THE TICKER

Republicans are counting on their tax overhaul to stave off disaster in the midterm elections.

But they're having a hard time selling the big package to voters on the campaign trail, raising questions about just how effective lowering taxes, which has traditionally been synonymous with GOP rule, will be as a message heading into November. In a bid to boost the impact on individuals, my colleague Erica Werner reported earlier this week that House Republicans leaders want to make permanent the tax overhaul's cuts for individuals.

Top Republican strategists say there’s no reason to panic, yet. They blame a mix of factors for the tax package's lack of traction: President Trump’s unpopularity and the president's message discipline on his own landmark win (see Trump's tearing up of a prepared speech when he was supposed to be stumping recently on taxes).

GOP strategists also argue the relief some taxpayers expected to see filing their returns this week won’t fully kick in until next year. They say the law itself represented a muddled set of objectives that prioritized a corporate cut over benefits to families.

Some Republicans contend the party may have discovered the ceiling on the support the tax cuts can generate. 

“Tax cutting is built into the GOP brand, so asking for extra credit is like a Boy Scout asking for an extra badge for telling the truth,” Republican strategist and Trump critic Mike Murphy said. 

The party’s enthusiasm about rising approval for the cuts early in the year reflected the “faulty supposition that when a monthly poll is done, voters are locked in,” he says. Rather, polls are “a noise meter — what’s in the news this week and what’s loud gets pushed. When tax cuts were everywhere for six weeks, people were generally in favor … But it inflates like a balloon and then goes out.” 

Murphy said  there's still time to sell the cuts — especially if wages are rising and GOP candidates make the case the tax cuts deserve some credit for goosing economic growth. Then again, he said, “Trump’s long political shadow looms over everything.” A senior Republican aide agreed: “You need to look at the poll numbers through the prism: Anything associated with Trump is upside down.”

A new poll this week shows support for the tax overhaul has dropped down to the same levels as around the time of its passage late last year. The latest NBC-Wall Street Journal poll, for example, shows that just 27 percent of Americans think the law is a good idea, while 36 percent call it a bad idea — roughly the sentiment reflected in the same poll in December. In between, amid a wave of stories about companies sharing their windfalls with workers in the form of bonuses and other goodies, backing for the law crested in January at 30 percent. 

A Gallup poll this week shows a majority still disapprove of the law, 52 percent to 39 percent, though approval has improved 10 points since early December. 

Trump made that argument on Friday morning:

Other Republican strategists downplay worries about the lack of the overhaul's political resonance at this point.

“I actually think we’re in a pretty good position,” says GOP consultant Alex Conant. “It’s going to require a great deal of message discipline to keep talking about them — and not just framing what we’re for but what we’re against, specifically against the Democratic plan to raise taxes.” 

Democrats say there is compelling evidence the overhaul will add to what they expect to be historic House Republican losses in November.

Beyond the national polls, they point to the special election in southwestern Pennsylvania last month, where Republicans bailed on a tax-cut message when it failed to resonate; Democrat Conor Lamb prevailed in a district President Trump carried by 20 points. And in Iowa’s 1st District — which swung 17 points from backing Obama in 2012 to Trump in 2016 — the liberal coalition Not One Penny has charted a 21 percent drop among independents for incumbent GOP Rep. Rod Blum after spending $410,000 on ads there opposing the tax package. 

“A lot of Democrats want a core economic message. And the Trump tax has laid it out for us: Republicans gave a tax break to the wealthy Americans and rich corporations that fund their campaigns, and it comes at the expense of people who work for a living,” says Democratic operative Jesse Ferguson. He pointed to polling from Navigator Research, a new joint initiative by Democratic groups to hone their message, that found voters by a 6-point margin believe congressional Republicans passed the bill to benefit their donors rather than because they thought it would help the economy. 

House Republicans are worried enough that exiting Speaker Paul Ryan (R-Wis.) is gearing up to pass a second round of cuts this summer. The move, as Erica wrote Wednesday, is designed to “rev up the GOP base and improve the standing of Republicans at the polls.” 

Some Senate Republicans are arguing against the gambit, worried it would give vulnerable Democrats an opportunity to say they, too, supported tax cuts. And while Democrats are in much stronger shape to retake the House, tensions are high among Republicans in the upper chamber, too: “Senate Majority Leader Mitch McConnell is scrambling to reassert control over a Republican Party hamstrung by a razor-thin governing majority and riven by increasingly bloody primary fights,” The Post’s Michael Scherer, Sean Sullivan and Josh Dawsey write. “McConnell had to pull aside rogue senators over their occasional defiance twice in the last two days. He warned one — Bob Corker — in a private conversation that his comments risked hurting the party’s ability to hold its majority in November’s midterm elections.”

