| | | | |  | | By Eleanor Mueller and Declan Harty | | | Editor’s note: Morning Money is a free version of POLITICO Pro Financial Services morning newsletter, which is delivered to our subscribers each morning at 5:15 a.m. The POLITICO Pro platform combines the news you need with tools you can use to take action on the day’s biggest stories. Act on the news with POLITICO Pro.
| | For years, Congress has blinked as the national debt balloons. Now, a long-shot effort to carve a common path forward could be gaining momentum. House Budget Chair Jodey Arrington (R-Texas) says he wants the House to pass a bill from Reps. Bill Huizenga (R-Mich.) and Scott Peters (D-Calif.) that would create a fiscal commission to study spending as part of looming appropriations legislation. Sen. Joe Manchin (D-W.Va.), who is sponsoring similar legislation alongside Sen. Mitt Romney (R-Utah), said Tuesday he “will fight like the dickens to keep it in” if that happens. “If you want to fight inflation, if you want to fight all the different things we’re having troubles with right now — even though Wall Street seems to be doing well — it’s going to be by reducing the debt of this nation,” Manchin told Eleanor. Senate Democrats “understand that, we’ll just see if they take it seriously — [and] if it comes from the House, it’ll be serious.” It will be a heavy lift. House Budget ranking member Rep. Brendan Boyle (D-Pa.) was not among the three Democrats who voted to advance the bill out of committee last week amid concerns that it could lead to cuts to Social Security and Medicare. And Senate Majority Leader Chuck Schumer has indicated a similar wariness to sign off on the commission. “The right wingers come up with a new idea every day,” Schumer told reporters last week when asked about the measure. Manchin said he’s fighting to win him over. “I hope, and I think, he understands the seriousness of what we’re dealing with right here,” Manchin said of his talks with Schumer. “You can’t survive, and provide the services this country needs, carrying that type of debt.” Similar efforts have been ill-fated — like the Obama-era Simpson-Bowles Commission, which deadended when its members failed to approve their own recommendations, and the subsequent Joint Select Committee on Deficit Reduction, which was unable to reach any agreement at all. A related bill from Sen. Mike Rounds (R-S.D.) never made it out of committee last session.
| | | | JOIN 1/31 FOR A TALK ON THE RACE TO SOLVE ALZHEIMER’S: Breakthrough drugs and treatments are giving new hope for slowing neurodegenerative diseases like Alzheimer’s disease and ALS. But if that progress slows, the societal and economic cost to the U.S. could be high. Join POLITICO, alongside lawmakers, official and experts, on Jan. 31 to discuss a path forward for better collaboration among health systems, industry and government. REGISTER HERE. | | | | | The upcoming election, meanwhile, could make any kind of cross-aisle compromise even harder to sell. “People are so afraid of Twitter,” Peters said last week. “It's easy for us to sit in our corner and say how awful the Republicans are.” But there are a handful of reasons this push may face better odds. Its members would need only a simple majority to advance their proposal — which “right there alone puts us way ahead of Simpson Bowles and others,” Arrington said. And unlike Rounds’ proposal, there’s not an explicit focus on changes to Social Security and Medicare — something that would set off even louder alarm bells for Democrats. The commission would also include private-sector experts, which could “give members of Congress some political cover,” said Romina Boccia, who studies budget policy at the libertarian Cato Institute. They can say, “‘These aren't the things that we necessarily would have thought of first, but these experts really convinced us that we need to make the following changes that might not be as politically popular as some other changes,’” Boccia said. IT’S WEDNESDAY — And everyone seems to be sick! Send cold remedies, immunity boosters and whatever else is keeping you on your feet this week to emueller@politico.com and dharty@politico.com. A big welcome back to our Zach Warmbrodt, who regains the Morning Money reins today after reporting from Davos last week (and celebrating his birthday Monday — don’t forget to wish him feliz cumpleaños if you haven’t yet!).
| | A message from Chime: Tired of overdraft fees? Learn how Chime is different.
