Subject: POLITICO's Morning Money: Trump's magical thinking tax plan — Treasury departure lounge — Trump won't release tax returns — Is secular stagnation real?
From: Morning Money <[email-masked]>
To: <[email-masked]>
Date: Thu, 12 May 2016 06:03:14 -0600

By Ben White | 05/12/2016 08:00 AM EDT

TRUMP'S MAGICAL THINKING TAX PLAN - In one of the more inexplicably bizarre statements of an already bizarre campaign, Donald Trump economic adviser Sam Clovis suggested the real estate magnate's tax cut plan could generate a government surplus of as much as $7 trillion over 10 years. This is, to put it mildly, complete nonsense. "Our proposals, what we think will happen, will lead us in fact to about a $4.5 to $7 trillion surplus at the end of 10 years, if all of our initiatives are put in place," Clovis said at the Peterson Foundation fiscal summit. 

The conservative Tax Foundation scored Trump's current plan (now subject to possibly endless revision) as adding $10 trillion to the debt over ten years. Clovis complained that the Foundation did not use "dynamic scoring" which takes into account the potential growth effects of tax reductions. The only problem with this: They DID use dynamic scoring to get to the $10 trillion figure. When scoring on a static basis, the group said Trump's plan would cost $12 trillion. There is simply no way to get to Clovis' estimate without massive tax hikes. 

TREASURY DEPARTURE LOUNGE - Anne Wall, Assistant Secretary for Legislative Affairs, is headed out. Treasury Secretary Jack Lew on Wall's tenure: "For five years, including for the last two years at Treasury, I have relied on the sound advice and strategic judgment of Anne Wall, who brought a special combination of determination, humor and a comprehensive understanding of policy and Congress to her role as Assistant Secretary for Legislative Affairs. 

"Anne played a pivotal role in securing some of Treasury's signature policy accomplishments, including Trade Promotion Authority, IMF quota reform, and the Joint Comprehensive Plan of Action with Iran, as well as in protecting key administration priorities, including the Affordable Care Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act." 

TRUMP WON'T RELEASE RETURNS - POLITICO's Nolan D. McCaskill: "Donald Trump has no plans to release his tax returns before November. Despite pressure from his now-vanquished Republican rivals and even 2012 GOP presidential nominee Mitt Romney, Trump has refused to oblige. 'There's nothing to learn from them,' the presumptive nominee told The Associated Press in an interview conducted Tuesday and published Wednesday. ... 

"The real estate mogul has said voters aren't interested in his tax returns but that he would release them after the conclusion of an audit. Trump surrogate Ben Carson said last week that Trump would release his tax returns before the general election." http://go.politicoemail.com/?qs=8b4ebb51bb795caf7ac65da9d55b7c1e4e3bb09933feabd2a7c2da8477b0e827

HARD TO SEE how Trump gets away without releasing his returns, a tradition though not a requirement for presidential candidates. He would be the first major party candidate to not release returns since Gerald Ford in 1976. Trump has said he cannot release returns because they are under IRS audit. This, of course, is entirely untrue. There is nothing stopping him from releasing the returns. 

As CNN Money reported on Wednesday even Richard Nixon released returns that were under IRS audit. The only conclusion that can be drawn is that Trump is hiding damaging information in his tax returns. He is likely to come under intense pressure both from Democrats (Hillary Clinton jumped on it Wednesday) and members of his own party (Mitt Romney, Rep. Darrell Issa among others so far) to release the returns. 

BUT WAIT MAYBE HE WILL! - Trump on Wednesday night on Fox denied he told the AP he wouldn't release his returns: "I didn't say that. I said I'm being audited ... So, the answer is, I'll release. Hopefully before the election I'll release." 

TRUMP OPPONENTS are already circulating lists of reasons they think Trump might be hiding his returns. Among them: "Trump's taxes could show that he doesn't make nearly as much money as he suggests ... Trump probably reports relatively little taxable income ... Trump may lower his taxes by deducting parts of his lifestyle as business expenses and borrowing against his assets ... Trump's tax returns may show that his most valuable asset - his name - belongs to an offshore shell company.

