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Italian Prime Minister Giuseppe Conte (center) with Deputy Prime Ministers Luigi Di Maio (left) and Matteo Salvini (right). Photo: Simona Granati - Corbis/Getty Images

In an expected but unprecedented step, the European Commission has rejected the budget proposal put forth by Italy's populist government, Bloomberg reports.

Why it matters: Italy's budget proposal included tax cuts and a guaranteed "citizens income" for the poor, and would have raised its annual budget deficit to 2.4% of GDP. Italy's debt is already the second-highest in Europe, and its plans to boost spending have sparked investor fears and prompted Moody's Investors Service to downgrade the country's debt to one level above junk.

The big picture: The European Commission asks all EU member states to submit budgets that keep their annual deficits below 3%. While Italy's proposal meets that limit, its overall debt currently sits at a sky-high 130% of GDP. Italy now has three weeks to revise its plans and submit a new proposal, but Prime Minister Giuseppe Conte has reportedly said the government has no "Plan B" for fiscal spending, per Bloomberg.

What to watch: The budget rift between Italy and Brussels will likely fuel even stronger feelings of discontent in one of the most Euroskeptic countries in the EU.

Go deeper

Senate confirms retired Gen. Lloyd Austin as defense secretary

Photo: Greg Nash-Pool/Getty Images

The Senate voted 93-2 on Friday to confirm retired Gen. Lloyd Austin as secretary of defense. Sens. Mike Lee (R-Utah) and Josh Hawley (R-Mo.) were the sole "no" votes.

Why it matters: Austin is the first Black American to lead the Pentagon and President Biden's second Cabinet nominee to be confirmed.

House will transmit article of impeachment to Senate on Monday, Schumer says

Photo: Drew Angerer/Getty Images

Senate Majority Leader Chuck Schumer (D-N.Y.) announced that the House will deliver the article of impeachment against former President Trump for "incitement of insurrection" on Monday.

Why it matters: The Senate is required to begin the impeachment trial at 1pm the day after the article is transmitted.

Dan Primack, author of Pro Rata
2 hours ago - Politics & Policy

Private equity bets on delayed tax reform in Biden administration

Illustration: Brendan Lynch/Axios

In normal times, private equity would be nervous about Democratic Party control of both the White House and Congress. But in pandemic-consumed 2021, the industry seems sanguine.

Driving the news: Industry executives and lobbyists paid very close attention to Treasury Secretary nominee Janet Yellen's confirmation hearings this week, and came away convinced that tax reform isn't on the near-term agenda.