FirstFT: Biden to revive billionaire tax plan

Joe Biden will take aim at Wall Street and corporate America in his annual State of the Union address tonight, reviving his plan for a tax on billionaires and calling on Congress to quadruple the levy on share buybacks.

The newest proposal that Biden will unveil is the quadrupling of the 1 per cent excise tax on share buybacks, which was passed as part of last year’s Inflation Reduction Act (IRA), and staunchly opposed by business.

Biden will also reprise his attempt to enact a tax on billionaires’ unrealised investment gains, which he had championed throughout 2022 but failed to secure in the final round of negotiations over the IRA following a backlash from some Republicans and moderate Democrats.

In addition, he will call on Congress to extend a cap on insulin costs to all Americans after the IRA approved it only for seniors through the Medicare government healthcare scheme.

The proposals are part of Biden’s efforts to double down and defend his economic policies, which have delivered huge jobs growth but also high inflation. Polls show Americans disapprove of Biden’s handling of the economy.

Fiscal policy is set to be a crucial political battleground over the next few months as Biden tries to secure an increase in the US debt limit from congressional Republicans to avoid a damaging default on America’s financial obligations.

• Go deeper: With US unemployment at its lowest level since 1969, Joe Biden is tonight expected to defend his economic record as he makes the case for a second term.

Five more stories in the news

1. Google reveals answer to ChatGPT The search engine has revealed plans to launch a chatbot to rival OpenAI’s popular ChatGPT. Called Bard, Google’s chatbot will give users access to its most powerful language-based artificial intelligence system as it seeks to make up for lost ground in AI technology. Chinese internet group Baidu joined the AI race today, announcing plans for its own search engine chatbot.

2. New Carlyle chief could make $180mn in 5 years Carlyle Group’s new chief executive Harvey Schwartz stands to make more than $180mn over the next five years, a pay deal that would make him one of Wall Street’s highest-paid executives. Part of the Goldman Sachs veteran’s pay package will be based on Carlyle’s share price performance.

4. Rescue teams in Turkey and Syria race to save survivors Rescue teams in Turkey and Syria worked through the night against freezing temperatures to pull survivors from rubble as the death toll from the powerful earthquake reached 5,000, with 20,000 wounded.

3. No plans to return Chinese balloon The US said yesterday there were no plans to return debris from the balloon it shot down on Saturday, even after technical experts finish analysing the surveillance capabilities that were on board the craft. Washington also stressed it was still committed to stabilising relations with China.

5. UK to design ‘digital pound’ The UK Treasury and Bank of England are designing a “digital pound” that could supplant banknotes by the end of this decade and fend off potential Big Tech competitors. With the decline of cash, ministers and officials said there was likely to be a need for a publicly-backed digital currency that ensured the central bank retained control of the heart of the UK financial system.

The day ahead

Monetary policy US Federal Reserve chair Jay Powell will deliver his first public remarks since the central bank downshifted to a smaller interest rate rises and Friday’s much stronger-than-expected jobs data. He is set to speak at the Economic Club of Washington, appearing in conversation with club chair and Carlyle Group co-founder David Rubenstein. Stocks in Europe edged higher ahead of Powell’s appearance.

Economic data The US will release its December international trade data, which economists expect will show the trade deficit widening to $68.5bn from $61.5bn in November. Separately, Canada will disclose its trade balance for the same month, and is forecasted to report its own widened deficit.

Corporate results Car rental group Hertz, Spirit Airlines, Royal Caribbean Cruises and private equity firms KKR and Carlyle Group report earnings before the opening bell. Burrito chain Chipotle and insurer Prudential report after the market closes.

What else we’re reading

How Russia bought a new sphere of influence on the cheap In Europe, Vladimir Putin’s invasion of Ukraine has been humiliating and costly. But in Africa, Russia has been making dramatic inroads, helped by a volatile mix of jihadist terror, anti-French sentiment and coups d’état. It has succeeded in challenging western influence and established what a senior adviser to Emmanuel Macron calls “a second front”.

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Central banks are not here to make profits Unlike businesses, central banks have a mandate to act in the public interest: to safeguard the value of the money they issue so that people can make financial decisions with confidence. Making a loss is sometimes the price to pay for keeping economies stable in extraordinary times, writes Agustín Carstens, general manager of the Bank for International Settlements.

Brexit could be reversed — here’s how At the height of Britain’s Brexit debate, passions ran so high that some talked of a “new English civil war”, writes Gideon Rachman. But the side that won the civil war ultimately lost, as the English restored the monarchy 11 years after King Charles I was executed in 1649. Could a similar reversal happen with Brexit?

Ford has bigger problems than an EV price war Ford’s stock is down more than 9 per cent since Thursday evening, when it reported earnings that missed both Wall Street’s and its own forecasts, writes Alexandra Scaggs. Analysts worry the shift to electric vehicle production will not improve profitability.

Are CEOs with MBAs good for business? Researchers looked at the effects on a company when a chief executive with an MBA or undergraduate business degree takes over from one without such qualifications and found no evidence that CEOs with such degrees increase sales, productivity, investment or exports relative to the levels the company achieved before. Do you think businesses are better run by a MBA graduate? Email [email protected] and vote in our poll.

Take a break from the news

Where can you find the best Japanese food in London? Tim Hayward points to Jugemu, a tiny 20-seater in Soho.