Monday, July 29, 2024

Meet Harris’s economic brain trust

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POLITICO Morning Money

By Sam Sutton

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QUICK FIX

Now that they’ve been unburdened by what has been, Vice President Kamala Harris’s economic policy allies are working on a message to address what can be.

Apologies for that groaner. But establishing a clear and coherent message has been a critical priority for the Harris campaign over the last week as she sought to reverse voters’ dismal attitudes about the economy.

Who’s in her ear? Harris’s kitchen cabinet includes former aides like Mike Pyle, a former top executive at BlackRock, as well as venture capitalist and longtime adviser Rohini Kosoglu, your host reported alongside POLITICO trade policy wiz Gavin Bade. Key former aides like Deanne Millison, who now works on manufacturing policy at Ford, as well as Kristine Lucius and Ike Irby, are also in the mix.

From our report: “At a meeting on Tuesday led by the campaign’s policy director Grace Landrieu, Pyle, Kosoglu and other members of Harris’s economic inner circle provided guidance to a network of outside economists and consultants on how the vice president thinks about economic matters and how the campaign’s messaging might evolve to reflect the presumptive Democratic nominee, four people who attended the event told POLITICO.”

So far, there haven’t been any substantive policy shifts from President Joe Biden’s platform. It was also Harris’s platform, after all, and the vice president’s allies are quick to note that her campaign will continue to highlight their shared economic track record. But Harris’s ascendance has sharpened the focus on policies that address “the care economy” — i.e. child care, elder care, health care — rather than the overall macro environment. (As always, read Victoria Guida.)

That messaging is much more in step with Harris’s historic approach to economic policy. 

“A lot of times, what she focuses on in those big, big macroeconomic discussions is: Let's get granular here. How is this going to work?” Oak Tree Strategies President Nathan Barankin, Harris’s former chief of staff, told your host. “She wants to drill down to the greatest level of certainty that can be acquired to figure out who's going to actually benefit from turning left or turning right on a particular decision.”

What does that approach mean in practice now that she’s running for president in the general election? 

The Californian is starting to tack closer to the center on policies she’d touted as a senator and as a candidate in the 2020 presidential campaign. She supported a ban on fracking in 2019, now she does not.

One of her signature legislative proposals — which would have granted sizable tax credits to middle-class earners — required a repeal of former President Donald Trump’s 2017 tax cuts. If she allowed all of those cuts to expire, it would violate her pledge to not raise taxes on those making less than $400,000.

As Adam Cancryn reports, echoing Biden’s oft-repeated pledge also “effectively rules out the prospect that Harris could embrace far more progressive policies as a candidate — such as massively expanding Social Security benefits.”

Barankin described the policies Harris rolled out earlier in her career as “value principles” that would represent a starting point for what she would like to achieve. Some would be politically impossible, even if Democrats were to secure majorities in both houses.

But when “you run for president, you’ve got to articulate your values. And a lot of times you put out proposals that implement aspects of your values,” he said. For Harris, that does not mean those proposals are “set in stone, and [that] she would never consider anything else in order to achieve those similar objectives.”

IT’S MONDAY — Some people use “Californian” to signify squishiness. It’s important to remember the same descriptor applied to Billy Martin. Send tips and suggestions to ssutton@politico.com.

 

Pro Briefing: Kamala Harris and the World. What we expect on foreign policy and trade. Join POLITICO Pro for a deep-dive conversation with our specialist reporters about the vice president’s approach to foreign policy. Register Now.

 
 
Driving the Week

MONDAY  

TUESDAY … House Financial Services Oversight and Investigations Subcommittee will hold a hearing on ESG and the influence of proxy advisers at 10 a.m. …. Senate Finance will hold a hearing on tax incentives for economic development at 10 a.m. … Job openings data for June will be released at 10 a.m. … The Conference Board’s consumer confidence index for July will be out at 10 a.m. … The SEC holds a Small Business Capital Formation Advisory Committee Meeting at 10 a.m. … The House Oversight and Accountability Economic Growth, Energy Policy, and Regulatory Affairs Subcommittee holds a hearing on the effect of the Biden administration’s economic policies at 2 p.m. … The House Financial Services Digital Assets, Financial Technology and Inclusion Subcommittee holds a hearing on decentralized finance at 2 p.m. … The Senate Banking Subcommittee on Economic Policy will hold a hearing on non-compete agreements at 2:30 p.m. …

WEDNESDAY … Senate Banking will hold a hearing on infrastructure and public transportation investments at 10 a.m. … The Federal Reserve will announce its rate decision at 2 p.m. … Fed Chair Jerome Powell holds a press conference at 2:30 p.m. …

THURSDAY … Second-quarter productivity will be released at 8:30 a.m. … The ISM Manufacturing Index for July will be released at 10 a.m. … The SEC has a closed meeting at 2 p.m. …

FRIDAY … The July jobs report will be out at 8:30 a.m. …

Senate Banking pushes FDIC vote to fall — Senate Banking Chair Sherrod Brown will not schedule a vote on Biden's nominees to chair the FDIC and join other agencies until after the August recess, two sources briefed on their plans and granted anonymity to discuss closed-door conversations told Eleanor Sunday.

Brown missed a Friday deadline to announce a Wednesday vote, which he'd previously floated. Though the committee could still announce Thursday votes today, it would have to work around the absences of Democrats including Sens. Bob Menendez of New Jersey, who is slated to step down Aug. 20, and John Fetterman of Pennsylvania, who is working remotely this week following a Covid-19 diagnosis — a tall order for any party-line candidate.

Brown did not respond to a request for comment.

Trump’s big bitcoin betTrump unveiled key elements of his crypto platform at the Bitcoin Conference in Nashville, Jasper Goodman reports. His topline agenda includes having the government hold a stockpile of bitcoin — also a priority of Sen. Cynthia Lummis (R-Wyo.), creating a crypto advisory council, installing a crypto-friendly Securities and Exchange Commission chair and blocking the Federal Reserve from creating its own digital currency.

— As Jasper points out, the crypto industry is planning to spend more than $160 million on the election. Trump’s pro-crypto tilt has helped him forge alliances with top venture capitalists and executives like Elon Musk, Marc Andreessen and the Winklevoss twins (“Male models with a big beautiful brain,” Trump said in his speech). South Carolina Sen. Tim Scott, the leading Republican on Senate Banking, vowed to pass crypto-friendly legislation if he takes the gavel next year. Senate Agriculture Chair Debbie Stabenow (D-Mich) had planned to hold a vote on her crypto bill this week, but scrapped it after it became clear there wouldn’t be GOP support and multiple Democrats would oppose, Meredith Lee Hill and Eleanor Mueller reported Sunday.)

— The Harris campaign is trying to reverse the industry’s slide to the right. More than a dozen House Democrats published a letter urging the Democratic National Committee to endorse cryptocurrency policies that would support the industry, Jasper reports.

— Now that the SEC has signed off on investment products linked to the price of bitcoin and ether, public pensions are getting involved. Jersey City Mayor Steven Fulop, who’s seeking the Democratic party nomination for governor next year, announced last week that the city’s retirement system was in the process of investing in bitcoin exchange-traded funds. Michigan’s retirement system for public employees now has around $6.6 million invested in 21Shares’ ARKB spot Bitcoin ETF.

What Jerome Powell is readingRep. Andy Barr of Kentucky, a leading contender to take outgoing House Financial Services Chair Patrick McHenry’s (R-N.C.) spot as the committee’s top Republican, told Eleanor that he’s prioritizing legislation that would limit the Federal Reserve's independence. He’s also consulting with the Trump campaign on his agenda.

“Can some of those reforms survive a filibuster in the Senate? Maybe not,” Barr said. “But it's still worth pushing because it creates some accountability.”

2024 ELECTION

The donor pressure campaign As fundraising for Harris surges, top Democratic donors and executives are ratcheting up pressure on the vice president on antitrust policy. IAC Chairman Barry Diller said on CNBC that he would lobby the vice president to replace FTC Chair Lina Khan — Wall Street’s bête noire and a favorite of progressives — echoing similar comments from LinkedIn founder Reid Hoffman. As Declan Harty and I reported last week, one of the big tests for Harris will be placating her allies in the boardroom without alienating the party’s left flank and financial watchdogs. Watch this space.

The cost of change — Treasury Secretary Janet Yellen said it will take $3 trillion of investment each year to combat climate change, which she identified as an “existential threat,” Ester Wells reports.

First in MM: Another day, another interchange fight — The Bank Policy Institute is rolling out a new ad campaign blasting debit interchange caps as a “chain store charity.” The Federal Reserve is currently reviewing comments on a proposal that would lower the maximum interchange fee charged by large issuers.

Liquidity Risk — New research from economists Sergey Chernenko of Purdue University and Viet-Dung Doan of Hong Kong Baptist University found that an SEC proposal that would require mutual funds to keep at least 10 percent of their portfolio in highly liquid assets would have “a limited effect” on bond sales during runs.

On the Hill

The long tail of the Silicon Valley Bank saga — Sen. Mark Warner introduced legislation that would require large and mid-size banks to test borrowing at the Federal Reserve’s Discount Window, which financial institutions can use for short-term loans. Warner said the legislation is intended to “reduce the unnecessary stigma associated with that use, and improve the window’s operations to meet the challenges of the digital age.”

 

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The Economy

Oh yeah, there’s a Fed meeting this week — And for the first time since the Covid-19 pandemic, Powell is expected to telegraph that a rate cut could come in September, The WSJ’s Nick Timiraos reports.

— While unemployment is still near historic lows and wage growth is continuing to power consumer spending, “small businesses are feeling the pain from costlier loans. And lower-income households are falling behind on payments for their car loans and credit cards,” Bloomberg’s Jonnelle Marte reports.

Trouble in the stock market? — Microsoft, Meta Platforms, Apple and Amazon will all report second-quarter earnings this week. With the tech-heavy Nasdaq on the verge of correction territory, “these earnings are really important,” Michael O’Rourke, chief market strategist at Jonestrading, told Bloomberg. “If you can’t beat expectations then I think the interpretation is that AI is not delivering the way people hoped.”

 

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Sam Sutton @samjsutton

 

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