Nativist Trump is dominating the headlines this morning for the acid-laced invective he directed at immigrants from the developing world on Thursday. And on another critical policy front, Globalist Trump may have quietly won the day again.
Just this morning -- after the Post reported that the president asked lawmakers in a meeting yesterday why the United States needed to accept immigrants from "shithole" countries, referring to Haiti, El Salvador and unspecified African nations -- Trump tweeted that while his language was "tough," it wasn't the language reported. It was unclear what part of the reported language the president denied.
The language used by me at the DACA meeting was tough, but this was not the language used. What was really tough was the outlandish proposal made - a big setback for DACA!— Donald J. Trump (@realDonaldTrump) January 12, 2018
Yet in a wide-ranging interview with the Wall Street Journal, his first of the year, the president signaled a new dovishness toward renegotiating the North American Free Trade Agreement. He said he would terminate the pact barring the willingness of Canada and Mexico to agree to different terms — “a Trump deal” — but will put off any final call until after the Mexican presidential election, set for July 1.
“I understand that a lot of things are hard to negotiate prior to an election,” Trump told the newspaper. “They have an election coming up fairly shortly. I understand that makes it a little bit difficult for them.”
The evidence suggests that President Trump’s attitude doesn’t spring from some newfound magnanimity toward our northern and southern neighbors (which together account for nearly a third of our trading activity) but rather the successful appeal by free traders in his orbit to a priority he values even more than protectionism: preserving the stock market rally. The Washington Post’s David J. Lynch and Damian Paletta report:
“When President Trump met with six Republican senators last week to talk about trade, the lawmakers issued a stark warning: Implementing an unrestrained “America first” agenda — such as withdrawing from the North American Free Trade Agreement — would endanger stock prices that have soared since his election.
Just steps from the Oval Office, the president listened as Sens. Cory Gardner (Colo.) and Pat Roberts (Kan.) depicted the potential fallout if Trump follows through on his threats to quit NAFTA.
The talks, which will resume later this month in Montreal, have been stalled over U.S. demands for significant concessions from Mexico and Canada. The impasse has prompted treaty proponents to search with growing urgency for any argument that might sway the president, leading to the new emphasis on investments.”
The argument that an attack on our trading relationships could spook investors got fresh ammunition Wednesday.
A Reuters report that Canadian officials are increasingly convinced that Trump will pull out of NAFTA prompted a sell-off; the S&P 500 and the Nasdaq posted their first losses of the year; and General Motors shed $2 billion in just 90 minutes. Recall that last month, Trump suggested investors file a class-action suit against ABC News, blaming a report on the Russia probe it later retracted for a market dip:
People who lost money when the Stock Market went down 350 points based on the False and Dishonest reporting of Brian Ross of @ABC News (he has been suspended), should consider hiring a lawyer and suing ABC for the damages this bad reporting has caused - many millions of dollars!— Donald J. Trump (@realDonaldTrump) December 3, 2017
Since Trump has replaced his basement-dwelling poll numbers with soaring stock prices as his preferred scoreboard for his presidency, invoking the market’s performance plucks at his vanity. And last week’s meeting wasn’t the first time that free traders have made use of the tactic. “In early December, during a similar session with another group of senators, Sen. Joni Ernst (R-Iowa) showed Trump a chart demonstrating that his April threat to exit NAFTA caused pork futures to sink, according to a third executive briefed on the closed-door meeting,” David and Damian write.
The president is hearing it closer to home, as well. Jonathan Swan of Axios reported last month that Treasury Secretary Steven Mnuchin and National Economic Council Director Gary Cohn have made the same pitch in stereo against the rash imposition of trade barriers: “They're telling him the stock market is at an all-time high, and that new tariffs on whole industries like steel and aluminum would hurt it.”
Last spring, administration officials used another appeal to Trump’s self-interest to forestall a precipitous pullout from NAFTA. Back in April, with his mind apparently made up to follow through on his campaign pledge to withdraw from the pact, he met with Agriculture Secretary Sonny Perdue, who brought out a prop, per reporting by The Post at the time:
“A map of the United States that illustrated the areas that would be hardest hit, particularly from agriculture and manufacturing losses, and highlighting that many of those states and counties were ‘Trump country’ communities that had voted for the president in November. ‘It shows that I do have a very big farmer base, which is good,’ Trump recalled. ‘They like Trump, but I like them, and I’m going to help them.’ By Wednesday night, Trump — who spent nearly two years as a candidate railing against the trade agreement — had backed down, saying that conversations with advisers and phone calls with the leaders of Canada and Mexico had persuaded him to reconsider."
The case for the market’s fragility isn’t airtight. As Damian and David write, “there is no iron link between global trade and the stock market.”
“The S&P 500 index, the broadest measure of the U.S. stock market, has risen about 50 percent since the beginning of 2014 despite a decline in global trade volumes over that period, according to World Trade Organization statistics.
In continuing to climb through 2017, stocks also shrugged off a surge of Commerce Department trade enforcement actions. The Trump administration in 2017 opened 79 anti-dumping and countervailing-duty investigations — a 52 percent increase from the previous year.
But industry representatives who favor the status quo argue that a NAFTA collapse would so disrupt North American supply chains, especially in the auto industry, that it would trigger a market sell-off. Farmers are worried about losing export sales to Mexico if NAFTA ends. The beef industry has warned that Mexico would place 25 percent tariffs on U.S. exports.”
That said, Trump was on wobbly ground in his Thursday interview with the Journal when he asserted, “the American market would go up if I terminated NAFTA and renegotiated a new deal.” The claim, made just moments before he committed himself to forbearance, underscored again the president’s changeability. But his shocking comments on immigration later in the day point to his gut preference for walling the country off.
The struggle between the nativist and the globalist continues.
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— Immigration talks falter. The Post's Ed O'Keefe, Erica Werner and Josh Dawsey: "Immigration talks on Capitol Hill foundered Thursday after the White House and some GOP lawmakers rejected a tentative deal from a bipartisan Senate group — and... Trump made incendiary remarks about people from developing countries. In a midday immigration meeting with senators in which they discussed the fate of certain immigrants from Haiti, El Salvador and some African nations, Trump became frustrated and made a reference to 'shithole countries,' arguing that the U.S. should bring in more immigrants from Norway instead, according to several people briefed on his comments. Those explosive remarks from the president roiled the debate as Democrats erupted in outrage and accused Trump of setting back prospects for any deal... The day began much differently, with rumors circulating on Capitol Hill that senators from both parties were close to an immigration deal."
— Pelosi slams negotiators. Politico's Heather Caygle: "Minority Leader Nancy Pelosi complained Thursday that immigration negotiations are being led by "five white guys" — and was quickly rebuked by her No. 2, Minority Whip Steny Hoyer, himself one of those white guys involved in the talks. 'The five white guys I call them, you know,' Pelosi said at her weekly news conference. 'Are they going to open a hamburger stand next or what?' Pelosi said, complaining that minority members of Congress were not involved in deciding the fate of Dreamers. Pelosi's quip was a reference to the hamburger chain Five Guys and the five white men leading the immigration negotiations... 'That comment is offensive. I am committed to ensuring DREAMers are protected and I will welcome everyone to the table who wants to get this done,' Hoyer said."
— Powell, Quarles get new votes. WSJ's Kate Davidson: "The Senate Banking Committee will vote next week for the second time on the nomination of Jerome Powell to be the next Federal Reserve chairman, a spokeswoman said Thursday. The committee voted 22-1 last month to approve Mr. Powell’s nomination, but the nomination expired at the end of 2017 and the White House had to resubmit it this month, requiring a second committee vote. A committee spokeswoman said the vote is set for Wednesday. If confirmed by the full Senate, Mr. Powell would take the helm of the central bank when Chairwoman Janet Yellen’s term expires Feb. 3... The Senate Banking Committee also will vote Wednesday on the nomination of Fed Vice Chairman for Supervision Randal Quarles to serve a full 14-year term on the Fed board. Mr. Quarles was confirmed last year to fill an unexpired term that ends Jan. 31. The White House has nominated him to serve a full term on the Fed board."
