On The Money: Trade chief defends Trump tariffs before skeptical Congress | Kudlow denies plan to demote Fed chief | Waters asks Facebook to halt cryptocurrency project

On The Money: Trade chief defends Trump tariffs before skeptical Congress | Kudlow denies plan to demote Fed chief | Waters asks Facebook to halt cryptocurrency project
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Happy Tuesday and welcome back to On The Money, where we're a Leo anyway. 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-- Trade chief defends Trump tariffs before skeptical Congress: U.S. Trade Representative Robert LighthizerRobert (Bob) Emmet LighthizerWhiskey, workers and friends caught in the trade dispute crossfire GOP senator warns quick vote on new NAFTA would be 'huge mistake' Pelosi casts doubt on USMCA deal in 2019 MORE on Tuesday defended President TrumpDonald John TrumpCensus Bureau intends to wrap up count on Oct. 5 despite judge's order Top House Republican calls for probe of source of NYT Trump tax documents New Yorkers report receiving ballots with wrong name, voter addresses MORE's use of tariffs to squeeze concessions from adversaries and trading partners.

Lighthizer spoke before a Senate panel, where lawmakers expressed worries about recent moves by Trump ratcheting up the trade war with China and the potential blowback for the economy.


"If there's a better idea than tariffs I'd like to hear it. I haven't heard it," he told the Senate Finance Committee when asked about Trump's strategy if trade talks with China fail.

"I know one thing that won't work, and that is talking to them, because we've done that for 20 years," he added. The Hill's Niv Elis takes us there.


The background:

  • Lawmakers from both parties have been critical of Trump's decisions to threaten and impose tariffs in a multi-front trade war, complaining that the import taxes increase prices on U.S. consumers and invite retaliation that shuts exporters out of global markets.
  • Trump increased tariff rates on $200 billion of Chinese imports last months as trade talks between the two countries faltered. And the president has threatened to impose new tariffs on an additional $300 billion of imports. Those tariffs, along with existing ones, would hit nearly every Chinese import to the United States.


The moves have only sparked more anxiety about Trump's strategy and the risk to the U.S. economy.


What comes next: Lighthizer appears before the House Ways and Means Committee on Wednesday, where he will face another round of grilling from lawmakers.



  • U.S. Trade Representative Robert Lighthizer testifies before the House Ways and Means Committee on the administration's trade policy, 9:30 a.m.
  • A House Financial Services subcommittee holds a hearing on the economic impact of Trump administration tax and trade policies, 10 a.m.
  • The Senate Judiciary Committee holds a hearing entitled "Combating Kleptocracy: Beneficial Ownership, Money Laundering, and Other Reforms," 10 a.m.
  • A House Financial Services subcommittee holds a hearing on proposals to strengthen securities law enforcement, 2 p.m.
  • The Senate Budget Committee holds a hearing entitled "Fixing a Broken Budget and Spending Process: Lessons from States," 2:30 p.m.



Kudlow says Trump 'not taking any actions' to demote Fed chairman: President Trump's top economic adviser said Tuesday that the White House is not considering demoting Federal Reserve Chairman Jerome Powell, brushing off earlier reports that the president had looked into it.

"We are not taking any actions to change his status," said National Economic Council Director Larry KudlowLarry KudlowMORE about Powell, who President Trump appointed to chair the Fed in 2017.

Kudlow's comments come after Bloomberg News reported that Trump had explored in February whether he could legally demote Powell from the Fed's chairmanship.

Kudlow declined to confirm or deny the Bloomberg article, saying "It allegedly happened six months ago," though the report said Trump considered the demotion four months ago in February.

"It's not happening today and therefore I have nothing to say about it," Kudlow added.


The fine print:

  • Trump is barred by the Federal Reserve Act from firing Fed board members without "cause," which is generally understood to be personal misconduct or gross negligence, not policy differences.
  • The law is less clear on whether Trump could demote the Fed chairman and render him a regular member of the Fed board of governors. If the demotion were legal, Trump could appoint a new Fed chairman without removing Powell from the central bank entirely.


