A proposed tax credit to help protect homes from natural disasters

Summary

Marketplace Morning Report: Summary of "A Proposed Tax Credit to Help Protect Homes from Natural Disasters"

Release Date: April 16, 2025
Host: David Brancaccio
Duration: Approximately 7 minutes and 48 seconds of content

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1. Introduction and Market Overview

David Brancaccio opens the episode by addressing the intersection of economic developments and their impact on everyday lives. He highlights a significant downturn in the stock prices of major computer chip manufacturers, notably mentioning NVIDIA, which experienced a 6% drop in pre-market trading. This decline is attributed to the U.S. government's new restrictions on the types of chips American tech firms can export to China.

Quote:

"Now limits on what the US allows tech firms to sell to China."
— David Brancaccio [01:02]

2. Impact of U.S. Export Restrictions on the Tech Industry

Novo Safo, a Marketplace contributor, delves deeper into the ramifications of the U.S. Commerce Department's new export controls. NVIDIA revealed a $5.5 billion charge in a regulatory filing due to these restrictions, which specifically target lower-powered chips designed to circumvent previous export limits. This move aims to impede China's advancements in artificial intelligence. Additionally, other chipmakers like AMD are similarly affected.

Further compounding the issue, ASML, a Netherlands-based company critical to high-powered chip manufacturing, expressed uncertainty about future operations. The firm missed quarterly analyst estimates and downgraded its sales forecasts. Concerns about potential tariff-induced cost increases for shipping parts to and from the U.S. persist.

Quote:

"The new limits also apply to other chip makers such as AMD."
— Novo Safo [01:24]

3. China's Economic Growth and New Trade Negotiator

Transitioning to international trade dynamics, Brancaccio references Reuters reports indicating that NVIDIA was aware a week prior of its inability to sell advanced chips in China but failed to inform certain Chinese customers, leading to unexpected disruptions.

Stephen McDonnell, BBC's China correspondent, provides insights into China's economic landscape. China's GDP growth from January to March stood at 5.4%, a figure surpassing modern expectations despite being lower relative to previous standards. In a strategic move, China appointed Li Chengang as its new top trade negotiator, signaling Beijing's preparedness for intensified trade negotiations amidst ongoing tensions with the U.S., particularly following former President Trump's imposition of 45% tariffs on Chinese goods.

Quote:

"China's new trade representative has decades of experience as a negotiator..."
— Stephen McDonnell [02:52]

4. Environmental Regulations and Natural Disasters in the U.S.

Brancaccio shifts focus to environmental policy, highlighting a controversial decision by the Trump administration. 66 coal-fired power plant operators have been granted exemptions allowing them to continue emitting hazardous pollutants like benzene, arsenic, and mercury for at least two years. The Associated Press uncovered this exemption list on the EPA's website, including major firms such as Dominion, NRG, and Southern Company.

This policy backdrop sets the stage for discussing the increasing frequency and severity of natural disasters in the U.S., including wildfires in Los Angeles County that demolished 16,000 homes and structures, as well as recent flooding and tornadoes in the Midwest and hurricanes affecting North Carolina.

Quote:

"People want to build in more resilience—a roof that doesn't blow off or catch fire."
— David Brancaccio [03:27]

5. Proposed Tax Credit for Disaster Mitigation

The core segment of the episode features a conversation between Senator Adam Schiff (Democrat, California) and Representative Tim Sheehy (Republican, Montana) regarding a bipartisan initiative to introduce a tax credit aimed at enhancing home resilience against natural disasters.

Key Points Discussed:

• Tax Credit Details: Homeowners can write off up to 25% of the costs associated with upgrades that protect against disasters, such as fire-resistant roofs or flood barriers. The credit phases out for families earning between $200,000 to $300,000 annually to ensure broad support and inclusivity.

  Quote:

  "If you wanted to replace your roof... it would be covered up to 25% of the cost overall."
  — Senator Adam Schiff [04:49]

• Economic Justification: Schiff emphasizes that the tax credit is not only a preventive measure but also a financially sound investment. Studies indicate that for every dollar invested in the credit, communities save five to six times by averting disaster-related expenses.

