All eyes are on the Federal Reserve after new data showed wage growth slowing. We’ll also look at billions of dollars in potential pandemic loan fraud, Biden’s late budget proposal and a report finding that the IRS is far more likely to audit Black taxpayers.
But first, see which members of the last Congress have already moved on to lobbying.
Welcome to On The Money, your guide to everything affecting your bills, bank account and bottom line. For The Hill, we’re Sylvan Lane, Aris Folley and Karl Evers-Hillstrom. Subscribe here.
Wage growth slows as Fed set to ease up rate hikes
Wages and benefits rose at a slower rate during the final three months of 2022, according to data released Tuesday, giving the Federal Reserve room to ease up its fight against inflation.
The Labor Department’s Employment Cost Index (ECI), which tracks increases in wage and benefits costs for employers, rose 1 percent for non-military employees during the fourth quarter, slightly lower than economists expected. It was the smallest gain in the ECI since the fourth quarter of 2021.
Why it matters: The Fed pays close attention to the index as a sign of how much a strong labor market is driving inflation. The year-end slowdown in wage and compensation growth could give the Fed more confidence to keep slowing down — and eventually stop — its series of aggressive rate hikes.
“A downshift in ECI wage growth in Q4 would not immediately stop Fed officials talking about their intention to raise rates further. But their tone likely will soften, and such data would make it more difficult for them to continue hiking after this week,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote in a Tuesday analysis.
Sylvan breaks it down here.
📺 EVENT INVITE
On the Record Newsmaker event, Wednesday, Feb. 1 at 3 p.m. ET/12 p.m. PT
Rep. Virginia Foxx (R-N.C.), chairwoman of the House Education and the Workforce Committee, sits down with The Hill’s Bob Cusack for a live newsmaker event to discuss her priorities for the 118th Congress. RSVP and join us live.
Almost 70K ‘questionable’ Social Security numbers used for $5.4B in pandemic-related loans: watchdog
A pandemic watchdog group identified nearly 70,000 “questionable” Social Security numbers that were used to obtain $5.4 billion in pandemic-related federal loans.
The group, the Pandemic Response Accountability Committee, issued the report on Monday analyzing information from more than 33 million applications from the COVID-19 Economic Injury Disaster Loans and the Paycheck Protection Program.
- The group found that more than 221,000 Social Security numbers used on applications were “not issued” by the federal government, or did not match the applicants’ name or date of birth.
- The federal government awarded nearly 70,000 of the 221,000 Social Security numbers flagged for potential identity fraud a loan or a grant.
The Hill’s Lauren Sforza has all the details here.
White House to release budget proposal on March 9
The White House will release its budget proposal for next fiscal year on March 9, officials said Tuesday, as they pressure Speaker Kevin McCarthy (R-Calif.) to release a detailed budget of his own outlining House Republicans’ spending plans.
The White House on Tuesday circulated a memo from National Economic Council Director Brian Deese and Office of Management and Budget Director Shalanda Young ahead of President Biden’s meeting with McCarthy on the debt ceiling. The two officials confirmed Biden would unveil his budget for fiscal 2024 in early March.
- White House officials are using the release of the budget to lean on McCarthy to be transparent about whether he wants to cut programs like Social Security and Medicare as members of his caucus call for spending cuts.
- Biden and McCarthy will meet Wednesday at the White House to discuss the debt ceiling, which lawmakers must raise in the coming months or risk a government default that could wreck the economy. Some Republicans have signaled they plan to use the debt ceiling negotiations as leverage to secure spending cuts and reforms to government programs.
The Hill’s Brett Samuels has the details here.
Black taxpayers more than three times more likely to be audited by IRS
A new report found that the IRS audits Black taxpayers at a significantly higher rate than non-Black taxpayers.
The paper, published by Stanford’s Institute for Economic Policy Research, said that despite the IRS’s “race-blind audit selection,” Black taxpayers are audited 2.9 to 4.7 times more often than non-Black taxpayers.
- The research did not suggest that the disparity is a result of one group of people evading taxes more than another but rather that it may be a result of the computer algorithms the IRS uses for selection.
- The study found that the largest disparity between the groups was among those claiming the earned income tax credit, which helps low- to moderate-income workers and families get a tax break, according to the IRS.
Lauren Sforza has more here.
Good to Know
ExxonMobil announced record profits for the year 2022, reporting it made $55.7 billion over the past year and drawing ire from the left.
CEO Darren Woods said on Tuesday that the annual profits were a record for the company during an earnings call. He said that the company “benefited from a favorable market” but also made investing choices in the past that helped it “take full advantage of the undersupplied market.”
Other items we’re keeping an eye on:
- The public health emergency for the mpox outbreak that began last year is officially ending as of Tuesday, with the number of reported cases continuing to dwindle and advocacy groups declaring the emergency’s conclusion a victory for the LGBTQ community.
- House Republicans passed a bill on Tuesday to end the COVID-19 public health emergency, moving ahead with the legislation despite the Biden administration announcing one day earlier that the declaration would end in May.
- An animal group is trying to save thousands of cats, dogs and other pets left behind amid the war in 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.