Republicans will get another live look at how issue is playing next Tuesday, when voters in Arizona's 8th district head to the polls in a special election to replace former GOP Rep. Trent Franks. Trump carried the district by 21 points, but polling there shows the race is competitive. Democratic candidate Hiral Tipirneni, a doctor new to politics, has argued Republicans will cut Social Security and Medicare to pay for the tax bill — an argument she hopes will resonate will older voters.

"If Republicans can use the bill to excite their own voters and persuade independent voters that the country is headed in the right direction under their leadership, they might avoid catastrophic losses," says Nathan Gonzales, editor of Inside Elections. "They might still lose, but it might not be a tsunami."

MARKET MOVERS

Tech drop leads stocks lower. AP's Alex Veiga: "Losses among technology and consumer products companies weighed on U.S. stocks Thursday, snapping a three-day winning streak for the market. Banks bucked the trend, rising along with bond yields. Energy companies also eked out a slight gain, despite a late-afternoon downturn in oil prices. The broad market slide came as investors pored over the latest corporate quarterly results ... The S&P 500 index fell 15.51 points, or 0.6 percent, to 2,693.13. The Dow Jones industrial average slid 83.18 points, or 0.3 percent, to 24,664.89. The drop knocked the blue chip average slightly into the red for the year."

WH sees labor market slack. Bloomberg's Rich Miller and Jeanna Smialek: "Many Federal Reserve policy makers believe the U.S. has achieved full employment. White House officials aren’t so sure. Kevin Hassett, chairman of... Trump’s Council of Economic Advisers, said joblessness below 4 percent may be equivalent to full employment now. That’s well shy of the 4.5 percent estimate of the Fed, based on the median projection of policy makers released in March, and compares with last month’s U.S. jobless rate of 4.1 percent. 'I’m not sure full employment is one number,' Hassett told a conference... 'I think it could be in the 3’s now.'... Fed Chairman Jerome Powell has been cautious about declaring that the U.S. has achieved full employment."

Federal Reserve officials and Wall Street are ramping up their warnings about an inversion of the Treasury curve. When long-term yields dip below shorter-term counterparts, it’s usually been a sign that a recession is nigh.
Bloomberg
An economic index that measures U.S. business trends continued to increase in March, pointing to robust economic growth throughout 2018.
WSJ
TRUMP TRACKER

TRADE FLY-AROUND:

GOP won't confront Trump on trade. The Post's Seung Min Kim: "Farm-state Republicans concerned about the damage the administration’s trade policies will do to their states headed to the White House last week and came away pleased — Trump told them he would reconsider his decision to abandon a Pacific rim trade deal that would benefit their farmers. It didn’t last long. Trump soon made clear through Twitter and his top aides that he had little interest in reengaging in the Trans Pacific Partnership trade pact despite what he told the lawmakers. The episode has left the Republican senators involved annoyed but resigned to the difficult reality that in Trump, they do not believe they have a reliable partner on a politically fraught issue ahead of the midterm elections."

Trump leaves Ex-Im in limbo. NYT's Alan Rappeport: "As trade tensions mount, an 84-year-old Washington institution could have been a powerful tool for... Trump. The institution, the Export-Import Bank, was created to help American companies compete overseas and bolster exports by providing cheap government-backed loans. But the institution, which once financed multibillion-dollar projects, has been effectively crippled by the Trump administration. The bank has been without a chairman since Mr. Trump took office and the last of the bank’s five board members quit in March... The effective shuttering of the bank has put American manufacturers like Boeing and General Electric at a global disadvantage, prompting a frenzied lobbying campaign by business groups worried that the White House is undermining its own trade goals."

Lighthizer plays hardball. Politico: "As top-level ministers gathered in Washington toward the end of this week, the Trump administration has already been thinking about how to get a new NAFTA agreement through both chambers of Congress. One strategy that has seemed to gain favor is to force a congressional approval on the new NAFTA by withdrawing from the existing pact even before the new one is ready. The thinking is that Congress will have to approve whatever terms are in the new deal quickly, lest the U.S. is left hanging without an agreement with two of its largest trading partners. U.S. Trade Representative Robert Lighthizer is said to have advocated for such an approach, according to current and former administration officials."

Mexican negotiator: NAFTA is 70-80 percent done. Washington Examiner's Sean Higgins: "The renegotiations for the North American Free Trade Agreement are '70-80 percent' complete and discussions on remaining issues could be completed in the next two to three weeks, Mexico's top economic official said Thursday. 'I would say that 70 or 80 percent is already in black and white, but the most complex issues are still pending,' Ildefonso Guajardo said, according to the Spanish-language newspaper Vanguardia. By 'black and white,' he meant that the details were in writing. Guajardo's optimistic assessment matches that of Trump administration officials."

