News: Trouble at the docks

Friday, September 27, 2024

Trouble at the docks

Sep 27, 2024

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QUICK FIX

The 2024 presidential campaign is about to get rocked by a labor dispute involving tens of thousands of workers at more than a dozen of the country's largest ports.

Workers represented by the International Longshoremen's Association — led by the powerful and mercurial Harold Daggett — will go on strike next week if they don’t agree to a new contract with the United States Maritime Alliance, a collection of companies that oversee operations at ports from New York to Houston. A lengthy shutdown would delay imports of grocery staples and cars, potentially costing the U.S. billions of dollars in economic activity each day.

The longer it takes for the ILA and USMX to reach an agreement, the more likely it is that consumer prices start to climb. And if consumers start getting sticker shock in the final days of the presidential campaign, it could scramble Kamala Harris and Donald Trump’s attempts to sway voters on how their platforms will stabilize prices, your host reports.

The risks to Harris are more obvious: The White House says President Joe Biden will not intervene to stop the strike (that was never in doubt) and even though administration officials are talking to the union and USMX “directly [about] being at the table and negotiating in good faith fairly and quickly,” Daggett has provided no indication that he’s eager to do Biden or Harris any favors. (In fact, he recently put out a release describing a productive 90-minute meeting he had with Trump in Mar-a-Lago).

If higher shipping costs and delays cause prices to rise in the near term, it could dent voter sentiment on the economy just as it has started to meaningfully improve. That could make it harder for Harris’s recent barrage of pro-labor, pro-capitalist and anti-price-gouging economic messaging to resonate.

Any chaos or economic blowback will likely be enough for Trump to go on the offensive. The strike “will give voters, particularly union voters, yet another reason to want a historically successful dealmaker back in the White House,” said Jonathan Berry, a former top Labor Department official under Trump who is now a managing partner at the law firm Boyden Gray.

But even though Trump has had some success in amassing support among the rank-and-file, an ILA strike could prove to be a litmus test for his actual views on the labor movement. Setting aside Daggett’s comments about their meeting, we’re only a few weeks removed from a livestream with Elon Musk where Trump advocated the idea of firing striking workers.

That’s the sort of side-by-side comparison that Harris allies will relish (particularly those in swing states).

“If I were a union member, and a strike was forthcoming, I think I would go out and vote for the people who support my right to do that,” said North Carolina state Rep. Deb Butler, a Democrat whose district includes the Wilmington port. “Many national figures, Donald Trump included, would not set foot on a picket line.”

IT’S FRIDAY — There’s an Oakland A’s snowglobe on my desk that was once part of an Oakland Tribune-branded giveaway. Both are gone as of today, so now it’s a reminder of the consequences of greed. On that note, unless your name is John Fisher, I hope you have a wonderful weekend. Have thoughts or tips? Send ‘em my way to ssutton@politico.com.

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Driving the Day

The personal consumption expenditures index for August will be out at 8:30 a.m. … The Brookings Institution holds its virtual Brookings Papers on Economic Activity conference starting at 8:30 a.m. …. Economist Jason Furman will speak at a Peterson Institute for International Economics event at 1 p.m. … Federal Reserve Governor Michelle Bowman will speak before an Alabama Bankers Association Bank CEO Meeting at 1:15 p.m. …

Harris’ crypto play — Democrats couldn’t stop fighting over crypto policy. On the campaign trail, Harris “is walking a fine line that has yet to trigger a public outcry from her party’s crypto lovers or haters,” Jasper Goodman reports. The maneuvering has forced crypto “advocates to rethink how they grade whether a policymaker is truly an ally or not.”

— Also from Jasper: A super PAC funded by the crypto industry has now spent more than $40 million backing Senate Banking Chair Sherrod Brown’s GOP opponent in the critical Ohio Senate race. Defend American Jobs — one of three affiliated super PACs funded by major crypto firms that have raised more than $160 million combined — has made the Ohio race, which could determine control of the Senate, its top target.