  Quote:

  "What we've seen from some studies is that it not only pencils out in the end..."
  — Senator Adam Schiff [05:51]

• Bipartisan Support and Legislative Outlook: Despite a highly polarized Congress focused on tax cuts, Schiff remains optimistic about the bill's passage. The initiative is portrayed as a strategic tax cut, contrasting with the administration's previous stance on cutting disaster mitigation funds.

  Quote:

  "It's the kind of thing that can get through... even in a highly partisan and polarized Congress."
  — Senator Adam Schiff [06:30]

• Contrast with Trump Administration Policies: Sheehy points out the administration's rollback on disaster mitigation funding, emphasizing the necessity for bipartisan efforts to prioritize resilience over cuts.

  Quote:

  "This is about money for disaster mitigation... administrations idea seems to be that states should pay for this kind of stuff."
  — Representative Tim Sheehy [06:47]

6. Closing Remarks

Brancaccio wraps up the discussion by reiterating the importance of proactive measures in disaster prevention and the potential legislative success of the proposed tax credit. He underscores the episode's focus on how economic policies intersect with community resilience and personal safety.

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Notable Quotes:

• Senator Adam Schiff [04:49]: "If you wanted to replace your roof... it would be covered up to 25% of the cost overall."
• Senator Adam Schiff [05:51]: "What we've seen from some studies is that it not only pencils out in the end..."
• Senator Adam Schiff [06:30]: "It's the kind of thing that can get through... even in a highly partisan and polarized Congress."
• Representative Tim Sheehy [06:47]: "This is about money for disaster mitigation... administrations idea seems to be that states should pay for this kind of stuff."

Conclusion

The episode of Marketplace Morning Report effectively intertwines pressing economic news with vital discussions on disaster preparedness. By addressing both the macroeconomic factors affecting the tech industry and the legislative efforts to safeguard communities, the report provides listeners with a comprehensive understanding of the multifaceted challenges and solutions shaping today's world.

Transcript

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[David Brancaccio]

Break help pay to make a house that stands up to floods or fire? I'm David Brancaccio with Los Angeles First Stock prices of computer chip makers are down this morning with AI and gaming giant Nvidia down 6% in pre market trading. Now limits on what the US allows tech firms to sell to China. A part of this marketplace's Novo Safo has that.

[Novo Safo]

Nvidia disclosed in a regulatory filing that it's taking a five and a half billion dollar charge because the US Is issuing new limits on exports of certain Nvidia chips. These limits are on lower powered chips which Nvidia specifically designed to deal with previous export controls. Those controls were set up to slow China's advancements in artificial intelligence, the Commerce Department said. The new limits also apply to other chip makers such as amd. Meanwhile, there was concerning news from the leading company that makes the equipment necessary to build high powered chips. That company is the Netherlands based ASML and it said its outlook for this year and next has become more cloudy. It also missed analyst estimates for quarterly results and its forecast of future sales came in below expectations. ASML has manufacturing operations in the U.S. but an executive said the company is not sure whether tariffs will raise the costs of shipping parts here or shipping finished product out to other countries. I'm novasafo for Marketplace.

[David Brancaccio]

Reuters reports Nvidia knew about a week ago it would no longer be able to sell some advanced chips in China, but did not tell some of its China based customers who were taken by surprise by that. There's news China's economy grew by 5.4% January to March, lower by its modern standards but beating expectations. Meanwhile, China unexpectedly appointed a new top trade negotiator. Stephen McDonnell reports from Beijing.

[Stephen McDonnell]

Li Chengang's appointment is seen as a sign that Beijing is preparing for a tough period of trade relations following the onslaught of Donald Trump's 145% tariffs on Chinese goods. China's new trade representative has decades of experience as a negotiator and was formerly the country's ambassador to the World Trade Organisation. With the US President declaring that the ball is in China's court, the latest economic growth figures for this country were released. But a senior official from the National Bureau of Statistics did acknowledge that the US Tariffs will put certain pressures on our country's foreign trade and economy.

