On The Money: GOP angst grows over Trump's trade war | Trump promises help for 'Patriot Farmers' | Markets rebound | CBO founding director Alice Rivlin dies | Senate to vote on disaster aid bill next week

Happy Tuesday and welcome back to On The Money, coming to you on a slightly better day for the stock market. I’m Sylvan Lane, and here’s your nightly guide to everything affecting your bills, bank account and bottom line.

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THE BIG DEAL–GOP angst grows amid Trump trade war: Republicans are growing more nervous about next year’s race for the Senate as President TrumpDonald John TrumpLawsuit alleges Trump campaign paid women less than men Graham encourages Donald Trump Jr. to plead the 5th Crunch time for Senate disaster aid talks MORE ratchets up a trade war with China that increasingly threatens to cause pain to U.S. farmers.

The 2020 elections are still more than a year off, Trump is popular in farm country and voters in rural states largely have stuck with the president as the economy grows and the jobless rate falls.

But GOP senators say few expected the trade war to last as long as it has.

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With markets plunging on Monday and China announcing retaliation against U.S. farm exports, fears are growing that the fight could take a bite out of pocketbooks and even pose a threat to GOP senators at the ballot box next year. The Hill’s Alexander Bolton tells us why.

  • “We all want to resolve this as soon as possible,” said Sen. Todd YoungTodd Christopher YoungOvernight Health Care: HHS issues rule requiring drug prices in TV ads | Grassley, Wyden working on plan to cap drug costs in Medicare | Warren to donate money from family behind opioid giant Dem senator calls on McConnell to endorse bipartisan bill to raise smoking age to 21 Export-Import Bank back to full strength after Senate confirmations MORE (Ind.), chairman of the Senate GOP campaign arm. “We all want to keep this economy growing faster than we’ve seen in decades.”
  • Sen. Johnny IsaksonJohn (Johnny) Hardy IsaksonTammy Duckworth visits Iraq for first time since being shot down in 2004 Congress punts on disaster aid amid standoff with Trump, Dems Overnight Defense: Transgender troops rally as ban nears | Trump may call more troops to border | National Guard expects 3M training shortfall from border deployment | Pentagon to find housing for 5,000 migrant children MORE (R-Ga.), whose home-state colleague Sen. David Perdue (R-Ga.) could face a tough race next year, said farmers are likely to take the brunt of punishment from China.
  • Sen. Joni Ernst (R-Iowa), who is up for reelection next year in a state that former President Obama won twice but that Trump carried by nearly 10 points in 2016, said she wants to talk with Agriculture Secretary Sonny PerdueGeorge (Sonny) Ervin PerdueCalifornia jury links RoundUp to cancer, awards couple billion Trump to meet Chinese leader as trade tensions escalate On The Money: House chairman issues subpoenas for Trump’s tax returns | Trump touts trade talks as China, US fail to reach deal | Five things to know about Trump’s trade war with China | GOP offers support for Trump on tariffs MORE about assistance for farmers.
  • “Raising tariffs will hurt both US & China economies + more importantly will hurt US farmers/consumers/businesses Enough is enough China needs to negotiate seriously & quit moving the goalpost Enforceable trade deal needed for certainty,” Senate Finance Committee Chairman Chuck GrassleyCharles (Chuck) Ernest GrassleyTop Finance Dem offers bill to help those repaying student loans save for retirement The Hill’s Morning Report – Presented by Pass USMCA Coalition – Deadline approaches for 2020 Dems Trump Jr. subpoena spotlights GOP split over Russia probes MORE (R-Iowa) tweeted on Monday.

 

Opening for Democrats? Trump announced Monday that his administration will make about $15 billion in assistance available to farmers hurt by Chinese tariffs, but the National Farmers Union said that pledge would provide only a “temporary” fix and warned of “permanent damage” from farmers losing a share of the Chinese market.

Democrats see the growing anxiety in farm country as a chance to make inroads with rural voters.

“I think there is an opportunity. We have actually done some focus groups in farm country,” said Celinda Lake, a Democratic pollster. “Farmers were very loyal to Trump and wanted to give him a chance and thought everybody needed to do their fair share, but I think it’s getting different now.”

