Happy Friday 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.
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THE BIG DEAL—Trump lawyer urges Treasury not to hand over Trump’s returns: An outside lawyer for President Trump on Friday argued that Democrats can’t legally request Trump’s tax returns, and said the Internal Revenue Service shouldn’t provide the information to Congress until it receives an opinion for the Justice Department’s Office of Legal Counsel.
“Caution and deliberation are essential to ensure that the Treasury Department does not erode the constitutional separation of powers or the Tax Code’s ‘core purpose of protecting taxpayer privacy,’ … protections that safeguard not just the President, but all Americans,” lawyer William Consovoy said in a letter to the Treasury Department’s general counsel.
The Hill’s Naomi Jagoda has more on this breaking story here.
Why it matters: The letter marks the start of Trump’s formal effort to fight Democrats’ request for his tax filings. The president has already made comments to reporters indicating that he did not want to comply with Democrats’ request.
Trump is the first president in decades to refuse to voluntarily release his tax returns. He has cited a longtime IRS audit, though the IRS has said that audits don’t prevent people from making their own tax information public.
Background: House Ways and Means Committee Chairman Richard Neal (D-Mass.) on Wednesday sent a letter to IRS Commissioner Charles Rettig requesting six years worth of Trump’s personal and business tax returns.
Neal made the request under a provision of the federal tax code that states that Treasury “shall furnish” tax returns requested by the chairmen of Congress’s tax committees, provided that they are viewed in a closed session.
Democrats say that there is little room in the statute for the IRS to deny their request, which they say has a legitimate legislative purpose.
But Trump’s lawyer disagrees. “While the committee has jurisdiction over taxes, it has no power to conduct its own examination of individual taxpayers,” Consovoy wrote. “Enforcement of our nation’s tax laws is entrusted to the IRS–an arm of the Executive Branch.”
More on the tax-return fight… Mnuchin’s loyalty to Trump tested: Treasury Secretary Steven Mnuchin faces a challenging test after Democrats formally requested President Trump’s tax returns.
Mnuchin has been one of Trump’s most loyal Cabinet members, defending the president’s policies and personal conduct when others have shied away.
Now as the president’s chief line of defense he will have to balance his loyalty to Trump against a request that many experts say leaves him little wiggle room.
“[The] request tests Mnuchin’s oath of office: whether Mnuchin will faithfully execute the laws of the United States, or whether Mnuchin will bend to the will of the president,” said Steve Rosenthal, a senior fellow at the Urban-Brookings Tax Policy Center who testified before Congress in February about the need to request Trump’s tax returns. The Hill’s Naomi Jagoda and I explain why Mnuchin is in a tough spot here.
The challenge: Mnuchin has been a fierce Trump loyalist and advocate for his agenda, supporting the president’s positions and controversial comments even when they differ from his own views.
- A business-friendly Republican, Mnuchin shared Trump’s support for cutting taxes and loosening bank regulations, if not his protectionist trade policy.
- While top White House officials say Mnuchin has expressed deep concerns about Trump’s tariffs behind closed doors, he’s supported the president’s trade agenda in public and in negotiations with Chinese counterparts.
- Mnuchin also proved his loyalty amid the backlash to Trump’s response to violent white nationalist rallies in Charlottesville, Va., in 2017, when the president faced an uproar for blaming “both sides” after deadly clashes between white nationalists and counterprotesters. Mnuchin, who is Jewish, insisted the president was not racist and did not sympathize with neo-Nazis.
What comes next: Trump has refused to turn over his tax returns and the IRS has until Wednesday to comply with Neal’s request. The president insisted Friday that the law is “100 percent” on his side, but that’s not at all what the relevant statute implies. And his lawyer has urged the Treasury Department not to turn over the returns until the Justice Department weighs in. Stay tuned.
LEADING THE DAY
Economy rebounds with 196K jobs in March, unemployment holds at 3.8 percent: The U.S economy added 196,000 jobs in March, the Labor Department reported Friday, rebounding from a dismal February hiring slowdown.
The unemployment rate and held steady at 3.8 percent as the labor force participation rate stayed even at 63 percent.
Hourly earnings also increased by 3.2 percent in the past 12 months, slightly lower than February’s annual rate of 3.4 percent.