After initially announcing a $12 million ad buy backing Republican Bernie Moreno, a crypto booster, it has continued to pump money into Buckeye State television markets, according to federal campaign finance disclosures. A sister super PAC, Protect Progress, has spent around $10 million boosting Democrats running for Senate in Arizona and Michigan, according to the filings. Both states are also key to determining control of the upper chamber.

The Trump agenda — Trump’s plans to impose across-the-board tariffs, conduct mass deportations and erode the Fed’s independence would cause “a large inflationary impulse and significant declines in US employment, particularly in durable manufacturing and agriculture,” according to a new report from Warwick McKibbin, Megan Hogan and Marcus Noland Peterson for the Peterson Institute for International Economics. Depending on the scale of the policies, and the level of retaliation that occurs, U.S. GDP would be between 2.8 and 9.7 percent lower than otherwise projected by the end of his term.

BofA's new Ukraine boost — Zach Warmbrodt reports that Bank of America plans to provide up to $1 million in disaster relief support for the UN's Ukraine Humanitarian Fund, per an internal memo from Bernie Mensah, the bank's president of international. Mensah represented BofA during a meeting with Ukraine President Volodymyr Zelenskyy this week. The bank is starting with a $250,000 contribution and will match contributions from other companies.

Bank of America's Aukse Jurkute is leading a BofA team to support the economic development and reconstruction of Ukraine. MM interviewed CEO Brian Moynihan earlier this year on the bank's work to support the country in cooperation with USAID.

WWBWD — The Commerce Department’s latest estimates of U.S. growth coming out of the pandemic suggest the economy was expanding more quickly than many had assumed. Now, we don’t gloat too often in this newsletter. But the late, great godfather of Morning Money, Ben White, got roasted in 2022 when he reported that the U.S. was not in a recession despite two consecutive quarters of negative growth estimates. Now the revised estimates are out and — guess what? — our boy had it right.

Fed File

Barr sees a path — Fed Vice Chair for Supervision Michael Barr said he thinks his scaled-back plan to raise capital requirements for large financial institutions will be widely supported by his colleagues at the Fed, Michael Stratford reports. Barr’s remarks at the New York Fed did not address how the changes have triggered disagreements with other regulators.

— Bloomberg’s Jonnelle Marte and Alex Harris: “Federal Reserve Bank of New York President John Williams on Thursday announced the formation of a body of private market participants to monitor the use of interest-rate benchmarks, or reference rates, across financial markets.

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At the regulators

New Treasury market push — SEC Chair Gary Gensler is making a final push to require certain Treasury trading platforms to register as broker-dealers and comply with Regulation Alternative Trading Systems — a rule crafted in the late 1990s, Declan Harty reports.

New Russian crypto sanctions — The Biden administration announced new sanctions and criminal charges against Russian crypto exchanges that were allegedly used to facilitate ransomware attacks and hacks, Stratford reports. Biden said the move would aid Ukraine in its war with Russia.

First in MM: House, Senate Republicans urge Yellen to slow EU climate rule — Rep. Andy Barr (R-Ky.) and Sen. Bill Hagerty (R-Tenn.) led more than 60 other Republicans Thursday in sending a letter to Treasury Secretary Janet Yellen asking her to delay implementation of an EU requirement that companies track environmental impacts and more along their supply chain, Eleanor reports.

"That is neither practical nor realistic — nor does it genuinely constitute 'due diligence,' which is generally defined as review and analysis prior to actions being taken," the members write. "American companies will be required to comply with [Corporate Sustainability Due Diligence Directive] even though the U.S. has not ratified many of the international conventions underlying the directive."

The policy went into effect at the end of July. Yellen has herself expressed concerns to Congress over its "negative unintended consequences" for companies.

Treasury did not respond to a request for comment.

Jobs report

Zack Rosenblum is leaving the Treasury Department where he was counselor to the secretary. He helped spearhead policy related to payments and emerging technologies, particularly digital assets, and also worked on other issues, including housing policy and Treasury’s anticorruption rulemaking efforts. Rosenblum, who previously worked for Senate Majority Chuck Schumer (D-N.Y.) for eight years, is headed to the private sector. — Daniel Lippman

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