Happy Tuesday and welcome back to On The Money, coming to you on a slightly better day for the stock market. I’m Sylvan Lane, and here’s your nightly guide to everything affecting your bills, bank account and bottom line.
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THE BIG DEAL–GOP angst grows amid Trump trade war: Republicans are growing more nervous about next year’s race for the Senate as President Trump ratchets up a trade war with China that increasingly threatens to cause pain to U.S. farmers.
The 2020 elections are still more than a year off, Trump is popular in farm country and voters in rural states largely have stuck with the president as the economy grows and the jobless rate falls.
But GOP senators say few expected the trade war to last as long as it has.{mosads}
With markets plunging on Monday and China announcing retaliation against U.S. farm exports, fears are growing that the fight could take a bite out of pocketbooks and even pose a threat to GOP senators at the ballot box next year. The Hill’s Alexander Bolton tells us why.
- “We all want to resolve this as soon as possible,” said Sen. Todd Young (Ind.), chairman of the Senate GOP campaign arm. “We all want to keep this economy growing faster than we’ve seen in decades.”
- Sen. Johnny Isakson (R-Ga.), whose home-state colleague Sen. David Perdue (R-Ga.) could face a tough race next year, said farmers are likely to take the brunt of punishment from China.
- Sen. Joni Ernst (R-Iowa), who is up for reelection next year in a state that former President Obama won twice but that Trump carried by nearly 10 points in 2016, said she wants to talk with Agriculture Secretary Sonny Perdue about assistance for farmers.
- “Raising tariffs will hurt both US & China economies + more importantly will hurt US farmers/consumers/businesses Enough is enough China needs to negotiate seriously & quit moving the goalpost Enforceable trade deal needed for certainty,” Senate Finance Committee Chairman Chuck Grassley (R-Iowa) tweeted on Monday.
Opening for Democrats? Trump announced Monday that his administration will make about $15 billion in assistance available to farmers hurt by Chinese tariffs, but the National Farmers Union said that pledge would provide only a “temporary” fix and warned of “permanent damage” from farmers losing a share of the Chinese market.
Democrats see the growing anxiety in farm country as a chance to make inroads with rural voters.
“I think there is an opportunity. We have actually done some focus groups in farm country,” said Celinda Lake, a Democratic pollster. “Farmers were very loyal to Trump and wanted to give him a chance and thought everybody needed to do their fair share, but I think it’s getting different now.”
- Democrats have failed to recruit high-profile stars to run against incumbent GOP senators, including in Colorado, Georgia, Montana and Texas. But other Democratic hopefuls are eager to take advantage of the political environment.
- Retiring Sen. Pat Roberts (R-Kan.) said he can already see farm issues having an impact on the race to replace him and the 2020 presidential election, noting that presidential candidates such as Sens. Elizabeth Warren (D-Mass.) and Bernie Sanders (I-Vt.) have released farm plans.
Trump seeks to ease farmers’ concerns: The president insisted Tuesday that farmers would be among the biggest beneficiaries of higher tariffs on Chinese goods, promising that his administration would be “making up the difference” to U.S. farmers if the levies cause exports to fall.
In a pair of tweets, the president said that “forgotten” U.S. farmers would benefit from funds raised by the U.S. with the tariffs, even as other Republican lawmakers have warned that Americans would take an economic hit from the measures.
- “Our great Patriot Farmers will be one of the biggest beneficiaries of what is happening now,” Trump tweeted. “Hopefully China will do us the honor of continuing to buy our great farm product, the best, but if not your Country will be making up the difference based on a very high China buy.”
- “This money will come from the massive Tariffs being paid to the United States for allowing China, and others, to do business with us,” he added. “The Farmers have been “forgotten” for many years. Their time is now!”
Trump also called on the Federal Reserve to help him out with a rate cut, arguing it would clinch victory against China.
“China will be pumping money into their system and probably reducing interest rates, as always, in order to make up for the business they are, and will be, losing,” Trump tweeted Tuesday, though Beijing has not announced monetary policy changes.
Trump, of course, has been calling on the Fed to cut rates for a few months now. The president has also frequently criticized the Fed and its chairman, Jerome Powell, for raising interest rates seven times during his presidency.
Powell said in a press conference earlier this month the Fed is unlikely to adjust interest rates without a major shift in the health of the economy.
