News: How Walz will inform the Harris’ ‘care economy’ agenda

Wednesday, August 7, 2024

How Walz will inform the Harris’ ‘care economy’ agenda

Aug 07, 2024

Presented by

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.

QUICK FIX

Vice President Kamala Harris’ selection of Minnesota Gov. Tim Walz was a stunner to anyone who’d assumed that popular Pennsylvania Gov. Josh Shapiro was a lock for the number two slot on the Democratic ticket.

Shapiro may have offered a boost to Harris in must-win Pennsylvania. But with Walz, she is running alongside a seasoned policymaker who’s delivered on “care economy” issues that she’s put at the forefront of her campaign.

Walz spent much of his time as governor focusing on affordability and access issues relating to education, child care and health care. He signed legislation that guaranteed paid family and medical leave for workers and provided $545 million in child tax credits to Minnesota parents — Harris has identified both issues as top priorities — and he raised sales taxes to support rental assistance programs and expand the state’s housing supply.

“The economy is a garden. You have to take care of it. It needs tending, it needs nurturing,” Walz said during a 2018 gubernatorial campaign ad. “This idea that you’re somehow thrifty by not investing in education, by not investing in infrastructure, by not investing in health care and research? It makes no sense.”

That message clearly resonated with Harris. As Eugene Daniels, Elena Schneider, Holly Otterbein and Christopher Cadelago repor t, Walz’s accomplishments in Minnesota included policies that she wants to replicate in her presidency.

And though Walz was generally viewed as a moderate during his decade-plus career in Congress, his recent policy agenda — particularly since Democrats seized control of the Minnesota state senate in the 2022 midterms — have transformed him into a popular figure on the left.

“Harris was certainly signaling care was going to be one of her signature issues. But it felt like picking Walz is a real affirmation of that commitment,” said Suzanne Kahn, the vice president of Roosevelt Forward, an advocacy affiliate of the progressive think tank Roosevelt Institute. Dawn Huckelbridge, who helms Paid Leave PAC, told Eleanor Mueller that Walz’s addition has created “the strongest paid leave ticket we’ve ever had.”

Financial watchdogs like Better Markets CEO Dennis Kelleher and Matt Stoller of the American Economic Liberties Project also praised the pick, particularly given Walz’s support for new Minnesota laws targeting so-called credit card junk fees and large health care mergers.

One group that was less than enthusiastic? Minnesota bankers.

“Generally, the business environment in Minnesota has become more challenging, mainly due to some new employment laws and the overall business tax climate. As bankers, we would prefer a more growth-oriented approach,” Joe Witt, president and CEO of the Minnesota Bankers Association, told Michael Stratford in a statement. “However, the MBA has always enjoyed a good working relationship with the Minnesota Department of Commerce, our state bank regulator.”

IT’S WEDNESDAY — What do you think of Walz? Does his selection complicate some of the inroads Harris has made with Wall Street centrists? Or will it help? I want to know. Email me at ssutton@politico.com.

A message from the Georgetown Psaros Center for Financial Markets and Policy:

The Georgetown Psaros Center for Financial Markets and Policy will convene leaders at the intersection of finance and policy at the 2024 Financial Markets Quality (FMQ) Conference on September 17. This year’s keynote speakers include Jamie Dimon, JPMorganChase; Nellie Liang, U.S. Department of the Treasury; Patrick McHenry, U.S. House Financial Services Committee; David Schwimmer, LSEG; Rostin Behnam, U.S. Commodity Futures Trading Commission; and more. Learn more about FMQ by visiting the Georgetown Psaros Center website.

Driving The Day

Reps. Andrew Garbarino (R-N.Y.) and Pat Ryan (D-N.Y.) will speak at a POLITICO event covering the future of Social Security at 8:30 a.m. … Deputy Treasury Secretary Wally Adeyemo, Federal Trade Commission Chair Lina Khan and Consumer Financial Protection Bureau Director Rohit Chopra will hold a virtual briefing on unfair and deceptive practices in the consumer solar sector at 11:30 a.m.

During unprecedented times, POLITICO Pro Analysis gives you the insights you need to focus your policy strategy. Live briefings, policy trackers, and and people intelligence secures your seat at the table. Learn more.

The Economy

What recession fears? — The stock market bounced back on Tuesday after notching steep losses earlier in the week. The S&P 500, Dow Jones and Nasdaq all finished up on the day, Reuters reports. And Japan’s Nikkei surged by 10 percent, just one day after notching its worst day since 1987, the AP reports.

— As we covered in yesterday’s MM, stock market tumult is unlikely to have much bearing on either the Federal Reserve or the presidential election. But the level of uncertainty about the health of the labor market will remain a relevant factor for both. So where does that leave Fed Chair Jerome Powell? Once again, he’s in a bit of a pickle.

As your host reports alongside Victoria Guida and Eleanor Mueller: “The central bank chief has been under fire since Friday’s jobs report showed an unexpected jump in the unemployment rate — the kind of number that would’ve led Fed policymakers to cut borrowing costs at their meeting last week if it had come only a few days earlier. Still, they’re giving no indication that immediate action is necessary to avoid a recession, with unemployment still at only 4.3 percent and inflation looking close to being tamed.”

What French Hill is thinking — Jasper Goodman caught up with Rep. French Hill (R-Ark.) — who’s in the running to lead the GOP caucus on House Financial Services – before Friday’s jobs report upended markets and ignited fears of a potential recession. While other Republican leaders have urged the Fed to hold off on announcing rate cuts ahead of the election, Hill took a different tack.

“That's not how we do monetary policy,” he said. “We do monetary policy by carefully assessing short-term money market conditions and reserves in the banking system and reaction to the economy, both in coincident indicators and in leading indicators, and make a judgment. So, I would hope that they would make an analytic decision about that. It has really nothing to do about what happens on the first Tuesday in November.”

Solomon: No emergency rate cuts — Goldman Sachs CEO David Solomon is also in the camp that Fed won’t take emergency steps to lower borrowing costs, Bloomberg reports.

A message from the Georgetown Psaros Center for Financial Markets and Policy:

2024 ELECTION

Wall to Walz coverage — Walz’s track record on tax policy is affirmatively progressive, Benjamin Guggenheim reports. The child tax credit was part of a $3 billion billion package passed during the 2023 legislative session that was touted as the largest tax cut in the state’s history.

— He also passed legislation banning non-compete agreements, which is in line with Biden administration policies, writes Nick Niedzwiadek. And his clean energy agenda included a law that mandates 100 percent clean electricity in the state by 2040, comprehensive energy permitting reform, boosting electric vehicles, banning PFAS “forever chemicals,” and cutting carbon from the state’s natural gas sector, writes Catherine Morehouse.

SUBSCRIBE TO GLOBAL PLAYBOOK: Don’t miss out on POLITICO’s Global Playbook, our newsletter taking you inside pivotal discussions at the most influential gatherings in the world. Suzanne Lynch delivers the world's elite and influential moments directly to you. Stay in the global loop. SUBSCRIBE NOW.

On Wall Street

Major investigation — The FT’s Will Schmitt and Stephen Gandel report that the Securities and Exchange Commission is investigating allegations that Wells Fargo, Morgan Stanley and other Wall Street firms have been “systematically cheating customers out of billions of dollars in interest payments.”

No work and all pay? — A steamfitters pension has accused Kohlberg Kravis Roberts co-founders Henry Kravis and George Roberts of netting $650 million of company shares through tax receivable agreements in exchange for doing zero work, The WSJ’s Ben Foldy reports. The suit is similar to other cases that have been brought against Apollo Global Management and The Carlyle Group, and the website host GoDaddy.

In the private credit world — Bloomberg’s John Sage and Ellen Schneider report that Prospect Capital, an early leader of the private credit space, is bleeding cash as the companies to which it extended floating rate loans struggle to make payments. What’s more, “a series of circular financing arrangements between the fund and the REIT” it fully controls is attracting scrutiny from analysts.

An interesting economic barometer — Airbnb shares fell after the bell on Tuesday after the travel company reported disappointing quarterly revenue. The reason? “Domestic travel in the United States has been pressured since the start of the year as more Americans have grown cautious about travel spending on worries about the health of the economy,” write Aishwarya Jain and Doyinsola Oladipo for Reuters.

A message from the Georgetown Psaros Center for Financial Markets and Policy:

Join global experts and leaders at the Georgetown Psaros Center for Financial Markets and Policy’s annual FMQ Conference hosted on the Georgetown University campus. This year’s conference theme is Future of Financial Markets: Innovation and Uncertainty, where attendees will spend the day hearing from esteemed industry professionals and policymakers on a range of topics affecting the future of finance and policy.

From regulatory trends to technological advancements, FMQ 2024 offers unparalleled opportunities to network, collaborate, and gain actionable knowledge as panels will focus on market structure, innovation in ETFs, financial market regulation, and cryptocurrency.

Don't miss this opportunity to gain valuable perspectives from leaders at the forefront of shaping global financial practice and policy. Secure your place at FMQ 2024 and be at the forefront of shaping the future of financial markets. Register to reserve your spot today.

Jobs report

Deborah Kilroe will join the Dallas Fed as a vice president for communications on Sept. 1. She was previously director of communications at the Congressional Budget Office.

Follow us on Twitter