The Hill’s Morning Report — Can the economy help Republicans buck political history in 2018?

 

 

 

Welcome to The Hill’s Morning Report, and happy Thursday! Our daily email gets you up to speed on the most important developments in politics and policy, plus trends to watch, co-created by Jonathan Easley and Alexis Simendinger. (CLICK HERE to subscribe!)

 

President Trump celebrates his 72nd birthday today. There will be ice cream and cake.

And here’s the sparkler quote from Federal Reserve Chairman Jerome Powell at the conclusion of the central bank’s second day of deliberations on Wednesday: “The economy is doing great.”

Hill.TV’s “Rising” program starting at 8 a.m.: Guests include Attorney General Jeff Sessions, who talks about the dismissal of former FBI Director James Comey, immigration and asylum policies, whether federal marijuana law might change, and today’s Justice Department inspector general report; and also interviewed, John Podesta, former White House chief of staff under former President Clinton, White House counselor to former President Obama, and campaign manager for Hillary Clinton in 2016. Watch: http://digital-stage.thehill.com/hilltv/rising

The deck is stacked against Republicans this election cycle.

The congressional ballot has tightened and President Trump’s approval rating has eased upward, but Democrats are still favored to win a majority in the House.

Among their advantages:

• The president’s party historically loses seats in its first midterm election.
• Democrats appear to have an advantage in enthusiasm, which has produced several surprisingly strong showings in special elections.
• Republicans are defending more competitive House seats than expected due to a flood of retirements.
• Trump’s approval rating is historically low for a first-term president (43 percent, RealClearPolitics average. Presidential job approval above 50 percent can lift parties in power during election years).

But will the booming economy potentially cancel out some Democratic advantages?

CGCN Group passed along this fascinating historical look at how the Trump economy stacks up to those of his predecessors, and what it meant for the president’s party in the House:

 

 

As former Presidents Bill Clinton and George W. Bush can attest, the party in power can lose big even when the economy is humming. And Trump is less popular at this point in his first term than his predecessors.

However, no president since 1994 has faced a midterm election with unemployment this low and the Dow Jones industrial average this high. And it’s been 20 years since the party in power could boast about this level of gross domestic product growth and consumer confidence.

The Fed’s Powell gushed about the state of the economy at a news conference on Wednesday, where he also raised the longer-term outlook for the United States.

Overall:

“The main takeaway is that the economy is doing very well.”

On the impact of the GOP’s tax cuts law:

“The fiscal changes — that includes both the tax cuts, individual and corporate, and the spending changes — will provide meaningful support to demand, significant support to demand over the course of the next three years.”

On whether Trump’s trade war will cause a slow-down:

“Right now, we don’t see that at all. The economy is very strong, the labor market is strong, growth is strong. We really don’t see it in the numbers. It’s just not there … I would put it down as a risk.”

Here’s the upshot, from CGCN’s analysis:

“The [midterm elections] outcome will most likely hang on which tectonic force – Trump’s polarizing persona on one side, the thriving economy on the other – wins out. At the moment, Trump does not appear to be the same anvil for Republicans he was six months ago. That, of course, could change as quickly as his next tweet.”

LEADING THE DAY

West Wing personnel: National Economic Adviser Larry Kudlow, recovering from a heart attack, tells Politico in a text message that he expects to return to his job … CBS News is reporting that Press Secretary Sarah Huckabee Sanders is planning to leave her post by the end of the year. The report also says deputy press secretary Raj Shah is eyeing the exits. Sanders responds:

 

 

INVESTIGATIONS: The long-awaited report from Inspector General Michael Horowitz about the FBI and Department of Justice’s (DOJ) handling of the investigation into Hillary Clinton will be released today.

You can find the report here when it drops. https://oig.justice.gov/

The Hill’s Olivia Beavers and Katie Bo Williams have the rundown on what to watch, including Horowitz’s appraisal of Comey’s actions, as well as those of FBI agent Peter Strzok and lawyer Lisa Page (The Hill).

Here’s a clip from the first part of Hill.TV’s interview with Sessions, in which he defends Comey’s firing and says the IG report could lead to more firings (Hill.TV).

Elsewhere, it was a busy 24 hours on the investigations front….

ABC News is reporting that former Trump attorney Michael Cohen is likely to cooperate with federal investigators. It’s believed that prosecutors are looking into Cohen’s private business dealings, but the president has a lot of exposure here as investigators sift through personal documents of his self-described “fixer.”

The Washington Post: Special counsel Robert Mueller stays focused on Cohen.

A new poll finds that Mueller’s image is at an all-time low. That is an interesting development, although perhaps expected, in light of his public silence about the investigation during a year in which conservative lawmakers and media have hammered the special counsel (Politico/Morning Consult).

And former Senate Intelligence Committee staffer James Wolfe made his second appearance in court, pleading not guilty to charges he lied to the FBI about his contacts with the media. This case has attracted attention because the DOJ seized private communications between Wolfe and New York Times reporter Ali Watkins as it sought information about leaks from the committee. Wolfe and Watkins had a romantic relationship while she covered the committee that Wolfe served (The Washington Post).

