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First look: Tallying Trump’s debt — Treasury Secretary Steven Mnuchin on Sunday said he thought the U.S. debt was “very manageable” before Covid hit and that economic growth was bringing down deficits. According to a new paper out this morning from the Committee for a Responsible Federal Budget, that’s not accurate.
From the paper: “During the 2016 campaign, U.S. Budget Watch estimated that … Trump’s proposed agenda would add $4.6 trillion to budget deficits between 2017 and 2026, excluding interest. Between taking office and the start of the COVID crisis, we estimate the President’s actual actions have increased deficits by $3.9 trillion.
“Of the $3.9 trillion in higher deficits, $2.3 trillion is from reducing taxes, $950 billion from increasing defense and veterans spending, and $700 billion from increasing in non-defense discretionary spending … We estimate that taken together, these $3.9 trillion of tax cuts and spending will lead to about a 15 percent of GDP increase in debt by 2026.” Full paper.
Stocks keep tanking — Wall Street seems to have finally clued in that there is no new stimulus coming anytime soon, Covid-19 is still hammering the U.S. and stock prices — especially Big Tech — have gotten way ahead of themselves. Not clear where this long anticipated decline will bottom out. But it’s certainly not fodder for Trump’s Twitter feed.
And Congress remains completely stuck in partisan maneuvering over another stimulus package rather than moving close to actually providing fresh cash to a still struggling economy. Via our Marianne LeVine and John Bresnahan: “Senate Republicans introduced their new coronavirus relief bill Tuesday and are eyeing a vote later this week …
“While Republicans acknowledge that their proposal likely will not clear the 60-vote threshold to move forward in the Senate, they view the effort as a way to pressure Democrats into caving on their demands.”
FIRST LOOK II: HOW COMPANIES CAN BOOST TURNOUT — The Center for American Progress and Business for America have a new paper out this morning about how U.S. corporations are getting more active in encouraging voting and what else they could do.
TRUMP’S ECON APPROVAL RATING FALLS — Via Investors Business Daily: “Americans grew more pessimistic about the U.S. economy over the past month as support for federal economic policies dived to the lowest level since … Trump was elected, the new IBD/TIPP Poll finds.
“The failure of the White House and Congress to approve new fiscal stimulus, resulting in a big hit to unemployment benefits, likely explains faltering confidence in the Trump economy. … 37% of adults give Trump positive marks on handling the economy, while 45% disapprove. That compares to a 43%-40% positive rating a month ago. The IBD/TIPP poll showed Joe Biden leading Trump, 49%-41%.”
GOP BILL WOULD LIMIT FED — Our Victoria Guida: “Draft legislation from Senate GOP leadership would take away the Federal Reserve’s ability to make new emergency loans with coronavirus relief funds after January, a sharp shift from when Congress handed the central bank a key role in driving the economic rescue.
“The legislation, which is unlikely to pass either chamber in its current form, would also reallocate some of the $500 billion previously set aside for emergency lending by the Treasury Department and the Fed.”
REGULATORS WANT MORE BANK DIVERSITY DATA — Our Zachary Warmbrodt: “Bank and credit union regulators told lawmakers today they’re exploring ways to obtain more information from lenders on their employment of minorities and women, which the firms have struggled to improve … Some of the agencies raised concerns about diversity self-assessments that lenders voluntarily provide to regulators”
FEDS CRACK DOWN ON SMALL BUSINESS LOAN FRAUD — Our Kellie Mejdrich: “Federal prosecutors are ramping up charges against individuals who they say fraudulently obtained government-backed small business loans that were intended to soften the economic blow of the coronavirus pandemic.
“The Justice Department has brought more than 40 cases involving false applications for more than $170 million from two federal programs, saying the money was used to finance such extravagances as luxury cars, Vegas gambling trips and nights on the town at strip clubs. And the Small Business Administration’s inspector general’s office says it has ‘initiated hundreds of cases involving potential fraud’ in the two programs.”
TECH’S SUDDEN SELL-OFF CONTINUES — AP’s Stan Choe and Alex Veiga: “Big technology stocks tumbled again on Tuesday, continuing the Icarus-like flight path for companies that just a week ago were the high-flyers carrying Wall Street to record heights. The S&P 500 fell 95.12, or 2.8 percent, to 3,331.84 and clinched its first three-day losing streak in nearly three months.
“Big names that were the main reasons for the market’s rocket ride back from its pandemic-caused losses were among the heaviest weights. Apple sank 6.7 percent, Microsoft pulled 5.4 percent lower and tech stocks across the index were down 4.6 percent.”