Fed: Tariffs more likely to kill than create jobs. Bloomberg's Matthew Boesler: "Trump may hope his tariffs on imported steel and aluminum will create new jobs, or at least protect existing ones. Researchers at the Federal Reserve Bank of New York said the opposite outcome was more likely. 'The new tariffs are likely to lead to a net loss in U.S. employment, at least in the short to medium run,' Mary Amiti, Sebastian Heise, and Noah Kwicklis wrote in a blog post Thursday on the Fed bank’s website. 'Although it is difficult to say exactly how many jobs will be affected, given the history of protecting industries with import tariffs, we can conclude that the 25 percent steel tariff is likely to cost more jobs than it saves.'"

Lagarde: Trade tensions hit confidence. Bloomberg's Enda Curran and Andrew Mayeda: “Trade tensions between the U.S. and China risk eroding business and investor confidence, even as global growth enjoys its best upswing in years. That’s the message being conveyed to finance ministers and central bankers from around the world gathered in Washington for spring meetings of the International Monetary Fund… ‘What is extraordinarily meaningful is the questioning of the overall system under which operators have been operating in for decades,’ IMF Managing Director Christine Lagarde said Thursday at a press conference. ‘It’s the confidence that risks being eroded.’”

Mnuchin: Russian sanctions hurt. Bloomberg's Saleha Mohsin and Jennifer Epstein: "U.S. sanctions on Russian oligarchs that sent the ruble tumbling and roiled metals markets had the effect the Trump administration wanted, Treasury Secretary Steven Mnuchin said. Mnuchin, speaking in an interview broadcast Thursday on Fox Business, said that the sanctions against tycoons close to the Russian government had the 'necessary impact.' He didn’t rule out additional financial penalties, saying the administration “is not afraid to use these tools -- we will use these tools -- but we’re not going to broadcast to the world our exact thinking.”

Moody's: Not really. Reuters: "Rating agency Moody’s Investors Service said on Wednesday Russia’s strong public and external finances would shield its economy from the impact of the latest U.S. sanctions... The Russian banking system has enough earnings capacity for absorbing credit losses arising from exposures to sanctioned companies."

MELTDOWN WATCH:

Trump vents. The Post's Bob Costa, Josh Dawsey and Rosalind Helderman: "In recent days, the president has been regularly venting and speculating to aides about his legal status and the expected timeline for the Russia investigation to end, according to associates briefed on the discussions. Trump also loudly and repeatedly complained to several advisers earlier this week that former FBI director James B. Comey, former deputy FBI director Andrew McCabe and former Democratic presidential nominee Hillary Clinton, among others, should be charged with crimes for misdeeds alleged by Republicans, the associates said. Although White House officials said Thursday that Trump has not called Justice Department officials or taken any formal action, the persistent grousing has made some advisers anxious, according to two people close to the president."

Trump not a target, Rosenstein says. Bloomberg: "Deputy Attorney General Rod Rosenstein told... Trump last week that he isn’t a target of any part of Special Counsel Robert Mueller’s investigation or the probe into his longtime lawyer, Michael Cohen, according to several people familiar with the matter. Rosenstein, who brought up the investigations himself, offered the assurance during a meeting with Trump at the White House last Thursday, a development that helped tamp down the president’s desire to remove Rosenstein or Mueller... After the meeting, Trump told some of his closest advisers that it’s not the right time to remove either man since he’s not a target of the probes. One person said Trump doesn’t want to take any action that would drag out the investigation."

ALSO: 

The company run by the family of White House adviser Jared Kushner received a federal grand-jury subpoena for information related to paperwork the company filed in New York City concerning its rent-regulated tenants.
WSJ
MONEY ON THE HILL

Quarles ducks gun-control debate. American Banker's John Heltman: "Federal Reserve Vice Chairman for Supervision Randal Quarles on Thursday found himself in the middle of an issue that is not part of a bank regulator's typical purview: gun control. Testifying before lawmakers increasingly critical of large banks cutting ties with firearms-related businesses, Quarles struck a neutral tone. He said the central bank does not view banks’ decisions over whether or not to provide loans or services to the firearms industry as a matter of prudential or systemic risk."

THE REGULATORS

Wells hit with $1 billion fine. The Post's Renae Merle: "Federal regulators are preparing to fine megabank Wells Fargo about $1 billion for misbehavior in its auto and mortgage businesses, according to two people familiar with the negotiations. The settlement, which could be announced as soon as Friday, would be the most aggressive move by regulators during the Trump administration to punish a big bank. It also escalates problems at Wells Fargo, which has been under intense federal scrutiny since admitting in 2016 that it had opened millions of sham accounts that customers didn’t want.

"The regulators — the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency — have been investigating Wells Fargo for months after it acknowledged charging thousands of customers for auto insurance they didn’t need, driving some to default on their loans and lose their cars through repossession. Wells Fargo also admitted that it had charged some customers improper fees to lock in an interest rate for a mortgage. The combined $1 billion fine would be among the largest ever levied by either regulator."

Barclays CEO fined. FT: "UK regulators say they will fine Barclays chief executive Jes Staley after a probe into his efforts to uncover a whistleblower in 2016, but said he would not be banned over the affair. In the landmark decision, Barclays will avoid any sanctions by the Financial Conduct Authority and the Bank of England’s Prudential Regulation Authority for sloppy whistleblowing systems after the bank moved to tighten up processes. Mr Staley apologised last year for his “mistake” in ordering the bank’s security team to try to identify a whistleblower who had made allegations about a recently recruited colleague. The board gave Mr Staley a formal reprimand and promised to cut his pay by a “very significant” amount."
 

POCKET CHANGE

AT&T chief takes the stand. The Post's Brian Fung: “In his most detailed comments to date about how the AT&T-Time Warner merger came to be, AT&T chief executive Randall Stephenson said Thursday that he spent hours in his home office during summer 2016 poring over Time Warner's financial statements, analyst reports and other data in the first steps of what could become the biggest corporate acquisition of his career ... With the television and media industries changing rapidly around him, Stephenson said, he became convinced that only a large deal with a major content company — Time Warner — could put AT&T on the best track for the future ... Stephenson's testimony caps off AT&T's defense of its $85 billion deal to acquire Time Warner, as the government seeks to block the deal with antitrust arguments Stephenson on Thursday said were 'absurd' and 'defied logic.'"

Teachers union drops Wells over guns. Bloomberg’s Hannah Levitt: “Wells Fargo & Co.’s financial ties to gunmakers and the National Rifle Association have prompted the American Federation of Teachers to remove the bank from its list of recommended mortgage lenders. The 1.7-million-member national union said the move came after its attempts to meet with bank executives to discuss the matter went unanswered... The AFT had contacted the bank earlier, urging the firm to stop doing business with the NRA and makers of guns and ammunition. ‘We can only assume that, in light of your silence and the NRA attacks, you have decided that the NRA business is more valuable to you than students and their educators are,’ AFT President Randi Weingarten said in the letter to Wells Fargo Chief Executive Officer Tim Sloan.”

Puerto Rico board backs fiscal plan. Politico’s Colin Wilhelm: “Puerto Rico’s federal oversight board on Thursday approved a sweeping fiscal recovery plan calling for steep cuts in government spending and pensions over the strong objections of the U.S. territory’s government. The congressionally created panel approved the plan in a 6-1 vote. Several board members expressed concern that Puerto Rico's government would undermine the plan, prolonging the commonwealth's more than decade-long recession.”

Bitcoin’s break-even price. CNBC’s Evelyn Cheng: “If bitcoin can't recover $8,600 soon, bitcoin "miners" will likely find it unprofitable to keep creating the cryptocurrency, Morgan Stanley analysts said. Bitcoin traded slightly higher near $8,200 on Thursday, according to CoinDesk. It has struggled to recover in the last few months after tumbling from a record high above $19,000 in mid-December.”

Deutsche Bank's accidental $35 billion payment. Bloomberg News's William Canny: "A routine payment went awry at Deutsche Bank AG last month when Germany’s biggest lender inadvertently sent 28 billion euros ($35 billion) to an exchange as part of its daily dealings in derivatives, according to a person familiar with the matter. The errant transfer occurred about a week before Easter as Deutsche Bank was conducting a daily collateral adjustment, the person said. The sum, which far exceeded the amount it was due to post, landed in an account at Deutsche Boerse AG’s Eurex clearinghouse. The error, which took place in the final weeks of former Chief Executive Officer John Cryan’s tenure, was quickly spotted and no financial harm suffered. But the episode raises fresh questions about the bank’s risk and control processes, which Cryan had boasted of improving before his ouster."

The internet and mobile phones have increasingly connected far-flung communities to the global financial grid.
WSJ
Mayor Bill de Blasio said the statue known as “Fearless Girl” would be moved from its spot on Broadway; “Charging Bull” may soon follow.
NYT
DAYBOOK

Today

  • The American Bankruptcy Institute’s annual spring meeting continues.

Coming Up

  • The Peterson Institute for International Economics hosts an event on “Central Bank Independence Revisited” on April 23.
THE FUNNIES

From The Post's Tom Toles: 

BULL SESSION

Chris Christie's official portrait will cost taxpayers $85,000:

Sen. Tammy Duckworth (D-Ill.) casts historic Senate vote with her 10-day-old daughter in arms

"How loyal is Michael Cohen?," Stephen Colbert asks: