On The Money: Fed delivers second rate cut to fend off global risks | Trump says Fed has 'no guts' | House gets deal on continuing resolution | GM faces bipartisan backlash amid strike

On The Money: Fed delivers second rate cut to fend off global risks | Trump says Fed has 'no guts' | House gets deal on continuing resolution | GM faces bipartisan backlash amid strike
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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.

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THE BIG DEAL--Fed delivers second rate cut to fend off global risks: The Federal Reserve announced Wednesday it would cut interest rates for the second consecutive time this year to protect a record stretch of U.S. prosperity from looming foreign risks.

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In a statement following a two-day meeting in Washington, the central bank's rate-setting Federal Open Markets Committee (FOMC) said it would cut interest rates by 0.25 percentage points to a 1.75 to 2 percent baseline range. 

The decision marks the second time since July -- and the 2008 recession -- that the Fed has moved to ease borrowing costs. I explain why the Fed cut rates here.

  • The cut follows months of signals from Federal Reserve Chairman Jerome Powell that the central bank would act to stave off a potential recession while the U.S. economy remains strong.
  • Fading global growth, rising trade tensions, and a minefield of geopolitical flashpoints are among several risks the Fed is seeking to outmaneuver. By cutting rates, the Fed hopes to stimulate a slightly slowing U.S. economy before it's too late to prevent a recession.
  • "We took this step to help keep the US economy strong in the face of some notable developments and to provide insurance against ongoing risks," Powell said Wednesday.

 

Trump lashes out: With interest rates already well below historically neutral levels, the Fed is depending on a small burst of steady stimulus to prop up a strong labor market and consumer spending. 

But marginally cheaper money may do little to appease Trump, who has derided the Fed's efforts to defend the U.S. economy from factors largely driven by his trade battles.

"Jay Powell and the Federal Reserve Fail Again. No 'guts,' no sense, no vision! A terrible communicator!," Trump tweeted after the Fed announced the slim rate cut.

 

Why Trump is not happy: 

  • Trump has tried to bully the Fed into cutting rates, suggesting they go below zero percent, which would match countries with drastically worse economies than the U.S. 
  • The Fed has only cut rates by that magnitude in times of crisis and is unlikely to do so otherwise. But Trump insists that the independent central bank should help him in his trade war with China by lowering rates to weaken the U.S dollar.
  • The president faces political risks ahead of the 2020 election if he fails to land an agreement or allows the trade war to slow the economy into recession. Lower rates could help support U.S. exports and power the economy through the mounting costs of the trade war.

 

ON TAP TOMORROW

  • The Consumer Financial Protection Bureau (CFPB) hosts a symposium on behavioral economics, 9 a.m.
  • The Senate Appropriations Committee holds a markup of the fiscal 2020 spending bills for Financial Services-General Government, Agriculture, and Transportation-Housing and Urban Development (HUD), 10:30 a.m.

 

LEADING THE DAY

Senate Democrats block government spending bill: Senate spending talks hit another roadblock on Wednesday amid a partisan battle over funding for President TrumpDonald John TrumpZuckerberg launches public defense of Facebook as attacks mount Trump leaning toward keeping a couple hundred troops in eastern Syria: report Warren says making Israel aid conditional on settlement building is 'on the table' MORE's U.S.-Mexico border wall.

Senate Democrats on Wednesday blocked a bill to fund most of the federal government, marking the latest setback for spending talks with days to go until the Sept. 30 deadline to avoid a shutdown.

  • Senators voted 51-44 on taking up a House-passed bill that was expected to be the vehicle for any Senate funding action, depriving it of the 60 votes needed to overcome the initial hurdle.
  • The stalemate comes as Senate spending negotiations have been largely derailed over partisan battles on issues including the wall and concerns among Republicans that Democrats could try to force in abortion-related language.

The Hill's Jordain Carney explains how we got here.

 

But they have a deal on a CR over in the House: House Democrats filed stopgap legislation Wednesday evening to prevent a shutdown and keep the government running through Nov. 21.

A floor vote on the continuing resolution (CR) is expected Thursday.

House Democrats unexpectedly pulled the bill from rules consideration on Tuesday night over disagreements with Republicans about several issues, including how the extension dealt with health care and aid to farmers affected by the trade war with China.

Negotiations continued Wednesday with Senate Republicans in hopes of striking a deal before the House vote, which would allow the Senate to take up the bill as is.

“While the House did its work, the Senate appropriations process is far behind. Because of this delay, we must pass a continuing resolution to avoid another government shutdown,” House Appropriations Committee Chairwoman Nita LoweyNita Sue LoweyTrump officials say aid to Puerto Rico was knowingly stalled after Hurricane Maria McConnell tees up government funding votes amid stalemate Dem committee chairs blast Trump G-7 announcement MORE (D-N.Y.) said.

The Hill's Niv Elis has more on that here.

 

General Motors faces bipartisan backlash amid strike: GM is facing political heat from both sides of the aisle in the midst of a high-stakes fight with striking autoworkers.

President Trump along with some of his top Democratic challengers are pressuring the company to quickly negotiate an end to the dispute after almost 50,000 employees walked off the job when talks failed between GM and the United Auto Workers (UAW) union.

  • Trump has long complained about GM's ongoing disputes with its workers and bashed the company for shifting some U.S. production to Mexico. And the president is still smarting over GM's closure of its Lordstown, Ohio, assembly plant earlier this year, which drew wide bipartisan condemnation.
  • Several Democrats looking to unseat Trump have also expressed solidarity with the striking GM workers, urging support for the UAW and condemning the auto company.

 

Why? The controversy also comes as Trump and Democrats fight over the industrial states that drove GM's success, where workers are asking the company to make up for off-shored jobs, concessions in past negotiations and a costly taxpayer bailout.

  • More than 48,000 GM employees walked off the job Sunday after UAW's contract with the automaker lapsed without an agreement on a new one.
  • After GM came close to collapsing during the 2008 financial crisis, a federal rescue package and UAW concessions in contract negotiations, such as a tiered compensation system for new hires, helped keep the automaker afloat. 
  • The company has since rebounded, bringing in $11 billion in profits last year despite the challenge of dealing with changing consumer preferences. GM workers are now seeking a greater share of those profits, along with higher base pay and greater parity among full-time and temporary workers.

 

GOOD TO KNOW

  • The Senate on Wednesday voted to confirm two Treasury Department nominees who were criticized by Democrats for their roles in controversial department actions -- including the refusal to comply with requests for President Trump's tax returns.
  • Nearly two dozen lobbying groups called on Congress on Wednesday to conduct more stringent oversight of President Trump's tariffs, saying their industries have been harmed by White House trade policies.
  • Following a tumultuous few months, executives from top U.S. companies are expecting a moderate 2.3 percent growth rate in 2019, down from their previous expectation of 2.6 percent, according to a new survey.

 

ODDS AND ENDS