SALT-n-pessimism

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0:11This is the Indicator from Planet Money. I'm Waylon Wong. And I'm Darian Woods. Today, mingling with us once more, our Planet Money muchacho, the marvelous Mr. Kenny Malone. Oh, please. Kenny! Just Kenny Malone. Just Mr. Kenny Malone was my... There's alliteration next to our other. It's not really true. Okay, yeah, that's right. Or do we actually need all the honorifics? Because it is Indicators of the Week. On today's show, the Senate and stablecoins. The salt cap sticking point. And starkly split sentiments on the state of the economy. That's all after the break. Support for this podcast and the following message come from Ameriprise Financial.

0:56Chief Market Strategist Anthony Saglin-Bennie shares the importance of a goal-based investment strategy. You have to know where you're going, right? What's the goal? What's the destination? By identifying those goals, you can construct a well-diversified portfolio that hopefully helps meet those goals. For more information and important disclosures, visit Ameriprise.com slash advice. Ameriprise Financial cannot guarantee future financial results. Security is offered by Ameriprise Financial Services, LLC, member FINRA, and SIPC. This message comes from LPL Financial. What if you could have more control over your future?

1:32LPL Financial removes the things holding you back and provides the services to push you forward. Because when it comes to your finances, your business, your future, LPL Financial believes the only question should be, what if you could? LPL Financial, member FINRA SIPC. No strategy assures success or protects against loss. Investing involves risk, including possible loss of principal. It is Indicators of the Week. Darian, you're up first. My indicator is$27.6 trillion. That's a measure of how much people are using stablecoins globally. Last year, there was$27.6 trillion worth of trading, payments, and transfers on stablecoins like Tether.

2:14And I bring this up because the Senate has just passed a bill that might bring special regulation for these cryptocurrencies for the first time. Makes sense that there's so much money zipping through the blockchain that maybe some lawmakers want to put some guardrails on. Yes. And so a reminder of what stablecoins are. They are cryptocurrencies whose value is pegged to something else, often the US dollar. So unlike Bitcoin or Ether, whose values fluctuate wildly, you are promised that when you buy one of these cryptocurrencies, it'll stay basically the same. And because of this apparent certainty, stablecoins are increasingly popular.

2:51We'll link to our full explainer on stablecoins in the show notes. These cryptocurrencies are often used for people sending money across borders who would otherwise face high bank fees and delays. Or they're used in countries where inflation is high, also for scams and drug deals and ransoms. All right. So, wide range there. What, then, is in this bill? Is it addressing some of those things? A lot of use cases. There's many use cases, as Waylon said. To be clear, the things I just mentioned are legal. You don't need a lot for that. They don't need special regulation. But the coins themselves seem to.

3:27So the bill does a few things. First, it says that companies that run stable coins need to hold the equivalent amount of actual U.S. dollars or close equivalents like U.S. treasury bonds. Okay, makes sense. Then it clarifies who's in charge of regulating stable coins in the U.S. The bill says for large stable coins, it's the office of the comptroller of the currency. And for the smaller stablecoins, it's actually up to the state where the stablecoin company is based. Huh. Okay, so you would hope that then those state regulators are on top of this? They're having the baton handed to them? Yeah, and you've hit on a major criticism of the bill.

4:07Berkeley economist Barry Eichengreen wrote an op-ed in the New York Times this week. He pointed out that regulators couldn't move fast enough to act when Silicon Valley Bank's assets were vaporizing a few years ago. And so he's skeptical that regulators will be able to scrutinize the hundreds or even thousands of stablecoins that could be issued all over the country. Supporters of the bill, though, say that this at least gives some rules of the road as opposed to none. And speaking of rules, I read that the Trump family can still promote their stablecoins under this bill. Yeah, members of Congress can't shill the stablecoin game, but presidents and their families, they are notably excluded.