WHY TESLA WAS LEFT OUT OF THE S&P 500 — WSJ’s Gunjan Banerji and Michael Wursthorn: “Tesla Inc. was passed over for inclusion in the S&P 500 index, a move th at put a halt to the parabolic run in the electric-car maker’s shares.
“S&P Dow Jones Indices, which determines the makeup of the index, said Friday afternoon that online marketplace Etsy Inc., technology firm Teradyne Inc. and pharmaceutical company Catalent Inc. would be added in its quarterly rebalancing. Tesla — whose shares have catapulted to new highs, partly in anticipation of joining the S&P 500 — was noticeably absent.”
JPMORGAN INVESTIGATING EMPLOYEES OVER ALLEGED MISUSE OF PPP FUNDS — Reuters: “JPMorgan Chase & Co is investigating employees who may have been involved in the misuse of federal funds meant to help small businesses and other customers hurt by Covid-19 shutdowns, according to an internal memo seen by Reuters. The bank said it had found cases of customers ‘misusing Paycheck Protection Program loans, unemployment benefits and other government programs,’ according to the memo, which was verified by a bank spokeswoman.”
FED ENABLED A RECORD EXPANSION AND TRUMP IS TAKING CREDIT — NYT’s Jeanna Smialek and Jim Tankersley: “Trump is using the prepandemic economy to make a case for his re-election, highlighting time and again that unemployment rates fell to record low levels for Black and Hispanic workers in 2019, and that wages were climbing steadily under his watch.
“He is also seeking to convince voters that he is rapidly returning America to that prosperous place following waves of pandemic-wrought job loss — fostering what he labeled a ‘Super V’ rebound on Sunday — and that Joseph R. Biden Jr. would “destroy” the economy if he wins in November.”
MAIN STREET LOANS GOING MOSTLY TO $1M-PLUS BORROWERS — Bloomberg’s Catarina Saraiva: “The Federal Reserve’s Main Street Lending Program, aimed at supporting small to mid-size businesses through the coronavirus pandemic, has mostly made loans in the millions of dollars, according data disclosed by the central bank Tuesday. Of the 118 loans bought by the Fed’s program through the end of August, only 11 were under $1 million. Only one, at $265,000 was close to the $250,000 minimum loan size.”
MORTGAGE REFINANCINGS BOOM — WSJ’s Orla McCaffrey: “The mortgage market recorded its best quarter in years this spring, a reflection of how the housing market is booming in 2020 even as much of the economy stumbles. Lenders issued $1.1 trillion in home loans between April and June, according to mortgage-data firm Black Knight Inc. That was the biggest quarter in the company’s records, which date to 2000. Lenders extended roughly $2.5 trillion in home loans in all of 2019. Refinancings, up more than 200 percent from a year ago, drove the increase.”
BEZOS TOPS FORBES’ RICHEST LIST, WHILE TRUMP DROPS LOWER — Reuters’ Sheila Dang and Catherine Koppel: “Amazon Chief Executive Jeff Bezos topped Forbes’ list of richest Americans for the third year in a row, while U.S. President Donald Trump’s ranking dropped as the coronavirus pandemic slammed his office buildings, hotels and resorts, the magazine said Tuesday.
“The aggregate wealth of the Forbes 400 list rose to a record $3.2 trillion, as the richest Americans continued to do well even though the pandemic has devastated the economy, which is short about 11 million jobs compared to where it was in February.”
With help from the indefatigable Daniel Lippman … Catherine Edmonson started on Monday as an associate at Teneo. She most recently was chief of staff for Rep. Henry Cuellar (D-Texas).
ENGAGED — Doug Michelman, president of Sprint’s 1 Million Project Foundation and a Visa and FleishmanHillard alum, proposed to Nina Dobbs. The couple met 3 years ago at a Galactic concert, and he proposed at The Point on Saranac Lake in the Adirondacks.
WEEKEND WEDDING — CJ Anderson, senior associate at BNY Mellon’s real estate division, married Madeleine O’Connor, communications associate at the Community Preservation Corporation. The couple married with 7 members of their immediate families present on Goose Rocks Beach in Kennebunkport, Maine, and met through mutual friends at GWU. Their first date was walking his (late) family dog.
Oliver Schwab is now EVP of government affairs at private equity firm Virtua Partners. He is the former chief of staff to Rep. David Schweikert (R-Ariz.).