What Is the Supply Chain and How Does It Work?
We live in a global economy, powered by a complex network of resources, materials, manufacturing, and transportation, which work together to bring products and services to customers. This is known as the supply chain.
The supply chain is made up of a variety of players ranging from locally based raw material suppliers to large, transnational corporations: Each plays a role in the creation and distribution of the products that fuel everyday life, from the clothing we wear to the roofs above our heads to the food we consume and the chips that power our electronics—to name just a few.
How Was the Supply Chain Constructed?
The supply chain has been around since the Industrial Revolution, but there have been key developments in recent history:
- World War II is to thank for many breakthroughs in logistics, since weapons and supplies needed to get to troops both quickly and efficiently.
- After the war, there were other advancements, such as the invention of the storage pallet, which allowed goods to be consolidated and stacked vertically, and the shipping container, which can be moved by boat, truck, and railway car, enabling perishable items to be transported across great distances quickly—and saving both time and money.
- The expansion of global trade in the 1980s, especially the rise of manufacturing in Asia, created a global division of labor and lowered prices for goods.
- International trade agreements in the 1990s allowed countries to exchange products as well as raw materials with each other freely, building quite a web.
What Is Supply-Chain Management? What Do Supply Chain Managers Do?
True to its name, supply-chain management makes sure all of the moving parts needed to create a finished product are running smoothly. This includes:
- Storing the raw materials needed to create a product
- Sourcing cost-effective manufacturers
- Assembling basic parts into finished products
- Warehousing products until they are sold, and
- Delivering the products to consumers
A supply-chain manager’s job is to maximize efficiencies and prevent shortages. They manage inventory, production, sales, and vendor and customer relations in order to increase profits. For instance, a supply chain manager could develop a strategic partnership with a vendor or lower production expenses by purchasing directly from the source.
Why Is Supply Chain Management Important?
Supply chain management is a critical component to any business’ success. It is important because it can reduce a company’s operating expenses and thus increase profitability.
What Are Some Types of Supply Chain Models?
There are several different kinds of supply chain models, and each business should choose the one best designed for its needs:
- The continuous flow model is designed to produce a steady cadence of the same product on high demand, usually for a well-established company. There is little modification to product design here. This model is all about maximizing efficiency. An example of this would be commodity manufacturing.
- The fast chain model is built for responsiveness. It’s used for trendy products with short lifecycles. Manufacturers who change their product lines quickly—and can be the first to hit the market—are the ones who win big here. Think apparel companies, like Nike, who can sell mass volumes of a particular design before it goes out of style. When the next trend comes along, they develop a new supply chain around it.
- The efficient model is designed for competitive businesses that need an “edge” to get ahead, whether it’s through inventory management, production output, or delivery logistics. The breakfast cereal market is an example of this: Products are very similar, and manufacturers sell to the exact same audience, so a cereal company like General Mills must figure out how to reduce costs, either along the supply chain or among its suppliers, in order to gain an advantage.
- Everything about the agile model is made to provide a cost-effective response to what customers want. Companies that follow this model don’t mass manufacture products; rather, they might have a base product that can be customized quickly to meet specific demand. The “copycat” clothing manufacturer, Zara, is one example.
- The custom configured model differs from the above models in that it centers around small batches of specialty products. This model requires greater setup time and produces products in limited-edition quantities. An example of this would be a furniture company that lets consumers choose finishes, design styles, etc.
- One model that strives to be the best of all worlds is the flexible model. Because of its flexible planning strategies, it can respond to high volume demand at peak season and survive long periods at low demand. An example of this would be the office supply store, Staples. It anticipates increased volume during the back-to-school shopping season but also uses seasonal contracts with suppliers, along with stocking algorithms, to lower production levels the rest of the year.
What Is Behind the Current Supply Chain Issues? How Does the Supply Chain Impact Inflation?
The COVID-19 pandemic created a global tangle of disruption. Although vaccinations lessened the severity of the virus, the supply chain logjam became even more twisted in early 2022, when new, vaccine-resistant COVID-19 variants were discovered, and a war erupted in eastern Europe. These factors led to production and transportation issues in both food and energy supply chains, which resulted in higher prices—and whenever there’s an increase in prices, inflationary pressures are felt in the economy.
