Keeping its cool – POLITICO
WHAT, ME WORRY? America’s trade dispute with China is only growing. But if you’re thinking that Wall Street seems to be basically shrugging off what looks like a burgeoning trade war, at least for now – you’re not alone.
“I wouldn’t say that Wall Street doesn’t care, I think that’s a bit strong,” Richard Bernstein, the former chief investment strategist at Merrill Lynch, told Morning Money’s Ben White on the latest POLITICO Money podcast. “I would say that for where they are right now, the trade wars are taking a back seat to the fundamentals of the U.S. economy. The U.S. is really hitting on all eight cylinders right now, and I think that’s the more important story for the stock market.” That said: Wall Street could get very worried very quickly if the trade war keeps getting hotter, Bernstein added.
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CERTAINLY GETTING WARMER: Tuesday marked Washington’s turn in the mounting trade dispute with Beijing, as the Trump administration singled out another $200 billion in Chinese goods for a 10 percent tariff.
“The new tariff list broadens the types of goods caught up in the trade war by targeting items like seafood, minerals, chemicals, and personal care items, such as shampoo and soap. It also includes a number of consumer products such as handbags, luggage, gloves and paper,” Pro Trade’s Doug Palmer and Adam Behsudi report. Both GOP lawmakers and business and retail groups expressed concern about yet another round of tariffs, even as most said they basically support President Donald Trump’s efforts to combat China’s stealing of intellectual property.
THANKS FOR JOINING US this Tuesday, where your author does find himself wishing that his recent leave coincided with Jay Cutler’s reality television debut. Bear down, everybody.
Weehawken. Dawn. Guns. Drawn. Today marks 214 years since the most famous duel in American history, when then-Vice President Aaron Burr killed former Treasury Secretary Alexander Hamilton just across the river from New York.
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THE DAY IN MARKUPS: The House Ways and Means Committee marks up almost a dozen bills this afternoon, including one measure, H.R. 4616 (115), that would impose a moratorium on Obamacare’s employer mandate and a further delay in the Affordable Care Act’s tax on expensive employer-provided health insurance. That measure would cost some $39.5 billion over a decade, the Joint Committee on Taxation said Tuesday, with most of that sum coming from the employer mandate pause. Among the other bills on the docket: A measure, H.R. 6306 (115), to increase the contribution limits to health savings accounts, slated to reduce revenues by more than $15 billion over a decade, and $10.9 billion legislation, H.R. 6311 (115), that would allow Obamacare’s premium tax credit to be used to purchase insurance outside of Affordable Care Act exchanges.
The day in 2.0 prep: Ways and Means Chairman Kevin Brady (R-Texas) told reporters on Tuesday that Republicans were open to indexing taxes on capital gains to inflation in their upcoming follow-up to last year’s Tax Cuts and Jobs Act, H.R. 1 (115), Pro Tax’s Aaron Lorenzo reports. “we’re continuing to consider ways that we can unlock more of that and encourage more of the investment in the communities and the economy,” Brady said. There had been some hope on the right that the Treasury Department could index capital gains on its own through regulation, but Steven Mnuchin, the department’s secretary, has pooh-poohed that idea.
CAN YOU SAY “IRS FUNDING!” Both the full House and Senate are now slated to vote on their 2019 Financial Services spending bills over the next couple weeks, our Sarah Ferris and Jennifer Scholtes report. The House vote is expected next week, while the Senate will take up its financial services measure with the Interior-Environment bill as part of a “minibus” during the week of July 23. As it stands, the House would give a touch more – $11.6 billion, compared to the Senate’s $11.3 billion – to the IRS next year as it continues to work toward implementing the Tax Cuts and Jobs Act and modernizing its 20th-century technology systems.
Side note: Looking for any clues on when the Senate Finance Committee might act on Chuck Rettig’s nomination to be IRS commissioner, after Rettig got his hearing late last month? Join the club. “We’ll get him out of here,” was all Finance Chairman Orrin Hatch (R-Utah) would say on Tuesday.
NO THANKS: Almost 20 conservative organizations, including Americans for Tax Reform, FreedomWorks and the Heartland Institute, urged House Speaker Paul Ryan (R-Wis.) and Majority Leader Kevin McCarthy (R-Calif.) to bring up a resolution stating that a carbon tax would be “detrimental” to the U.S. economy. “Despite recent attempts to market several carbon tax proposals as ‘conservative,’ it is also important to note the striking similarities between those proposals and carbon tax legislation being pushed by liberal members of Congress,” the groups wrote. The House’s No. 3 Republican, Majority Whip Steve Scalise of Louisiana, is the main sponsor of the anti-carbon-tax resolution.
VIVA HAVANA: The Cuban government will once more allow privately owned restaurants and bed and breakfasts starting in December, The Associated Press reports. The end of the 16-month freeze will be paired with new measures meant to block tax evasion and too much wealth accumulating at the top end. Havana’s détente with the U.S. in 2015 fueled a new Cuban upper middle-class, but one “whose businesses often depended on small-scale bribery and the purchase of goods stolen from state-run enterprises.” That, in turn, prompted blowback from the Cuban working class, given that state salaries still average around $30 a month. “Under the measures announced Tuesday, Cubans will no longer be able to run more than a single business and entrepreneurs will be required to conduct all transactions through accounts in state-run banks, officials told state media. High-earning businesses will pay new taxes and entrepreneurs who put enterprises in the names of friends or relatives face permanent cancellation of business permits.”