The feud: Trump has bashed Powell and the Fed for close to a year, accusing the bank and its chairman of suppressing the economy by unnecessarily raising interest rates. The Fed has raised rates four times under Powell, a Republican appointed by Trump to lead the central bank.

Trump reportedly considered firing Powell in December as the stock market cratered into a bloody sell-off after the Fed's final rate hike of the year. Powell has said that he cannot be fired by Trump and would not resign if asked to by the president, waving off concerns about political pressure.


The Bloomberg report comes as the Fed kicks off a highly anticipated monthly meeting where the bank faces a critical decision on whether to cut interest rates.

  • The Fed is expected to announce Wednesday that it will keep rates steady for now but may project at least one cut by the end of the year.
  • While the U.S. economy continues to grow and enjoy low unemployment, Trump's escalating trade battles and recent signs of slowness in key economic data have left investors anxious.
  • And Trump is ratcheting up the pressure on his hand-picked chairman, seeking the Fed's help as he attempts to end a trade war with China -- and clinch another presidential term in 2020.


The question of how to move interest rates is just one of several challenges facing the Fed as it grapples with intense political pressure and an uncertain economic forecast.

"The Fed has to wrestle with not only all of the uncertainty that's in the market because of the trade battles but an unprecedented amount of political risk," said Karen Shaw Petrou, managing partner at Federal Financial Analytics. I've got more on the Fed's big test here.


Maxine WatersMaxine Moore WatersPowell, Mnuchin stress limits of current emergency lending programs Pelosi: House will stay in session until agreement is reached on coronavirus relief Omar invokes father's death from coronavirus in reaction to Woodward book MORE calls on Facebook to halt cryptocurrency project: House Financial Services Committee Chairwoman Maxine Waters (D-Calif.) on Tuesday called on Facebook to halt its new cryptocurrency project until regulators and Congress weigh in on the endeavor.

In a statement, Waters said that the social media giant should back away from the financial services industry because of the company's repeated privacy breaches, alleged violation of consumer protection laws, and a string of other controversies involving user data.

"With the announcement that it plans to create a cryptocurrency, Facebook is continuing its unchecked expansion and extending its reach into the lives of its users," Waters said in a Tuesday statement.

"Given the company's troubled past, I am requesting that Facebook agree to a moratorium on any movement forward on developing a cryptocurrency until Congress and regulators have the opportunity to examine these issues and take action." I explain why here.


What happened:

  • Facebook on Tuesday unveiled its plans to launch Project Libra, a payments system based on a cryptocurrency supported by more than two dozen major corporations, including Uber, Mastercard, Spotify, Vodafone, Coinbase and Women's World Banking.
  • Facebook said that the cryptocurrency project would be operated by the non-profit Libra Association and separate from the social media platform.

Facebook's immense size, reach, market power and pervasive privacy breaches raised concerns across the political spectrum about Libra's potential effect on financial markets.


The bottom line: It usually takes allegations of severe abuse (like with Wells Fargo) or a massive data breach (like with Equifax) to prompt this level of bipartisan concern from the financial regulatory leaders in Congress. It's obviously early, but Facebook has

clearly struck a chord with lawmakers. Expect more action on this down the pipeline.



  • Republican and Democratic leaders in Congress will meet Wednesday with senior White House officials in another attempt to reach a deal on raising spending caps and the federal debt ceiling.
  • Key House Democrats on Tuesday released legislation to renew expired tax breaks and expand tax credits benefiting low- and middle-income workers and families.
  • TechNet, a network of technology CEOs, wrote to Congress on Tuesday expressing their support for President Trump's revised North American trade deal.



  • Google on Tuesday announced a $1 billion investment for housing in the Bay Area, including funding for 15,000 new homes.
  • Charitable giving by individuals declined in 2018 amid a complicated climate for donations to nonprofits that included tax-code changes in President Trump's 2017 law, according to a report released Tuesday.