Chime is expanding banking with no overdraft fees to everyday people. Cost is a barrier to many, which is why Chime never charges overdraft or monthly fees — and there are no minimum balance requirements for our checking and savings accounts. We reach customers traditional banks don't, can't or won't and are helping everyone unlock financial progress. Learn more. | | | | | The SEC will vote on final SPAC disclosure and liability rules at 9:15 a.m. … AEI holds a discussion on the Fed’s war against inflation with former CEA Chair Jason Furman, among others, at 1:15 p.m. The Trump trade 2.0 — Wall Street is bracing for the possibility that Donald Trump is heading back to the White House — with tariffs, chaos and more in tow. As Trump’s cruise toward the Republican nomination picks up steam following a commanding win over Nikki Haley in New Hampshire last night, the market has started to reckon with what the former president’s second go-around in Washington could look like for both policy and portfolios, our Declan Harty reports. “[The] US 2024 election is firmly on investors’ radars already,” Goldman Sachs’s Dominic Wilson and Vickie Chang wrote in a note, adding that New Hampshire “will likely continue that focus.” Investors have yet to start shaking up their trading strategies more than nine months out from November, market analysts say. Election cycles are long, and plenty can still happen before then. For comparison’s sake, at this point in the hellscape that was 2020, there were only two recorded cases of COVID-19 in the U.S., Pete Buttigieg had yet to win Iowa and Trump had only been impeached once. But RSM US Chief Economist Joe Brusuelas said that in another Trump administration “one can’t help but think about a 10% tariff on all imports,” resulting in higher prices. Steve Massocca, a managing director at Wedbush Securities, expects that there would be a rise in energy stocks caused by friendlier fossil fuel policies. And Interactive Brokers Chief Strategist Steve Sosnick is bracing for a wave of volatility to come with another Trump term — and even beforehand. “You’re looking at the potential for extraordinary volatility throughout this race,” Sosnick told Declan, calling Trump someone “who almost personifies volatility.” “He has shown us that he is not afraid to embrace chaotic situations, and the market views chaotic situations through the lens of volatility.” Long runway for Brown crypto bill — Senate Banking Chair Sherrod Brown told reporters Tuesday that “there’s still a battle here” as he looks to legislate on illicit activity in crypto, Eleanor reports. The Ohio Democrat said last week he was in talks on a bill that would target the use of digital assets for money laundering. As part of that, “we’ve got to sit down and work through a lot of these different currents,” Brown said. “Some people think that crypto’s way more legitimate than it’s been and want to overlook the role it's played in fentanyl, the role it’s played in terrorism.” Sanctions-related proposals are also on the table, Brown said, though he underscored that “it’s not been decided yet.” Sen. Jack Reed (D-R.I.) said in October that Brown was looking at combining relevant bills from Reed and Sen. Elizabeth Warren (D-Mass.), among others, in the wake of the Hamas attacks on Israel.
| | | | A message from Chime:   | | | | | Pre-positioning, memorize it — In the world of central banking, “a quiet revolution” to end bank runs is afoot, POLITICO EU’s Izabella Kaminska reports. Known as pre-positioning, the concept would require banks to put up collateral with a central bank before they could get cash out of it — not all that different, Kaminska reports, than “common folk who have to resort to high street loan sharks.” Union ranks— U.S. union membership dipped in 2023 to a new record low of 10 percent, despite continued support for workers, our Grace Yarrow reports. Still, the latest tally is only down from 10.1 percent last year, Yarrow adds. Why leak Trump’s taxes — Our Brian Faler reports: “A former IRS consultant leaked former President Donald Trump’s and other wealthy people’s tax returns to the news media because he had a “deep, moral belief” the public had a right to know how much they paid in taxes, his lawyers said. In a court filing, representatives for Charles Littlejohn, 38, said he was outraged by Trump’s refusal to release his tax returns despite a decades-old tradition of presidents volunteering their filings.”
| | A message from Chime: Chime is expanding banking with no overdraft fees to everyday people. Cost is a barrier to many, which is why Chime never charges overdraft or monthly fees — and there are no minimum balance requirements for our checking and savings accounts. We reach customers traditional banks don't, can't or won't and are helping everyone unlock financial progress. Learn more. | | | | | Trump SPAC on the rise … again? — While the Trump trade may still be developing, there are avenues to tap into the former president’s rising stock in the 2024 election including Digital World Acquisition Corp. The company vying to merge with Trump Media & Technology Group has been on a wild ride since Iowa that options traders are expecting will only continue, Bloomberg reports.
| | Crypto has a comms problem — FINRA, the brokerage industry watchdog, recently conducted a sweep of more than 500 crypto-related communications made or distributed by member firms. The results were not promising: About 70 percent of those reviewed contained potential violations, FINRA said in a report Tuesday. Grayscale’s woes — Just two weeks after the SEC finally signed off on Grayscale Investments’ bid to convert its massive bitcoin trust GBTC into an exchange-traded fund, the crypto money manager is suffering from some hefty outflows, The Wall Street Journal reports. One possible reason: FTX, which cashed out of a large chunk of its 22 million units in the fund, the paper added. “We took God at his word” — Colorado Securities Commissioner Tung Chan has filed charges against a pastor and his wife for allegedly running a crypto scheme that netted them $1.3 million in proceeds, CoinDesk reports. The pastor’s response: God told them to do it. "The Lord told us to walk away from our parking company. … He took us into this cryptocurrency … well, that cryptocurrency turned out to be a scam. … And I said Lord ... you told me to do this," the pastor said in a video response, according to the report.
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