What to Know in Washington: Credit for a Record-Breaking Economy

About to break records for the longest expansion, the U.S. economy sure looks like an asset for a president gearing up to seek re-election.

“If voters went to the ballot box today, it would be the strongest economy in U.S. election history,” said Justin Waring, an investment strategist at UBS in New York.

Unemployment is close to a half-century low and inflation is so subdued that some have pronounced it dead. The two gauges added together are known as the “misery index.” Waring, who has crunched those numbers, says they show Americans are less miserable than they’ve ever been.

Which is exactly what President Donald Trump’s been telling them.

Trump is taking credit for the economy’s performance, and he’s getting strong approval ratings on the issue right now. That doesn’t mean it will automatically carry him to a second term. Other issues energize voters too, while the decade-long run of economic growth could come to an end before election day, still more than a year off.

And even if it doesn’t, there are reasons why this expansion may lack oomph at the ballot box — as the Democrats found out in 2016. Christopher Condon and Steve Matthews look at some of the issues at play.
About to break recoAbout to break records for the longest expansion, the U.S. economy sure looks like an asset for a president gearing up to seek re-election.rds for the longest expansion, the U.S. economy sure looks like an asset for a president gearing up to seek re-election.
Trump over the weekend warned that the U.S. would face an epic stock market crash if he’s not re-elected. “If anyone but me takes over,” Trump told his 61 million Twitter followers on Saturday, “there will be a Market Crash the likes of which has not been seen before!”

Trump officially starts his 2020 campaign tomorrow with a rally in Orlando, Fla., and appears to be road-testing some of the themes he’ll be touching on in the next 18 months, including stoking fear of a market meltdown. “Tuesday will be a Big Crowd and Big Day,” he said in another tweet.

The president has claimed several times this year and as recently as Friday in a “Fox & Friends” interview that the U.S. stock market would be 5,000 to 10,000 points higher if the Federal Reserve hadn’t raised interest rates four times in 2018. Read more from Ros Krasny.

More on the Economic Outlook: Meanwhile, Chairman Jerome Powell’s frequent assurance that sustaining the U.S. economic expansion is the Federal Reserve’s “overarching’’ goal is opening the door to potentially aggressive interest-rate cuts. The timing, size and whether such moves are indeed in his plans may become clearer when Powell and his colleagues meet tomorrow and Wednesday in Washington. Read more from Craig Torres.

More Politics & Elections

Trump Faces ‘Uncomfortable’ Voters: A majority of Americans say they would be “very uncomfortable” voting for Trump in 2020, and Joe Biden continues to lead surveys on likely Democratic primary voters — partly on the feeling that he’s best positioned to beat Trump in a general election. A flurry of opinion polls yesterday also showed that a majority of voters think the Trump administration has gone too far on its immigration enforcement efforts, and that economic optimism has slipped from the high levels seen shortly before Trump’s inauguration in 2017. Read more from Ros Krasny, Hailey Waller and Kevin Varley.

Trump Dumps Pollsters: Trump’s re-election campaign has severed ties with some of its pollsters after the leak of months-old surveys showed him trailing Biden in key states, according to multiple reports. NBC News first reported that the Trump pollsters were ousted following revelations that internal campaign polling from March showed Trump trailing Biden in traditionally Democratic-leaning states such as Pennsylvania that cemented the president’s victory in 2016, as well as in swing states and some typically Republican strongholds such as Georgia. Read more from Ben Brody.

Biden Leads Pack: Meanwhile, Biden leads early in the Democratic race, helped by a sense that he is best placed to beat Trump, a new “CBS Battleground Tracker” poll shows. Sens. Elizabeth Warren (D-Mass.), Kamala Harris (D-Calif.), Bernie Sanders (I-Vt.), and Pete Buttigieg are among the candidates that likely Democratic voters are at least considering in 18 states that will shape the initial 2020 fight, the poll shows. The CBS News/YouGov poll shows Biden had support of 31% of Democratic primary voters with three senators next: Warren at 17%, Sanders at 16%, and Harris at 10%. Read more from Ros Krasny.

Warren shrugged off surveys showing her gaining support nationally and in some key early primary states, to place second behind Biden, Sahil Kapur reports. “It’s way too early to talk about polls. What are we, eight months away from the first caucuses and primary elections?” the Massachusetts senator told reporters Saturday in Charleston, S.C.

Trump Prepares for G20

Ross Downplays Prospect of Deal: This month’s G-20 summit in Japan isn’t the forum for the U.S. and China to make headway in resolving their trade dispute, according to Commerce Secretary Wilbur Ross. The gathering in Osaka, due to be attended by Trump and his Chinese counterpart Xi Jinping, is too broad an event to expect much progress, Ross said in an interview with Bloomberg TV at the Paris Air Show today. The two nations have other pressing issues to discuss, such as North Korea and events in Hong Kong, he added.

“I think eventually we will have a deal with China, but I don’t think it will come directly out of the G-20,” Ross said. “G-20 is a 40,000-foot-level kind of discussion. The main thing that could come out is an agreement on principles for how to move forward. That’s the most.” Read more from Christopher Jasper and Guy Johnson.

Pence Tiananmen Speech Delayed: Vice President Mike Pence was set to deliver a speech criticizing China’s human rights record on June 4, the anniversary of the Tiananmen Square massacre, until Trump stepped in. The president delayed the speech to avoid upsetting Beijing ahead of a potential meeting with Xi at the Group of 20 meeting, according to several people familiar with the matter. Trump also put off U.S. sanctions on Chinese surveillance companies that Pence planned to preview in his remarks.

The speech was tentatively rescheduled for June 24, just days before the Osaka summit. But with Beijing signaling that Xi might not agree to a meeting, there is now debate within the administration about when Pence should deliver the speech and how hard he should be on the Chinese. Read more from Jenny Leonard and Jennifer Jacobs.

Potential Putin-Trump Meeting: A meeting of Trump and Russian President Vladimir Putin could be organized on the eve of the G-20 summit, Kremlin spokesman Dmitry Peskov said, according to Interfax. Russia has not received any offers from the U.S. so far, but if it does reach out, a full-scale meeting could be set before the G-20 leaders’ meeting on June 28-29 in Osaka, Peskov said, cited by Interfax. If Trump suggests an informal, quick meeting during the G-20, that won’t be enough to talk about all the issues that need to discussed, Peskov said.

Happening on the Hill

Appropriations Work Resumes: The House this week will look to complete work and pass a nearly $1 trillion spending package, after debating a number of amendments last week to the measure containing Defense, Labor-HHS-Education, State and Foreign Operations, and Energy and Water appropriations. Read more.

Once that bill is passed, the House will consider its second appropriations package that includes Agriculture-FDA, Commerce-Justice-Science, Interior-Environment, Military Construction-VA and Transportation-HUD funds. Agencies and programs covered by those five appropriations bills would receive about $320 billion in fiscal 2020 discretionary funding under the measure.

More than 500 amendments have been submitted to the House Rules Committee for the package. Read more.

Defense Policy in Senate: The Senate plans to hold a floor vote this week on its $750 billion version of defense authorization legislation which would provide troops with a 3.1% pay raise, require the Defense Department to implement more policies to address sexual assault, and authorize construction funds to replenish money redirected for activities along the southern border. Read more.

Drug Price Plans: Republicans want to give states more power to work out payment plans with pharmaceutical companies in a bid to help some Medicaid programs afford expensive new treatments. Senate Finance Committee members including Chairman Chuck Grassley (R-Iowa), Bill Cassidy (R-La.) and Tim Scott (R-S.C.) are pushing to include a provision in a drug-pricing package that would let states finance the cost of gene and cell therapies, some of which cost $1 million or more. The change, they argue, would help states offer Medicaid patients access to the next generation of cures without emptying their coffers. Read more from Alex Ruoff.

What Else to Know Today

Tariff Hearing: New Balance has long advocated and benefited from tariffs, competing with Nike and other footwear companies while still making shoes in the U.S. Now, it’s among the critics of Trump’s duties testifying at a public hearing starting today.

The Boston-based firm said while it supports Trump’s efforts to force China to address intellectual property theft in a trade deal, its U.S. factories are supported by a global supply chain connected to China and built over decades. Duties on soles and other components would hurt the business, as do China’s retaliatory tariffs on U.S. exports, the company said. Read more from Mark Niquette.

Italy’s Salvini in Washington: Italy’s Matteo Salvini is off on his first official trip to the U.S., but the populist leader still doesn’t know if he’ll get the prize he wants most: an audience with Trump, who he cites as his political inspiration. The deputy premier, the dominant force in his country’s quarrelsome ruling coalition, will sit down today with both Pence and Secretary of State Michael Pompeo. Salvini’s official schedule does not include a meeting with Trump.

Still, a White House visit with Pence could yield some face time with the president, according to three officials who asked not to be named discussing confidential plans. That could take the form of a “spontaneous’’ encounter, one of the officials said, although Trump usually only meets with heads of state or leaders of governments. Read more from John Follain.

Pompeo Promises to Protect Gulf Shipping: There’s “no doubt” Iran was responsible for attacks on two oil tankers leaving the Persian Gulf last week, and the U.S. will guarantee safe commercial navigation going forward with its partners, Pompeo said. “The United States is going make sure that we take all the actions necessary, diplomatic and otherwise, that achieve that outcome,” Pompeo said on “Fox News Sunday,” one of two scheduled appearances on the political talk shows.

Pompeo spoke days after he and Trump accused Iran of being behind attacks that crippled the tankers in the Strait of Hormuz, which abuts Iran and is a strategic choke point for crude oil coming out of the Persian Gulf. Read more from Mark Niquette and Shawn Donnan.

Lockheed’s Sikorsky Plant Plans: Trump said Lockheed Martin CEO Marillyn Hewson will be making a decision on the fate of the Sikorsky’s plant in Coatesville, Pa., “soon.” Trump said in a tweet he spoke with Hewson about continuing the operations of the helicopter manufacturer’s plant. “She will be taking it under advisement,” he said. The company told the plant’s 465 workers last week it plans to shut down the operation, The Philadelphia Inquirer reported.

To contact the reporter:
Zachary Sherwood in Washington at zsherwood@bloomberg.net

To contact the editors responsible:
Loren Duggan at lduggan1@bloomberg.net;
Giuseppe Macri at gmacri@bloomberg.net

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