“We think our monetary policy stance is in a good place and we are going to be patient,” Powell said on May 1. “We don’t feel like the data is pushing us in either direction.”
LEADING THE DAY
Grassley: US and Canada near deal to lift tariffs on steel, aluminum: While the U.S. trade war with China continues to escalate, there appears to be some movement toward resolving Trump’s battle with Canada.
Sen. Chuck Grassley (R-Iowa) signaled Tuesday that the U.S. and Canada might be moving closer to a deal that will lift steel and aluminum tariffs implemented by President Trump.
He told reporters during a press call that he is optimistic “based on the fact that it seems to me … that they’re talking,” according to Politico.
“That’s my understanding. And [there’s] even the possibility of some face-to-face talks very soon,” the Senate Finance Committee chairman added. “And maybe in 48 hours I’ll have a more definitive answer for you.”
Grassley has previously threatened to block a vote on Trump’s renegotiation of the North American Free Trade Agreement if the president did not lift steel and aluminum tariffs on Canada and Mexico.
Markets recover some losses after trade-related rout: U.S. stock markets on Tuesday recovered about half of the value they lost the day before due to increasing trade tensions.
The Dow Jones Industrial Average closed Tuesday with a gain of 207 points, covering roughly one-third of the 617 points it lost Monday. The S&P 500 closed 0.8 percent higher after losing 2.4 percent on Monday, while the Nasdaq composite rose 1.1 percent after falling 3.4 percent Monday.
CBO founding director Alice Rivlin dies: Alice Rivlin, an economist who served as the founding director of the Congressional Budget Office (CBO), died on Tuesday of cancer, the Brookings Institution said. She was 88.
Rivlin had a lengthy career, holding several prominent government positions.
In addition to serving as the first director of the CBO from 1975 to 1983, she served as director of the White House Office of Management and Budget and as vice chair of the Federal Reserve Board during former President Clinton’s administration. During former President Obama’s administration, she served on the Simpson-Bowles Commission focused on deficit reduction.
Rivlin had been affiliated with Brookings for several decades. Right up until her death, she had been working on a book that urges congressional leaders to end partisan warfare, Brookings said.
GOOD TO KNOW
- Sen. Ron Wyden (D-Ore.), the ranking member of the Senate Finance Committee, is pressing the Trump administration over its handling of a request from House Democrats for President Trump’s tax returns...
- …And Rep. Bill Pascrell (D-N.J.) argued Monday that if President Trump’s tax returns are not turned over to Congress following a subpoena, Treasury Secretary Steven Mnuchin and IRS Commissioner Charles Rettig should face fines or jail time.
- Sens. Rob Portman (R-Ohio) and Ben Cardin (D-Md.) on Tuesday rolled out a bipartisan bill aimed at reforming the retirement system as lawmakers eye sweeping changes to the plans.
- House Democrats on Tuesday unveiled a bill that would add funding for major arts programs that President Trump had sought to cut or eliminate altogether.
- House Democrats also rejected President Trump’s attempts to drastically scale back funding for environmental programs, releasing two spending bills that boosted funding to the programs, including those the administration hoped to scrap entirely.
- Senators are entering a crucial stretch as they try to break the logjam on a stalled disaster recovery bill before leaving next week for the Memorial Day recess.
- Senate Majority Leader Mitch McConnell (R-Ky.) said the upper chamber would vote on a disaster recovery bill next week even if negotiators haven’t reached a deal.
- A federal judge on Tuesday gave lawyers for President Trump and Democrats on the House Oversight and Reform Committee until the end of the week to make their final arguments on whether the court should uphold a subpoena requesting Trump’s private financial records.
- The federal labor board’s top lawyer said Tuesday that Uber drivers should be classified as contractors, meaning they should not be eligible for the full range of benefits offered to full-time employees.
ODDS AND ENDS
- The Federal Communications Commission (FCC) is ramping up its battle against Chinese telecom companies as the Trump administration pursues an aggressive trade strategy against China.
- A study published Tuesday found that soda sales have dropped in Philadelphia since the city implemented a tax on the sugary beverages in 2017, while the decline was partially offset by an increase in sales in nearby neighborhoods.
- Comcast on Tuesday announced that it had agreed to sell its ownership stake in Hulu to Disney, which will immediately take over operational control of the streaming service.