"Old tax filings show that Trump had negative income due to depreciation in 1978. Trump may be using real estate depreciation to lower his income - possibly to below zero ... Sen. Ted Cruz has speculated that Trump's tax returns may contain evidence of his ties to organized crime. ... Cruz suggested Trump's tax returns may show significant donations to left-wing organizations, including Planned Parenthood ... Trump's returns may show his unwillingness to give to charity, already evinced by his paltry support of his own foundation" 

TRUMP-CLINTON TIED - Reuters: "Trump pulled even with Democratic rival Hillary Clinton in a Reuters/Ipsos opinion poll released on Wednesday, in a dramatic early sign that the Nov. 8 presidential election might be more hotly contested than first thought. ... Trump's numbers surged after he effectively won the Republican nomination last week by knocking out his two remaining rivals, according to the poll.

"The national survey found 41 percent of likely voters supporting Clinton and 40 percent backing Trump, with 19 percent undecided. The survey of 1,289 people was conducted over five days and has a credibility interval of 3 percentage points" http://go.politicoemail.com/?qs=8b4ebb51bb795caf254dfeecf9c8f1562b154a044de6a8fe70f2c1721b8efc31

FIRST LOOK: IS SECULAR STAGNATION REAL? - Bloomberg Businessweek cover features Larry Summers and Janet Yellen: "The world economy is acting weird. Growth is paltry and uneven. It might not a cyclical thing. We may be stuck in secular stagnation." 

Cover: "Larry Summers has something to say: The economy is really sick. Is he right?" by Peter Coy http://go.politicoemail.com/?qs=8b4ebb51bb795caf68f7b75d3f712b4f58d2e98ec4f4001432b925a1b37f16b0 Cover image: http://go.politicoemail.com/?qs=8b4ebb51bb795caf54dc926659ad1c7e2493e0714b6ad59a2b36a64f37854817

JOIN ME NEXT WEEK! - POLITICO's Ben White takes Morning Money live for a lunch briefing with President and CEO of the Federal Reserve Bank of Atlanta, Dennis Lockhart and President and CEO of the Federal Reserve Bank of San Francisco, John C. Williams. Tuesday, May 17 - Doors at 12:00 p.m.; The W Hotel - 515 15th St NW. RSVP: http://go.politicoemail.com/?qs=8b4ebb51bb795caf17850c03cd3f3ad3514aefa2775edda65e7b878e4151cfcb

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THIS MORNING ON POLITICO PRO FINANCIAL SERVICES - Patrick Temple-West on Sens. Elizabeth Warren and Tom Cotton asking FINRA about investor protections -- and to get Morning Money every day before 6 a.m. -- please contact Pro Services at (703) 341-4600 or [email-masked]. 

DRIVING THE DAY - Trump meets on Capitol Hill with House Speaker Paul Ryan and other GOP leaders ... House Financial Services subcommittee has a hearing at 10:00 a.m. on "The Future of Housing in America: A Comparison of the United Kingdom and United States Models for Affordable Housing" ... Jobless claims at 8:30 a.m. expected to dip to 270K from 274K ... Import prices at 8:30 a.m. expected to rise 0.6 percent.

TRUMP TWEAKS TAXES - POLITICO's Shane Goldmacher: "Conservative economists Larry Kudlow and Steve Moore, tasked by Donald Trump's campaign to revise his tax plan, have called their changes 'tweaks' but what they submitted to the nonprofit Tax Foundation for a new deficit score amounts to a dramatic rewrite of Trump's original plan. ... 

"The new plan, compared against Trump's initial proposal, would increase tax rates across all income levels, dramatically reduce the number of people who would pay no income taxes at all and impose a new cap on charitable deductions for the wealthy. It was described to POLITICO by Tax Foundation analyst Alan Cole. Trump himself has not yet approved the revisions being drafted by Kudlow, a CNBC host, and Moore, a fellow at the Heritage Foundation" http://go.politicoemail.com/?qs=8b4ebb51bb795caff7a9d3af5d39e262566430612cfe60d7145398dc44051bd0

IS TRUMP REALLY THE KING OF DEBT? - Bloomberg View's Timothy L. O'Brien reviews the record and finds the answer is a great big no. http://go.politicoemail.com/?qs=8b4ebb51bb795caf4cf3cd98fac8a77cd191b36c1198febaefc8c36a9fc0ebdd

REAL TALK ON DEBT - Committee for a Responsible Federal Budget's Maya MacGuineas: "First the presumptive Republican nominee suggested in March that he would pay off the national debt in eight years. He later backed away from that proposal, which was good because such an aggressive goal would be both politically challenging and probably economically devastating ... 

"More ideal is a plan that keeps the debt from growing faster than the economy and achieves balance down the road, on a timetable consistent with helping the economy to grow, not shrink. ... An important point in this debate is that the U.S. does not need to ever pay off the debt completely; the goal is to keep it at a manageable level. National debt is desirable in that it provides the U.S. Treasury market" http://go.politicoemail.com/?qs=8b4ebb51bb795caf0bb5b702649a45c6f7694dce443823093f4ecaabdb3bc6f7

JAMIE DIMON VS CAM FINE - CNN Money's Patrick Gillespie: "Jamie Dimon wants to be friends with small banks on Main Street. But the JPMorgan chief wasn't exactly extending the olive branch on Wednesday when he responded to criticism from a small bank lobbyist by calling him 'a jerk.' ... Camden Fine, a long time community banker and head of a group that represents small banks, had rejected Dimon's op-ed last month in The Wall Street Journal titled 'Large Banks and Small Banks Are Allies, Not Enemies.'

Fine argued that Dimon is trying to use small banks as cover in Congress to help get his agenda passed. 'Just because Jamie Dimon says 'let's sing kumbaya' doesn't mean community banks are going to just line-up like a Greek chorus,' Fine told Bloomberg.Speaking on CNBC Wednesday, this was what Dimon had to say about Fine. 'I think the guy who wrote that is a jerk,' Dimon said in a phone interview. 

"Fine fired back at Dimon in a phone interview with CNNMoney on Wednesday. 'What is this, junior high school?' said Fine, who is president of the Independent Community Bankers of America. 'To be called a jerk by Jamie Dimon - I take as a badge of honor. It means he has no good argument to our response. So he resorts to name calling, and in my view that is the last refuge of small minds.'" http://go.politicoemail.com/?qs=8b4ebb51bb795cafbc2ae4d5d8a700375017dc533873f89a2a73f36d00ed6def

A former senior Hill staffer emails: "Help me understand how Cam's belligerence is good for his members? The deals he has cut cost his guys millions of dollars every year - the Durbin Amdt, CFPB. Dodd Frank wouldn't have happened without Camden Fine cutting a deal with Barney Frank, a fact Barney highlighted in his book"

WALL STREET NIGHTMARE: DEALS GONE BUST - WSJ's Liz Hoffman: "In the world of mergers and acquisitions, 2015 was a year of record-breaking deals. This year is one of broken-deal records. More than $395.4 billion in U.S. mergers, including, most recently, Staples Inc.'s combination with Office Depot, have fallen apart in 2016, according to data provider Dealogic, felled by exacting regulators, rocky markets or reluctant targets. That will be a record even if no other deals stumble for the rest of the year.