Let’s take a deeper look at each factor:
The COVID-19 Pandemic
The COVID-19 pandemic underscored the importance of a resilient supply chain. When the pandemic began, businesses with complex supply chains were hit especially hard as restrictions shuttered operations, sending workforces home. Borders were closed, which prevented raw materials and product shipments from entering countries.
Consumers who were stuck at home changed their buying habits, and businesses were left with billions of dollars of unsold goods, causing inventories to rise. However, as soon as stay-at-home restrictions were lifted, demand spiked, yet inventories were not able to be replenished quickly enough due to ongoing bottlenecks.
One example everyone remembers has to do with toilet paper. The White House estimates that stay-at-home orders caused a 40% increase in demand for retail toilet paper, which is softer than the kind used in restaurants and offices. Suppliers usually only keep 2-3 weeks’ worth of retail toilet paper inventories on-hand in their warehouses, and so when demand skyrocketed, they simply could not satisfy it fast enough.
Similarly, automotive makers witnessed a decrease in demand at the outset of pandemic and canceled orders of semiconductors, which require a long lead time. Cars are made of steel, rubber, plastic, and semiconductors, which all have their own web of supply chains, and so when demand returned, further delays ensued.
Other sectors affected by the pandemic included the housing market, which was devastated by an increase in commodities prices—spiking as high as 20%. The cost of framing lumber needed for a 2,000 sq foot house, for instance, jumped from just $7,000 in 2019 to more than $27,000 in 2021.
China’s 2022 Lockdown
In early 2022, the city of Shanghai experienced the most widespread COVID-19 outbreak since March 2020, based on the Omicron variant. From February 28 to June 1, 2022, Chinese authorities placed the entire city of 25 million, along with neighboring cities, under a lockdown. China has long held a “zero-tolerance policy” for COVID-19 but had been a bit more lenient with Shanghai, since it was an important manufacturing center as well as the world’s largest port.
Multinational companies with operations in China—,like Apple, which has assembly plants in Shanghai—were hammered. Amazon also operates out of Shanghai, and Adidas made the city its Chinese headquarters in 2017. Not only did the lockdown affect manufacturing, but it also impacted 2022 consumer sales—by as much as $4 billion in Q2 for Apple alone.
Now that the lockdown has ended, some manufacturers, like Volkswagen and Tesla, have been authorized to restart production, although it will take some time to reduce backlogs. The lockdown also snarled traffic for up to 20% of the world’s container ships, as they literally sat for weeks, waiting for their cargo to be offloaded. Some analysts believe shipment delays will be felt as late as 2023.
Russia’s Invasion of Ukraine
Russian President Vladimir Putin announced the Russian army’s invasion of Ukraine on February 24, 2022, saying his aim was to “demilitarize and de-Nazify Ukraine.” In the subsequent months, Russian military forces destroyed cities in the east part of the country, killed thousands of citizens, and displaced millions more.
This part of the world is rich in natural resources—its wheat products are used to feed developing nations, and its raw materials, like palladium and neon, are important components in semiconductors. Russia’s response to Western support of Ukraine was to cut off gas supplies to Poland and Bulgaria, which halted shipments of commodities, causing prices to increase even further.
More importantly, Russia is one of the world’s biggest oil suppliers, and the invasion resulted in the loss of supplies of 3 million barrels of oil per day, which pushed prices higher than $4 per gallon in the US. However, President Biden promised to tap strategic oil reserves in compensation.
The war has also tangled transportation logistics, which now face disruptions in the Black Sea, air restrictions over Russia and Ukraine, and freight issues across Eastern Europe. The whole world waits to see what will happen next.
Is There a Silver Lining?
Before you think the global supply chain is snarled beyond repair, there is some hope: The most recent reading from The New York Federal Reserve’s Global Supply Chain Pressure Index (GSCPI) reveals that pressures declined in May 2022, and its three-month reading indicates that they may have actually stabilized.
This index factors in data from a variety of sources, including backlogs, freight issues, and delivery times, and stretches back to 1997. Changes in pressures are associated with producer price inflation in the United States, making this dataset useful to watch. We look forward to seeing if a peak has occurred.
The GSPCI is released on the fourth business day of every month; the next index will be published on July 6. 2022.
How Will Supply Chain Issues Be Resolved?
Throughout globalization, a business’ main objective was to maximize efficiencies. Most companies did this through an inventory management method known as “just in time,” which allowed them to receive goods from suppliers only when they were needed.
Now, as shocks from pandemics, climate change, and war create mass disruption the world over, companies are acknowledging that they need to take delays into consideration through their strategic planning processes. They can do this by identifying the weak links in their networks and prioritizing digital technologies, which might alleviate the need for human drivers.
Their aim has now become the creation of “just in case” backup systems, which guarantee a minimal level of supply during times of crisis. This method involves a greater reliance on robotics, AI, and machine learning.
Are the Terms “Supply Chain” and “Logistics” Interchangeable?
Logistics makes up an important part of the overall supply chain, but the two terms are not interchangeable. The term “supply chain” encompasses much more than logistics and also includes activities like manufacturing and delivery.
What Does Transparency in the Supply Chain Mean?
Transparency is an incredibly important part of the supply chain, and fortunately, most companies pledge to be socially responsible in their business practices in order to be accountable to their customers. How do they achieve this? By making sure their suppliers are acting according to legal and ethical standards in terms of raw material extraction methods, labor practices, and product pricing, to name just a few.
When Will Supply Chain Issues End? Which Supply Chain Shortages Are Coming?
TheStreet.com’s Dan Weil has identified five factors to watch to see if supply chain issues will resolve in 2022.federal reserve pandemic covid-19 housing market white house army vaccine lockdown stay-at-home orders global trade commodities oil europe poland russia ukraine china
TDR’s U.S. Stock Market Preview For The Week Of August 8, 2022
A weekly stock market preview and the data that will impact the tape. Sunday Evening Futures Open – Stock Market Preview Weekend News And Developments…
A weekly stock market preview and the data that will impact the tape.
Sunday Evening Futures Open – Stock Market Preview
Weekend News And Developments
Berkshire Hathaway dramatically slowed new investment in the second quarter after setting a blistering pace at the start of the year, as the US stock market sell-off pushed the insurance-to-railroad conglomerate to a $43.8bn loss.
China’s southern island province of Hainan started mass Covid-19 testing on Sunday, locking down more parts of the province of over 10 million residents, as authorities scramble to contain multiple Omicron-driven outbreaks, including the worst in capital Sanya, often called “China’s Hawaii”.
Cuba: 17 missing, 121 injured as fire rages in oil tank farm in Matanzas City
Equity positioning for both discretionary and systematic investors remains in the 12th percentile of its range since January 2010, according to Deutsche Bank published last week.
Fisker Inc. (NYSE:FSR) unveils a process for qualifying US-based reservation holders of the Fisker Ocean all-electric SUV to retain access to the existing federal tax credit. The current $7,500 tax credit would be unavailable should Congress pass the Inflation Reduction Act of 2022 and President Biden signs the legislation into law.
Former Labour prime minister Gordon Brown has called for an emergency budget before the UK hits a “financial timebomb” this autumn. Mr. Brown said millions would be pushed “over the edge” if the government does not address the cost of living crisis.
Israel said Sunday it killed a senior Islamic Jihad commander in a crowded Gaza refugee camp, the second such targeted attack since launching its high-stakes military offensive against the militant group just before the weekend. The Iran-backed militant group has fired hundreds of rockets at Israel in response, raising the risk of the cross-border fighting turning into a full-fledged war.
Rhine river hit by drought conditions, hampers German cargo shipping. According to reports, transport prices have shot up as drought and hot weather have affected water levels in the river Rhine in Germany leading cargo vessels to reduce loads during transportation.
Taiwan’s defense ministry said it had detected 66 Chinese air force planes and 14 Chinese warships conducting activities in and around the Taiwan Strait on Sunday, Reuters reports. Thursday’s drills involved the live firing of 11 missiles.
Unifor: 1,800 members from across the country arrive in Toronto this weekend before Monday’s start to the union’s 4th Constitutional Convention, where delegates will elect a new National President and vote on key priorities and initiatives. Unifor is Canada’s largest union in the private sector, representing 315,000 workers in every major area of the economy.
U.S. rate futures have priced in a 69% chance of a 75 bps hike at its September meeting, up from about 41% before the payrolls data. Futures traders have also factored in a fed funds rate of 3.57% by the end of the year.