[David Brancaccio]

Steve McDonnell is the China correspondent for the BBC. The Trump administration has given operators of 66 coal fired power plants the ability to keep emitting toxics, including benzene, arsenic and mercury for at least two years. The Associated Press noticed the list of the exemptions from Biden era clean air rules posted on the EPA's website. Dominion, NRG and Southern Company are among firms with power plants in category wildfires destroying 16,000 houses and other structures in Los Angeles County. More recently, flooding and tornadoes in the Midwest, upending lives. And our friends in North Carolina and beyond still piecing together after the hurricanes. People want to build in more resilience a roof that that doesn't blow off or catch fire. Vents in the foundation or attic that don't suck in flaming embers. Lifting homes above high water marks. Sure, why not? But it costs money. Tim Sheehy, a Republican senator from Montana, and Adam Schiff, a Democrat from California, have an idea. I spoke to Senator Schiff. Good morning.

[Senator Adam Schiff]

Good morning.

[Tim Sheehy]

If this were to become law, people.

[David Brancaccio]

Could write off half the cost.

[Tim Sheehy]

Of what?

[Senator Adam Schiff]

Well, those same improvements that you mentioned. So if you wanted to replace your roof with one that would be less likely to be set ablaze in a fire, it would be covered up to 25,050% of the cost overall. But if you want to do brush clearance or other things to harden your home, whether against fire or flood or other natural disasters, this is a way to do it. And you don't have to be a victim of a natural disaster in the past. You just have to live in a state where there's been a major disaster declaration which covers most of the states. And you know, the benefit is not just for the particular homeowner. What we saw in the tragic LA fires when we had 100 mile an hour winds, is you could have embers traveling a mile or two, go through a vent in a house, set that house on fire, and then that house would set the whole neighborhood on fire. And so if you can harden that one home or several around it, you may save the whole neighborhood.

[David Brancaccio]

Fine print here is it's up to.

[Tim Sheehy]

25 grand if a family makes less than 200,000 a year and then it.

[Senator Adam Schiff]

Phases out above that, it phases out at 300,000. So above 200 and going to 300, there's a phase out. That's a compromise to try to get the broadest support possible. And we also want to make sure that we can help as many families as possible. What we've seen from some studies is that it not only pencils out in the end, but also ends up saving five or six times the investment in that tax credit in the cost of avoiding these incredibly costly disasters.

[Tim Sheehy]

You've started with some bipartisan support here, but does something like this get through? This Congress with its focus on tax.

[Senator Adam Schiff]

Cuts, it is the kind of thing that can get through. Now, it could get soiled up in the big tax cut bill or could be handled separately, but I think there'll be a lot of bipartisan support for the idea. It's the kind of thing that can move even in a highly partisan and polarized Congress.

[Tim Sheehy]

This is about money for disaster mitigation. It comes at a time when the Trump administration is seen as pulling the other way on that topic with cuts to disaster mitigation funds. You saw from FEMA to places like, for instance, New York State. The administration's idea seems to be that states should pay for this kind of stuff.

[Senator Adam Schiff]

So they are certainly moving in the wrong direction when it comes to protecting us from natural disasters. But, you know, apart from these spending cuts, they seem to have an insatiable appetite for tax cuts. This is a form of a tax cut. It's a tax credit. So this might cut in the other direction. That's why I say even in this environment, we have a chance of getting it done.

[Tim Sheehy]

Senator Adam Schiff is a Democrat from California.

[David Brancaccio]

Thank you very much.

[Senator Adam Schiff]

Thank you.

[David Brancaccio]

And in Los Angeles, I'm David Brancaccio. You're listening to the Marketplace Morning Report from apm, American Public Media.

[Janelie Espinal]

If there's one thing we know about social media, it's that misinformation is everywhere, especially when it comes to personal finance. Financially inclined from Marketplace is a podcast you can trust to help you get serious about your money so you can build a life you've always dreamed of. I'm the host, Janelie Espinal, and each week I ask experts important money questions, like how to negotiate job offers, how to choose a college that you can afford, and how to talk about money with friends and family. Listen to financially inclined wherever you get your podcasts.