4:49Speaking of carve-outs and priorities, I suppose, my indicator this week is$10 ,000. That is currently the maximum amount of state and local taxes that you, any of you, are allowed to deduct on your federal taxes,$10 ,000. This is the salt cap that you hear people talking about. Indeed, the salt cap. The olden days, you used to be able to deduct all of the salt you paid. But then in 2017, the first Trump administration put the$10 ,000 cap in place as part of Trump's Tax Cuts and Jobs Act. And now the salt cap is back in the news because it's apparently a big sticking point on the gigantic spending bill that's getting hashed out right now.

5:34Yeah, there's a mismatch, right, between the salt cap in the Senate's version and then the House's version of this bill. Indeed. So the House passed a version with a much bigger SALT cap,$40 ,000. The Senate's version still has the$10 ,000 cap. And this is a big enough issue that members of the House have said things like the Senate's bill, quote, is dead on arrival and a, quote, slap in the face. I find this debate super interesting because salt really cuts across party beliefs. Higher salt caps really benefit people who own a lot of property and are paying a lot of taxes, i.e. wealthy people.

6:16Indeed, this is the kind of policy that you would hear Democrats typically bristling at. This is true. And yet it's the blue states that benefit the most from increasing salt because they tend to have higher taxes. And so you'll have Democratic New York Senator Chuck Schumer. He's snarling at some of the Republicans for not wanting to raise the cap. That's exactly right. And this time around, we're also hearing from New York Republicans in the House who have a slim majority and have been pushing for the salt cap increase, which is a tax cut of sorts after all, just then to have their Senate colleagues slap them down.

6:52But look, I mean, ultimately, the rhetoric coming out of the Senate seems to indicate that negotiations are still to come, that there's a lot of room for compromise between a$40 ,000 salt cap and a$10 ,000 salt cap, making the bill dead on arrival. Waylon, what do you have that's dead on arrival? Oh, my segment? Great. I'll just see myself out. Now what's suddenly alive on arrival is Waylon's segment. Hit us. That's right. I've got piping hot, fresh survey results. My indicator is 15 percentage points. That is the size of the gap between how men and women feel about the economy. That's according to a new Harris poll conducted for The Guardian.

7:36And the survey shows that 62 % of women are worried about the economy versus 47 % of men. That is a bigger gap than I would have expected. So the women are more concerned. We are worried, Kenny. And this gender gap in sentiment cuts across party lines. It's not just Democratic identifying women who feel more negative about the economy and inflation. More Republican identifying women also signal they felt worse than men. Here's how the Harris Poll's chief strategy officer summed it up for The Guardian. Her name is Libby Rodney, and she said, Women are experiencing the sharp edge of inflation on essentials like groceries and child care in ways that stock portfolios can't capture.

8:20Okay. A very traditional role kind of explanation of things. Is there more to it than this? No, because you know what? In the year of our Lord, 2025, women are still more likely to do the grocery shopping. Right. That is the reality. And Indicator listeners might remember a couple years ago, I interviewed an economist who studied inflation expectations among heterosexual married couples. And her findings are pretty stark. So in households where men didn't grocery shop, they expected much lower inflation than their wives. And then in households where the spouses split the shopping more equally, this gender gap went away.

9:00Yeah, that intuitively makes sense. Like if you're out there looking at price tags of eggs and ground beef going up week after week, you are probably going to be more worried about inflation. Yeah. So the Harris poll showed that women are more concerned about food prices and affording essential goods than men are. The gender gap also shows up, though, in sentiment around jobs and workplace stuff. So 54 percent of women said they think they'll get a raise this year versus 63 percent of men. And if those men do get raises, well, maybe they should go to the grocery store and see how far their paychecks stretch.

9:33That's right. Thanks for joining us for Indicators of the Week, Kenny. Oh, it is my pleasure. This episode was produced by Angel Carreras with engineering by Kweisi Lee. It was fact-checked by Tyler Jones. Kicking Cannon is our editor, and The Indicator is a production of NPR.

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