Chinese phone maker Xiaomi is now off the US trade ban list that Trump put it on, and its shares are soaring

Biden and Xi Jinping
Then Vice President Biden met with Chinese President Xi Jinping at a California meeting aimed at strengthening Chinese investment in the state. China has now the lead in 5G infrastructure, but experts say don’t count Silicon Valley out yet.

  • The US is taking China’s Xiaomi Corp off its trade ban list, a court filing showed.
  • This means Americans will be able to invest in Xiaomi – shares have already risen 6% since the news broke.
  • The US government placed it on a trade-ban list for allegedly having ties to the Chinese military.
  • See more stories on Insider’s business page.

The Department of Defense (DoD) will remove China’s Xiaomi Corp from a government trade-ban list, a court filing on Tuesday showed, allowing Americans to invest in the smartphone maker in the future.

The filing stated that the two parties had reached an agreement to resolve their ongoing litigation after Xiaomi sued the US government earlier this year.

A Xiaomi spokeswoman said the company was watching the latest developments closely, but did not elaborate. Shares in the company rocketed over 6% in Hong Kong as news of the decision spread.

DoD officials didn’t immediately respond to a request for comment after US business hours on Tuesday.

In January, the DoD, under the Trump administration, accused the Beijing-based firm of having ties to China’s military and placed it on a trade ban list, meaning Americans couldn’t invest in it. The government labeled Xiaomi a “communist Chinese military company.”

The same restrictions were placed on seven other Chinese companies, including state-owned Chinese plane maker Commercial Aircraft Corporation of China and the airline Grand China Air.

Xiaomi filed a lawsuit against the US government, calling its placement “unlawful and unconstitutional” and denying any connections to Chinese military.

Under the new Biden administration in March, a federal judge temporarily blocked enforcement of the trade ban, citing the government’s “deeply flawed” process for including it in the ban.

Reuters reported that other Chinese firms placed on the same blacklist were considering similar lawsuits.

Xiaomi was one of the more high-profile Chinese tech companies that former President Donald Trump targeted for alleged ties to China’s military.

Xiaomi’s local smartphone rival Huawei Technologies Co Ltd was also put on an export ban list in 2019 and barred from accessing critical technology of US origin, affecting its ability to design its own chips and source components from outside vendors.

The export ban put in place by the government brought the company’s smartphone division to its knees.

Later, the DoD placed similar restrictions on China’s Semiconductor Manufacturing International Corporation, a company which is key to China’s domestic chip sector.

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Billionaire Ray Dalio says the US government’s big fiscal push could cause the economy to overheat and the dollar to fall

GettyImages 1178614090
Ray Dalio.

Ray Dalio, founder of the hedge fund Bridgewater Associates, spoke about inflationary risks, dollar devaluation, and investing in China on Tuesday at The Wall Street Journal’s “Future of Everything Festival.”

The US government’s massive stimulus spending raises the risk of inflation and could debase the dollar due to large amounts of money put into the system, Dalio said.

President Joe Biden’s $1.9 trillion stimulus package, along with his $2 trillion American Jobs Plan risk forming a bubble, with money overflowing in the economy, Dalio said. He suggested such risks should be carefully balanced, and “productivity” is essential to prevent the economy from overheating.

The hedge-fund manager believes stock markets are in a bubble that isn’t being driven by debt.

“There’s two types of bubbles,” Dalio said. “There’s the debt bubble when the debt time comes back, and you can’t pay for it, and then you have the bubble bursting. And the other kind of bubble is the one where there’s just so much money and they don’t tighten it as much, and you lose the value of money. I think we’re more in the second type of bubble.”

Dalio has been a long-time admirer and advocate of China. He has previously said the country isn’t perfect, but should be “open-mindedly assessed based on evidence.”

uighur protest china
Ethnic Uighur demonstrators take part in a protest against China, in Istanbul, Turkey October 1, 2020.

He rejected the idea that China’s repression of largely Muslim minorities in the province of Xinjiang should influence investor decisions.

“I don’t really understand, and I don’t study the human-rights issues. I follow what the laws are on those particular things,” he said, and added that the US too has human-rights concerns. “Would I not invest in the United States because of those?”

The billionaire also touched upon Robinhood and its popularity among retailer investors. Having previously expressed concern about the GameStop saga being a product of wealth inequality, he suggested the trading app is a progressive step for the investing world.

“It’s information. It allows you to play the game. And there’s nothing like doing it in amounts you can afford,” Dalio said. “It’s a real plus, but it has some drawbacks, too.”

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Biden’s Education Secretary allows undocumented college students to access stimulus funds

GettyImages-dreamers-daca-supreme-court
Advocates for immigrants with Deferred Action for Childhood Arrivals, or DACA, rally in front of the Supreme Court June 15, 2020 in Washington, DC.

  • Education Sec. Miguel Cardona said undocumented and international students can now receive stimulus aid.
  • This lifts a Trump-era policy that banned those students from receiving emergency aid.
  • The top Republican on House Education called it an insult while Senate Education’s top Democrat is relieved.
  • See more stories on Insider’s business page.

President Joe Biden’s $1.9 trillion stimulus package included nearly $36 billion in emergency funding for struggling students, but international and undocumented students were ineligible to receive that aid – until now.

Secretary of Education Miguel Cardona just eliminated that rule.

“The pandemic didn’t discriminate on students,” Cardona said in a press call on Monday. “We know that the final rule will include all students, and we want to make sure that all students have an opportunity to have access to funds to help get them back on track.”

On Tuesday, the Biden administration issued a final rule that revised a Trump-era policy barring international and undocumented students from accessing emergency aid. In June, Trump’s Education Secretary Betsy DeVos had issued a rule stating only those who participate in federal student aid programs can receive stimulus money that shut out undocumented and international students, including those protected under the Deferred Action for Childhood Arrival program, also known as “Dreamers.”

DeVos’ rule also initially barred students who defaulted on student loans and those convicted of minor drug crimes from receiving aid, but that was lifted in January.

Cardona said during the call that the final rule will apply to all three rounds of stimulus funding and will ensure every student who needs it can access aid.

“What this does is really simplify the definition of a student,” Cardona said. “It makes it easier for colleges to administer the program and get the money in the hands of students sooner.”

DeVos’ policy met a number of legal challenges, including an ongoing lawsuit initiated by California Community Colleges that said they have kept millions of dollars received for grants because of DeVos’ limits on who is eligible to receive them.

Rep. Virginia Foxx – the top Republican on the House Education Committee – called it “an insult to every American.”

“President Biden is fueling an immigration crisis, and this final rule exacerbates the emergency at the southern border,” Foxx said in a statement. “I call on elected Democrats to stop swindling law-abiding citizens, put Americans first, and respect the sacrifice of hardworking taxpayers.”

But Chair of the Senate Education Committee Patty Murray said in a statement she was “relieved” Cardona took this step to give every struggling student needed aid.

Separately, the Education Department said in a Tuesday press release that it is now making available $36 billion in grants that will help over 5,000 institutions, including Historically Black Colleges and Universities (HBCUs), Tribally Controlled College or University, and Hispanic Serving Institutions.

“These funds are critical to ensuring that all of our nation’s students – particularly those disproportionately impacted by the COVID-19 pandemic – have the opportunity to enroll, continue their education, graduate, and pursue their careers,” Cardona said in a statement. “With this action, thousands of institutions will be able to provide direct relief to students who need it most, so we can make sure that we not only recover from the pandemic, but also build back even stronger than before.”

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How Biden’s historically diverse administration plans to improve workforce diversity and economic equity

Biden cabinet
Joe Biden holds the first Cabinet meeting of his presidency on April 1, 2021.

  • President Biden vowed to appoint the most diverse Cabinet in history and fix economic inequities.
  • Financial support for women, communities of color, and low-income American are among the pledges.
  • The president faces an uphill battle to get the plans through Congress amid Republican resistance.
  • See more stories on Insider’s business page.

President Joe Biden promised his Cabinet would be the most diverse in history. Recently released data revealed his progress.

After saying he wanted his administration to “look like America” in December last year, the 78-year-old president has mostly succeeded in his plan to diversify the executive branch, according to an analysis by Insider in February.

As the country tries to emerge from the worst economic crisis since the 1930s, Biden has installed a diverse team to forward his economic and business agenda, which includes tackling entrenched inequities.

Among them, Treasury Secretary Janet Yellen as the first woman to lead the department in its 231-year history, Cecilia Rouse as the first African American to chair of the Council of Economic Advisors, and Pete Buttigieg as the first openly gay cabinet member in his role as transportation secretary.

Last week marked the first 100 days of the Biden administration. We take a look at some of the actions taken since his January inauguration to promote diversity in business, the workplace and support communities disproportionately affected by the Covid-19 pandemic.

Bridge
Biden’s $2 trillion American Jobs Plan aims to rebuild the country’s aging road and bridge network.

A $2 trillion infrastructure plan that targets funding towards underserved neighborhoods

Biden’s proposed $2 trillion infrastructure bill sets out to repair the country’s dilapidated road and bridge network, expand access to high-speed broadband and accelerate the clean energy transition.

The American Jobs Plan targets infrastructure projects towards historically underserved communities. The plan includes proposals to replace lead pipes that disproportionately harm Black children and a $20 billion investment to “reconnect” previously cut-off areas to affordable public transportation systems.

The plan would also build more climate-resilient public infrastructure, with a focus on low-income people and communities of color, who are most vulnerable to the impact of extreme weather events such as flooding.

However, Republicans have opposed the bill, citing its “far-left” priorities and the corporate tax hike Biden has said will finance the plan.

Jennifer Granholm
Energy secretary Jennifer Granholm speaks at Howard University.

Proposed funding to build a diverse clean-energy workforce, with investments targeted towards historically Black colleges

Biden’s administration is pushing for more solar panels to be installed in communities disproportionately affected by pollution, as part of his American Jobs Plan.

The Department of Energy announced on Tuesday that $15.5 million would go into installing solar panels in underserved communities and training a diverse clean-energy workforce.

The DOE also committed $17.3 million to fund internship and research programs, with a focus on training more students of color in STEM fields. More than $5 million will be directed to 11 colleges, including historically Black universities Howard and Florida A&M.

Historically Black colleges have long been denied equal access to federal funding opportunities, DOE secretary Jennifer Granholm said in a roundtable discussion at Howard University on Monday.

“This administration is really committed to making the transition to clean energy an inclusive transition, offering benefits to every community,” Granholm said.

Working mom
Biden’s American Families Plan aims to support working mothers.

A plan to introduce 12 weeks of paid family leave – and Biden hopes it will encourage women to stay in the workforce

Biden has introduced a $1.8 trillion American Families Plan – made up of a mix of investments and tax cuts – that would create a national paid family and medical leave program.

The plan is estimated to cost $225 billion over 10 years.

The Biden administration hopes that introducing 12-weeks of paid family leave will help mothers to keep working, reduce racial disparities in lost wages, and improve children’s health.

Biden’s plan also commits to providing support for low- and middle-income families to access childcare, ensuring this does not account for more than 7% of their income, and investing in the childcare workforce.

Childcare workers are among the most underpaid in the US and more than nine in ten jobs are held by women, and more than four in ten by women of color.

D&I training
Biden reversed a decision by former President Trump to ban federal workplace diversity training.

An overturn of Trump’s ban on federal workplace diversity and inclusion training

One of Biden’s first actions as president was to revoke the workplace diversity training ban, signed by former President Trump, across federal agencies and their contractors.

Biden issued an executive order on his first day in office, which overturned Trump’s ban on diversity and inclusion training that taught critical race theory and involved discussions on institutional racism.

The new order instead advances a “whole-of-government” approach to addressing racial inequities, and asks federal agencies to consider whether their policies and programs create barriers for underserved communities to access their benefits and services.

Takeout delivery
Biden has extended unemployment insurance for gig workers.

Targeted Covid-19 relief, including protections for those in insecure work

The landmark $1.9 trillion stimulus package includes funding commitments to help communities that have been disproportionately affected by the pandemic.

In the law, signed in March, $5 billion is provided to farmers of color to invest in their business, buy equipment and repay loans.

“This is a big deal for us,” John Boyd, Jr., president of the National Black Farmers Association, told CBS. “We see this as a great opportunity to help thousands.”

In the package, unemployment insurance for self-employed and gig workers, such as ride-share and takeout delivery drivers, has been extended until September.

In announcing the plan, Biden called on businesses to provide back hazard pay to frontline workers – who are disproportionately Black, Latino and Asian American and Pacific Islander – in retail and grocery sectors. It was employers’ “duty,” the proposal stated, to compensate workers who had risked their lives to keep businesses running.

Biden still faces a challenging road ahead

The president’s administration has taken bold and swift action in its first 100 days, even winning praise from more left-leaning members of his own party. But the impact of Biden’s policies will only be felt in the coming months and years.

Biden still faces an uphill battle to get his Jobs Plan and Families Plan through Congress in the face of Republican opposition and with a razor-thin majority.

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The White House needed extensive security upgrades but the Trumps didn’t want to deal with the noise and made it a problem for Biden’s administration

Donald Melania Trump wave White House lawn
Hey, at least Melania looks happy.

  • Trump passed on important security upgrades for the White House during his tenure, CNN reported.
  • Now, the needed renovations are ongoing during Biden’s presidency.
  • Trump reportedly passed because he didn’t want to deal with the noise.
  • See more stories on Insider’s business page.

Former President Donald Trump and former First Lady Melania Trump decided to pass along much-needed upgrades to White House security to President Joe Biden because they didn’t want to deal with construction noise or alter the aesthetic, CNN reported.

The United States Secret Service, the National Park Service, and the White House worked together to implement new security changes in several phases so it wouldn’t upset the first family, but when the final phase was set to start, the Trumps said they didn’t want to deal with the construction.

The first lady specifically didn’t want the effort to impact the aesthetics of the back lawn, where events could be hosted, CNN reported.

The needed updates have now been going on for several weeks and are forcing Biden to have to take a motorcade for about two minutes every time he wants to get on and off his helicopter, Marine One, because it can’t land right by the White House.

“It’s been a headache,” said one Secret Service source with knowledge of altered movements to circumvent the construction.

The renovations start from the farthest southern juncture of the lawn to the foot of the South entrance of the White House building.

This isn’t the first instance that Biden had to deal with the issues remaining from the Trump era.

Trump left office on January 20, breaking with tradition and not attending Biden’s inauguration later that day. In his first 100 days, some of Biden’s executive orders were used to reverse policies enacted by his predecessor.

As of late last month, Biden had reversed 62 of Trump’s orders, including revoking the permit to build the Keystone XL oil pipeline .

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White House Press Secretary Jen Psaki says she’ll resign next year when it’s ‘time for somebody else to have this job’

jen psaki
“I think it’s going to be time for somebody else to have this job…” Psaki said.

  • Jen Psaki, the face of Biden’s administration, says she will step down in around a year.
  • “I think it’s going to be time for somebody else to have this job in a year from now, or about a year from now,” she told CNN.
  • Psaki says she accepted the job after agreeing with President Biden’s transition team that she would serve in the role for about a year.
  • See more stories on Insider’s business page.

White House press secretary Jen Psaki said she plans to leave the role next year to spend more time with her family.

“I think it’s going to be time for somebody else to have this job in a year from now or about a year from now,” Psaki said in an interview with CNN’s David Axelrod, her former colleague in the Obama administration, on Thursday.

Psaki, who delivers regular press briefings as the public face of Biden’s administration, said that she wanted to be able to more spend time with her two young children.

“I don’t want to miss moments, I don’t want to miss things, and I’m very mindful of that as well,” she said.

“It’s a great job, it will be hard [to leave], but I also never thought I’d be here, and I also love my kids a lot.”

Psaki is a communications veteran and seasoned Democratic operative who worked on Obama’s first campaign in 2008 and subsequently worked on his White House communications team as his deputy press secretary and deputy communications director.

She later became the spokesperson for the state department before returning to the White House in 2015 as Obama’s communications director.

She has a long-standing relationship with President Biden from her time in the Obama administration but was nonetheless a somewhat surprising pick as the new administration’s press secretary, having spent the previous four years working in a variety or media, consultancy, and academic roles.

Psaki told Axelrod that she had accepted the job after agreeing with President Biden’s transition team that she would serve in the role for about a year, which would mean her leaving the post from January.

“When I talked to the inner circle of the Biden orbit, we talked about coming in and doing this job for a year which was quite appealing to me for many reasons,” she said.

“One: What a moment in history to be a part of. It’s always true in the White House but following Trump, if you can take the temperature down a little bit, that’s a cool thing to be a part of.”

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JPMorgan chief Jamie Dimon wants detailed disclosures on how federal money is spent if lawmakers raise taxes. Democratic lawmakers were quick to respond.

jamie dimon
Jamie Dimon, CEO of JPMorgan Chase, takes part in a panel discussion about investing in Detroit at the Kennedy School of Government at Harvard University in Cambridge, Massachusetts, U.S., April 11, 2018.

If President Joe Biden plans to raise taxes among large corporations and the wealthy, JPMorgan Chase CEO Jamie Dimon wants to know where every single extra penny ends up.

The billionaire businessman urged lawmakers to court the devil in the details during a recorded interview for the Investment Company Institute’s general membership meeting posted Thursday. During the 30-minute conversation, Dimon voiced his “concerns” about Biden’s $2 trillion infrastructure plan.

“I’m…concerned how the money’s going to be spent,” he said. “The government needs to be very clear on what they want to accomplish.”

He noted his support for a bipartisan bill and also suggested that lawmakers create and share an itemized list of the ways extra dollars from a tax hike would fund the government’s infrastructure plans.

“On highways, how many miles are you going to build? How much is it going to cost? When’s it going to get done? Who’s responsible?”

Dimon’s preference for specifics – like Biden’s proposed bill – goes beyond the traditional elements of infrastructure.

“On education, not just free community colleges,” he added. “How many kids are going to graduate? How many kids are going to have a job at $65,000 a year?”

Biden’s infrastructure bill has been slammed by Republicans, who have called it a “liberal wish-list,” and “Soviet-style infrastructure,” arguing the bill has little to do with traditional infrastructure, like roads and bridges.

“So I worry about not just the bill, but we’re just throwing money. It doesn’t work,” he said. “And we already waste tremendous sums of money.”

Dimon said if lawmakers are going to take the American people’s money, they owe it to the public to be up front with how they use it, comparing it to the information companies are required to disclose.

In response to Dimon’s comments, Democratic Sen. Brian Schatz of Hawaii in a tweet Thursday evening said the federal government already keeps a detailed record of spending outcomes, and pointed Dimon to The Senate Committee on Appropriations.

Dimon did say he believed taxation and infrastructure are “completely unrelated.”

“We should have proper infrastructure, proper immigration, proper healthcare, proper stuff,” he said. “And then we should have proper corporate taxation, and obviously we got to pay for this stuff.”

The businessman also called the idea of some of Biden’s proposed tax hikes “a little crazy,” arguing that competitive corporate taxation is vital to capital formation and economic growth in the country.

“I think they’re making a mistake,” Dimon said about the proposal to get rid of the Trump-era corporate tax cut and raise rates on businesses. Dimon lobbied for the tax cuts.

Rep. Alexandria Ocasio-Cortez picked up on his past push for the cut to corporate tax rates.

“That’s funny, because Jamie Dimon didn’t give working people an itemized list of the school districts, public hospitals, infrastructure, or affordable housing projects he was helping defund when he pushed for the $2T GOP Tax Scam in 2017 w/ goodies for yacht and jet owners,” she tweeted in reply to Dimon’s wish for an itemized list.

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Moderna stock plummeted on Biden’s support of waiving vaccine patent protections, but that backing won’t have a material impact on the company, Morgan Stanley says

Moderna covid vaccine coronavirus
Moderna’s COVID-19 vaccine won emergency use authorization from the FDA in December 2020.

  • Moderna shares have dropped sharply since the Biden administration on Wednesday voiced support for waiving patent protections on COVID-19 vaccines.
  • Morgan Stanley said it doesn’t see the US’s waiver support as having a material impact on Moderna’s business.
  • Moderna’s management had indicated it wouldn’t enforce its vaccine patent during the pandemic, says Morgan Stanley.
  • See more stories on Insider’s business page.

Moderna shares fell sharply for a second session Thursday after the US said on Wednesday it supports waiving intellectual property protections for COVID-19 vaccines. The stock has now declined as much as 23% since Monday’s close after a 7% drop on Tuesday.

But Morgan Stanley said it doesn’t see a waiver materially hurting the biotech company’s business.

The Biden administration supports a waiver “in service of ending this pandemic,” even as it “believes strongly in intellectual property protections,” US Trade Representative Katherine Tai said in a statement Wednesday.

A waiver would allow other countries to make vaccines from Johnson & Johnson, Pfizer, and Moderna without fearing sanctions at the World Trade Organization.

While the US’s waiver support generates “a negative headline, we believe the practical impact is limited,” on Moderna’s business, said Matthew Harrison, an equity analyst at Morgan Stanley, in a note published Thursday.

He said Moderna’s management had previously indicated it wouldn’t enforce its intellectual property patent during the pandemic. Meanwhile, the investment bank said it doesn’t believe the WTO has any mechanism to force Moderna’s management to teach other manufacturers how to make its vaccine, which suggests no change in the status quo.

“Finally, we believe any new manufacturing operation could take 6-9 months to scale, effectively limiting the impact of other manufacturers,” wrote Harrison.

Shares of Pfizer were off by nearly 3% on Thursday and BioNTech was down by more than 2%.

“You have this political pressure to share patents with every pharmaceutical company. Then you have the other side of it, which is these pharmaceutical companies need to be motivated to always do research and development. Even though there was a pandemic and a humanitarian crisis, there is still a cost,” Hilary Kramer, chief investment officer at Kramer Capital Research, told Insider.

“Whether it’s Pfizer or Moderna or BioNTech, they have a responsibility to their shareholders and they also have a responsibility to continue to have a pipeline of products and to know [that R&D] is going to pay off,” she said. “We need to watch that – that could have a greater impact on pharmaceutical stocks.”

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Biden launches a fiery defense of his tax hikes: ‘This is about making the average multimillionaire pay just a fair share’

Biden
President Joe Biden.

  • In a Wednesday address, President Joe Biden gave an impassioned defense of his proposed tax hikes.
  • Biden wants to hike taxes on corporations and Americans making over $400,000 a year.
  • He said the rates he’s proposing have historical precedent, and he wants to offset spending.
  • See more stories on Insider’s business page.

While answering questions after a Wednesday address on the impact of the American Rescue Plan, President Joe Biden doubled down on his tax proposals and the need for wealthier Americans and corporations to pay their fair share – and took aim at prior Republican tax cuts.

“My Republican friends had no problem voting to pass a tax proposal – it expires in 2025 – that costs $2 trillion,” Biden said, adding that none of that was paid for. In fact, he said, it “gave the overwhelming percentage of those tax breaks to people who didn’t need it. The top one tenth of 1% didn’t need it.”

As for the argument Republicans gave in 2017, that it would generate a “great economic surge and growth,” Biden said “everyone from the Heritage Foundation on has pointed out it hadn’t done that.”

Then he turned to his plans to hike taxes.

“The biggest 35 or 30 corporations didn’t pay a single solitary penny last year, and they’re Fortune 500 companies,” Biden said. “They made $400 billion. They paid no taxes. How can that make any sense?”

Biden said sometime in the 2000s – he’d have his staff supply the exact date – the average CEO of a Fortune 500 company made about 36 times what the average employee of that corporation made.

“It’s over 450 times as much now. As my mother would say, who died and left them boss?” he said before raising his voice while questioning how it can benefit the economy to have CEOs make so much more than workers. “No, seriously, what rationale, tell me what benefit flows from that?”

“We’re not going to deprive” any executive “of their second or third home” or traveling privately by jet, he said.

“It’s not going to affect your standard of living at all. Not a little tiny bit,” Biden said, raising his voice, “while I can affect the standard of living of people I grew up with.”

Biden has proposed a slew of tax measures to offset the proposed spending in his two-pronged infrastructure package. Those include raising the income tax rate for the wealthiest Americans to 39.6%, bringing up the capital gains rate to the same level, and increasing the corporate tax rate from 21% to 28%. The corporate tax rate was one measure that was slashed under Trump’s tax package, falling from 35% to 21%.

Biden said he was open to compromising on the corporate tax rate – some Democrats have floated an increase to 25%, instead of 28% – but said he still wants to offset spending.

“I’m willing to compromise, but I’m not willing to not pay for what we’re talking about,” he said.

Inequality expert Sarah Anderson has testified in front of the Senate Budget Committee that the yearly gap between CEO pay and the pay of average workers is about 350 to 1.

Overall, the tax burden of Biden’s proposal would fall squarely on the top 1% of American tax filers, who would pay an average additional $100,000 per year. Biden addressed his proposal to raise the income tax rate to 39.6% for Americans making over $400,000, which he noted was a return to the Bush-era level.

“Just raise it back to what it was before. It raises enough money from that savings to put every single person in community college who wants to go,” he said. On that topic, he posed a question: “What’s going to grow America more?” The options, he said, are “the super wealthy having to pay 3.9% less tax” or an entire generation “of Americans having associate degrees.”

In closing, Biden said: “This is about making the average multimillionaire pay just a fair share. It’s not going to affect their standard of living” – pausing to whisper – “a little bit.”

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A student-loan forgiveness program for public-service workers has a 98% denial rate. 56 Democrats say it’s time for Biden to fix it.

Sen. Kirsten Gillibrand
Sen. Kirsten Gillibrand (D-NY).

  • 56 Democrats urged Education Sec. Miguel Cardona to fix the Public Service Loan Forgiveness program.
  • The letter cited its high denial rate, with fewer than 2.5% of eligible applicants being approved.
  • Biden campaigned on fixing the program to give public service workers needed relief.
  • See more stories on Insider’s business page.

President Joe Biden campaigned on reforming the Public Service Loan Forgiveness (PSLF) program, which he – along with many lawmakers in past years – said is failing borrowers due to its low approval rate.

His campaign website said: “Biden will see to it that the existing Public Service Loan Forgiveness Program is fixed, simplified, and actually helps teachers.”

On Wednesday, 56 Democratic lawmakers urged Biden to follow through on his promise.

Senate and House Democrats, led by Sens. Tim Kaine of Virginia, Kirsten Gillibrand of New York, and Rep. John Sarbanes of Maryland, wrote a letter to Biden’s Education Secretary Miguel Cardona stressing the need to improve the PSLF program to give public servants the loan forgiveness they deserve.

The PSLF program allows government and nonprofit employees with federally backed student loans to apply for loan forgiveness after proof of 120 monthly payments under a qualifying repayment plan, but 98% of all borrowers from the general public have been rejected from the program.

“After the first round of forgiveness initially became available to PSLF borrowers more than three years ago, approval rates for the program have remained below 2.5%,” the letter said. “The program has been beset by numerous ‘donut holes’ that disqualify certain types of loans, repayment plans and the payments themselves, leading to extraordinary confusion and distrust of the PSLF program and, by extension, the federal government.”

The lawmakers urged Cardona to waive barriers in PSLF, including to:

  • Expand the definition of an “eligible loan” to include all federal student loans;
  • Make all repayment plans eligible for PSLF;
  • Waive the restriction that requires a borrower to be in public service at the time of loan forgiveness;
  • And establish data-sharing agreements with the Dept. of Defense and Office of Personnel management to automatically identify public service workers with outstanding student debt.

The letter also called for extensive communication from the Education Department to borrowers to ensure they are aware of any changes that might impact loan forgiveness.

In past weeks, lawmakers from both parties have introduced legislation to reform the PSLF program. Last week, Sen. Marco Rubio of Florida and Sen. Maggie Hassan of New Hampshire introduced the Recognizing Military Service in Public Service Loan Forgiveness (PSLF) Act, which allows service members who deferred their student loan payments while deployed to count that period of time toward their PSLF progress.

This followed a a Government Accountability Office report that found that 287 Dept. of Defense personnel had received loan forgiveness as of January 2020, while 5,180, or 94% of DOD borrowers, were denied. Sen. Elizabeth Warren released a statement calling the findings, and PSLF, “nothing short of a disaster.”

Education Secretary Betsy DeVos was sued multiple times over the program’s high denial rate.

Sarbanes said on Twitter: “We must ensure that America’s teachers, social workers, public defenders, service members and community health care workers – along with many other public servants – receive the student loan forgiveness they have earned.”

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