Finally, the walls are closing in around Environmental Protection Agency Administrator Scott Pruitt, who is the subject of more than a dozen investigations into his spending and influence peddling at the agency.

Trump has publicly embraced Pruitt’s performance at EPA so far, but the drumbeat to oust him over his management decisions and ethics controversies is coming from conservatives now. It is growing louder.

The Hill: Sen. James Inhofe (R-Okla.), one of Pruitt’s top allies in Congress, says the EPA administrator may need to resign.

The National Review: Pruitt should resign.

The Hill: Conservative group launches ads calling on Trump to fire Pruitt.

 

 

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CONGRESS: Immigration is not the policy about which most House Republicans imagined arguing throughout June, at least not during an election year. But the debate that flared last year when Trump ended the program for “Dreamers,” known as Deferred Action for Childhood Arrivals, promises to heat up again next week when two legislative approaches are expected to hit the House floor.

The White House, for strategic reasons, plans to back both bills, arguing the president supports Republicans’ efforts to forge a consensus (The Hill). In truth, the president does not expect to ever see an immigration bill on his desk this year. 

House Speaker Paul Ryan (R-Wis.) managed to tamp down a rebellion within his conference when he struck a deal that once again shows that conservatives – and not centrists – call the shots in the House GOP conference. A plan now calls for consideration of two bills on immigration. Trouble is, a second measure, imagined as a compromise between centrists and conservatives with a dollop of Trump’s druthers mixed in, remains M.I.A. It’s just the latest drama to engulf Ryan this year (The Hill).

That compromise measure, yet to be unveiled, is to include a provision that would halt the separation of children from their parents at the border, a Trump policy that many lawmakers and their constituents view as inhumane, NBC News reports. The work-in-progress measure will also protect up to 1.8 million Dreamers who came to the United States illegally as children, plus eliminate the diversity visa lottery and add $25 billion in spending to secure the U.S.-Mexico border.

Separately, however, NBC News correspondent Pete Williams reports how the administration is trying to shut down DACA by urging a federal court in Texas to declare DACA illegal, setting up a potential conflict that could allow the government to halt the program that offers protection from deportation within a matter of weeks.

Meanwhile at the Department of Homeland Security, a newly created office in Los Angeles will be charged with identifying and revoking naturalized citizenship and green cards from people who lied on applications about their immigration status. Misrepresentation or fraud could result in their removal from the United States (The Hill).

IN FOCUS/SHARP TAKES

➔  ECONOMY & TRADE: The Trump administration, deepening its global trade offensive, is preparing to levy tariffs on tens of billions of dollars of Chinese goods in the coming week, perhaps as early as Friday — a move that is likely to spark heavy retaliation from Beijing (The Wall Street Journal).

Trump will meet today with his advisers to decide if the prepared tariffs plan will go into effect, Reuters reports.

The president, during an interview with “Fox News Special Report” with Bret Baier broadcast on Wednesday, said Beijing recently upped its assistance to North Korea, countering his administration’s “maximum pressure” efforts, because “China could be a little bit upset about trade because we are very strongly clamping down on trade. I think very strongly. I mean you’ll see over the next couple of weeks.”

The administration’s tariffs policies and posture toward Chinese telecom company ZTE continue to spark opposition on Capitol Hill (The Hill). Members of the Senate Finance Committee will press Commerce Secretary Wilbur Ross about the administration’s recent decision to impose steel and aluminum tariffs during a hearing on June 20 (The Hill).

China, with trade, business and power in mind, writes Evan Osnos in The New Yorker, was the biggest winner at U.S.-North Korea summit:

“The Chinese are breathing a deep sigh of relief. They got what they most wanted,” one China specialist said. “And, best of all, it came out of President Trump’s mouth. The Chinese didn’t even have to rely on Kim Jong Un to do their bidding.”

The Federal Reserve’s Powell on Wednesday said there was too little data at the moment to gauge the economic impacts of Trump’s trade policies.

“We have broad contacts among business leaders around the country,” the newly confirmed chairman told reporters. “Reserve bank presidents … say that concerns about changes in trade policy are rising,” he added. “And also, that you’re beginning to hear reports of companies holding off on making investments and hiring people.”

➔  CAMPAIGNS & POLITICS: Trump is already having an outsized impact on the 2018 midterm elections.

We saw this play out in Tuesday’s primaries, in which Rep. Mark Sanford (R-S.C.), a vocal Trump critic, lost his bid for reelection after the president called for his ouster over Twitter.

The Hill: Trump tightens grip on GOP.

The Hill: In primaries, Trump can hurt. But can he help?

Republican National Committee chairwoman Ronna McDaniel sent this message to the GOP:

 

 

Former President Obama is leaving his mark too. The Hill’s Amie Parnes has the inside story on how Obama is consulting with potential 2020 candidates as his political committee ramps up for the 2018 midterm elections, although some Democrats are complaining that his efforts are long overdue.

Speaking of potential 2020 candidates…

The Hill’s Lisa Hagen and Ben Kamisar were at the Hyatt Regency on Capitol Hill yesterday for the cattle call of Democratic presidential hopefuls, including Sens. Cory Booker (D-N.J.), Elizabeth Warren (D-Mass.), Bernie Sanders (I-Vt.), Kirsten Gillibrand (D-N.Y.) and Kamala Harris (D-Calif.).

Read their colorful story HERE. A few takeaways: Sanders is still a star, universal health care and expanding Social Security and Medicare are energizing issues on the left, and anger at the Trump administration runs hot.

Back to 2018…

Trump is attacking Sen. Claire McCaskill (D-Mo.), one of 10 Democrats running in states he carried in 2016, over a head-scratching unforced error. McCaskill touted a RV tour across the Show Me State but abandoned the RV for her private plane for some stretches of the trip.

 

 

McCaskill responds: “Paying on my own dime to visit more Missouri veterans is not something I’m going to apologize for.”

More from the campaign trail: … The House Republican campaign arm will not support Virginia Senate candidate Corey Stewart, who is backed by Trump but has a history of controversy (The Hill) … Sen. Sherrod Brown (D-Ohio) is up big in his reelection bid (Quinnipiac University) … Democrats have a 6 point advantage in the congressional generic ballot (Public Policy Polling) … the Congressional Leadership Fund, a top GOP super PAC, is putting six figures behind a new round of ads attacking House Minority Leader Nancy Pelosi (D-Calif.) (The Hill) … Dems seek to leverage ObamaCare fight for midterms (The Hill)

The Morning Report is created by journalists Jonathan Easley jeasley@digital-stage.thehill.com & Alexis Simendinger asimendinger@digital-stage.thehill.com. Suggestions? Tips? We want to hear from you! Share The Hill’s reporting and newsletters, and encourage others to SUBSCRIBE!

OPINION

The Supreme Court’s cake shop ruling was a victory for the First Amendment, by the ACLU’s Ria Tabacco Mar and Brian Hauss, opinion contributors to The Hill. https://bit.ly/2JMJM91

Quarter million lives at risk in the latest battle for Yemen, by Simon Henderson of the Washington Institute for Near East Policy, opinion contributor to The Hill. https://bit.ly/2LQg7wz

WHERE AND WHEN

The House meets at 10 a.m. and legislative business begins at noon … With opening pitch at 7:05 p.m. at Nationals Park in Washington, lawmakers from both parties face off for the annual Congressional Baseball Game for charity. It’s a ticketed event and will be broadcast by C-SPAN. Members of the House and Senate who signed up to play tonight include Majority Whip Rep. Steve Scalise (R-La.) and Republican Sens. Jeff Flake (Ariz.) and Rand Paul (Ky.): https://www.congressionalbaseball.org/teams/

The Senate will convene at 9:30 a.m. and resume consideration of the National Defense Authorization Act for Fiscal Year 2019. The Appropriations Committee meets at 10:30 a.m. to mark up a spending measure for the Interior Department, Environmental Protection Agency and related agencies; an appropriations bill for the departments of Commerce and Justice, science and related agencies; and a separate measure covering appropriations for the legislative branch.

The president has no public schedule on his birthday.

Gary Cohn, who served 15 months as White House national economic adviser before quitting, will be interviewed at 8:30 a.m. during an event moderated by The Washington Post. Expect Cohn to talk about Trump, trade tariffs, China, taxes, and how he thinks Republicans may fare in November.

ELSEWHERE

> Federal court approval for a merger between AT&T and Time Warner could open the floodgates to a wave of media concentrations. The court ruling comes as Comcast is preparing a bid for Fox, by Harper Neidig, The Hill.

> World Cup soccer is coming back to the United States, by Brian Straus, Sports Illustrated.

> How a blind woman’s damaged brain created new pathways to allow her to see objects in motion, Science Daily.

THE CLOSER

And finally … welcome to the Morning Report’s weekly QUIZ CONTEST. You can send smart guesses by midnight, and winners can take a bow in Friday’s newsletter. Email your answers to jeasley@digital-stage.thehill.com or asimendinger@digital-stage.thehill.com and put “Quiz” in the subject line. Good luck!

North Korean leader Kim Jong Un, 34, is a smiling dictator. Which of these statements is FALSE, according to a flurry of recent news coverage?

1. Kim as a teen attended a Swiss boarding school under an assumed name, and was known to despise lukewarm pasta.
2. As a student, Kim wore Chicago Bulls T-shirts to class every day.
3. As leader of North Korea, Kim had his uncle executed and his rebellious half-brother murdered, according to intelligence sources.
4. Kim is addicted to cheese, particularly imported Emmentel, and sent a North Korean team to France to learn more about cheese making. (At the Singapore summit, no cheese appeared on the menu.)
5. North Korean school children are taught that Kim learned to drive at the age of three.