Will mandating mandates work?
President Biden on Thursday laid out a wide-ranging plan to tackle the coronavirus pandemic, including requiring companies with more than 100 employees to mandate that their workers get vaccinated or face weekly testing. The move comes as airlines, restaurants and other businesses are already feeling the pain of an economic pullback caused by the Delta variant of the virus. The new rule will affect some 80 million workers.
Many companies were already moving toward mandates. In a recent Willis Towers Watson survey, 52 percent of respondents said they planned to institute vaccine mandates by the end of the year, and 21 percent said they already had such requirements. But many of those mandates, including at companies like Goldman Sachs and UPS, have focused on white-collar workers, who tend to have higher vaccination rates. This presidential directive will help industries facing labor shortages, like retail and hospitality, institute a requirement on their frontline workers. “It levels the playing field,” said Ian Schaefer, a partner at the law firm Loeb & Loeb.
But companies will now face new decisions, like whether to pick up the tab for weekly testing and how to handle religious exemptions — tasks many are already finding challenging. A recent poll by Aon of 583 global companies found that of the employers that have vaccine mandates, 48 percent said they were allowing for religious exemptions; only 7 percent said they would fire a worker for refusing to get vaccinated.
Reaction was, unsurprisingly, mixed. The Business Roundtable and the U.S. Chamber of Commerce both welcomed the Biden administration’s actions. But Gov. Greg Gianforte, Republican of Montana, the only state to ban vaccine mandates, called the new rules “unlawful and un-American.” The Republican National Committee said it intended to sue.
Whether legal challenges will prove successful is unclear. OSHA’s emergency temporary standards pre-empt state governments’ existing rules, except in states that have their own OSHA-approved workplace agencies. (About half do.) The legal basis for a challenge is likely to be weakest in states that are directly within OSHA’s jurisdiction, like Montana, Texas and Florida.
HERE’S WHAT’S HAPPENING
Europe slows its pandemic bond-buying. Policymakers approved a moderate reduction of government bond purchases, citing “favorable financing conditions.” The European Central Bank’s president, Christine Lagarde, said the move was not a taper, but a “recalibration.”
A rare dialogue between Beijing and Washington tries to ease a strained relationship. Yesterday, for the first time in seven months, Biden and China’s leader, Xi Jinping, held a substantive conversation. They discussed the responsibility both countries have to “ensure competition does not veer into conflict,” a statement from the White House said. Meanwhile, Chinese regulators granted Evergrande, the world’s most debt-saddled property developer, more time to negotiate with its creditors, evading a $300 billion bust, for now.
The Food and Drug Administration delays its decision on Juul Labs. The F.D.A. had been expected to rule on whether products from the e-cigarette maker and other large vaping companies could stay on the market, but the agency said it needed more time. Meanwhile, the agency announced yesterday that it had denied the applications of almost one million flavored e-cigarette products, mostly made by small companies, to remain on the market.
Texas bans social media companies from removing or hiding posts, citing political “censorship.” The law, which was signed yesterday by Gov. Greg Abbott, will allow Texans, or anyone who shares or post messages in Texas, to sue platforms with more than 50 million monthly users. A similar law in Florida was blocked this summer by a judge, as critics say the laws violate companies’ First Amendment rights to decide what content they host.
The White House sets a zero-carbon challenge for aviation. The government announced a new target to reduce aviation emissions by 20 percent by 2030, with a $4 billion funding pot to support sustainable aviation fuel projects. Separately, Harvard said its $42 billion endowment would no longer invest in fossil fuels.
Democrats take aim at buybacks
Proponents of President Donald Trump’s 2017 corporate tax cut argued that companies would use the savings to grow their businesses, hire workers or raise wages. Instead, in 2019, the largest American companies spent a record $728 billion on stock buybacks — a 55 percent increase from 2018, before the law took effect. Now, The Times reports, Democrats are coalescing around a plan to tax those stock buybacks that is likely to be included in the Senate’s budget bill.
The proposal would tax buybacks at 2 percent. Democrats say the proposed tax would bring in about $270 billion over 10 years, and would push companies to invest more in their workers and businesses instead of using excess cash for buybacks. But it can’t do both. If the proposed tax does cause companies to cut buybacks, the revenue the tax generates would shrink as well.
The proposal will also address large business partnerships that are often used to avoid taxes. The rules for taxing partnerships were written with small businesses, like doctor’s offices, in mind. Increasingly, though, partnerships have been used by large companies to shift profits in order to avoid taxes. The new rules would prevent a single corporate entity that controls multiple partnerships from shifting profits or debt between them in order to reduce its overall tax bill.
Some Democrats wanted to make buybacks illegal. But Democratic tax aides said on Thursday that they were trying to balance the desire to curtail buybacks with the need to raise revenue for the social policy bill. At the very least, a 2 percent tax on buybacks could persuade some companies to shift excess cash to shareholder dividends, which are taxed at an individual level.
“It all made me feel that I was being dragged into some inevitable future dreamed up by people much more techie than me, one in which the seams between the real world and the technology that supports it had all but vanished.”
— Mike Isaac, a Times technology reporter, on his experience trying out Facebook and Ray-Ban’s new sunglasses that can take photographs, record video, answer phone calls and play music and podcasts.
A new way to talk about SPACs
As SPACs struggle with redemptions, they’re trying new ways to connect with shareholders ahead of investor votes that will seal their deals’ fates.
One example is the food tech company Benson Hill, which will be the first SPAC — or special purpose acquisition company — to host a retail investor webcast and Q. and A. on Say, a platform recently acquired by Robinhood, ahead of its shareholder vote expected this month. Benson Hill announced the open forum yesterday on Reddit. Say has been used by other companies, including Tesla, to allow individual investors to ask questions on earnings conference calls, access to which had previously been reserved mostly for analysts employed by Wall Street banks. “We recognize the attention paid to SPACs these days and want to leverage the platform in a positive way,” said Benson Hill’s C.E.O., Matt Crisp.
Understand Vaccine and Mask Mandates in the U.S.
- Vaccine rules. On Aug. 23, the Food and Drug Administration granted full approval to Pfizer-BioNTech’s coronavirus vaccine for people 16 and up, paving the way for an increase in mandates in both the public and private sectors. Private companies have been increasingly mandating vaccines for employees. Such mandates are legally allowed and have been upheld in court challenges.
- Mask rules. The Centers for Disease Control and Prevention in July recommended that all Americans, regardless of vaccination status, wear masks in indoor public places within areas experiencing outbreaks, a reversal of the guidance it offered in May. See where the C.D.C. guidance would apply, and where states have instituted their own mask policies. The battle over masks has become contentious in some states, with some local leaders defying state bans.
- College and universities. More than 400 colleges and universities are requiring students to be vaccinated against Covid-19. Almost all are in states that voted for President Biden.
- Schools. Both California and New York City have introduced vaccine mandates for education staff. A survey released in August found that many American parents of school-age children are opposed to mandated vaccines for students, but were more supportive of mask mandates for students, teachers and staff members who do not have their shots.
- Hospitals and medical centers. Many hospitals and major health systems are requiring employees to get a Covid-19 vaccine, citing rising caseloads fueled by the Delta variant and stubbornly low vaccination rates in their communities, even within their work force.
- New York City. Proof of vaccination is required of workers and customers for indoor dining, gyms, performances and other indoor situations, although enforcement does not begin until Sept. 13. Teachers and other education workers in the city’s vast school system will need to have at least one vaccine dose by Sept. 27, without the option of weekly testing. City hospital workers must also get a vaccine or be subjected to weekly testing. Similar rules are in place for New York State employees.
- At the federal level. The Pentagon announced that it would seek to make coronavirus vaccinations mandatory for the country’s 1.3 million active-duty troops “no later” than the middle of September. President Biden announced that all civilian federal employees would have to be vaccinated against the coronavirus or submit to regular testing, social distancing, mask requirements and restrictions on most travel.
SPACs’ executives are allowed to communicate more freely with investors ahead of listings than in I.P.O.s. That has given SPACs the ability to use mediums like Reddit, and now Say, to increase investor interest in their deals. It’s also allowed some companies to make wildly optimistic projections.
Regulators continue to look at how SPACs affect retail investors. The S.E.C. chairman, Gary Gensler, indicated yesterday that the agency may be considering a rule requiring SPACs to disclose dilution, referring to a prior study indicating that dilution is significant and is a burden borne primarily by retail investors. “We can do more to strengthen SPAC disclosures, especially around dilution,” Gensler said.“I’ve asked staff to look closely at each stage of the SPAC process to ensure that all investors are being protected.”
Weekend reading: In money we trust
El Salvador this week became the first country to adopt Bitcoin as legal tender, beginning a new chapter in a digital revolution that’s already transforming finance. The economist Eswar Prasad of Cornell University, a senior fellow at the Brookings Institution and a researcher at the National Bureau of Economic Research, spoke to DealBook about this evolution, outlined in his new book, “The Future of Money.” The interview has been edited and condensed for clarity.
Is Bitcoin a success, in light of the developments?
Whether the first generation of cryptocurrencies will succeed is unclear. Bitcoin has failed spectacularly at its purpose. It’s bad for transactions because it’s impractical and volatile, and is by and large used as a speculative vehicle. But the promise of blockchain technology is phenomenal.
Why is blockchain promising?
This open system creates lots of opportunities. It could make payments cheaper and faster. It could democratize finance by allowing people with only a mobile phone to use new services. But the question is whether people will trust the new system, because it turns out that trust is very important.
Isn’t this digital system “trustless”?
Take an example from digital payments rather than cryptocurrencies. In Kenya, an established telecoms company sought a license for a mobile phone-based regulated payments system. It was a great success because trust made a difference. People knew the company and it got a license, so trust in the government was also an element. But in Somalia, a similar experiment did not work so well because of civil strife. There just wasn’t a functioning government.
So do we need to trust whatever the technology?
We do seem to require trust. And that gets to the heart of why next generation cryptocurrencies succeed where Bitcoin fails. Stablecoins — digital tokens with value tied to a stable asset like the dollar — will gain traction. But their value comes from the government, and the irony is that the trustless financial system is undergirded by digital tokens representing trust in the dollar.
What makes the dollar trustworthy?
The institutional framework that supports the dollar gives the currency its strength, and there are three main elements that create trust within this frame. They are an independently controlled central bank; rule of law; and a system of checks and balances.
THE SPEED READ
Oxford Nanopore, a genomics company that has been essential to Britain’s coronavirus testing, is planning a London listing valued at over $3 billion. (Reuters)
Packable, the top third-party seller on Amazon, is going public via a SPAC merger that values the company at $1.5 billion. (CNBC)
JP Morgan is buying the company behind the Zagat guide in a deal that will leave The Infatuation to operate as a separate brand within the bank. (WSJ)
The century-old high-end New York City retailer ABC Carpet filed for bankruptcy, blaming lockdowns and a mass exodus from the city. (WSJ)
Google is facing another antitrust inquiry from the European Union over allegedly forcing its voice assistant on most Android devices. (Insider)
Gov. Kathy Hochul of New York signed a law effectively banning the sale of most gas-powered vehicles by 2035. (CNBC)
Wells Fargo was fined $250 million for failing to fix issues with its mortgage business that were first identified three years ago. (WSJ)
The food delivery companies Grubhub, DoorDash and Uber Eats are suing New York City over a law that caps the commission that they can charge restaurants to use their services. (WSJ)
Presidents of the Boston and Dallas Feds will sell their individual stock holdings to address ethics concerns. (CNBC)
Best of the rest
About 1.6 million workers in Britain are still furloughed, even as the country plans to end its wage subsidy program at the end of the month. (Bloomberg)
“El Salvador’s New Bitcoin Wallets Could Cost Western Union $400 Million a Year.” (CNBC)
“Inside the Cult of Crypto.” (FT)
Houseparty, the video chat app that helped many unite at the beginning of the pandemic, is shutting down. (Gizmodo)
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