Powell urged to protect against Trump meddling. Bloomberg's Jesse Hamilton: "Trump’s nominee to lead the Federal Reserve is being asked to give assurance he would shield the central bank from any White House effort to influence its oversight of Deutsche Bank AG, a troubled lender that has been drawn into investigations of Russian meddling in U.S. politics. Senate Banking Committee member Chris Van Hollen made the request in a letter to Fed Governor Jerome Powell ahead of the panel’s scheduled vote on Powell’s nomination to succeed Janet Yellen. The Maryland Democrat said his concerns stem from Trump’s 'significant liabilities' with the bank at a time when the Fed could be weighing supervisory and enforcement actions against the Frankfurt-based company."
— Banking on bitcoin. The Hill's Ali Brelan and Sylvan Lane: "The Senate Banking Committee will hold a hearing with top financial regulators in early February examining the implications of bitcoin. Commodity Futures Trading Commission Chairman Christopher Giancarlo and Securities and Exchange Commission Chairman Jay Clayton will testify before the committee at the hearing... Both agencies have largely not taken firm regulatory action on bitcoin or other cryptocurrencies over the past several months, but have issued warnings to investors about digital currencies in recent months."
— Workers have to check their paychecks. The Post's Damian Paletta: "Millions of Americans will need to use a new Internal Revenue Service online calculator to ensure their new paychecks are accurate, Trump administration officials said Thursday as they issued guidelines for implementing the recently passed tax law. The guidelines are necessary for businesses to calculate how much to withhold in taxes from employees’ paychecks beginning as soon as next month. The White House said Thursday that businesses should make these adjustments by Feb. 15, part of the administration’s push for millions of workers to see bigger paychecks as quickly as possible. In rushing the process, the Treasury Department is asking companies to rely on outdated forms to help determine how much to withhold."
(Watch Mnuchin announce the IRS will release a new tax calculator as part of its implementation of the tax law:)
— Agony and ecstasy at Walmart. The Post's Abha Bhattarai and Todd C. Frankel: "Walmart, the largest U.S. private employer with more than 1 million workers, said Thursday it plans to raise starting wages from $9 to $11 an hour and hand out employee bonuses ranging from $200 to $1,000, becoming the latest company to give a least some of the credit for new worker benefits to the recently passed tax plan. But economists and professors cast doubt on whether tax policy changes were the driving force behind the move by a retailing giant that for years has stood as a lightning rod for criticism over low worker pay. With the national unemployment rate at 4.1 percent, a 17-year low, there are more job openings in the retail industry than at any time since the turn of the century, government data show...
But it wasn’t all good news. The retailer also said Thursday that it had suddenly closed 63 Sam’s Club stores, affecting thousands of workers. In a tweet, the company said the closures would help “better align” its physical locations with its strategy. (Ten locations will reopen as e-commerce fulfillment centers.) Walmart said the pay increases apply to all its hourly workers in the United States, including those at its Sam’s Club stores."
— Treasury IG: All clear. NYT's Alan Rappeport: "A probe into the Treasury Department’s role in crafting and assessing the Trump administration’s tax plan found no evidence of any improper political interference with the career tax staff, but cast doubt on whether the department’s robust economic growth projections were achievable. The Treasury Department’s Office of Inspector General launched a probe into the practices of Treasury’s Office of Tax Analysis after The New York Times reported on the lack of a Treasury analysis of the $1.5 trillion tax plan and concerns that career tax staff were shut out of the tax bill process. Steven Mnuchin, the Treasury secretary, had repeatedly asserted that the tax bill would pay for itself and that Treasury staff were working on a detailed analysis of the plan’s costs that would bear out that assertion...
'It is unclear whether the Department’s involvement in the tax legislating process in 2017 has been any more or less ‘political’ than it has been in past years,' Rich Delmar, the counsel to the inspector general, wrote in a report outlining its findings. 'I do not see a basis to conclude that the process employed by Treasury this past year was contrary to law, an abuse of authority or otherwise improper.'”
— Citi: NY, CA taxpayers could pay $3k more. CNBC's Kellie Ell: "Homeowners in high-tax states on the coasts are going to feel the pinch from the new Republican law overhauling the personal code, according to a Citigroup real estate analyst. 'If you live in New York, Connecticut, or California, you're going to get hurt,' said Will Randow on CNBC's 'Squawk Box' on Thursday. On average per household, residents in those states could see their tax bills go up about $3,000, he calculated. The reason comes down to a change in the GOP tax law having do to with the so-called SALT provision."
— Still unpopular. The Hill's Mallory Shelbourne: "A majority of respondents in a new survey said wealthy individuals will reap the most benefits from the Republican tax cuts. Sixty-six percent of those polled in a Quinnipiac University poll released Thursday said the wealthy will 'benefit the most,' while 22 percent said the middle class will receive the most help from the tax legislation. A majority of Americans, 52 percent, said they do not approve of the tax plan, compared to 32 percent who support the Republican legislation. Sixteen percent said they did not know or did not provide an answer."
— Fix for co-op loophole? Bloomberg's Mario Parker and Sahil Kapur: "A provision in last month’s U.S. tax overhaul that gives farmers the opportunity to significantly minimize their taxable income is drawing fire from some companies who could lose out as a result, while two Senators behind the change pledged to fix the problem. The measure in question gives farmers a bigger deduction if they sell crops to agricultural co-operatives. That appears to be a win for farmer-owned agribusinesses such as CHS Inc. at the expense of other major crop buyers like Archer Daniels Midland Co., Bunge Ltd. and Cargill Inc. The two Republican senators who worked to craft that part of the bill, Senator John Hoeven of North Dakota and John Thune of South Dakota, say they were trying to preserve a provision from the outgoing tax code, and that the outcome for co-ops was unintentional. They’re now working with other lawmakers and the agriculture industry to find a "reasonable solution,” Ryan Wrasse, a spokesman for Thune, said in an emailed statement Wednesday."
— Deficit already widening. Bloomberg's Sarah McGregor: "The U.S. budget deficit is widening on increased spending, just as tax cuts look set to knock the other side of the government’s ledger: revenue. The U.S. budget gap rose 7 percent to $225 billion in the first quarter of the government’s fiscal year from a year earlier, the Treasury Department reported on Thursday. Spending rose at a slightly higher pace than revenue, increasing 5 percent to $994.5 billion between October and December. Receipts gained 4 percent to $769.5 billion."
— Rolling deep to Davos. Bloomberg's Jennifer Jacobs: "Trump plans to bring a big delegation with him to the small Swiss ski town of Davos in two weeks, including eight Cabinet members and some of the White House’s senior staff... Secretary of State Rex Tillerson, Commerce Secretary Wilbur Ross and U.S. Trade Representative Robert Lighthizer will be part of the delegation, the White House announced. Homeland Security Secretary Kirstjen Nielsen, Energy Secretary Rick Perry, Transportation Secretary Elaine Chao and Labor Secretary Alex Acosta will also attend. The president’s son-in-law and senior adviser Jared Kushner, National Economic Council director Gary Cohn, chief of staff John Kelly and National Security Adviser H.R. McMaster also will attend the World Economic Forum the week of Jan. 22 as part of the delegation."
— Mnuchin defends. Politico's Cristiano Lima: "Mnuchin announced at the White House daily press briefing that he'd be leading the delegation on the trip to Davos later this month. The treasury secretary also rebuffed claims that the summit is a schmoozefest for the wealthy global elite. 'I don’t think it’s a hangout for globalists,' Mnuchin said, using a term popularized by the nationalist wing of the Republican Party. 'I think the idea is that the economic team will go over and talk about the America First economic strategy.'"
— Trump cancels London trip. The Post's Karla Adam and Jennifer Hassan: "Many Londoners on Friday offered their own reasons for President Trump canceling a possible trip to the British capital: He was nervous about the expected protests that could greet him. 'It seems he's finally got the message,' wrote London's mayor, Sadiq Khan. In a tweet sent at 5 a.m. London time, Trump said that he was canceling a visit to the British capital because he was “not a big fan” of the real estate deal that saw the United States selling its old embassy, located in one of the poshest areas in London, and moving to shiny new building in south London, an area Trump described as 'off location.'" Here's the tweet:
Reason I canceled my trip to London is that I am not a big fan of the Obama Administration having sold perhaps the best located and finest embassy in London for “peanuts,” only to build a new one in an off location for 1.2 billion dollars. Bad deal. Wanted me to cut ribbon-NO!— Donald J. Trump (@realDonaldTrump) January 12, 2018
— Trump allies urge against talking to Mueller. CNN's Kara Scannell and co.: "Close advisers and friends of... Trump are warning him not to sit for an interview with special counsel Robert Mueller, with some expressing skepticism that there would be any circumstance in which it makes sense to voluntarily submit to an interview, according to multiple sources familiar with the ongoing discussions. The President has told friends he's willing to talk with Mueller -- the man Trump views as leading a 'witch hunt' against him -- to make the case there was no wrongdoing, sources told CNN. White House special counsel Ty Cobb says the White House is cooperating with Mueller's investigation into potential collusion between the Trump team and the Russians in the 2016 election. Some key allies on Capitol Hill also are urging Trump to avoid potential political and legal jeopardy and not answer questions from Mueller. They are part of a group of supporters ranging from lawyers on the Trump team and in the White House orbit to friends who say it would be unwise for the President to talk."
— Schiff argues GOP foot-dragging. The Post's Karoun Demirjian: "The top Democrat on the House Intelligence Committee on Thursday detailed a list of witnesses and documents Democrats say Republicans have kept them from accessing during the panel’s Russia investigation, and blamed the committee’s chairman and House Speaker Paul D. Ryan (R-Wis.) for attempting to end the probe before it is complete. Rep. Adam B. Schiff (D-Calif.) said that committee Republicans had blocked Democrats’ efforts to subpoena Deutsche Bank for financial records related to President Trump’s family on the suspicion that Russians 'may have laundered money through Trump properties.' Democrats also were stymied in their effort to subpoena executives at Twitter, Schiff said, to secure the direct messages that members of Trump’s inner circle exchanged with representatives of WikiLeaks and its founder, Julian Assange, who Democrats believe acted as Russian intermediaries during the 2016 presidential campaign."
— #MeToo's a no-show on Wall St. Bloomberg's Max Abelson: "Three women who’ve had long careers in banking sat down for lunch together in Manhattan on the first Wednesday of the year. It didn’t take long before they asked one another the question: Why hasn’t the Harvey Weinstein effect hit finance? After the movie mogul was accused last October of sexual harassment and assault, powerful men have been pushed out of jobs in the media, the arts, politics, academia, and the restaurant business because women spoke up to allege egregious behavior. Something is different on Wall Street. While the #MeToo movement spreads far and wide, these companies have seemed practically immune. Some bankers and executives will tell you that’s because the industry cleaned out bad behavior more than a decade ago, after a string of lawsuits revealed what women were putting up with across top companies. That’s not the case, according to interviews with 20 current and former Wall Street women, who asked not to be identified describing personal experiences and observations."
BUT: A Morgan Stanley exec took a rapid fall. NYT's Kate Kelly and Andrew Ross Sorkin: "Late last year, Morgan Stanley got a tip: Reporters were asking about allegations that a high-profile executive, the former congressman Harold E. Ford Jr., had harassed a female journalist. Morgan Stanley conducted a quick investigation, interviewing the accuser and Mr. Ford, who denied the allegations. According to Morgan Stanley officials briefed on the internal process, the Wall Street bank concluded that it was a he-said, she-said situation and didn’t find proof of harassment.
Then Morgan Stanley fired Mr. Ford. Why? It depends on whom you ask. The Morgan Stanley officials briefed on the process say that amid a national outcry over sexual harassment, the bank had little choice but to fire Mr. Ford after it learned of the allegation. Even though the harassment charge was never corroborated, they said, the bank found evidence that Mr. Ford had misled executives about some of his behavior, which itself constituted cause to remove him."
From The Washington Post's Heather Long: "The Chinese are now buying as much stuff as Americans, a game-changer for the world economy:"
- The Economic Policy Institute holds a discussion on "Understanding the decline in manufacturing jobs.”
- The American Enterprise Institute holds an event on “New thinking about poverty and economic mobility” on Jan. 18.
From the New Yorker:
Treasury Secretary Steven Mnuchin said he is “expecting new sanctions on Iran:"
Here's how Trump’s "shithole" comment matches with his past statements on immigrants:
Here's a running list of countries Trump has insulted:
Watch The Daily Show's Trevor Noah on President Trump's "shithole" remark: