly 4% increase from the $782 billion enacted for this fiscal year. The requested increase is more than double than the 1.6% boost the administration sought for defense spending in last year’s budget.
• The budget also includes $17.4 billion for law enforcement at the Department of Justice, including $1.7 billion for efforts to combat gun trafficking, and provides funding for the U.S. Marshals and the Federal Bureau of Investigation to address violent crime.

Biden to Propose New Minimum Tax on Wealthiest Americans – Wall Street Journal, 3/28/2022

• President Biden will propose a new minimum tax on households worth more than $100 million as part of his annual budget, the White House said Saturday, in a bid to ensure the very wealthiest Americans pay at least 20% in tax on their income and rising asset values each year.
• The proposal would affect fewer than 20,000 households, and it would apply only to those who don’t pay at least 20% in tax on a combination of income as typically defined and their unrealized gains on unsold assets such as stocks and closely held businesses.
• The plan would generate roughly $360 billion in revenue over 10 years, according to a White House fact sheet released in advance of Monday’s full budget proposal.
• That is about twice as much money as raising the top individual income-tax rate to 39.6% from 37%, and it would affect a much smaller group of people.
• If enacted, the measure would likely face legal challenges to its constitutionality under the 16th Amendment.
• Even with the additional funding sought by Mr. Biden, the Internal Revenue Service could struggle to administer the proposal and would find itself in protracted disputes with taxpayers.

U.S. goods trade deficit narrows; retail inventory accumulation slows – Reuters, 3/28/2022

• The U.S. trade deficit in goods narrowed in February after setting a record high in the prior month as exports rebounded, but any lift to economic growth this quarter could be offset by businesses slowing their pace of inventory accumulation.
• The deficit fell 0.9% to $106.6 billion, the Commerce Department said on Monday. Exports increased 1.2% to $157.2 billion. The rebound in exports was led by a 6.3% surge in shipments of consumer goods.
• Food exports accelerated 3.6%, while industrial supplies increased 2.6%. But motor vehicle exports dropped 3.4% as production continued to be hampered by a global semiconductor shortage.
• There were also substantial declines in exports of capital goods and other goods.
• Imports of goods gained 0.3% to $263.7 billion. They were curbed by a 9.9% decline in imports of motor vehicles as well as a 3.0% drop in food imports. But there were strong increases in imports of industrial supplies and other goods.
• Motor vehicle inventories gained 0.9% after surging 2.5% in January. Excluding motor vehicles, retail inventories increased 1.2% after accelerating 1.7% in January. This component goes into the calculation of GDP growth.

U.S., EU Reach Preliminary Deal on Data Privacy – Wall Street Journal, 3/28/2022

• The U.S. and the European Union reached a preliminary deal to allow data about Europeans to be stored on U.S. soil, heading off a growing threat to thousands of companies’ trans-Atlantic operations.
• The deal, announced Friday by President Biden and European Commission President Ursula von der Leyen, could if concluded resolve one of the thorniest outstanding issues between the two economic giants.
• It also assuages concerns of companies including Meta Platforms and Alphabet’s Google that were facing mounting legal challenges to data transfers that underpin some of their operations in Europe.
• The new deal, dubbed the Trans-Atlantic Data Privacy Framework, attempts to address the EU top court’s concerns by establishing an appeals process for EU individuals that includes what the U.S. calls an independent Data Protection Review Court with binding authority to adjudicate claims and impose remedies.

Biggest metros lost residents in first full year of pandemic – NBC News, 3/28/2022

• The pandemic intensified population trends of migration to the South and West, as well as a slowdown in growth in the biggest cities in the U.S.
• The exodus from the biggest U.S. metropolitan areas was led by New York, which lost almost 328,000 residents. It was driven by people leaving for elsewhere, even though the metro area gained new residents from abroad and births outpaced deaths.
• Metropolitan Los Angeles lost almost 176,000 residents, the San Francisco area saw a loss of more than 116,000 residents and greater Chicago lost more than 91,000 people from 2020 to 2021.
• The San Jose, Boston, Miami and Washington areas also lost tens of thousands of residents primarily from people moving away.
• On the flip side, the Dallas area grew by more than 97,000 residents, Phoenix jumped by more 78,000 people and greater Houston added 69,000 residents, including Giusti.
• In the Phoenix metropolitan area, growth was driven by moves from elsewhere in the U.S., while it was propelled by a combination of migration and births outpacing deaths in Dallas and Houston.
• The U.S. Census Bureau’s Vintage 2021 estimates also showed micro areas — defined as having a core city of less than 50,000 residents — gaining population from mid-2020 to mid-2021, after years of slow growth or declining population.

Los Angeles Mayor Blames ‘Housing, Housing and Housing’ for Urban Exodus – Bloomberg, 3/28/2022

• Los Angeles Mayor Eric Garcetti blamed high housing costs for the surge of people moving out of the second-largest U.S. city.
• LA County lost 160,000 residents during the 12 months through July 1, the biggest population drop of any U.S. county, according to a U.S. Census report released last week. That accounted for almost two-thirds of the declines in California, the most populous state.
• The city approved permits for 17,900 housing units in 2021, more than double the number issued when he took office in 2013 — an increase that Garcetti credited to a raft of state and local laws to increase housing density.
• Still, the number of homeless in LA — a city of 4 million residents — has nearly doubled from almost 23,000 in 2013 to 41,290 in 2020. The increase continued after voters in 2016 approved a $1.2 billion bond with the promise to develop 10,000 new housing units for the unsheltered. The program has been beset by slow progress and soaring costs, with an average price per unit running nearly $600,000.

