What to Know in Washington: Trump 2020 Rust Belt Pitch Imperiled

President Donald Trump has been boasting about creating manufacturing jobs in states key to his re-election, but a growing recession in the sector threatens to reverse that trend and imperil his message.

A decline in manufacturing jobs in coming months could hurt Trump in Rust Belt swing states such as Michigan, Ohio and Pennsylvania and could give Democrats a weapon against him.

Trump visited Pennsylvania yesterday to make his case.

“Factory floors across this land are once more crackling with life,” Trump told workers at a Royal Dutch Shell plant in Monaca, northwest of Pittsburgh. “Our steel mills are fired up and blazing bright. The assembly lines are roaring.”

But Trump faces U.S. manufacturing output declining in consecutive quarters, the common definition of recession within the industry, the result of global weakness and a trade war between the U.S. and China.

So far, job growth has helped Trump make his case. Payrolls in manufacturing totaled about 12.9 million workers in July, the most since November 2008, data from the Bureau of Labor Statistics show. Since Trump took office, employment in factories has increased by about a half million workers after stagnating in the prior two years.

But hiring momentum in the sector has faded. In the six months through July, 38,000 jobs have been added at factories, the fewest for a similar period since January 2017, when Trump took office.

Trump campaigned in 2016 on overhauling trade deals to revive the country’s industrial base—a strategy that helped him pick off the historically Democratic states of Michigan, Pennsylvania and Wisconsin that the Hillary Clinton campaign took for granted. Democrats carried those three states in every election from 1992 to 2012 and they will likely need them to win in 2020. Read more from Vince Golle and Mike Dorning.

Photographer: Justin Merriman/Bloomberg
Trump speaks at the Shell Petrochemicals Complex in Monaca, Pa.

Politics & Policy

2020 Democrats Go on Bill-Filing Blitz: Half of the 10 members of Congress seeking the 2020 Democratic presidential nomination have already hit career highs in legislation-drafting productivity this year, and it’s only August. One—Sen. Amy Klobuchar (D-Minn.)—ranks third in the entire 535-member Congress. With Republicans controlling the Senate and even lukewarm support from fellow Democrats, few of the bills are likely to be debated, let alone voted on and passed. But the proposals allow the candidates to stake out territory on issues important to them and burnish their reputations as being unafraid of policy details. Read more from Gregory Korte.

Pompeo Mulls Kansas Senate Run: Republican political donors were told to hold off contributing to the 2020 Senate race in Kansas in the expectation that Secretary of State Michael Pompeo may decide to run, according to two people familiar with the matter. A Pompeo ally has been advising potential contributors to wait until after the secretary of state makes his decision, said the people. The top U.S. diplomat and former CIA director, who served as a congressman in the state’s 4th district from 2011 to 2017, has until June to enter the race. Pompeo has offered mixed signals about his intentions. Read more from Nick Wadhams and Jennifer Jacobs.

Navient Student Loans Documents Sought: House Oversight and Reform Chairman Elijah Cummings (D-Md.), Financial Services Chairwoman Maxine Waters (D-Calif.), and Education and Labor Chairman Bobby Scott (D-Va.) are demanding documents from student loan providers Nelnet and Navient, the Consumer Financial Protection Bureau, and the Education Department, saying the Trump administration has failed to adequately oversee student loan servicing, previewing more stringent inquiries to come, Chelsea Mes reports.

AOC Chides Barstool Sports for Anti-Union Tweets: Rep. Alexandria Ocasio-Cortez (D-N.Y.) chided Barstool Sports founder Dave Portnoy for a series of tweets that several legal experts say violate federal labor law. “If you’re a boss tweeting firing threats to employees trying to unionize, you are likely breaking the law & can be sued, in your words, ‘on the spot,’” she tweeted. Portnoy then tweeted back, “Hey @aoc welcome to the thunder dome. Debate me.” Portnoy has previously made a show of firing employees, and earlier tweets promised to crush organizing activity and fire any employees who spoke with a lawyer or a journalist about forming a union at the site. Read more from Josh Eidelson.

