Happy Wednesday and welcome back to On The Money. I’m Sylvan Lane, and here’s your nightly guide to everything affecting your bills, bank account and bottom line.
THE BIG DEAL-Trump gambles with new stimulus strategy: President Trump is taking a huge political and economic risk by walking away from negotiations with Democrats on a coronavirus relief package just four weeks before the election.
Trump on Tuesday abruptly put a halt to talks between Treasury Secretary Steven Mnuchin and Speaker Nancy Pelosi (D-Calif.) until after Election Day, accusing the Democratic leader of not negotiating in “good faith” despite some signs of progress between top negotiators in recent weeks.
The president later relented somewhat, urging Congress to send him smaller stand-alone bills based on areas of broad agreement instead of a sweeping measure sought by Pelosi and Mnuchin. But Trump’s approach has frustrated Republicans and business groups and thrust the prospect of future assistance into further uncertainty.
“The economy as a whole is not making a lot of progress,” said Claudia Sahm, a former senior economist and research director at the Federal Reserve. “There are real human costs – today and years from now – of not sending money out and turning it into a political battle,” Sahm added. The Hill’s Morgan Chalfant and I explain why here.
Resistance in Trump’s orbit:
- White House economic adviser Larry Kudlow reiterated his position that the economic recovery doesn’t depend on “a massive assistance package” but said officials believe that agreements on specific, targeted relief to the airline industry, small businesses and schools would be helpful.
- Some of Trump’s advisers, including conservative economist Stephen Moore, have argued against a large spending bill and raised concerns over the growing deficit, arguing that the job growth since May points to a strong recovery.
Serious concerns beyond it: A broad range of prominent economists, including Federal Reserve Board Chairman Jerome Powell, have warned in increasingly dire terms that failing to approve more aid could derail the U.S. economy in its attempt to recover from the worst recession since the Great Depression.
- In a Tuesday speech, Powell – a Republican debt hawk – warned that the U.S. could slip into a “tragic” cycle of layoffs and economic decline without more help for millions of unemployed Americans, struggling businesses and state and local governments.
- Powell and other top economists argue it will be impossible for the economy to fully recover from the pandemic until the coronavirus is under control. Until then, millions of Americans and businesses in the hard-hit leisure, hospitality, entertainment and travel industries will suffer.
“There’s a mistaken thought that we’re somehow out of the woods or into a period when we have enough momentum for the recovery to be self-fulfilling, but I really don’t think that’s the case,” said Adam Ozimek, chief economist at labor and services recruiting firm Upwork.
Video: Focus turns to individual items as comprehensive stimulus talks end (CNBC)
“Now we need to just focus on helping the small businesses survive for the long run without trying to tie their hands too much,” he added.
LEADING THE DAY
Trump cannot block grand jury subpoena for his tax returns, court rules: A federal appeals court on Wednesday ruled that President Trump cannot block enforcement of a New York grand jury subpoena for eight years of his tax returns.
The ruling, from a three-judge panel for the U.S. Court of Appeals for the 2nd Circuit, affirms a federal judge’s decision in August that rejected Trump’s claims that the subpoena from Manhattan District Attorney Cyrus Vance Jr. was overly broad and issued in bad faith.
The parties have agreed to temporarily halt enforcement of the subpoena. The Hill’s John Kruzel and Naomi Jagoda break it down here.
- The Manhattan District Attorney’s Office last year subpoenaed Trump’s accounting firm, Mazars USA, for the president’s personal and business tax returns and other financial records.
- Trump initially challenged the subpoena by arguing that presidents have sweeping immunity from the criminal process.
- In July, the Supreme Court rejected that argument and sent the case back to the lower courts for further proceedings. Trump then filed a new complaint that argued that the subpoena is too broad and amounts to presidential harassment.
- The appeals court rejected the argument that the subpoena is too broad.
Long-term jobless figures rise, underscoring economic pain: The number of people who have joined the ranks of long-term unemployment has spiked to a record high in a worrying sign of the economic recovery’s health.
- According to the Labor Department, the number of people out of work for more than 27 weeks increased to 2.4 million in September, an increase of 32.5 percent from the previous month.
- There are 4.9 million people who have been unemployed between 15 and 26 weeks.
Workers who have been separated from their jobs for more than 6 months typically have a more difficult time getting back to work even once the economy improves.
“Last week we saw the biggest spike in long-term unemployment since they started measuring long-term unemployment,” said Michele Evermore, senior researcher and policy analyst at the National Employment Law Project.
The Hill’s Niv Elis tells us about the trouble they face here.
GOOD TO KNOW
- Citibank has agreed to pay a $400 million fine and overhaul its internal risk management, data protection and compliance controls to settle enforcement actions by the Federal Reserve Board and Office of the Comptroller of the Currency (OCC), the two regulators announced Wednesday.
- U.S. stocks soared Wednesday amid hopes that Republicans and Democrats might reach an agreement on aid for the airline industry, even as a broader coronavirus relief package appeared to be off the table.
- Rep. Steve Womack (R-Ark.) is set to take over as the top Republican on the House Appropriations Subcommittee on Financial Services and General Government, replacing outgoing ranking member Tom Graves (R-Ga.).
ODDS AND ENDS