U.S. Supreme Court turns away challenge to Trump steel tariffs – Reuters, 3/28/2022

• The U.S. Supreme Court on Monday declined to hear a challenge by steel companies to former President Donald Trump’s 2018 decision to double tariffs on steel imports from Turkey on national security grounds – a policy move defended by President Joe Biden’s administration.
• The justices turned away an appeal by steel importers – including Transpacific Steel LLC and the Jordan International Company as well as Turkish steel producer Borusan Mannesmann and its U.S. subsidiary – of a lower court’s ruling against their challenge.
• Trump increased what had been a 25 percent tariff to 50 percent, which the steel companies have argued exceeded his authority. They had sought repayment from the U.S. government of the $54 million they paid collectively in duties.

EUROPE & WORLD

Shanghai locks down as COVID surges in China’s financial hub – Reuters, 3/28/2022

• China’s financial hub of Shanghai launched a two-stage lockdown of its 26 million residents on Monday, closing bridges and tunnels and restricting highway traffic in a scramble to contain surging COVID-19 cases.
• The snap lockdown, announced by the local government late on Sunday, will split China’s most populous city roughly along the Huangpu River for nine days to allow for “staggered” testing by healthcare workers in white hazmat suits.
• It is the biggest COVID-related disruption to hit Shanghai, and sent prices of commodities including oil and copper lower on fears that any further curbs could hurt demand in China, the world’s second-largest economy.
• Residents east of the Huangpu were confined to their homes. Some said healthcare workers arrived to conduct tests as early as 7 a.m. on Monday.
• Those in the west rushed to stockpile food and other goods as they prepared for a similar fate from April 1. Delivery services were overwhelmed and supermarkets ran low on supplies. Several social media users posted images of what they had managed to buy.

G-7 Rejects Putin Demand for Ruble Payments for Russian Gas – Bloomberg, 3/28/2022

• Energy ministers from the Group of Seven industrialized nations unanimously rejected Russian President Vladimir Putin’s demand that natural-gas contracts be paid in rubles.
• The order represents a “one-sided and clear breach of contracts,” German Economy Minister Robert Habeck said Monday after chairing G-7 talks. “That means that a payment in rubles is not acceptable and we urge the relevant companies not to comply with Putin’s demand.”
• The order to have “hostile states” make natural-gas payments in rubles would essentially force European companies to directly prop up the currency after it was sent into free-fall by sanctions placed on the Russian economy following Moscow’s invasion of Ukraine.
• Putin ordered his government, Gazprom and the central bank to prepare all the necessary documents to switch to ruble payments by March 31.

El Salvador Locks Up Hundreds After Gangs Unleash Terror – Bloomberg, 3/28/2022

• Police in El Salvador used emergency powers to round up nearly 600 suspected gang members after criminals unleashed a killing spree over the weekend that spread terror across the Central American nation.
• In the early hours of Sunday morning, the National Assembly approved a state of emergency request made by President Nayib Bukele, which grants the police extra powers. The move came after at least 62 people were slaughtered on Saturday in some of the worst bloodshed since the nation’s civil war ended three decades ago.
• Bukele said that the police had made hundreds of arrests in two days, and pledged to take a tough line on the groups, which control entire neighborhoods and engage in extortion and drug trafficking.

SK Hynix CEO says top shareholder to secure $1.6 billion for M&A in chips, blockchain – Reuters, 3/28/2022

• The CEO of South Korean chipmaker SK Hynix said on Monday that its largest shareholder, SK Square, is considering merger and acquisition deals involving chip companies.
• “We are considering investment in companies ranging from those that are big in scale to those that are small,” Co-CEO of SK Hynix Park Jung-ho, who is also CEO of SK Square, said at the latter’s annual shareholders meeting.
• SK Square, which owns 20.1% of SK Hynix, plans to secure 2 trillion won ($1.63 billion) or more of its own for investments over the next three years, as well as establish a joint investment base with domestic and foreign investors, to invest intensively in areas such as chips and blockchain.
• SK Square executives were involved in SK Group’s large-scale chip M&As in the past decade such as the acquisition of SK Hynix in 2012, SK Hynix investing 395 billion yen ($3.21 billion) in a stake in Kioxia in 2017, and SK Hynix signing the $9 billion acquisition of Intel’s NAND business in 2020, SK Square said in a statement.

Evergrande electric vehicle arm to start taking car orders ‘imminently’ – Reuters, 3/28/2022

• China Evergrande New Energy Vehicle Group said it will start accepting orders for its inaugural electric car, the Hengchi 5 sport utility vehicle, “imminently” and open sales centres in 15 major cities across the country.
• Liu Yongzhuo, president of the electric vehicle (EV) arm of the world’s most indebted property developer China Evergrande Group, made the comment at an online meeting attended by nearly 200 global parts suppliers on Sunday, according to the firm’s official Wechat account. The social media post didn’t say exactly when the firm will start taking orders.
• The plan comes as the EV firm has been struggling to secure external investment. Evergrande told investors in a call last week it was trying to rope in investors to help bolster the unit’s finances – a goal it has been pursuing for months without much success.

Factmonster – TODAY in HISTORY

• The cities of Constantinople and Angora changed names to Istanbul and Ankara, Turkey. (1930)
• The Spanish Civil War ended. (1939)
• The most violent earthquake (9.2) in the United States struck Prince William Sound, Alaska. (1964)
• Nuclear power plant accident at Three Mile Island, near Harrisburg, Pennsylvania. (1979)
• Supreme Court rules unanimously that an anonymous tip does not justify a stop-and-frisk action against a person. (2000)