What The Analysts Are Saying…
Anybody that jumped on the ‘Fed is going to pivot next year and start cutting rates’ is going to have to get off at the next station, because that’s not in the cards. It is clearly a situation where the economy is not screeching or heading into a recession here and now.” — Art Hogan, chief market strategist at B. Riley Financial
“It is not a market bottom, things are not going to go up consistently from here because we are going to be buying low tech products for a while, so everyone has something to make up as COVID demand = pre-COVID, there are fewer units for this. Reality check – unlike ‘Big Tech’, consumer discretionary related companies are offering more cautious guidance.” — Morgan Stanley analyst commentary on a potential market bottom
“The fact of the matter is this (Aug. 5 nonfarm payroll report) gives the Fed additional room to continue to tighten, even if it raises the probability of pushing the economy into recession. It’s not going to be an easy task to continue to tighten without negative repercussions for the consumer and the economy”. — Jim Baird, chief investment officer at Plante Moran Financial Advisors
“We are surprised to not see investors start to chase upside calls in fear of underperforming the market. People are just watching.” — Matthew Tym, head of equity derivatives trading at Cantor Fitzgerald
What We’re Watching
• Psychedelic Sector Gaining Momentum: What started out as bottoming action after a protracted multi-quarter decline has now morphed into a tangible bullish impulse. We believe Netflix new docuseries How To Change Your Mind has played an important roll in the creation of critical mass awareness for the sector—and a rebound in broad market risk assets hasn’t hurt. At the tip of the spear for this sentiment shift is COMPASS Pathways plc (CMPS), which has risen 62.64% since the docuseries debuted on July 12. Price on the benchmark Horizons Psychedelic Stock Index ETF has now breached the 20-day MA/EMA.
We are watching to see if investor sentiment shifts into laggard names such as Cybin Inc. and MindMed, which has continued to fall following a proposed 15-1 reverse stock split initiative announced this year. Many Tier-2/3 names still 90%+ off their highs…
• Revive Therapeutics (RVV:CSE, RVVTF:OTC): This has been on our radar for the last couple of weeks, and remains on our watch list. The company has already confirmed that their statistician is in possession of 210 unblinded patient data for its Phase 3 clinical trial to evaluate Bucillamine to treat COVID-19. The company is currently attempting to revise endpoint data from a hospitalization/death focus to a symptoms focus. If they are to achieve this, it will mark a material event in the course of the trial.
We believe an endpoint decision, either positive or negative, is imminent and will have cause a material price action event.
• Consumer Price Index, August 10: Consumer inflation expectations for July are released by the New York Fed, while the University of Michigan’s preliminary survey of consumers for August is on tap. Taken together, these should give investors a better picture of how consumers are feeling about current economic conditions.
As of June, it’s running at 9.1% on an annual basis. Investors, economists and consumers will be watching to see if price increases are easing as everything from gasoline to food is elevated.
Given the mixed signals on the overall state of the economy (i.e. indications of recession vs. this week’s strong nonfarm payrolls number), CPI will be in-focus by market participants. Scotiabank expects 8.9% y/y (9.1% prior) and 0.4% m/m for headline CPI; ex-food-and-energy: 6.1% y/y led by a 0.6% m/m gain.
• Pot stocks earnings continue, with several Tier-1/Teri-2 names reporting including Curaleaf Holdings, Trulieve Cannabis, Marimed Inc., Cronos Group, TerrAscend Corp. and more. Last Wednesday, Green Thumb Industries allayed fears somewhat that this earnings season would be a write-off, producing solid numbers which beat expectations on several key metrics. An additional strong report or two will go a long way to help improve sentiment for a sector that’s been decimated over the past six quarters.
