Newsletter: California Inc.: You’ll be paying more in tax at the gas pump this week
Welcome to California Inc., the weekly newsletter of the L.A. Times Business Section.
I’m Business columnist David Lazarus, and here’s a rundown of upcoming stories this week and the highlights of last week.
Traders get back to work Monday with the tailwind of knowing that the economy grew at a solid annual rate of 3% in the third quarter. This marks the first time in three years that growth has hit at least 3% for two consecutive quarters, and came despite hurricanes Harvey and Irma.
LOOKING AHEAD
Fed chair: President Trump is expected to announce his pick for the next leader of the U.S. central bank sometime this week. Current Fed Chairwoman Janet Yellen is in the running, as is Fed governor Jerome Powell and Stanford University economics professor John Taylor. Also in contention is former Fed governor Kevin Warsh, while National Economic Council Director Gary Cohn is reportedly no longer being seriously considered.
Electric cars: Tesla reports its third-quarter earnings on Wednesday, and the production of its Model 3 vehicle will surely be discussed during the company’s conference call that afternoon. Manufacturing of the Model 3, Tesla’s new all-electric compact sedan, has been slowed by “bottlenecks” at its Fremont, Calif., factory, the company has said. From the vehicle’s launch in July through September, Tesla produced only 260 Model 3s — about three cars a day.
Russia’s influence: Representatives of Facebook, Google and Twitter are scheduled to appear before the House and Senate intelligence committees on Wednesday to discuss Russia’s use of social media to influence the 2016 presidential election. The internet giants have been criticized by members of Congress for not providing details about how Moscow might have used their platforms, ostensibly to help Donald Trump and harm his opponent, Hillary Clinton.
Fuel tax boost: The state’s tax on gasoline and diesel goes up Wednesday. The tax will be raised by 12 cents per gallon for gas, and 20 cents per gallon for diesel. The increases were approved by the Legislature and Gov. Jerry Brown in April and are intended to provide $5.2 billion annually for road and bridge repairs, and expanded mass transit in the state. A group of California Republicans have launched an initiative to repeal the increase.
Income tax reform: On Wednesday, Republicans on the House Ways and Means Committee are expected to release the party’s tax overhaul bill in hopes of getting that legislation through Congress by the end of the year. The chairman of the committee, Texas Republican Kevin Brady, said he expected to strike a deal to keep an apparently limited version of the state and local tax deduction for individual Americans, a break that party leaders had targeted for elimination.
THE AGENDA
Monday’s Business section takes a turn for the macabre as it heads to Hollywood Forever Cemetery for the 18th annual celebration of the Mexican tradition known as Dia de los Muertos, or Day of the Dead. The occasion (which is Nov. 1 and 2) has become rolled up into the Halloween retail juggernaut, a trend that unsettles some observers.
STORY LINES
Here are some of the other stories that ran in the Times Business section in recent days that we’re continuing to follow:
Arbitration clauses: The Senate voted to kill a controversial rule that would have allowed Americans to file class-action suits against banks instead of being forced in many cases into private arbitration. The move by the Senate followed a similar action by the House in July to rescind the rule. President Trump is expected to sign the repeal legislation, providing a major victory for the financial industry.
Home prices: Southern California home prices in September tied an all-time high as the white-hot real estate market continued to surge and raise concerns over housing affordability. The median price for the six-county region soared nearly 10% from a year earlier to $505,000, data firm CoreLogic said. That matches a price level reached in 2007 before the housing bubble burst and the economy cratered.
Blockbuster deal: Health insurer Aetna, which stunned Connecticut when it said it would move its headquarters from Hartford earlier this year, may be purchased by CVS Health. According to reports, CVS has been in talks for the last six months to buy Aetna in what would be a blockbuster deal. CEO Mark T. Bertolini told employees in June that Aetna is in the midst of a “transformation into a health company.”
Retirement saving: President Trump vowed there would be “no change” to rules for 401(k) plans, seeking to douse speculation that the Republican tax overhaul bill being drafted by Congress would include new limits on retirement savings. But columnist Miichael Hiltzik says slashing the tax deduction for 401(k) contributions could actually be a good thing that would help many Americans save more for retirement.
Harassment cases: Sex harassment accusations continue to roil the business world following the Harvey Weinstein scandal that rocked Hollywood. Political journalist Mark Halperin was pulled from his role at MSNBC and NBC News after a report alleging he harassed women. “Today” host Megyn Kelly blasted her former employer, Fox News, over disclosure that the network signed former host Bill O’Reilly to a $25-million contract after he paid $32 million to settle a harassment claim. Meanwhile, Weinstein sued his namesake company for documents he says he needs to defend himself.
WHAT WE’RE READING
And some recent stories from other publications that caught our eye:
Pain and profit: While opioid addiction spreads, a family dynasty founded by three brothers has been getting rich off sales of the drugs, reports the New Yorker. The Sackler family business, Purdue Pharma, has made billions with the prescription painkiller OxyContin, yet family members avoid the connection. “Purdue’s Website scarcely mentions the family, and a list of the company’s board of directors fails to include eight family members, from three generations, who serve in that capacity.”
Handle with care: Making Allergan’s drug Botox involves security measures that rival those of top-secret government agencies, reports Bloomberg. That’s because Botox is derived from a toxin that is considered one of the world’s most deadly potential agents of bioterrorism. “Allergan must account to the CDC if even a speck of the toxin goes missing, and when it’s sent to Allergan’s manufacturing facility in Ireland, its travels bring to mind a presidential Secret Service operation.”
Economic disparity: The topic has caught the attention of Ray Dalio, CEO of Bridgewater Associates, the world’s largest hedge fund. “The average household in the top 40% earns four times more than the average household in the bottom 60%. ... Those in the top 40% now have on average 10 times as much wealth as those in the bottom 60%.” Few people in the bottom 60% save any of their income, he writes in a LinkedIn post.
Dr. Robot: A robotic system designed by Intuitive Surgical of Sunnyvale is revolutionizing how doctors perform surgery, writes Fortune. “The instruments inside the patient include three separate, interchangeable components that can slice, shift, grasp, cauterize or otherwise manipulate human tissue, as well as a movable high-definition camera that illuminates the body’s internal landscape in stunning 3D clarity.”
SPARE CHANGE
Robotic surgery? Been there, done that. Luke Skywalker had an automated attending physician in “Empire;” Rico relied on machines to mend his arachnid-munched leg in “Starship Troopers;” and without a symphony of electronic medicine, there’d have been no perfect supreme being in “The Fifth Element.”
For the latest money news, go to www.latimes.com/business. Mad props to Scott J. Wilson for helping put this thing together.
Until next time, I’ll see you in the Business section.
