News: Harris’ economic vision comes into focus

Friday, August 16, 2024

Harris’ economic vision comes into focus — kind of

Aug 16, 2024

Presented by Wells Fargo

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Quick Fix

Vice President Kamala Harris will likely tout proposals on taxes, housing and more when she debuts her economic vision at last during a speech in North Carolina later today.

Don’t expect many specifics.

For instance, there are few details so far on how she would deliver on housing. A person briefed on the plan told our Katy O’Donnell Thursday that Harris is expected to call for the construction of 3 million homes — including by creating a $40 billion fund for local governments to boost supply and a tax incentive for developers who build for first-time homebuyers. But how she plans to bankroll the fund and what the tax incentive could look like remain unclear.

The same goes for her federal ban on price gouging. A campaign official told our Meredith Lee Hill earlier this week that Harris would direct the Federal Trade Commission and state attorneys general to investigate and levy penalties on food companies that violate it. The contours of the ban itself, however, are still murky.

Harris is dealing with a compressed timeline, to be sure. But she’s also leaving the door open for support from a wider array of stakeholders — including Wall Street executives, as our Sam Sutton and Adam Cancryn reported.

Harris may well also bring up other economic policies she has mentioned in previous stump speeches — like getting rid of taxes on tips, enacting paid leave, and expanding the child tax credit.

IT’S FRIDAY — And we’d like to officially rename this August the August That Wasn’t. Send your Hill tips and tricks now and forever to emueller@politico.com and @eleanor_mueller. You can find Morning Money’s regular author, Sam Sutton, in the usual places at ssutton@politico.com and @SamJSutton.

A message from Wells Fargo:

Wells Fargo seeks broad impact in our communities. As a company, we are focused on building a sustainable, inclusive future for all by supporting housing affordability, small business growth and financial health. We have donated nearly $2 billion to strengthen local communities over the last five years. What we say, we do. See how.

Driving the Day

Housing starts and building permit data for July will be released at 8:30 a.m. … The University of Michigan’s Consumer Sentiment survey will be released at 10 a.m. … Chicago Fed President Austan Goolsbee will participate in a fireside chat at the Angeles Investors’ Q3 Summit and Awards at 1:25 p.m.

‘Marked safe’ from a recession — for now — Fresh insight into retail sales and jobless claims Thursday served to offset market fears of an economic slowdown, CNBC’s Brian Evans and Pia Singh report.

The Commerce Department said Thursday that retail sales increased by 1 percent last month — well above the expected 0.3 percent. And the Labor Department said weekly jobless claims dropped to 227,000, lower than the anticipated 235,000.

“The data served as a boon to investors and a broader market trying to mount a comeback from an August rout,” Evans and Singh write.

There was one outlier: Manufacturing. The Philadelphia Federal Reserve said its manufacturing index slumped to -7 — “its first negative reading since January and well below the forecast for 7.9,” CNBC’s Jeff Cox writes.

“Markets will read any adverse shift in the data as a cause for the Fed to cut rates hard,” High Frequency Economics’ Carl B. Weinberg and Rubeela Farooqi wrote in a note. “We will have to see if it outweighs the better-than-expected retail sales and claims data.”

So far, the answer seems to be no. The Dow spiked 509 points, Nasdaq went up 2.15 percent, and the S&P 500 rose 1.47 percent Thursday.

The dollar, meanwhile, rose against the euro — “pulling the common currency back from a seven-month peak,” Reuters’ Laura Matthews and Alun John report.

ICYMI: This all comes the day after the Labor Department revealed that inflation last month slowed to its lowest level since early 2021, as Sam reported Wednesday.

CNBC’s Greg Iacurci is out with a handy chart that breaks down that trend by category.

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On the Hill

Senate Banking’s looming musical chairs — The committee that oversees the Fed, Wall Street and more could get a dramatic makeover next year, your host reports.

Current Chair Sherrod Brown (D-Ohio) is facing a tough reelection, and many expect ranking member Tim Scott (R-S.C.) to join the administration if Trump wins.

Already, the next most senior Republican — Sen. Mike Rounds (R-S.D.) — is fielding inquiries from K Street related to a potential chairmanship, a person close to him said. And Sen. Mark Warner (D-Va.) is facing pressure on and off the Hill to choose Senate Banking over Senate Intelligence should the gavel fall to him, two lobbyists said — thus keeping it out of the hands of Sen. Elizabeth Warren (D-Mass.).

“I cannot overstate how big of a push industry is making to him,” one of the lobbyists said. Warren “is absolutely terrifying to industry.”

Each potential leader means a different trajectory for the panel. Brown told POLITICO he wants “housing, housing, housing” next year; Scott said his priorities include housing, but also rolling back Biden-era regulations and taking guardrails off capital.

If Scott goes, a person close to Rounds says he would focus on many of the same things. But lawmakers and aides say they expect a bigger focus on compromising with Democrats and delegating to rank-and-file.

“I think you're going to see a pretty stark difference between the way that Senator Rounds would like to run the committee versus Tim Scott,” Kyle Chase, who served as Rounds’ chief of staff until last fall, said.

Things are messier on the Democratic side if Brown loses. Sen. Jack Reed of Rhode Island is expected to hold onto his Senate Armed Services seat; Sen. Bob Menendez of New Jersey is set to step down this month.

The job would go next to Sen. Jon Tester (D-Mont.). But it’s unclear whether he would want to give up his leadership role on Senate Veterans Affairs — particularly if Senate Democrats lose the majority. Same goes for the next in line, Senate Intelligence Chair Mark Warner (D-Va.).

“Let’s get through the election first — and besides that, Brown’s coming back,” Tester said.

If Warner chooses to keep his current job, the Senate Banking top spot would then go to Warren.

"Everybody knows that she will have a very broad, very aggressive, very pro-consumer, pro-investor, pro-competition agenda," said Dennis Kelleher, Better Markets president and CEO.

Warren said she wants the panel to focus on putting illicit finance guardrails on cryptocurrency next year.

A regulatory overhaul like the House passed isn't out of the question, Warren added: "We can certainly talk about that.”

"But the United States cannot continue down a path where crypto is the principal way that Hamas finances its activities,” Warren said.

House Republicans hit CFPB over medical debt — House Financial Services Chair Patrick McHenry (R-N.C.) led a letter to the Consumer Financial Protection Bureau yesterday raising concerns with its recent proposal to bar medical debt from consumer credit reports, our Katy O’Donnell reports.

The agency says medical debt is less predictive of people’s creditworthiness than other types of debt. McHenry and the letter’s other signatories argue that excluding it altogether could jeopardize the reports’ accuracy — and potentially reduce borrowers’ access to credit.

A message from Wells Fargo:

IN THE STATES

Banks, credit unions take first swing in Illinois — Bank and credit union groups filed a legal challenge to Illinois’ law exempting state taxes and tips from credit card swipe fees Thursday, our Michael Stratford reports.

It’s the latest development in the tussle between banks and retailers over whether legislators should weigh in on Visa and Mastercard’s role in the payment system. Stalled federal legislation from Sens. Dick Durbin (D-Ill.) and Roger Marshall (R-Kan.) would cap the fees they can charge retailers.

Under the Illinois law, merchants would either itemize transactions to exclude taxes and tips from the swipe fee or retroactively seek reimbursement from banks. The industry groups argued Thursday that both options would destabilize the existing payment system.

“We’re joining together in this legal challenge to protect Illinois … from the unprecedented chaos and confusion this new state law would create,” Rob Nichols, president and CEO of American Bankers Association, said in a statement.

In the markets

Close your Zillow tab already — Falling mortgage rates may not be the boon that aspiring homeowners hope, The Wall Street Journal’s Gina Heeb reports.

“Despite the recent drop, mortgage rates are unlikely to return to anywhere near the levels they were at before the Federal Reserve started to raise interest rates in early 2022. They might not move enough to make a huge difference soon, leaving home buyers to contend with record housing prices, limited inventory and renewed fears of a recession.”

Indeed, mortgage rates went up Thursday for the first time in three weeks, Bloomberg’s Natalie Wong reports.

At the regulators

Why interest on the debt is higher than you think — The amount of interest the U.S. pays on its debt could be even higher than Treasury reported this week, Bloomberg’s Ben Holland reports.

“Outlays by the Federal Reserve added about $100 billion to Uncle Sam’s effective interest bill over the past year. The sum is more than the government’s annual spending on NASA, the Federal Emergency Management Agency and Small Business Administration combined.”

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In the Workplace

Do you know where your CEO is? — Starbucks’ and Victoria’s Secret’s incoming CEOs will continue a larger trend of CEOs working remotely, Bloomberg’s Lily Meier reports.

“That’s a stark contrast to corporate employees, many of whom are facing a return-to-office mandate.”

A message from Wells Fargo:

Wells Fargo seeks broad impact in our communities. As a company, we are focused on building a sustainable, inclusive future for all by supporting housing affordability, small business growth and financial health.

In 2023, examples of our work include:
· Donated approximately $300 million to over 3,000 nonprofits in support of housing, small business, financial health, sustainability, and other community needs.

· Opened HOPE Inside centers in 15 markets supporting 57 retail branches to help empower community members to achieve their financial goals through financial education and free one-on-one coaching.

· Launched $10,000 Homebuyer Access℠ grants that will be applied toward the down payment for eligible homebuyers who currently live in or are purchasing homes in certain underserved communities.

What we say, we do. See how.