U.S. Economic Calendar
|TIME (ET)||REPORT||PERIOD||MEDIAN FORECAST||PREVIOUS|
|Monday, August 8|
|11:00 AM||NY Fed 3-year inflation expectations||July||—||3.60%|
|Tuesday, Aug. 9|
|6:00 AM||NFIB small-business index||July||89.5||89.5|
|8:30 AM||Unit labor costs||Q2||9.30%||12.60%|
|Wednesday, August 10|
|8:30 AM||Consumer price index||July||0.30%||1.30%|
|8:30 AM||Core CPI||July||0.60%||0.70%|
|8:30 AM||CPI (year-over-year)||July||-8.70%||9.10%|
|8:30 AM||Core CPI (year-over-year)||July||6.10%||5.90%|
|10:00 AM||Wholesale inventories (revision)||June||1.90%||1.70%|
|2:00 PM||Federal budget (compared with year earlier)||July||—||-$302 billion|
|Thursday, August 11|
|8:30 AM||Initial jobless claims||Aug. 6||265,000||260,000|
|8:30 AM||Continuing jobless claims||July 30||—||1.42 million|
|8:30 AM||Producer price index||July||0.20%||1.10%|
|Friday, Aug. 12|
|8:30 AM||Import price index||July||-0.80%||0.20%|
|10:00 AM||UMich consumer sentiment index (preliminary)||Aug.||53||52|
|10:00 AM||UMich 5-year inflation expectations (preliminary)||Aug.||—||2.90%|
Meme Of The Week
Key Earnings (US Markets)
|Monday, August 8||3D Systems||DDD||$0.00 per share|
|Take-Two Interactive Software||TTWO||$0.86|
|Tuesday, Aug. 9||Akamai Technologies||AKAM||$1.31|
|H & R Block||HRB||$1.24|
|Hilton Grand Vacations||HGV||$0.88|
|Norwegian Cruise Line||NCLH||-$0.83|
|Super Micro Computer||SMCI||$2.35|
|The Trade Desk||TTD||$0.20|
|Warner Music Group||WMG||$0.20|
|World Wrestling Entertainment||WWE||$0.55|
|Wednesday, August 10||AppLovin||APP||$0.50|
|Jack in the Box||JACK||$1.42|
|Pan Am Silver||PAAS||$0.14|
|Red Robin Gourmet||RRGB||-$0.16|
|Wolverine World Wide||WWW||$0.65|
|Thursday, August 11||AerCap||AER||$1.42|
|Brookfield Asset Management||BAM||$0.69|
|Melco Resorts & Entertainment||MLCO||-$0.44|
|Ryan Specialty Group||RYAN||$0.35|
|Wheaton Precious Metals||WPM||$0.32|
|Friday, Aug. 12||Broadridge Financial||BR||$2.65|
Past Week What’s Hot… and What’s Not
Top 12 High Short Interest Stocks
|BBBY||Bed Bath & Beyond Inc.||Nasdaq||46.38%||61.57M||79.96M||Retail (Specialty Non-Apparel)|
|ICPT||Intercept Pharmaceuticals Inc||Nasdaq||43.76%||23.62M||29.71M||Biotechnology & Medical Research|
|MSTR||MicroStrategy Inc||Nasdaq||39.29%||9.32M||9.33M||Software & Programming|
|BYND||Beyond Meat Inc||Nasdaq||37.91%||56.79M||63.54M||Food Processing|
|SWTX||SpringWorks Therapeutics Inc||Nasdaq||37.51%||31.64M||49.41M||Biotechnology & Medical Research|
|BIG||Big Lots, Inc.||NYSE||37.37%||26.49M||28.92M||Retailers – Discount Stores|
|EVGO||Evgo Inc||Nasdaq||35.65%||67.76M||69.00M||Utilities – Electric|
|UPST||Upstart Holdings Inc||Nasdaq||35.60%||72.32M||84.77M||Consumer Lending|
|BGFV||Big 5 Sporting Goods Corp||Nasdaq||34.65%||20.85M||22.33M||Retailers – Miscellaneous Specialty|
|SRG||Seritage Growth Properties||NYSE||34.38%||23.58M||43.68M||Real Estate Operations|
|NKLA||Nikola Corporation||Nasdaq||32.77%||265.95M||421.14M||Auto & Truck Manufacturers|
|BLNK||Blink Charging Co||Nasdaq||32.54%||33.98M||50.20M||Utilities – Electric|
Tags: stock market preview, stock market preview August 8, 2022.
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Senate Passes $740 Billion Tax, Climate Package — Will Go To House Next
Senate Passes $740 Billion Tax, Climate Package — Will Go To House Next
Update (1532ET): After much wrangling, the Democrats finally passed…
Update (1532ET): After much wrangling, the Democrats finally passed their sweeping economic package through the Senate on Sunday.
The estimated $740 billion "Inflation Reduction Act" - far less ambitious than their original $3.5 trillion vision - next heads to the House, where its passage is a foregone conclusion. According to Axios, a vote could come as early as Friday before it heads to President Biden's desk.
The package includes provisions to address climate change, pharmaceutical costs, and a supercharged IRS.
"It’s been a long, tough and winding road, but at last, at last we have arrived," said Senate Majority Leader Chuck Schumer (D-NY). "The Senate is making history. I am confident the Inflation Reduction Act will endure as one of the defining legislative measures of the 21st century."
WATCH: Kamala Harris and Senate Democrats cheer as they pass a bill to raise taxes on the middle class. pic.twitter.com/NPpPMGV7Wj— RNC Research (@RNCResearch) August 7, 2022
As the Washington Post notes, "Senators engaged in a round-the-clock marathon of voting that began Saturday and stretched late into Sunday afternoon. Democrats swatted down some three dozen Republican amendments designed to torpedo the legislation. Confronting unanimous GOP opposition, Democratic unity in the 50-50 chamber held, keeping the party on track for a morale-boosting victory three months from elections when congressional control is at stake."
And as Axios reports,
The Senate returned to the Capitol Saturday afternoon, and began voting late Saturday night and into Sunday on a series of amendments — part of the process known as "vote-a-rama."
- Senate Republicans offered dozens of amendments aimed at minimizing the bill, including stripping out funding for the Internal Revenue Service and eliminating COVID-19-related school mandates.
- Democrats held firm in their unity, with the help of Harris, of preserving the core elements of the package and voting down each GOP amendment.
. . .
The bill includes:
- $370 billion for climate change - the largest investment in clean energy and emissions cuts the Senate has ever passed.
- Allows the federal health secretary to negotiate the prices of certain expensive drugs for Medicare.
- Three-year extension on healthcare subsidies in the Affordable Care Act.
- 15% minimum tax on corporations making $1 billion or more in income. The provision offers more than $300 billion in revenue.
- IRS tax enforcement.
- 1% excise tax on stock buybacks.
Drilling down on the climate portion - Axios' Andrew Freedman writes:
- This includes tax incentives to manufacture and purchase electric vehicles, generate more wind and solar electricity and support fledgling technology such as direct air capture and hydrogen production.
- Independent analyses show the bill, combined with other ongoing emissions reductions, would cut as much as 40% of U.S. greenhouse gas emissions by 2030, short of the White House's 50% reduction target. However, if enacted into law, it would reestablish U.S. credibility in international climate talks, which had been flagging due in part to congressional gridlock.
- As part of Democrats' concessions to Sen. Manchin, the bill also contains provisions calling for offshore oil lease sales in the Gulf of Mexico and off the coast of Alaska, and a commitment to take up a separate measure to ease the permitting of new energy projects.
* * *
Senate Democrats late on Aug. 6 advanced a mammoth spending bill on climate and energy, health care, and taxes, after overcoming unanimous Republican opposition in the evenly divided chamber.
The procedural vote to advance the Democratic bill - which authorizes over $400 billion in new spending - was 51–50 after Vice President Kamala Harris arrived at the Capitol to cast a vote, breaking the deadlock in the Senate over the measure that Democrats say would reform the tax code, lower the cost of prescription drugs, invest in energy and climate change programs, all while lowering the federal deficit.
The vote means that senators will have 20 hours to debate on the measure, followed by a vote-a-rama, a marathon open-ended series of amendment votes that has no time limit. After that, the bill will head to a final vote. The measure is anticipated to pass the chamber as early as this weekend.
The House, where Democrats have a majority, could give the legislation final approval on Aug. 12, when lawmakers are scheduled to return to Washington.
The vote came after the Senate parliamentarian - the chamber’s nonpartisan rules arbiter - gave a thumbs-up to most of the Democrats’ revised 755-page bill.
But Democrats had to drop a significant part of their plan for lowering prescription drug prices, Parliamentarian Elizabeth MacDonough said.
The provision would have essentially forced companies not to raise prices higher than inflation. MacDonough said Democrats violated Senate budget rules with language in the bill imposing hefty penalties on drugmakers who raise their prices beyond inflation in the private insurance market.
As Mimi Nguyen Ly details at The Epoch Times, while the bill’s final costs are still being determined, it includes about $370 billion on energy and climate programs over the next 10 years, and about $64 billion to extend subsidies for Affordable Care Act program for federal subsidies of health insurance for three years through 2025.
It also seeks generate about $700 billion in new revenue over the next 10 years, which would leave roughly $300 billion in deficit reduction over the coming decade, which would represent just a tiny proportion of the next 10 year’s projected $16 trillion in budget shortfalls.
A large portion of the $700 billion—an estimated $313 billion—is expected to be generated by increasing the corporate minimum tax to 15 percent, while the remaining amounts include $288 billion in prescription drug pricing reform and $124 billion in Internal Revenue Service tax enforcement.
According to the current version of the bill, the new 15 percent minimum tax would be imposed on some corporations that earn over $1 billion annually but pay far less than the current 21 percent corporate tax. Companies buying back their own stock would be taxed 1 percent for those transactions, swapped in after Sinema refused to support higher taxes on private equity firm executives and hedge fund managers. The IRS budget would be increased to strengthen its tax collections.
The White House said in a statement of administrative policy on Aug. 6 that it “strongly supports passage” of the bill.
“This legislation would lower health care, prescription drug, and energy costs, invest in energy security, and make our tax code fairer—all while fighting inflation and reducing the deficit,” the statement reads.
“This historic legislation would help tackle today’s most pressing economic challenges, make our economy stronger for decades to come, and position the United States to be the world’s leader in clean energy.”
Republicans say the legislation is simply an alternate, dwindled version to the Democrat’s earlier Build Back Better bill—a multitrillion-dollar social spending package that was a major agenda of President Joe Biden—that Democrats have now dubbed the “Inflation Reduction Act of 2022.”
Senate Minority Leader Mitch McConnell (R-Ky.) said Democrats “are misreading the American people’s outrage as a mandate for yet another reckless taxing and spending spree.” He said Democrats “have already robbed American families once through inflation and now their solution is to rob American families yet a second time.”
“There is no working family in America whose top priorities are doubling the size of the IRS and giving rich people money to buy $80,000 electric cars,” McConnell said in a separate statement on Twitter.
“Americans want Washington to address inflation, crime, and the border—not another reckless liberal taxing and spending spree.”
Democrats have said the measure would “address record inflation by paying down our national debt, lowering energy costs, and lowering healthcare costs,” but Republicans have criticized the measure as having no potential other than to make matters worse, nicknaming the legislation “Build Back Broke,” in part because the bill would fulfill many parts of Biden’s Build Back Better agenda.
“The time is now to move forward with a big, bold package for the American people,” said Senate Majority Leader Chuck Schumer (D-N.Y.).
“This historic bill will reduce inflation, lower costs, fight climate change. It’s time to move this nation forward.”
But not every Democrat is buying what Chuck is selling...
As John Solomon reports at JustTheNews.com, Sen. Bernie Sanders, the former presidential candidate and proud socialist, on Saturday attacked President Joe Biden‘s Inflation Reduction Act for failing to live up to its name, after the non-partisan Congressional Budget Office declared it would have a minimal impact on surging prices.
“I want to take a moment to say a few words about the so-called Inflation Reduction Act that we are debating this evening," Sanders said just after voting with Democrats to advance the bill to debate on the Senate floor.
"I say so-called because according to the CBO and other economic organizations that have studied this bill, it will in fact have a minimal impact on inflation."
CBO declared this week that the $740 billion piece of legislation would only affect inflation by 0.1% in either direction.
"I don't find myself saying this very often. But on that point, I agree with Bernie," Sen. John Thune, R-S.D., told Insider.
Overall, economic analysts are divided on the measure, with some having predicted that the bill will worsen inflation and lead to stagnation in growth.
As Will Cain explained in an excellent monologue reality check, "look at the name of the bill, whatever it is, you can be sure the legislation will do the opposite."
Finally, as Goldman details in a new notes, the net fiscal impact of these policies continues to look very modest, likely less than 0.1% of GDP for the next several years...
While the final outcome may still yet differ in details, the fiscal impact is likely to be similar.
UN Warns Of ‘Worrying And Dangerous’ Conspiracy Theories
UN Warns Of ‘Worrying And Dangerous’ Conspiracy Theories
The United Nations would like everyone to be on the lookout for ‘worrying and dangerous’…
The United Nations would like everyone to be on the lookout for 'worrying and dangerous' conspiracy theories - especially those that might lead people to the conclusion that COVID-19 escaped from a lab in Wuhan, China... you know, the thing the WHO just admitted could very well be the case, and which Sen. Rand Paul (R-KY) has launched recent investigations into.
Before we get into the UN's latest salvo in the war over narratives (feel free to scroll down if you're a regular reader); We know from government contracts, FOIA records, and leaked emails that the US government was conducting risky gain-of-function research on US soil until former President Obama banned it in 2014 over ethical questions raised by the scientific community. The 'research' included manipulating bat Covid to be more transmissible to humans, and following Obama's ban, was funneled overseas to the Wuhan Institute of Virology through New York nonprofit, EcoHealth Alliance - whose CEO Peter Daszak secured lucrative contracts to study and manipulate bat coronaviruses in Wuhan China four months before Obama's ban.
Daszak was the guy behind The Lancet's "it couldn't have come from a lab" Natural Origin statement - for which he reportedly engaged in a "bullying campaign" - before generating significant controversy over conflicts of interest involving many of its authors and co-signatories, to which the Lancet later admitted.
“And then I see the scientists. “Oh, nothing here to look at. We know it’s the market. Did we find an animal? No. Do we have an explanation of where that furin cleavage site came in? No.”https://t.co/SsgzzPxZc6— Yuri Deigin (@ydeigin) August 5, 2022
The first $666,442 installment of EcoHealth's $3.7 million NIH grant was paid in June 2014, with similar annual payments through May 2019 under the "Understanding The Risk Of Bat Coronavirus Emergence" project.
Then, in 2017, a subagency of the National Institutes of Health (NIH) - headed by Dr. Anthony Fauci - resumed funding a controversial grant to genetically modify bat coronaviruses in Wuhan, China without the approval of a government oversight body.
Notably, the WIV "had openly participated in gain-of-function research in partnership with U.S. universities and institutions" for years under the leadership of Dr. Shi 'Batwoman' Zhengli, according to the Washington Post's Josh Rogin.
We also know (thanks to a FOIA lawsuit by The Intercept) that Daszak wanted to release 'Chimeric Covid Spike Proteins' Into Bat Populations Using 'Skin-Penetrating Nanoparticles,' only for the 'DEFUSE' proposal to be denied by DARPA on the grounds that it was too risky.
I just wish one of the defenders of the market theory would seriously address the DEFUSE proposal's details rather than just mischaracterising and dismissing them. https://t.co/Rbjm4wUlhE— Matt Ridley (@mattwridley) August 6, 2022
Based on the circumstantial evidence, the stonewalling and silence, deleted database, and the leaked DEFUSE grant proposal, the possibility of lab leak of FCS engineered virus is too high too ignore. pic.twitter.com/KGT3YrnEAx— victor tan (@Victorhashira) August 5, 2022
We challenge the UN to 'debunk' any of the above.
Now that you're up to speed
Enter the UN's new #ThinkBeforeSharing campaign, which helps people "learn how to identify, debunk, react to and report on conspiracy theories to prevent their spread."
To aid gullable individuals navigate the information highway without hitting any conspiracy potholes, UNESCO provides some helpful infographics - one of which thanks Stephen Lewandowsky - Australian psychologist and co-author of a March 2022 Scientific American report complaining about how "The Lab-Leak Hypothesis Made It Harder for Scientists to Seek the Truth."
So the default position of those behind the UN's "watch out for conspiracy theories" campaign is that the lab leak is a conspiracy theory. Right.
They recommend taking action when you've "identified a conspiracy theory," but that you don't get lured into an argument with a conspiracy theorist.
"Any argument may be taken as proof that you are part of the conspiracy and reinforce that belief," which will cause the conspiracy theorist to "argue hard to defend their beliefs."
So what to do? Show "empathy," and avoid "ridiculing them."
"If you are certain you have encountered a conspiracy theory," you must "react" immediately and post a link to a "fact-checking website" in the comments.
In short - this (from 2020):
New Zealand Prime Minister Jacinda Ardern:— Daily Wire (@realDailyWire) July 25, 2022
"We will continue to be your single source of truth… Unless you hear it from us it is not the truth."pic.twitter.com/WV7ZfdP2RR
Stay safe out there citizen!
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