You can probably scratch a revamped North American free trade pact off the congressional menu for this year.
AFL-CIO president Richard Trumka just all but doomed the near-term prospects for President Trump’s top legislative priority, telling my colleague Erica Werner it would be a “colossal mistake” for House Democrats to bring the measure up for a vote before Thanksgiving.
Barring a dramatic reversal, the labor leader’s declaration snuffs out the hope that House Speaker Nancy Pelosi (D-Calif.) will find the support she needs from her own caucus to forge ahead with the last hope for a major bipartisan accomplishment amid the impeachment firestorm.
“If there was a vote before Thanksgiving, the agreement would be defeated,” Trumka said.
The powerful labor leader pointed to what he framed as inadequate enforcement mechanisms for new Mexican labor standards part of the deal, officially the United States-Mexico-Canada Agreement (USMCA). “If they can’t enforce their own laws, we have a real problem," he told Erica. “No agreement will be able to work.”
Closer to home, striking General Motors workers are also complicating the push to earn congressional approval for the pact. Strikers, organized by the United Auto Workers, are demanding GM guarantee production in the United States instead of Mexico. “I can’t see the House Democrats bringing the USMCA to a vote while the UAW is out on the picket lines,” says Dan Ujczo, an international trade attorney with Dickinson Wright. “The optics of that are horrible.”
Against that backdrop, Trumka’s comments brought “any positive momentum toward reaching a deal to a screeching halt,” Ujczo says.
And if negotiators on either end of Pennsylvania Avenue can’t come to an agreement before Thanksgiving, “we’ll be in a bump-and-blame scenario: Bumping the issue into the lame duck in 2020, with Pelosi blaming the White House and the White House blaming Pelosi, while they both raise a lot of money off of it.”
And while U.S. Trade Representative Robert E. Lighthizer has continued hustling behind the scenes to allay Democratic concerns, Trump isn’t waiting to start playing the blame game.
His critiques of Pelosi and company raise the question where he’d prefer blasting Democrats for failing to legislate to securing a big bipartisan win:
Nancy Pelosi just said that she is interested in lowering prescription drug prices & working on the desperately needed USMCA. She is incapable of working on either. It is just camouflage for trying to win an election through impeachment. The Do Nothing Democrats are stuck in mud!— Donald J. Trump (@realDonaldTrump) October 2, 2019
The Do Nothing Democrats should be focused on building up our Country, not wasting everyone’s time and energy on BULLSHIT, which is what they have been doing ever since I got overwhelmingly elected in 2016, 223-306. Get a better candidate this time, you’ll need it!— Donald J. Trump (@realDonaldTrump) October 2, 2019
The Do Nothing Democrats don’t have time to get it done! https://t.co/2cwyMtT3Gu— Donald J. Trump (@realDonaldTrump) October 4, 2019
The Do Nothing Democrats are Con Artists, only looking to hurt the Republican Party and President. Their total focus is 2020, nothing more, and nothing less. The good news is that WE WILL WIN!!!!— Donald J. Trump (@realDonaldTrump) October 9, 2019
Republican congressional leaders have echoed the argument in recent op-eds in the Wall Street Journal and USA Today. Meanwhile, House Ways and Means Chairman Richard Neal (D-Mass.) — a key investigator in the impeachment inquiry — led a delegation of Democrats to Mexico this week to meet with President Andrés Manuel López Obrador and other officials. Lighthizer joined them.
But impeachment is blotting out everything else domestically. Vice President Mike Pence, in Iowa to promote the trade pact, found himself swamped by questions about his involvement in pressuring Ukrainian President Volodymyr Zelenskiy to investigate his predecessor Joe Biden.
"I came to Iowa today to turn up the heat," Pence said in a speech, according to the Des Moines Register. "I came to Iowa today to say it’s time for the Democrats in Congress to do their job, put politics aside and pass the USMCA this year.”
Later, facing questions from the press about the Ukraine scandal, Trump’s No. 2 insisted he “never discussed the issue of the Bidens with President Zelenskiy.”
— Stocks jump on trade optimism. The Post's Tom Heath: "Stock markets climbed Wednesday amid new optimism that high-level trade talks set to resume this week might usher in a breakthrough in the year-long U.S.-China conflict. The Dow Jones industrial average rose 182 points, or 0.7 percent, after Bloomberg News reported that a Chinese official 'with direct knowledge of the talks'' said that Beijing was open to a partial deal to limit the economic damage that tit-for-tat tariffs have wrought. The Standard & Poor’s 500 index rose 0.9 percent while the tech-laden Nasdaq composite rose 1 percent."
— Trade war worries Fed officials. WSJ's Nick Timiraos: "Federal Reserve officials grew more worried when they cut interest rates last month that slowing global growth, exacerbated by the U.S.-China trade war, could sap domestic hiring and economic activity. Since last month’s Fed meeting, surveys and other economic data have hinted that weakness in the hard-hit manufacturing might be spreading into other parts of the U.S. economy, such as the services sector. Officials in recent days haven’t dispelled market expectations that they would cut interest rates when they meet later this month, for their third reduction this year...
"Officials last month flagged the potential for reductions in business investment to chill hiring, which would weaken consumer spending—the primary engine of U.S. economic growth. Some also pointed to models that in recent months indicated a rising likelihood of recession over the medium term."
— Decreasing job openings is troubling sign: “U.S. job openings fell to a 1-1/2-year low in August and hiring declined, suggesting employment growth was slowing largely because of ebbing demand for labor as the economy loses momentum,” Reuters’s Lucia Mutikani reports.
“Despite the third straight monthly drop in vacancies reported by the Labor Department ... job openings are still plenty enough to ease financial market fears of a looming recession. Job openings are being closely watched for signs of whether an erosion in business confidence, which has weighed on capital investment, is spilling over to hiring.”
From The Post's Heather Long:
Just In: Job openings sink to lowest level since March 2018.— Heather Long (@byHeatherLong) October 9, 2019
This is a clear sign companies are starting to pull back on hiring as the trade war global slowdown take hold.
There were 291,000 fewer job openings in August 2019 vs. August 2018. #jobs #JOLTS pic.twitter.com/dcSC7PtVHI
— U.S.-China weighing possible deal: "The White House is looking at rolling out a previously agreed currency pact with China as part of an early harvest deal that could also see a tariff increase next week suspended, according to people familiar with the discussions," Bloomberg's Jenny Leonard reports.
"The currency accord, which the U.S. said had been agreed to earlier this year before trade talks broke down, would be part of what the White House considers to be a first-phase agreement with Beijing. It would be followed by more negotiations on core issues like intellectual property and forced technology transfers, the people said. The internal deliberations come as a team of Chinese negotiators, led by Vice Premier Liu He, arrived in Washington to resume trade talks with [Lighthizer] and Treasury Secretary Steven Mnuchin starting [today]. It’s the first face-to-face talks between senior officials since July."
And yet the U.S. is considering a crackdown on Chinese contraband: "The Trump administration is weighing options to crack down on shipments of contraband goods from China, adding a new point of friction with Beijing on the eve of a pivotal round of trade talks," the Financial Times's James Politi and Tom Mitchell report.
"The White House has been considering an executive order that would increase inspections on parcels from China to detect any illegal contents, according to people familiar with the matter. Administration officials have consulted with big logistics companies as it refines the plan. 'China sends the US close to 1m small air parcels a day, and a disturbingly high per cent appear to contain contraband ranging from counterfeit goods to deadly fentanyl and other opioids,'" Peter Navarro, the White House trade and manufacturing policy adviser, told FT.
Goldman Sachs: Expect tariffs to hit anyway. Per a new note from the bank's economic team: "Prior delays in scheduled tariff increases have proven temporary, and in most cases these tariff hikes have ultimately taken effect. We continue to expect these tariffs to ultimately take effect, even though some delays seem likely."
From Wendy Cutler, who negotiated the Trans-Pacific Partnership during the Obama administration:
On eve of China trade talks, I welcome both sides making sufficient progress to forestall future tariff hikes and even some rollbacks. Some call this a partial deal -- but i call it announcements of tangible progress that gives momentum to the overall talks.— Wendy Cutler (@wendyscutler) October 10, 2019
The NBA isn’t apologizing: “China usually gets what it wants from companies that come here and play by its rules. But what Beijing wants in its standoff with the NBA is the one concession the league has been unwilling to make: an apology,” the WSJ’s Eva Dou, James T. Areddy and Ben Cohen report.
“Many a company has apologized to China after 'hurting the feelings of the Chinese people' with hardly any notice back home. But this confrontation is different. And the result is that China’s traditional apology ritual is being mangled. That’s partly because the NBA itself has an unusual amount of leverage, and it’s beaming Beijing’s muscular tactics into the living rooms of Americans who otherwise don’t pay much attention to Asian geopolitics."
- Why things back home have been harder: “The league initially struggled to respond after China lashed out against a deleted tweet by Houston Rockets general manager Daryl Morey in support of Hong Kong protesters. But its first attempt to address the situation backfired in both the U.S. and China. The NBA was berated at home for prostrating itself before Beijing even though the statement fell well short of the traditional standards for repentance here.”
- Key graf: “This ritual apology is so entrenched for those setting off China’s wrath that Geng Shuang, a spokesman for its Foreign Ministry, merely said in a regular news briefing Tuesday that the NBA ‘knows clearly what to say and what to do.’”
Trump declines to criticize China over the NBA spat. The Post's David Nakamura: "Speaking to reporters at the White House, Trump said the two sides 'have to work out their own situation. The NBA knows what they’re doing.' At the same time, Trump accused NBA coaches Steve Kerr and Gregg Popovich, both of whom have criticized him in the past, of 'pandering to China' for failing to speak out forcefully on the matter in their own right."
— Stephen Moore says Trump knew 5 percent GDP growth wasn’t possible: Trump "is an ‘exaggerator’ who knew his policies wouldn’t generate the 5 percent growth he had promised while campaigning, according to Stephen Moore, who served as a campaign advisor to Trump and was a prospective Fed nominee,” CNBC’s Jeff Cox reports.
“In an interview with Mehdi Hasan, columnist at the Intercept, Moore stopped just short of calling the president a liar, but did say Trump hurts himself with falsehoods.”
— Unprecedented blackouts in Northern California: “Millions of Californians could spend days without power as the state's largest utility continues shutting off electricity in a desperate attempt to avoid wildfires sparked by windblown power lines,” the Los Angeles Times’s Hannah Fry, Patrick McGreevy, Taryn Luna, Maria, L. La Ganga report.
“The PG&E blackouts will ultimately affect 34 counties in Central and Northern California, more than half of the counties in the state. Overall, power to about 800,000 customers is expected to be shut off, leaving more than 2 million people in the dark, as potentially hazardous winds continue to strengthen throughout the day.”
— American delays 737 Max’s return: “American Airlines Group Inc. said it expects Boeing Co.’s 737 Max will remain out of service until January, the latest example of how the grounded plane continues to create additional costs and logistical burdens for carriers and passengers,” the WSJ’s Doug Cameron and Alison Sider report.
“The global fleet of Max jets was projected to be near 1,000 by the end of this year, based on Boeing’s production plans, before it was grounded in March following two fatal crashes. Now carriers that fly the Max are paying millions of dollars to maintain grounded planes and adjust their operations as the suspension continues. Analysts estimate some three million passengers will have experienced some disruption to their travels if the fleet remains grounded through year’s end.”
— Halliburton cutting 650 jobs: “Halliburton said it is cutting another 650 U.S. oilfield services jobs as U.S. and gas producers have slashed spending amid weak prices and investor demands for higher returns,” Reuters’s Liz Hampton reports.
“The latest job cuts, on top of an 8% reduction earlier this year, affect workers across Colorado, Wyoming, New Mexico and North Dakota, said spokeswoman Emily Mir. Employees affected by the change will be offered a chance to relocate to other regions, she said.”
— Purdue settlement hinges on DOJ’s approval: “OxyContin maker Purdue Pharma LP’s plan to turn over its operations to creditors and see its owners, the Sacklers, exit the opioid business is contingent on first resolving U.S. Justice Department probes, court filings show,” the WSJ’s Sara Randazzo reports.
“The disclosure emerged … in a proposed term sheet Purdue filed in U.S. Bankruptcy Court in New York that publicly lays out for the first time details of the company’s plan to resolve its sprawling opioid liabilities. Purdue is in bankruptcy court in the face of more than 2,600 lawsuits brought by states and local municipalities accusing the drugmaker of helping to fuel the opioid crisis by aggressively marketing opioid painkillers.”
— J&J shares fall amid $8 billion verdict: A jury award that hit Johnson & Johnson with $8 billion in punitive damages for a case involving its anti-psychotic drug Risperdal highlights the risks of the drugmaker’s all-or-nothing legal strategy, several legal experts told Reuters,” Carl O'Donnell and Tom Hals report.
“The jury in a Philadelphia court awarded the $8 billion to a man who previously won $680,000 over his claims that it failed to warn that young men using Risperdal could grow breasts.”
MONEY ON THE HILL
— Zuckerberg is coming back to the Hill: “Facebook chief executive Mark Zuckerberg has agreed to testify before Congress on the social media giant’s plans to launch the Libra cryptocurrency, following pressure from lawmakers,” my colleague Marie C. Baca reports.
“The House Financial Services Committee is expected to grill Zuckerberg with questions on Facebook’s impact on both financial services and housing sectors at the Oct. 23 hearing. Committee Chairwoman Maxine Waters (D-Calif.) and other lawmakers have previously expressed concerns about Libra and its potential to mask fraud, abuse and money laundering.”
— Warren to forgo some big-money events if nominated. NYT's Shane Goldmacher: "One of the centerpieces of Ms. Warren’s anti-corruption message has been her pledge to forgo traditional big-money fund-raisers, which advisers believe has helped fuel her rise... But in a reversal, she told CBS News in an interview posted late Tuesday evening that she would extend the pledge through the general election if she were to win the Democratic nomination...
"Her aides confirmed the decision on Wednesday but layered on some caveats: While she would forgo fund-raisers for her campaign, she would headline open press events for the Democratic National Committee, which has traditionally served as a virtual extension of the nominee."
— Corporate debt-to-GDP hits a record high, per this Bank of America chart, highlighted by CNBC’s Carl Quintanilla:
The pileup of risky corporate debt remains a major concern for economists, who fear a spike in defaults could dangerously exacerbate an economic downturn. The issue will be the subject of a briefing for House Democrats this afternoon by Gerald Cohen, a former Treasury deputy assistant secretary now with Haver Analytics. Cohen tells me his firm’s forecast finds economists most worried about the trade war triggering a recession — but corporate debt defaults could make one worse. “It’s their greatest domestic concern. When we go into recession, this will be an accelerant,” he says.
For a look at the Trump deregulatory push behind the expansion of the risky lending, see this April story from The Post's Damian Paletta.
- Delta Airlines is among the notable companies reporting its earnings, per Kiplinger.
- The American Enterprise Institute hosts an event called “Monetary policy in the 21st century: An Allan Meltzer perspective."
- Yahoo Finance hosts its “All Markets Summit” in New York, featuring Blackstone CEO Stephen Schwarzman, Nasdaq CEO Adena Friedman, Merck CEO Kenneth C. Frazier, Barclays CEO Jes Staley, Verizon CEO Hans Vestberg, CFTC chairman Heath Tarbert and Minnesota Fed President Neel Kashkari.
- Bloomberg hosts an event on the future of corporate governance.
From The Post's Tom Toles:
— GO NATS. Non-baseball fans in Washington might notice colleagues are a little bleary-eyed this morning. That's because the hometeam staged a dramatic, come-from-behind victory over the Dodgers — capped by a Howie Kendrick grand slam in the top of the 10th inning — to secure the franchise's first-ever berth in the National League Championship Series. The game ended early this morning. Some highlights:
From Mark Zaid, lawyer for the whistleblowers in the Ukraine matter: