On The Money: Deficit hits six-year high of $779 billion | Yellen says Trump attacks threaten Fed | Affordable housing set for spotlight in 2020 race

On The Money: Deficit hits six-year high of $779 billion | Yellen says Trump attacks threaten Fed | Affordable housing set for spotlight in 2020 race

Happy Monday 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.

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Write us with tips, suggestions and news: slane@thehill.com, vneedham@thehill.com, njagoda@thehill.com and nelis@thehill.com. Follow us on Twitter: @SylvanLane, @VickofTheHill, @NJagoda and @NivElis.

 

THE BIG DEAL--America's fiscal mess--Deficit hits six-year high of $779 billion: The federal government spent $779 billion more than it took in during the 2018 fiscal year, the highest deficit since 2012, according to Treasury Department data released Monday.

The deficit rose 17 percent from the previous year, fueled by the 2017 GOP tax cuts and a bipartisan agreement to increase spending. Treasury projected that the deficit will surpass $1 trillion in fiscal 2019, which began Oct. 1.

Overall receipts were similar to the previous year, up 0.5 percent despite a booming economy and a low unemployment rate. Outlays, however, rose six times faster, surpassing $4.1 trillion.

Earlier this month, the nonpartisan Congressional Budget Office issued a similar deficit figure of $782 billion. The Hill's Niv Elis breaks it down here.

Promises, promises: The fiscal performance is at odds with what President TrumpDonald John TrumpMeet the lawyer Democrats call when it's recount time Avenatti denies domestic violence allegations: 'I have never struck a woman' Trump names handbag designer as ambassador to South Africa MORE promised on the campaign trail, when he said he would eliminate the debt over two terms. Fiscal 2018 was the first full fiscal year under Trump's watch, and debt has risen from $20 trillion to around $21.5 trillion since he took office.

What the administration is sayingTreasury Secretary Steven MnuchinSteven Terner MnuchinOn The Money: Amazon taps New York, Northern Virginia for new offices | What it means for the DC area | Dems target vulnerable commerce chief | Earmarks look to be making a comeback New IRS chief to make updating agency technology a priority Trade discussions resume between US, China MORE and White House budget chief Mick MulvaneyJohn (Mick) Michael MulvaneyDem House can put Main Street's needs over Wall Street's wants On The Money: Dow, S&P fall to close rough week for Wall Street | Brady appears to rule out lame-duck tax cut action | New payday loan rule coming in January On The Money: Mnuchin pulls out of Saudi summit | Consumer bureau to probe controversial blog posts on race | Harris proposes new middle-class tax credit MORE issued a joint statement that blamed Congress for the increasing deficits, arguing that the president had requested far-reaching spending cuts in his budget proposals.

Dems respond: House Minority Leader Nancy PelosiNancy Patricia D'Alesandro PelosiPelosi and her opponents voice confidence over Speakership battle House Dems split on how to tackle climate change Overnight Energy: House Dems at odds over how to handle climate change | Trump shows support to California over wildfires | Zinke calls fires worse than Iraq war zones MORE (D-Calif.) laid the blame for the rising deficits on the GOP tax law.

"The bitter reality of the Republicans' tax scam dishonesty is laid bare by the Trump Administration's own report," Pelosi said Monday. "Republicans passed a tax scam for the rich that is adding $2 trillion to the deficit in order to give massive tax breaks to Big Pharma, big banks, big corporations shipping jobs overseas and the wealthiest 1 percent."

The CBO estimated that the 2017 tax law would add $1.9 trillion to deficits over a decade.

 

LEADING THE DAY

Yellen: Trump's Fed attacks threaten central bank, financial stability: Former Federal Reserve Chair Janet YellenJanet Louise YellenThe Hill's 12:30 Report — Sponsored by Delta Air Lines — Trump says Florida races should be called for GOP | Latest on California wildfires | Congress set for dramatic lame duck On The Money: US workers see highest wage growth since 2008 | Fed releases plan to loosen rules for major US banks | GOP chair criticizes UK tech tax | US drops in World Bank's list of best places to do business On The Money: Trump threatens more tariffs if no 'great deal' with China | Chamber warns against tax targeting tech companies | Dow bounces back | Consumer confidence rises in October MORE said Monday that President Trump's recent attacks on the central bank could harm the Fed and endanger the global financial system.

Yellen, who led the Fed from 2014 through February 2018, said Trump's criticism of recent Fed interest rate hikes are "essentially damaging to the Fed and to financial stability," according to multiple reports.

"I really think it is not a desirable thing for a president to comment so explicitly on Fed policy," Yellen said at the Mortgage Bankers Association convention in Washington.

"Obviously, presidents can speak out if they choose to and give their opinions about policy. There's no law against that, but I don't think it's wise."

Yellen, who raised rates four times between 2015 and 2018, also said she feared the economy could overheat if the Fed doesn't bring rates back toward historically neural levels.

"Growth needs to slow to stop the unemployment rate from falling ever further, which I believe will eventually create inflationary pressures,' Yellen said.

Trump last week escalated his criticism of the Fed by blaming the central bank for a steep two-day stock market slide and saying its leaders had gone "crazy" and were "making a mistake" with its "ridiculous" rate hikes.

The president's comments raised eyebrows in Washington and on Wall Street, but had no apparent impact on U.S. markets.

Republicans on Capitol Hill said that while they may disagree with the substance of Trump's remarks, they support his right to break with decades of White House precedent by publicly criticizing the Fed, an entity that fiercely guards its independence from politics.

Sen. Mike RoundsMarion (Mike) Michael RoundsOn The Money: Deficit hits six-year high of 9 billion | Yellen says Trump attacks threaten Fed | Affordable housing set for spotlight in 2020 race Lawmakers, Wall Street shrug off Trump's escalating Fed attacks GOP shrugs off dire study warning of global warming MORE (R-S.D.), a member of the Senate Banking Committee, said Trump is just expressing his opinion.

"I have no objection to him sharing his thoughts on it just like all of us like to share our thoughts on it," Rounds said. "I don't think it will pose a challenge to the Fed's independence."

Sen. Sherrod BrownSherrod Campbell BrownBudowsky: Sherrod Brown should run in 2020 Sherrod Brown: If Stacey Abrams doesn't win, Republicans 'stole it' Nearly six in ten want someone other than Trump elected president in 2020: poll MORE (Ohio), the top Democrat on the Senate Banking Committee who's up for reelection this year in a state Trump won in 2016, said Trump's attacks on the Fed are a symptom of his governing style.

"People are so used to this president commenting on everything and being critical of everybody else and pointing fingers -- it's always somebody else's fault -- of course he's going to do it," he said.

Disasters become big chunk of U.S. deficit: As Congress moves to prepare another emergency funding bill to help people hit by Hurricane Michael, budget watchers are crying foul. 

The level of funding needed to cover disasters each year, they say, is largely predictable, but Congress only includes a fraction of that funding in its annual appropriations.

The rest of the money provided nearly every year to pay for the nation's natural disasters just adds to the deficit, regardless of what promises or commitments the government has made to keep its spending down.

"Disasters aren't anomalies -- they are unfortunately a sure thing, and they are getting more costly every year," said Maya MacGuineas, president of the Committee for a Responsible Federal Budget.

She says funding to pay for the disasters should be part of a regular budget process, or the nation will unsustainably add to its debt. Niv Elis explains here.

 

FINANCE IN FOCUS--2020 edition: Affordable housing is poised to become a more prominent issue in the 2020 presidential race, with several potential Democratic candidates releasing proposals on the topic in recent months.

Housing hasn't been a top issue in past presidential elections, but Democratic strategists and housing experts say it could be a bigger part of the debate in the coming years as concern grows about how housing costs have increased faster than wages.

Three Democratic senators who many expect to run for president in 2020 -- Kamala HarrisKamala Devi HarrisO'Rourke receives invite to visit Iowa from Democratic Party in Des Moines Nearly six in ten want someone other than Trump elected president in 2020: poll Howard Dean: Democratic Party getting younger as GOP gets ‘older and whiter’ MORE (Calif.), Cory BookerCory Anthony BookerO'Rourke receives invite to visit Iowa from Democratic Party in Des Moines Bill to protect Mueller blocked in Senate McConnell: Mueller probe should be allowed to finish MORE (N.J.) and Elizabeth WarrenElizabeth Ann WarrenNearly six in ten want someone other than Trump elected president in 2020: poll Schumer reelected as Senate Democratic Leader Merkley seeking to change Oregon law so he can run for president and Senate in 2020: report MORE (Mass.) -- have all introduced bills aimed at reducing housing burdens. The senators also represent states with some of the highest housing costs. The Hill's Naomi Jagoda briefs us here. 

 

GOOD TO KNOW

 

ODDS AND ENDS