Buttigieg Flips Chops With Iowa Pork Queen: Pete Buttigieg won over royalty yesterday at the Iowa State Fair. “He’s pretty good,” said Grace Greiner, the 18-year-old Iowa pork queen, after she watched the South Bend mayor flip pork chops, a traditional task for politicians at the fair. Greiner had also flipped chops with rivals Sen. Kamala Harris (D-Calif.) and Rep. Tim Ryan (D-Ohio), but at least on meat-turning skills—apparently pork queens don’t talk politics—“He was probably the best.” Read more from Tyler Pager.

U.S.-China Relations

Airport Cleans Up After Night of Protest Chaos: Hong Kong’s airport resumed normal operations after a chaotic night of protest in which demonstrators beat and detained two suspected infiltrators and Trump warned of Chinese troops massing on the border. Only a few dozen protesters remained at Hong Kong International Airport as of 6 a.m. local time today, most having caught the last trains away from the airport rather than face dispersal by authorities. Flights appeared to be largely running as scheduled. Earlier yesterday, hundreds of people staged a sit-in at the departure gates, disrupting flights at Asia’s busiest international airport for the second straight day. Read more from Yvonne Man, Fion Li and Shawna Kwan.

• Pelosi Calls for End to ‘Alarming’ Tension: Speaker Nancy Pelosi (D-Calif.) said in a statement that Hong Kong’s “Chief Executive and Legislative Council must finally, fully meet the legitimate democratic aspirations of the Hong Kong people, as guaranteed under ’One Country, Two Systems,’ starting by completely and immediately withdrawing the dangerous extradition bill, investigating and ending police violence and granting universal suffrage.”
• China Likens Protesters to ‘Terrorists’: Beijing is ramping up its rhetoric against the protesters in Hong Kong, saying they “acted like terrorists” while swarming the city’s airport, as authorities restricted terminal access in a bid to stave off further demonstrations, Stephen Engle reports.
• China Refuses U.S. Warships Port Call: China has refused port visits to Hong Kong by two U.S. warships amid continued trade tensions and diplomatic spats between the two sides over pro-democracy protests in the Asian financial hub, Iain Marlow reports.

China Retaliatory Duties Outmatch U.S. Farm Tariffs: Trump’s new tariffs on Chinese agricultural products are likely to hurt the Asian nation a lot less than the retaliatory duties Beijing already imposes on the U.S. The administration, while delaying tariffs on big-ticket consumer products until December, decided to push ahead with 10% tariffs on Chinese agricultural goods as well as clothes, antiques, kitchenware and footwear from Sept. 1. The list ranges from the exotic—live primates, whales and foxes—to the more usual fare of milk and oils. Read more from Niu Shuping.

• Meanwhile, Chinese officials are sticking to their plan to visit Washington in September for face-to-face trade meetings, people familiar with the matter said, signaling that discussions remain on track for now despite the abrupt escalation in tariff threats this month. The U.S. yesterday delayed some of the new tariffs after top negotiators spoke on the phone, with Trump saying the encounter was “very productive,” and that he thinks Beijing wants to “do something dramatic” to end the impasse. Read more from Steven Yang.
• Tech Suppliers Shift Away From China: HP-laptop maker Inventec said it will to shift production of notebooks for the U.S. market out of China within months, adding to the technology industry’s exodus as the world’s largest economies escalate their trade war. Inventec said it plans to move its entire American-bound laptop operation to its home base in Taiwan within two to three months. Despite Trump’s postponement of some tariffs, tech firms aren’t waiting for a trade resolution. Debby Wu and Cindy Wang have more.

Administration’s Tech Scrutiny

Amazon Seller Complaints Drawing FTC Interest: Federal Trade Commission chairman Joe Simons said yesterday that the agency is interested in hearing complaints alleging that Amazon is punishing merchants that offer lower prices on other e-commerce websites. “Anyone who wants to complain, we’re all ears,” said Simons in an interview yesterday. “That’s the type of scenario that would be among the ones that we would want to look at, but I can’t tell you we are doing it for any particular platform.” Simons, who is leading a broad review of the tech sector and is investigating Facebook, in particular, stopped short of confirming the agency has opened a formal probe into how Amazon treats merchants on its marketplace. Read more from Naomi Nix.

• Breaking Up Tech Firms: Meanwhile, Simons said he’s open to breaking up major technology platforms if necessary by undoing their past mergers as his agency investigates whether companies are harming competition. FTC Chairman Joe Simons, who is leading a broad review of the technology sector, said in yesterday’s interview that breaking up a company is challenging, but could be the right remedy to rein in dominant companies and restore competition. Read more from David McLaughlin.
• Simons also said he’s heard Trump’s complaints about the size and political inclinations of large technology platforms, but isn’t going to let them affect his decisions. “I was basically retired before I took this job,” Simons, who previously served two stints at the FTC, said in the interview. “I’m just going to go back into retirement once I’m finished here, so it doesn’t really matter to me.” Read more from Ben Brody.
• Facebook Paid for Users’ Audio Transcription: Facebook has been paying hundreds of outside contractors to transcribe clips of audio from users of its services, according to people with knowledge of the work. The work has rattled contract employees, who are not told where the audio was recorded or how it was obtained, only to transcribe it, said the people, who requested anonymity for fear of losing their jobs. They’re listening into Facebook users’ conversations, but do not know why Facebook needs them transcribed, the people said. The Irish data protection commission, Facebook’s main privacy watchdog in the European Union, said it has asked the social media giant for more information following the news. Read more from Sarah Frier.

Movers & Shakers

Huawei Hires Trump-Connected Lobbyist: Huawei Technologies has hired a lobbyist with deep ties to Republican leadership as the Chinese telecom giant finds itself increasingly mired in Trump’s trade war with Beijing. The company hired Michael Esposito, according to a disclosure filed with the Senate. He describes himself as a member of Trump Victory, the joint fundraising group that includes the president’s re-election campaign and the Republican National Committee. Esposito is also an adviser to RNC Chairwoman Ronna McDaniel, according to the website of his firm, Federal Advocates. Ben Brody has more.

Pot’s ‘Friendly Conservative Face’ Tackles Congress: Marijuana lobbyist Don Murphy took it as a compliment when one Senate Republican told him he was like “gum on one shoe”—hard to get rid of and always there. Murphy, a former Maryland state legislator, has been a rare Republican in the weed legalization movement for two decades, adding a “friendly conservative face on marijuana policy.” His job has gotten easier as Republican support has grown, rising from 22% in 2000 to 53% last year, according to an Oct. 2018 Gallup poll. Republican allies including Sen. Cory Gardner (Colo.), where legal weed sales have totaled $6.7 billion since 2014, have also helped.

Murphy, who serves as the Marijuana Policy Project’s federal policy director, is now part of the fight to pass legislation designed to ensure pot businesses have full access to financial services. The bill, known as the SAFE Banking Act, would help legitimize the growing state-level legal cannabis industry. Read more from Ruiqi Chen.

Pence Aid Moves to Pentagon: The spokeswoman for Vice President Mike Pence, Alyssa Farah, will join the Defense Department as press secretary in September, the Washington Post reports. Farah has served in the White House for two years. She previously spokeswoman for the conservative House Freedom Caucus.

What Else to Know

Power Struggles Over Space Agency: Some early stumbles by the Pentagon’s fledgling Space Development Agency, including the loss of its first director after just three months, is part of the expected “turmoil and commotion” of creating a new organization, a top Defense Department official said yesterday. The agency is busy designing a constellation of satellites that could help protect the country from a new generation of hypersonic weapons, despite only having an interim director and a hesitancy in Congress about funding, said Undersecretary Mike Griffin, who oversees military research and engineering.

