“Federal Reserve Chairman Jerome Powell: The 60 Minutes interview.” See yesterday’s 13- minute CBS 60 Minutes video and transcript highlights here.
The “First Phase” of President Trump’s FY20 Budget will be released at 11:30 AM here. The “Second Phase,” the Appendix, Analytical Perspectives, and Major Savings and Reforms, will be released on March 18.
“Trump Plan Postpones Balanced Budget Despite Deep Spending Cuts.” Last night’s Bloomberg article led with:
President Donald Trump will propose a U.S. budget that wouldn’t balance for 15 years, even assuming stronger economic growth than private forecasters expect and with deep domestic spending cuts that have little chance of passing Congress.
Trump’s budget blueprint, to be released Monday, asks lawmakers to slash funding for most federal government agencies while boosting defense spending and setting aside $8.6 billion for a wall along the U.S.-Mexico border, according to a White House preview. The plan faces certain rejection by Democrats now in control of the U.S. House and will kick off a new political battle over spending priorities.
“Trump to Request $8.6 Billion for Border Wall in 2020 Budget.” Last night’s Wall Street Journal article led with:
WASHINGTON—President Trump plans to seek $8.6 billion for additional barriers along the southern U.S. border as part of his budget proposal to be released Monday, a potential prelude to another fight over funding the president’s long-promised border wall.
The White House budget document will propose $2.7 trillion in cuts to nondefense discretionary spending over the next decade, in part by reducing such spending by 5% next year below current federal spending caps, the president’s top budget official said Sunday. The administration didn’t offer specific details of the spending cuts, while also proposing increases on certain military matters and on veterans health care.
Congress is unlikely to approve anything that closely resembles the White House budget, as Democrats control the House and spending bills in the GOP-led Senate need bipartisan support. Instead, the blueprint serves to lay out a presidential administration’s priorities each year and represents the opening bid in negotiations over new spending bills for the next fiscal year, which begins Oct. 1.
Doug Holtz-Eakin on President Trump’s FY20 Budget: This morning, the American Action Forum President and former Congressional Budget Office Director concluded:
In short, there are only two important budgetary events on the 2019 horizon — passing a debt limit increase/suspension and cutting a deal on spending caps — and the President’s Budget is going to be irrelevant to both of them.
I agree. Either congressional leaders will cut a deal this spring, which President Trump could torpedo, like he did in January, or Congress will resort to passing lesser controversial appropriations and a last-minute debt limit/continuing resolution in late September. No default, and I very much doubt we’ll see another shutdown.
“Why Americans Don’t Cheat on Their Taxes.” The Atlantic Monthly’s Rene Chun writes:
If such a thing as American exceptionalism remains, maybe it can be found in this: Despite deep IRS budget cuts, an average audit rate that has plunged in recent years to just 0.6 percent, and a president who has bragged that dodging federal taxes is “smart,” most Americans still pay their income taxes every year.
How long can this last? If we don’t bolster the IRS soon, we will find out. In numerous conversations with friends at the IRS, the first concern of all is the “brain drain” as the experienced retire and either aren’t replaced or are replaced with inexperienced who don’t stay long.
“Wall Street’s Got It All Wrong When It Comes to the U.S. Bond Market.” This morning’s Bloomberg article leads with:
What, exactly, is the bond market telling us?
It’s an age-old question on Wall Street, but one that’s gained newfound urgency as the topsy-turvy markets leave everyone wondering where the U.S. economy is headed. Yet to a small but growing number of analysts, academics and former policy makers, the standard answers may not apply.
The debate centers around the term premium, a notoriously hard-to-understand feature of the U.S. Treasury market. Recently, it’s fallen toward historic levels, setting off alarms among prognosticators who say it is an ominous sign the slowdown in U.S. growth won’t merely be a fleeting event — and that investors who have poured into risk assets are living in a fantasyland.
The reality may be far less dire. To Jeremy Stein and William Dudley, two former Federal Reserve officials, the drop-off has more to due with a subdued inflation environment and the fact that long-term Treasuries are a natural hedge for investors who have seen their stock portfolios surge in value. Goldman Sachs Group Inc. and Deutsche Bank AG point to hiccups in how the term premium is measured, which may overstate its actual decline. And one of the creators of the most widely followed model says the Fed’s crisis-era bond investments have changed the way the term premium should be understood.
“The Experts Keep Getting the Economy Wrong.” Yesterday’s New York Times article by David Leonhardt led with:
President Trump likes to brag about the supposedly booming economy. So do other Republican politicians. Some journalists have gotten into the habit too, exaggerating the strength of the economic expansion, because it makes for a good story.
Here’s the truth: There is no boom. The economy has been mired in an extended funk since the financial crisis ended in 2010. G.D.P. growth still has not reached 3 percent in any year, and 3 percent isn’t a very high bar.
Last week, while attending an economics conference in Washington, I discovered one particularly clear sign of the economy’s struggles — namely, that it keeps performing worse than the experts have predicted.
Washington Calendar, March 11 – March 15
Fed Chair Powell, 7 PM tonight, will deliver “Welcoming Remarks” to the National Community Reinvestment Coalition’s Just Economy Conference in D.C.
Fed Gov. Brainard, 8:45 AM tomorrow, will speak on “Community Reinvestment Act Modernization” to the National Community Reinvestment Coalition’s Just Economy Conference in D.C.
The Sprint-T-Mobile merger will be questioned by the House Judiciary Committee at 2 PM Tuesday. Watch it live here.
China trade talks and the WTO will be the focus of USTR Lighthizer’s testimony on 10:15 AM Tuesday before the Senate Finance Committee.
China trade talks and the Budget will be the focus of Treasury Secretary Mnuchin’s testimony on Thursday before the House Ways and Means Committee at 9 AM and the Senate Finance Committee at 1:30 PM.
President Trump’s schedule (EDT):
12:15 PM: Lunch with Vice President Pence; and
1:30 PM: Daily intelligence briefing.
TUESDAY: Receives the Boy Scouts’ report to the nation.