The March report brings average monthly employment growth to 180,000 for the first quarter of 2019 following gains of 312,000 jobs in January and 33,000 in February, according to revised totals released Friday. I break down the data here.
The big takeaway: The bounce back toward strong job growth could help curb fears of an impending U.S. recession, even as monthly job gains and gross domestic product growth are likely to moderate in 2019.
“That sound you hear is the collective sigh of relief seeing hiring rebound back to the recent trend,” said Mark Hamrick, senior economic analyst at Bankrate.com, calling the monthly average “quite respectable for this stage of the nearly decade-old economic expansion.”
Even so, Trump called on the Federal Reserve to boost stimulus to the economy just hours after the jobs report painted a fairly sunny picture. “I personally think the Fed should drop rates,” Trump told reporters at the White House on Friday, predicting that the economy would take off like a “rocket ship” if the independent central bank lowered borrowing costs.
Trump has criticized the Fed throughout his presidency for raising interest rates after it cut them to near-zero levels during the Obama administration. The Fed has hiked rates eight times since Trump took office in 2017 and four times since Fed Chairman Jerome Powell took over the bank in 2018.
The president argued once again on Friday that the U.S. could have grown at a faster rate if the Fed didn’t increase borrowing costs in an effort to stave off inflation, which has remained below the central bank’s target range. I’ve got more on his comments here.
Trump hits Venezuelan oil with new sanctions: The Trump administration announced Friday a fresh wave of sanctions against Venezuela, targeting the country’s state-owned oil company in an effort to pressure embattled President Nicolás Maduro.
Vice President Pence said during a speech in Houston that the administration will sanction 34 vessels owned or operated by Petróleos de Venezuela, S.A. (PDVSA), as well as two companies that transport Venezuelan crude oil to Cuba.
“Venezuela’s oil belongs to the Venezuelan people,” Pence said.
Background: The vice president portrayed the latest sanctions as part of an ongoing effort to pressure Maduro to give up power peacefully. Maduro has hung on to power as Venezuela faces a worsening economic and humanitarian crisis. The U.S. led a coalition of nations earlier this year in recognizing opposition leader Juan Guaidó as the country’s legitimate president.
ON TAP NEXT WEEK
Tuesday:
- House Appropriations subcommittees will hold hearings on funding requests for the Departments of the Treasury, Agriculture, Justice, along with the U.S. Army and IRS.
- The House Financial Services Committee holds a hearing entitled “The Community Reinvestment Act: Assessing the Law’s Impact on Discrimination and Redlining,” 10 a.m.
- Treasury Secretary Steven Mnuchin testifies before the House Financial Services Committee on the state of the international financial system, 2:30 p.m.
Wednesday:
- The House Financial Services Committee holds a hearing on systemically important banks with the chief executives of the largest U.S. banks, 9 a.m.
- IRS Commissioner Charles Rettig testifies before the Senate Finance Committee on the 2019 tax filing season and IRS modernization, 10:15 a.m.
- The Senate Small Business Committee holds a hearing on reauthorization of the Small Business Administration’s international trade programs, 2:30 p.m.
NEXT WEEK’S NEWS, NOW
- Treasury Secretary Mnuchin and IRS Commissioner Rettig are scheduled to appear at several congressional hearings on Tuesday, the day before the deadline set by House Ways and Means Committee Democrats to turn over Trump’s tax returns to the panel. While the purposes of those hearings are not about the president’s finances, you can expect Mnuchin and Rettig to face many questions about the request for his tax returns.
- The chief executives of some of the largest U.S. banks will testify before the House Financial Services Committee on Thursday, the first group appearance of megabank CEOs since the financial crisis. Expect Dems to grill them on how they’re using record profits and their push for loosening banking rules, while Republicans could ask about their thoughts on the global financial and economic outlook.
GOOD TO KNOW
- U.S. companies are cutting back on production in China as a result of Trump’s tariffs on the country, according to The New York Times.
- President Trump on Thursday announced he will nominate Treasury official Jovita Carranza to lead the Small Business Administration, replacing outgoing leader Linda McMahon.
- China’s long process for approving genetically modified crops has become a contentious issue in trade negotiations with the U.S., Reuters reported Thursday, citing two sources with knowledge of the talks.
- Tech giants Facebook, Twitter and Google are sending company representatives to testify at a Senate hearing next week about big tech’s alleged “censorship” of conservative voices.