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This week in Bidenomics

Yahoo Finance's Rick Newman joined Yahoo Finance Live to break down President Biden's week.

Video Transcript

SEANA SMITH: President Biden facing a couple of setbacks this week, one of them being the minimum wage defeat. We've been talking about this for the last several weeks. We heard from the Senate parliamentarian late last night saying that it doesn't meet the guidelines for reconciliation.

We want to bring in Rick Newman for a little bit more about this and some of the other setbacks that President Biden faced this week. And Rick, just starting off with minimum wage because we've heard from President Biden a couple of times since he's taken office, he wants to make this a priority. He's been pushing for it. So what's the path forward?

RICK NEWMAN: Well, he did not get a $15 minimum wage, let's put-- put that caveat in there. You know, this has looked like a tough sell all along. There aren't even 50 Democrats who agree that the minimum wage should go from the current level of $7.25 all the way up to $15. So given that you've got at least two Democratic contract-- Democrats who say they don't support it and you need every Democrat to vote it, I've never understood why some of-- Bernie Sanders and others supporting this ever thought they were going to get it.

So it's not a surprise that it's out of the bill. It came out for technical reasons. It does not abide by those reconciliation rules in the Senate. But it probably wasn't even going to pass as part of this bill if they could get it in. So that relief bill could actually pass more quickly as long as the minimum wage stays out of it, because there's less for Democrats to argue about among themselves.

What's going to happen with the minimum wage, there is this one idea by Democratic Senator Ron Wyden to sort of raise the wage indirectly by imposing a new tax on big companies if they don't pay their workers at least $15 an hour. That sounds sketchy and convoluted, honestly. I have trouble seeing that passing.

But Democrats can always take another shot at this. And maybe it doesn't have to be $15. If they set a target of gradually raising the wage up to $10 or $11, they might be able to get 10 Republican senators to support it and be able to get it done through normal legislation. It's just probably not going to happen in the next month or two.

ADAM SHAPIRO: Rick, you also talk about what's been going on in the markets. And I realize-- I mean, it is what we live on when we talk about the yield on the 10-year. But I got to imagine for most people, they would look at us like, what are you talking about, how does it affect me, and why do I care, because mortgage rates are still incredibly low.

RICK NEWMAN: Yeah, it's complicated. You know, Adam, I think it affects people because first of all, there's a psychological issue here. So mortgage rates still are very low, but they're not as low as they used to be. And we've seen headlines, we've run a few of them, you've seen them elsewhere, mortgage rates suddenly jump. And I have noticed in somewhat-- by some ways of measuring it mortgage applications are down.

So people hear that mortgage rates are going up, they might feel like they just-- they sort of missed the chance to get in it at the bottom. And you know, we've had a sell-off here in tech stocks, especially. It's not a huge sell-off, and it comes after a big run-up. But people are, you know, looking at their 401(k)s and saying, well, this does affect me a little.

I think this is an issue for Biden, possibly, because one of the presumed proximate causes here is all this stimulus money that's now coming into the economy, especially with his new as much as $1.9 trillion bill. And we've been talking for a few weeks about economists who are saying this might be too much, it might overheat the economy. And that is what the market seems to be reacting to at the moment with rising Treasury rates. There's a good chance this will blow over and it won't turn out to be as bad as the taper tantrum in 2013. But it's very curious, and there's a lot for investors to figure out right now.

SEANA SMITH: Rick, you're also taking a look at what's happening with Neera Tanden. This, of course, is President Biden's pick to run Office of Management and Budget. When you take a look at what's going on there, I mean, it's unclear as to whether or not she will get confirmed by the Senate, how big of a blow do you think this could be to President Biden?

RICK NEWMAN: I think we can safely say she's not going to get confirmed. You've already got-- again, they have a total majority of one vote in the Senate, which means every single Democrat has to support everything Biden wants to pass on a simple majority. Then you've had Joe Manchin, the Democratic senator from West Virginia, said he's not going to support her. So I think she's-- I think she's done.

Now, Biden has indicated he could appoint her to another administration job that doesn't require Senate-- Senate approval. I think he should just do it, get it over with, handle it over the weekend, put a new nominee forward so he can move on. Because if he doesn't do that, this becomes a dispute among Democrats, and it does split the unity among his own party that Biden-- you know, he wants to-- he wants it to seem like he is leading a Democratic Party that is fully lined up behind him and his agenda.

And if he just drags on a fight over some cabinet nominees who are just not going to get through because of one or two detractors, that takes away from the unity that Biden won. So my guess is this is going to be over and done with, we're going to somebody else. There's already a number two nominee who could go-- move up and become the number one nominee. And I think we might have that news by next week.

SEANA SMITH: That does it for this week's Bidenomics. And of course, you can catch Rick Newman's column there on YahooFinance.com. Thanks so much, Rick. Have a great weekend.

RICK NEWMAN: Bye, guys.