Happy Wednesday and welcome back to On The Money. I’m Sylvan Lane, and here’s your nightly guide to everything affecting your bills, bank account and bottom line.
THE BIG DEAL– Trump blames impeachment probe for stock losses as recession fears rise: President Trump on Wednesday accused Democrats of derailing the economy with their impeachment inquiry as the stock market took heavy losses driven by rising recession fears.
“All of this impeachment nonsense, which is going nowhere, is driving the Stock Market, and your 401K’s, down,” Trump tweeted.
“But that is exactly what the Democrats want to do. They are willing to hurt the Country, with only the 2020 Election in mind!”
- Trump’s tweet came amid a steep Wednesday morning sell-off in U.S. stocks, with all three major indexes sinking more than 2 percent shortly before 1 p.m.
- The Dow Jones industrial average lost as many as 580 points, a 2.2-percent decline that sunk the index below the 26,000-mark first reached in January 2018, before closing with a loss of 494 points.
- The S&P 500 index and the Nasdaq composite closed 1.8 percent and 1.6 percent lower, respectively.
Trump has insisted that efforts to impeach him could derail the U.S. economy and crash financial markets, accusing Democrats of damaging the country to win the 2020 election.
The president has also sought to quash rising fears of a recession, driven in part by growing strains from his trade war with China.
But Wednesday’s stock losses may have been driven by data showing a severe slump in U.S. manufacturing output and several recent downgrades in global growth projections.
LEADING THE DAY
Trump to hit EU with new tariffs after WTO ruling: President Trump will impose 25 percent tariffs on certain European Union agricultural exports and 10 percent tariffs on European-brand aircraft on Oct. 18, the White House announced Wednesday.
The tariffs on crucial European exports follow a Wednesday decision by a World Trade Organization (WTO) arbitrator to allow the U.S. to impose tariffs on up $7.5 billion in European goods.
A senior administration official told reporters during the Wednesday briefing that the full list of European goods subject to tariffs will be released as soon as Wednesday evening by the White House Office of the U.S. Trade Representative.
“For years, Europe has been providing massive subsidies to Airbus that have seriously injured the U.S. aerospace industry and our workers,” U.S. Trade Representative Robert Lighthizer said in a statement.
“Finally, after 15 years of litigation, the WTO has confirmed that the United States is entitled to impose countermeasures in response to the EU’s illegal subsidies.” I break it down here.
- The WTO’s ruling Wednesday settles a 2004 case in which the U.S. accused the EU of providing unfair subsidies to Airbus, the continent’s top aerospace company. A WTO panel ruled in favor of the U.S. in 2011, and an arbitrator announced the approved level of retaliation Wednesday.
- While Trump has long complained about the effectiveness of the WTO, the regulator’s decision Wednesday gives the president a powerful, but risky weapon in his trade dispute with Europe.
The new tariffs: Do you like French wine? Maybe you’re more of a Scotch or Irish whiskey person. And what about imported brie, gouda, Parmigiano Reggiano or Swiss?
They’re all about to get more expensive thanks to the new round of tariffs.
The new 25-percent tariffs will cover a slew of popular and iconic European food products, such as wine, cheese, olives, Irish and Scotch whiskies, pork and cookies. The tariffs also apply to a wide array of clothing, tools, machines and other industrial products imported from Europe.
Top EU officials have pledged to retaliate with their own tariffs on U.S. products.
Warren outlines tax on federal lobbying: Sen. Elizabeth Warren (D-Mass.), a 2020 White House hopeful, on Wednesday announced a plan to “end lobbying as we know it” with a proposed tax on any corporation or organization that spends more than $500,000 annually in lobbying the federal government.
Her plan calls for a 35 percent tax rate on corporate and trade organization spending on lobbying totaling between $500,000 and $1 million, 60 percent for expenditures between $1 million and $5 million, and 75 percent on all spending over $5 million.
“Corporate lobbyists are experts at killing widely popular policies behind closed doors,” Warren wrote in announcing the proposal.
And naturally, K Street was not thrilled with the idea.
- “Senator Warren wants to tax people because she doesn’t like them exercising their constitutional right to petition the government. I am sure lots of people would like to tax politicians who give too many speeches, but that isn’t constitutional either.” — U.S. Chamber of Commerce Executive Vice President and Chief Policy Officer Neil Bradley.
- “No matter how you spin this or what you call it, it would be an unconstitutional attack on manufacturers’ First Amendment rights. We will always speak out for our values and our people, and we refuse to be silenced.” — Linda Kelly, National Association of Manufacturers senior vice president of legal, general counsel and corporate secretary.
- “I’m a big believer that the right to free speech and ability to petition the government was the First Amendment for a reason and any attempt to limit it is a bad idea and hurts our democracy.” — Lobbyist headhunter Ivan Adler.
DOJ joins Trump lawsuit over New York subpoena: The Department of Justice (DOJ) on Wednesday intervened in President Trump’s lawsuit over New York prosecutors’ subpoena for his tax returns.
Government lawyers agreed with Trump’s personal lawyers that the case belongs in federal court and argued that Trump should receive temporary relief as needed.
“The United States participates now to explain why it is both correct and important that the President’s challenge to the subpoena on account of his office be resolved in federal court rather than in state court, and to support interim relief as necessary to allow for appropriate briefing of the weighty constitutional issues involved,” they wrote in a court filing in federal court in New York.
The Manhattan district attorney’s office in late August issued a grand-jury subpoena to Trump’s accounting firm, Mazars USA, for the president’s tax returns and other financial records. Last month, Trump, in his personal capacity, filed a lawsuit in federal court against Mazars and Manhattan District Attorney Cyrus Vance (D) in an effort to block the subpoena.
GOOD TO KNOW
- Senate Democratic leaders on Wednesday requested that the IRS investigate the National Rifle Association (NRA) following a report on the gun group’s interactions with Russian nationals.
- Advocates are hopeful that a bill that would allow the financial sector to finally serve cannabis businesses could head to President Trump’s desk by the end of the year.
- U.S. Customs and Border Protection (CBP) this week barred the importation of goods from five countries in an attempt to curb forced labor abroad.
- Sen. John Kennedy (R-La.) on Wednesday said that the Treasury Department will create an online tool to help people redeem billions of dollars in savings bonds.
ODDS AND ENDS
- Pharmaceutical company Johnson & Johnson late Tuesday announced a $20.4 million settlement with two Ohio counties to resolve claims about the company’s role in creating the nation’s opioid crisis.