  • Democrats have failed to recruit high-profile stars to run against incumbent GOP senators, including in Colorado, Georgia, Montana and Texas. But other Democratic hopefuls are eager to take advantage of the political environment.
  • Retiring Sen. Pat RobertsCharles (Pat) Patrick RobertsNew tariffs on China pose major risk for Trump Republican senators give Pence an earful on trade Schumer, author discussed possible Kansas Senate run: report MORE (R-Kan.) said he can already see farm issues having an impact on the race to replace him and the 2020 presidential election, noting that presidential candidates such as Sens. Elizabeth WarrenElizabeth Ann WarrenBiden says he’d be open to breaking up Facebook Press: Who will be the first conservative to take on Trump? Democrats seeking nanny state policies voters rejected in 2016 MORE (D-Mass.) and Bernie SandersBernard (Bernie) SandersSanders and Ocasio-Cortez join up to preach Green New Deal, take jabs at Biden Press: Who will be the first conservative to take on Trump? Overnight Health Care — Presented by Campaign for Accountability — Measles outbreak tops 830 cases in US | Inslee signs nation’s first public option insurance bill | Maryland raises tobacco buying age to 21 MORE (I-Vt.) have released farm plans.

 

Trump seeks to ease farmers’ concerns: The president insisted Tuesday that farmers would be among the biggest beneficiaries of higher tariffs on Chinese goods, promising that his administration would be “making up the difference” to U.S. farmers if the levies cause exports to fall.

In a pair of tweets, the president said that “forgotten” U.S. farmers would benefit from funds raised by the U.S. with the tariffs, even as other Republican lawmakers have warned that Americans would take an economic hit from the measures.

  • “Our great Patriot Farmers will be one of the biggest beneficiaries of what is happening now,” Trump tweeted. “Hopefully China will do us the honor of continuing to buy our great farm product, the best, but if not your Country will be making up the difference based on a very high China buy.”
  • “This money will come from the massive Tariffs being paid to the United States for allowing China, and others, to do business with us,” he added. “The Farmers have been “forgotten” for many years. Their time is now!”

 

Trump also called on the Federal Reserve to help him out with a rate cut, arguing it would clinch victory against China.

“China will be pumping money into their system and probably reducing interest rates, as always, in order to make up for the business they are, and will be, losing,” Trump tweeted Tuesday, though Beijing has not announced monetary policy changes.

Trump, of course, has been calling on the Fed to cut rates for a few months now. The president has also frequently criticized the Fed and its chairman, Jerome Powell, for raising interest rates seven times during his presidency.

Powell said in a press conference earlier this month the Fed is unlikely to adjust interest rates without a major shift in the health of the economy.

“We think our monetary policy stance is in a good place and we are going to be patient,” Powell said on May 1. “We don’t feel like the data is pushing us in either direction.”

 

LEADING THE DAY

Grassley: US and Canada near deal to lift tariffs on steel, aluminum: While the U.S. trade war with China continues to escalate, there appears to be some movement toward resolving Trump’s battle with Canada.

Sen. Chuck Grassley (R-Iowa) signaled Tuesday that the U.S. and Canada might be moving closer to a deal that will lift steel and aluminum tariffs implemented by President Trump.

He told reporters during a press call that he is optimistic “based on the fact that it seems to me … that they’re talking,” according to Politico.

“That’s my understanding. And [there’s] even the possibility of some face-to-face talks very soon,” the Senate Finance Committee chairman added. “And maybe in 48 hours I’ll have a more definitive answer for you.”

Grassley has previously threatened to block a vote on Trump’s renegotiation of the North American Free Trade Agreement if the president did not lift steel and aluminum tariffs on Canada and Mexico.

 

Markets recover some losses after trade-related rout: U.S. stock markets on Tuesday recovered about half of the value they lost the day before due to increasing trade tensions.

The Dow Jones Industrial Average closed Tuesday with a gain of 207 points, covering roughly one-third of the 617 points it lost Monday. The S&P 500 closed 0.8 percent higher after losing 2.4 percent on Monday, while the Nasdaq composite rose 1.1 percent after falling 3.4 percent Monday.

 

CBO founding director Alice Rivlin dies: Alice Rivlin, an economist who served as the founding director of the Congressional Budget Office (CBO), died on Tuesday of cancer, the Brookings Institution said. She was 88.

Rivlin had a lengthy career, holding several prominent government positions.

