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What’s in Biden’s $1.8 trillion American Families Plan

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U.S. President Joe Biden delivers remarks on the administration’s coronavirus disease (COVID-19) response outside the White House in Washington, U.S., April 27, 2021.

Kevin Lemarque | Rueters

President Joe Biden on Wednesday will pitch Congress on $1.8 trillion in new spending and tax credits aimed toward children, students and families, senior administration officials said.

Biden will unveil the massive new package less than a month after the White House put forward a sweeping proposal to spend more than $2 trillion over eight years on infrastructure and other projects. Together, the plans comprise the Biden administration’s vision to overhaul the U.S. economy as the nation seeks to recover from, and look beyond, the coronavirus pandemic.

The new proposal, which includes about $1 trillion in investments and $800 billion in tax credits over a decade, will be fully offset in 15 years in part by raising the amount of taxes paid by the richest Americans, the White House said.

Here’s some of what the new plan calls for:

  • $225 billion toward high-quality childcare and ensuring families pay only a portion of their income toward childcare services, based on a sliding scale
  • $225 billion to create a national comprehensive paid family and medical leave program
  • $200 billion for free universal pre-school for all three- and four-year-olds, offered through a national partnership with states
  • $109 billion toward ensuring two years of free community college for all students
  • About $85 billion toward Pell Grants, and increasing the maximum award by about $1,400 for low-income students
  • A $62 billion grant program to increase college retention and completion rates
  • A $39 billion program that gives two years of subsidized tuition for students from families earning less than $125,000 enrolled in a four-year historically black college or university, tribal college or university, or minority-serving institution
  • $45 billion toward meeting child nutritional needs, including by expanding access to the summer EBT program
  • $200 billion to make permanent the $1.9 trillion Covid stimulus plan’s provision lowering health insurance premiums for those who buy coverage on their own
  • Extending through 2025, and making permanently fully refundable, the Child Tax Credit expansion that was included in the Covid relief bill
  • Making permanent the recent expansion of the Child and Dependent Care Tax Credit
  • Making permanent the Earned Income Tax Credit for childless workers

“These are investments that we can’t afford not to make as a country,” a senior administration official said Tuesday night in a conference call with reporters.

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To fund the laundry list of programs and tax perks, the proposal would, in part, reverse key pieces of the 2017 tax-cut law, the key legislative achievement of former President Donald Trump’s first year in office.

The Biden administration’s new spending plan would hike the top income tax rate to 39.6% for the wealthiest Americans. That rate had been cut to 37% for married couples with over $600,000 in taxable income as part of the 2017 law.

The plan would also seek to close a series of so-called tax loopholes, and raise taxes on capital gains to 39.6% for households making more than $1 million.

The Biden administration maintains that under the new plan, no one making $400,000 a year or less will see their taxes go up.

Biden is set to detail the plan Wednesday night, during an in-person address before a joint session of Congress that also lays out his administration’s broader legislative priorities going forward. The event comes of the eve of Biden’s 100th day in office.

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April’s inflation surge wasn’t as drastic as it looked, but the real test is still ahead

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A woman wears a face mask while shopping for a baby shower gift during the Covid-19 pandemic, at Madison’s Niche boutique in Huntington, New York on April 21, 2021.

Alejandra Villa Loarca | Newsday | Getty Images

There is probably less than meets the eye from the startling inflation pop in April, as goods impacted by a variety of temporary influences pushed core price increases at the quickest pace since the Reagan presidency.

Headline inflation rose by 4.2% from a year ago, while core prices excluding the volatile food and energy sectors got their biggest one-month bump of 0.9% going back to 1981.

At the root of the increases were issues related to the pandemic, both in terms of how aggressive the current recovery is and how bad things were a year ago.

There were factors such as supply chain congestion that added to the pressures. At the same time, an aggressively recovering economy pushed prices for airline tickets (up 10.2% in April), hotels (8.8% higher) and used car prices (up 10%).

While that was happening, the things that drive inflation over longer periods, like housing costs and the price of services, showed increases consistent with where they’ve been over time. Shelter costs broadly increased 0.4% in April while services excluding energy rose 0.5%.

In all, the narrative that the burst in inflation that so many had been forecasting will be transitory likely holds up – at least for now.

“The more persistent categories of inflation (services, and rent specifically) were relatively tame last month, but goods prices surged, as did transportation and travel,” wrote Eric Winograd, senior economist at AllianceBernstein. “None of those moves are likely to be persistent. Over time, that means that the most likely course of events is still for inflation to settle down as the supply side of the economy catches up to the demand side.”

Still, the numbers were jarring.

For headline inflation, it was the fastest year-over-year gain since September 2008, just before the economy fell off a cliff due to the financial crisis. And the Consumer Price Index numbers came the same day AAA reported that gasoline prices eclipsed $3 a gallon nationally for the first time in about seven years.

Federal Reserve officials have repeatedly assured the public that the coming inflation push is largely a result of temporary factors plus distorted comparisons to the economic shutdown of a year ago.

What could change

In the central bank’s thinking, the collective belief that inflation either will stay low or remain high becomes a self-fulfilling prophecy, and it then becomes the Fed’s job to massage policy in whichever direction is desirable.

For at least a decade, collective expectations have been low.

But should readings like Wednesday’s become commonplace, if consumers continue to see stories about sold-out gas stations and car orders delayed by months due to semiconductor shortages or if growth broadly should accelerate even beyond the current lofty expectations, the inflation picture can change in a hurry.

“The fact is that when we factor in all the monetary and fiscal stimulus that’s been delivered (or shortly will be), the Covid crisis seems likely to be a net inflationary event, at least in the near term,” wrote Rick Rieder, chief investment officer of global fixed income at asset management giant BlackRock.

“The risk of overheating in multiple places across the financial and real asset arenas is becoming more and more of a realistic challenge for future policy, as some have suggested, and without an evolution of what heretofore has been policy reacting to emergency economic conditions, the risk from this will only grow,” he added.

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Seychelles most vaccinated nation on Earth but Covid-19 has surged

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A woman holding an umbrella walks in a street in the Seychelles’ capital Victoria.

Valery Sharifulin | TASS | Getty Images

The Seychelles is causing concern for world health experts after a rise of Covid-19 cases among fully vaccinated individuals.

The World Health Organization said Tuesday that it would review coronavirus data from the Seychelles, an archipelago of 115 islands in the Indian Ocean, after the health ministry said more than a third of people who tested positive for Covid-19 in the week to May 8 had been fully vaccinated.

The Seychelles is viewed as having conducted a very successful vaccination rollout so far; it can boast having the highest share of people vaccinated against Covid-19 anywhere in the world, above Israel and the U.K.

The majority of vaccinated people have received China’s Sinopharm vaccine (approved for emergency use by the WHO last Friday) as well as the AstraZeneca shot (known as Covishield locally, a version produced in India). In total, the Seychelles with a population of over 97,000 has recorded just under 8,200 cases and 28 deaths during the pandemic.

On Monday, the Seychelles’ health ministry reported a steep rise in the number of cases. From 120 new cases reported on April 30, a week later over 300 cases per day were recorded on May 7 and May 8, respectively.

Of all the positive cases, the health ministry said 63% had either not been vaccinated or had only received one dose of SinoPharm or Covishield, but 37% of the new infections were in people who had received both doses.

The ministry noted that, of the patients requiring hospital treatment, 80% had not been vaccinated and tended to be people with co-morbidities. It added that “almost all” of the critical and severe cases requiring intensive care treatment had not been vaccinated either. To date, none of the patients who have died with Covid-19 have been fully vaccinated, it said.

While there was a flattening of new cases on May 7 and May 8 (with 317 new cases reported and then 314 cases, respectively), the health ministry said “the rate of transmission remains high and is of concern.”

The situation has certainly alarmed experts, particularly as 60% of the Seychelles’ total population has been fully vaccinated. What’s more, 86% of the Seychelles’ targeted population for vaccination — 70,000 people — have been fully vaccinated to date, ministry data shows.

What the WHO thinks

On Monday, WHO’s Director of Immunization, Vaccines and Biologicals, Dr. Kate O’Brien, said in a briefing that the WHO was in direct communication with the Seychelles’ health ministry and that the situation was a “more complicated situation than the top-line messages.”

“As was noted, the vaccines are highly efficacious against severe cases and deaths. Most of the cases which have occurred are mild cases. However, what is also important is that a substantial fraction, over 80% of the population, has been vaccinated. But as we know … some of the cases that are being reported are occurring either soon after a single dose, or soon after a second dose, or between the first and second doses.”

She said in this specific situation, a very detailed assessment was required “of what the situation is, first of all what the strains are that are circulating in the country, secondly when the cases occur relative to when somebody received doses, third what the severity of the cases is.”

“Only by doing that kind of evaluation can we make an assessment of whether or not these are vaccine failures or whether it is more about the kinds of cases that are occurring, the milder end of cases and then the timing of the cases relative to when individuals received doses. That evaluation is ongoing and we’re supporting and engaging with the country to understand the situation.”

CNBC has contacted the WHO for updated comment on the situation in the Seychelles but is yet to receive a reply.

Vaccine efficacy

The WHO has repeatedly warned that vaccination alone would not be enough to stop the pandemic in its tracks, but would rather be another weapon in the arsenal to fight the virus.

Restrictions on social contact as well as good personal hygiene are still seen as the basis or preventing the spread. Last week, the Seychelles re-imposed restrictions on some social gatherings and public spaces in a bid to curb the spread.

The situation faced by islanders acts as a reminder that no coronavirus vaccine currently in use has been proven to be 100% effective at preventing Covid-19 infection. Still, all the vaccines currently authorized for use by the WHO have proven to be very, if not extremely, effective at preventing serious Covid infections, with cases, hospitalizations and deaths greatly reduced in countries with advanced vaccination programs, like the U.K.

With a third wave of cases and new virus variants having the potential to cause further loss of life and economic destruction, time is of the essence to approve and distribute life-saving vaccines around the world, with the more available, the better.

On Friday, the WHO granted emergency use authorization to the China’s state-owned pharmaceutical firm SinoPharm, a move which could fast-track the shot’s use in WHO’s COVAX scheme, which aims to provide poorer countries with access to vaccines.

The WHO said the addition of the SinoPharm vaccine had “the potential to rapidly accelerate Covid-19 vaccine access for countries seeking to protect health workers and populations at risk.”

It noted that the WHO’s Strategic Advisory Group of Experts on Immunization had completed a review of the vaccine and, on the basis of all available evidence, recommended it for adults 18 years and older, in a two-dose schedule with a spacing of three to four weeks.

“Vaccine efficacy for symptomatic and hospitalized disease was estimated to be 79%, all age groups combined,” it said. However it noted that “few older adults (over 60 years) were enrolled in clinical trials, so efficacy could not be estimated in this age group.”

In March, AstraZeneca released updated clinical trial date which showed its vaccine was 76% effective at preventing against symptomatic Covid-19 infection. Vaccines by PfizerBioNTech and Moderna were found to be around 95% effective.

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China autonomous driving firm WeRide valued at $3.3 billion after funding

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Visitors looking at a driverless car with 5G technology by WeRide at a 5G innovation park in Hangzhou in China’s eastern Zhejiang province on Jan. 20, 2019.

Stringer | AFP | Getty Images

GUANGZHOU, China — Autonomous driving company WeRide has raised new funds valuing the company at $3.3 billion dollars.

The Nissan-backed start-up did not disclose the sum raised but said it totaled “hundreds of millions” of dollars from venture capital investors including IDG Capital and Sky9 Capital. A number of other backers and existing investors participated in the round.

Tony Han, CEO of WeRide said in a statement that the new funding would be used for research and development, and commercialization “with the aim of delivering large-scale autonomous mobility in the coming future.”

WeRide is one of the many companies based in China pushing aggressively to take a lead in the autonomous driving space globally.

In 2019, it opened a robotaxi project in the southern Chinese city of Guangzhou, where it is headquartered. Members of the public have been able to use the service since last year in a certain area of the city.

In April, WeRide obtained a permit from the California Department of Motor Vehicles (DMV) to conduct driverless testing on public roads in San Jose.

The company is competing with other start-ups such as Pony.ai, which raised $267 million in November, and AutoX. Larger technology firms including internet giant Baidu and ride-hailing company Didi, are also exploring the space.

WeRide’s latest funding round comes off the back of a $310 million cash injection in January.

WeRide’s CEO previously told CNBC that he predicts the large-scale application of robotaxis will take place between 2023 and 2025. He said that WeRide will begin to make money from the business in 2025. 

The company does not actually manufacture cars. Instead, it sells the autonomous driving systems to other automakers.

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