The Space Development Agency is separate from the proposed Space Force, which the Pentagon has asked Congress to authorize this year as the first new service branch since the Air Force was founded in 1947. The space agency would be moved inside the new service if it is approved. The Pentagon established the agency in March as part of its efforts to overhaul space operations and keep up with advancing Chinese and Russian capabilities. Travis J. Tritten has more.

Trump Fights Merger of Tax Return Suits: Trump deserves to keep his lawsuit challenging California’s law that presidential candidates release their tax returns separate from three others because he is the target of the law, his lawyers said yesterday. Trump and his campaign oppose a request to consolidate other suits with his suit in federal court in Sacramento. The plaintiffs in the other cases—a state Assembly member, the state and national Republican parties, and voters—don’t have the same legal claims or similar interests that warrant consolidation, his lawyers said in a court filing. Read more from Laura Mahoney.

Immigrants in Texas Sue for Release: Immigrants along the Texas-Mexico border, citing indefinite detention in “horrific conditions,” have asked a federal judge to order the U.S. to improve the conditions, give them access to lawyers and release them after 72 hours. U.S. Customs and Border Protection “has intentionally packed these people into filthy holding cells for lengthy periods of time, where they routinely sleep on concrete floors or concrete benches and are denied access to adequate food, water, medical and sanitation facilities,” their complaint, filed Monday in federal court in Brownsville, Texas, said. Read more from Gerald Porter Jr.

Trump Rule Aimed at Poor Migrants Draws Suit: The Trump administration faces a legal challenge over a new rule that could block immigrants from getting green cards if they use government benefits or are found likely to use them. San Francisco and Santa Clara County said in a complaint filed yesterday the “public charge” rule is unlawful because it conflicts with existing immigration laws and would hinder municipalities’ efforts to help needy residents. The rule, set to take effect in October, replaces a current policy saying immigrants shouldn’t receive more than half their income from cash benefits, such as Temporary Assistance for Needy Families or Supplemental Security Income from Social Security. Read more from Robert Burnson.

Trump Plans to End Methane Curbs: The Trump administration is readying a plan to end direct federal regulation of methane leaks from oil and gas facilities, even as some energy companies insist that they don’t want the relief. A draft proposal from the Environmental Protection Agency would prevent the federal government from restricting emissions of that potent greenhouse gas from oil wells and infrastructure, despite fears time is running out to avert catastrophic consequences of climate change. Read more from Jennifer A. Dlouhy.

Civil Rights Agency Told to Flip LGBT Stance: The Justice Department is urging the federal employment rights agency to flip its position and tell the Supreme Court to rule that businesses can discriminate against transgender employees without violating the law, according to sources familiar with the deliberations. The Equal Employment Opportunity Commission has so far kept its Obama-era position that businesses are banned from discriminating against LGBT workers because it’s a form of sex bias. But Trump’s Justice Department disagrees and is hoping to persuade the EEOC to switch sides. Read more from Ben Penn, Chris Opfer, and Paige Smith.

Tribes Nervously Eye Kavanaugh, Gorsuch: A law intended to prevent the breakup of American Indian families may be headed to the U.S. Supreme Court, and that has tribes worried. The New Orleans-based U.S. Court of Appeals for the Fifth Circuit recently revived the Indian Child Welfare Act in a 2-1 decision. That came after a district court judge, who was seemingly handpicked to rule against the law, found it unconstitutional. The 1978 law’s protections of “Indian children” in adoptions isn’t an unconstitutional race-based classification, but rather a political one, the Fifth Circuit said. Read more from Kimberly Strawbridge Robinson.

To contact the reporter on this story: Brandon Lee in Washington at blee@bgov.com

To contact the editors responsible for this story: Zachary Sherwood at zsherwood@bgov.com; Loren Duggan at lduggan@bgov.com