In addition to serving as the first director of the CBO from 1975 to 1983, she served as director of the White House Office of Management and Budget and as vice chair of the Federal Reserve Board during former President Clinton’s administration. During former President Obama’s administration, she served on the Simpson-Bowles Commission focused on deficit reduction.

Rivlin had been affiliated with Brookings for several decades. Right up until her death, she had been working on a book that urges congressional leaders to end partisan warfare, Brookings said.

 

GOOD TO KNOW

  • Sen. Ron WydenRonald (Ron) Lee WydenOn The Money: Stocks plummet as Trump’s trade war with China escalates | China retaliates with tariffs on US crops | Trump eyes 0B in new tariffs | Trump, Xi to meet | Kavanaugh breaks with conservative justices in Apple case Top Finance Dem offers bill to help those repaying student loans save for retirement GOP offers support for Trump on China tariffs MORE (D-Ore.), the ranking member of the Senate Finance Committee, is pressing the Trump administration over its handling of a request from House Democrats for President Trump’s tax returns…
  • …And Rep. Bill PascrellWilliam (Bill) James PascrellOn The Money: New tariffs on China pose major risk for Trump | Senators sound alarm over looming budget battles | Ocasio-Cortez, Sanders team up against payday lenders Dems highlight NYT article on Trump’s business losses in ‘tax gap’ hearing Dems say NYT report on Trump’s business losses boosts need to see president’s tax returns MORE (D-N.J.) argued Monday that if President Trump’s tax returns are not turned over to Congress following a subpoena, Treasury Secretary Steven MnuchinSteven Terner MnuchinTrump to meet Chinese leader as trade tensions escalate White House expects retaliation from China, stresses ongoing talks Trump boxed in on trade MORE and IRS Commissioner Charles Rettig should face fines or jail time.
  • Sens. Rob PortmanRobert (Rob) Jones PortmanThis week: House to vote on bill to ban LGBTQ discrimination On The Money: House chairman issues subpoenas for Trump’s tax returns | Trump touts trade talks as China, US fail to reach deal | Five things to know about Trump’s trade war with China | GOP offers support for Trump on tariffs The Hill’s 12:30 Report: Dems raise stakes with talk of ‘constitutional crisis’ MORE (R-Ohio) and Ben CardinBenjamin (Ben) Louis CardinTop Finance Dem offers bill to help those repaying student loans save for retirement Booker, Ayanna Pressley introduce bill taking aim at black maternal death rates Patricia Arquette pushes for Equal Rights Amendment at hearing MORE (D-Md.) on Tuesday rolled out a bipartisan bill aimed at reforming the retirement system as lawmakers eye sweeping changes to the plans.
  • House Democrats on Tuesday unveiled a bill that would add funding for major arts programs that President Trump had sought to cut or eliminate altogether.
  • House Democrats also rejected President Trump’s attempts to drastically scale back funding for environmental programs, releasing two spending bills that boosted funding to the programs, including those the administration hoped to scrap entirely.
  • Senators are entering a crucial stretch as they try to break the logjam on a stalled disaster recovery bill before leaving next week for the Memorial Day recess.
  • Senate Majority Leader Mitch McConnellAddison (Mitch) Mitchell McConnellCrunch time for Senate disaster aid talks Maryland raises legal tobacco purchasing age to 21 This week: House to vote on bill to ban LGBTQ discrimination MORE (R-Ky.) said the upper chamber would vote on a disaster recovery bill next week even if negotiators haven’t reached a deal.
  • A federal judge on Tuesday gave lawyers for President Trump and Democrats on the House Oversight and Reform Committee until the end of the week to make their final arguments on whether the court should uphold a subpoena requesting Trump’s private financial records.
  • The federal labor board’s top lawyer said Tuesday that Uber drivers should be classified as contractors, meaning they should not be eligible for the full range of benefits offered to full-time employees.

 

ODDS AND ENDS

  • The Federal Communications Commission (FCC) is ramping up its battle against Chinese telecom companies as the Trump administration pursues an aggressive trade strategy against China.
  • A study published Tuesday found that soda sales have dropped in Philadelphia since the city implemented a tax on the sugary beverages in 2017, while the decline was partially offset by an increase in sales in nearby neighborhoods.
  • Comcast on Tuesday announced that it had agreed to sell its ownership stake in Hulu to Disney, which will immediately take over operational control of the streaming service.

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