Happy Thursday and welcome to On The Money, your nightly guide to everything affecting your bills, bank account and bottom line. Subscribe here.
Today’s Big Deal: Crypto is taking center stage as Western nations enforce sanctions on Russia. We’ll also look at new House-passed retirement perks for higher earners and President Biden’s most recent effort to lower gas prices.
But first, see which news channel is hiring Caitlyn Jenner.
For The Hill, we’re Sylvan Lane, Aris Folley and Karl Evers-Hillstrom. Reach us at slane@thehill.com, afolley@thehill.com and kevers@thehill.com.
Let’s get to it.
Russian invasion thrusts crypto into spotlight
Russia’s invasion of Ukraine is thrusting cryptocurrency into the spotlight as policymakers ramp up their scrutiny of digital currencies.
Supporters of Ukraine are donating digital currencies to help fund the nation’s defense and aid humanitarian efforts in a movement that has bolstered crypto’s reputation. But Western officials have warned that Russian actors could use crypto to circumvent severe sanctions imposed by the U.S. and its allies.
- The Biden administration has stressed that it will hold crypto firms accountable if they help Russian actors evade sanctions, and Sen. Elizabeth Warren (D-Mass.) recently introduced a sweeping bill that would block foreign crypto platforms from doing business with sanctioned companies.
- Experts say that sanctioned Russian oligarchs could try to use crypto to evade sanctions, but they noted that digital assets can be tracked by regulators, and crypto isn’t an option for larger sanctioned players such as Russian state-owned companies.
- The largest crypto exchanges have insisted that they will comply with Western sanctions and track down those who try to use their platforms to evade them.
Meanwhile, the growing crypto industry is casting itself as a force for Ukraine, highlighting $67 million in crypto donations their users have sent to Ukraine to purchase bulletproof vests, rations and other key supplies. That’s made possible by a combination of high public interest and investment in crypto infrastructure from the Ukrainian government.
“In this situation, there is clear and abundant evidence that cryptocurrencies are playing a critical role in humanitarian relief and defense funding for Ukraine, and very little, if any, evidence that this innovation is being used for sanctions evasion by Russian actors,” said Sheila Warren, CEO of the Crypto Council for Innovation, an industry trade group.
Karl and Sylvan explain the crypto situation here.
Read more: US blacklists Russian entities for ‘evasion of international sanctions’
LEADING THE DAY
Congress gives IRA perks to high earners in tax bill
A retirement bill that passed the House on Tuesday delivers valuable breaks for wealthy taxpayers while papering over long-term revenue losses.
The Secure 2.0 Act, which is not yet slated for a vote in the Senate, pushes back the age at which the government can start taxing retirement accounts from 72 to 75, providing high-income earners an extra three years to defer tax payments and enjoy tax-free growth.
- To make up for the loss of revenue, the plan uses what critics call an accounting trick. The House-passed bill counts money collected by the government through taxes on Roth retirement accounts earlier to make up for the lost revenue on traditional accounts in the 10-year budget window. However, the change will add to the deficit unless a future Congress acts down the road.
- With Roth IRAs, people pay taxes when they contribute to their plans, but nothing when they take out funds. With traditional plans, taxes are paid upon withdrawal, so the switch under the new bill will lead to a short-term boost in government revenue but a long-term loss.
- Assuming tax rates remain the same, there’s no difference in the amount of tax that is paid between Roth and traditional retirement plans, only the timing as to when that tax is paid. So using the new payment schedule to justify a tax cut and keep government revenue neutral over the next decade doesn’t hold water, critics say.
“One should immediately be skeptical of a provision where the giveaway has to be hidden, has to be papered over by this accounting trick,” University of Chicago law professor Daniel Hemel said in an interview.
While three extra years of tax-free growth may sound attractive to taxpayers, the reality is that most Americans start using their retirement savings well before they turn 75, which means the exemption will be useful mostly for people who don’t have to live off their retirement plans in old age.
Biden announces largest-ever oil reserve release
The White House on Thursday announced plans for the largest-ever release of oil from the United States’ strategic reserves.
It said in a fact sheet that it would release an average of 1 million barrels per day for the next six months, resulting in a total release of about 180 million barrels.
The move comes as Russia’s invasion of Ukraine causes oil, and thus gasoline, prices to skyrocket. Many buyers are rejecting Russian barrels, creating less overall supply and increased demand from elsewhere.
- In remarks on the plan on Thursday, President Biden called on the oil industry to produce more, while also criticizing industry profits.
- The move follows prior releases from the Strategic Petroleum Reserve, including 30 million barrels earlier this month.
Business lobby defeats Biden labor nominee in Senate
Business groups celebrated this week after the Senate rejected David Weil, President Biden’s pick to run the Labor Department’s Wage and Hour Division.
The Senate failed to advance Weil’s nomination by a 47-53 vote on Wednesday night, with Democratic Sens. Joe Manchin (W.Va.), Kyrsten Sinema (Ariz.) and Mark Kelly (Ariz.) joining all Republicans in blocking Biden’s nominee.
Business groups centered their lobbying efforts around the three moderate Democrats who ultimately sank Weil’s nomination.
- The International Franchise Association and other business groups had warned Weil would implement rules that would crush the franchise model.
- Weil, who previously held the wage division post in the Obama administration from 2014 to 2017, attempted to hold corporations accountable for their franchisees’ labor practices during his previous tenure.
More than 90 Democrats in the House and Senate are calling on President Biden to extend the moratorium on federal student loan payments through the end of the year, ramping up pressure on the White House for further action just weeks before the pause is set to lapse.
Top Democrats in both chambers joined in making the request to Biden in a letter Thursday, including Senate Majority Leader Charles Schumer (N.Y.) and House Majority Whip James Clyburn (S.C.).
Here’s what else we have our eye on:
- Senators are finalizing an agreement to provide $10 billion in new coronavirus aid as they race to try to pass a bill before a two-week break set to start in days.
- A coalition of advocacy groups on Thursday launched a campaign to stop corporations from using nondisclosure agreements to hide the details of taxpayer-funded economic development deals from the public.
- Chicago will provide a limited number of prepaid gas gift cards to low-income residents, as gas prices have skyrocketed across the U.S.
- A group of oil exporting countries known as OPEC+ agreed to stick to a modest supply increase despite high prices linked to Russia’s invasion of Ukraine
That’s it for today. Thanks for reading and check out The Hill’s Finance page for the latest news and coverage. We’ll see you tomorrow.
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