"That is bad news for the banks that stood to make billions of dollars in fees on the M&A feast of 2015, a record-setting year of more than $4.6 trillion in announced deals. Financial advisers pocket most of their money only when deals close, which means that when deals go bust, the work they have already done goes largely unpaid. Three of the largest collapsed deals this year - Pfizer Inc.'s takeover of Allergan PLC, Halliburton Co.'s purchase of Baker Hughes and Staples' merger with Office Depot - will cost banks more than $300 million in advisory fees" http://go.politicoemail.com/?qs=8b4ebb51bb795caf62bbf94891bdec6d9cfe57de18389014d89362d3412e684c

GOP CRACK-UP PART I - NYT's Jennifer Steinhauer and Jonathan Martin: "As his party splinters and his policy agenda faces peril, Speaker Paul D. Ryan will enter his meeting with Donald J. Trump on Thursday increasingly at odds with a growing, if grudging, Republican congressional majority willing to embrace Mr. Trump as their candidate. ... The decision of Mr. Ryan, the party's most prominent skeptic of its polarizing new standard-bearer, will echo well beyond this campaign season when he anticipates rebuilding his party's post-Trump brand, ... 

"But Mr. Trump has said he has no intention of reinventing himself for the general election - a declaration that could force Mr. Ryan to acquiesce in the name of Republican unity or establish himself as the leading voice of opposition within the party. While Mr. Ryan has repeatedly cited his desire to unify his party and to reject the nasty tone of the Republican primary campaign, he appears to have complex motivations. ... He and his staff play down talk of a 2020 run for the White House, but how Mr. Ryan manages Mr. Trump over the next six months will play a major role in shaping Mr. Ryan's future." http://go.politicoemail.com/?qs=8b4ebb51bb795caf2bbcba7b253faa5a2067f4801c02708a5446694d655d02eb

GOP CRACK-UP PART II - WP's Dan Balz: "Trump will come to ... to hasten the process of unifying a fractured party. The reality is that, nice words to the contrary, Trump and those party leaders are likely never to fully achieve that result. Trump is an unpredictable presidential candidate, predictable only in the sense that what he says one day can change the next. Whatever reassurances he might try to offer in the face-to-face meetings - and Trump knows how to be charming in his personal encounters - could easily be washed away ... 

"For months, Ryan has been establishing himself as the keeper of Republican values and an advocate of positive messaging in the face of a hostile takeover by the renegade Trump, whose candidacy has been buoyed by the politics of anger. The presumptive nominee has made it clear that he will brook only minimal dissent from GOP officials and has sent conflicting signals about his desire to find true unity with party leaders ... One of the first questions about Thursday is: Which Trump will show up in Washington?" http://go.politicoemail.com/?qs=8b4ebb51bb795caf214bd843675d7edb88c22981e689c8d0132f73db9611831a

ELECTION BACKDROP: CRUMMY INCOMES - FT's Sam Fleming and Shawn Donnan in Washington: "More than four-fifths of America's metropolitan areas have seen household incomes decline this century, according to new research that exposes the politically charged reality of middle-class decline at the heart of this year's presidential election. The research on urban centres that are home to three-quarters of the US population shows that median household incomes, adjusted for the cost of living in the area, grew in just 39 out of 229 metro areas between 1999 and 2014. ... 

"The figures, prepared by the non-partisan Pew Research Center and shared with the Financial Times, cast light on the drivers of the economic discontent that have fueled the rise of ... Trump ... and Bernie Sanders ... Both men's campaigns have tapped into deep-seated concerns among middle class voters on the right and the left. Pew's research illuminates one source of that anxiety and raises questions about even some of America's most celebrated economic success stories" http://go.politicoemail.com/?qs=8b4ebb51bb795caf26845bb2e6e7ae89c91a5b9ae56f8d634c2a752975996045

BOONE PICKENS ALL IN FOR TRUMP - POLITICO's Alex Isenstadt: "Oil tycoon Boone Pickens is slated to host a reception for a pro-Donald Trump super PAC at his Texas ranch next month. ... Pickens, a prolific giver to Republican candidates and causes who on Wednesday announced his support for Trump, is scheduled to host an event at his North Amarillo, Texas, ranch on the weekend of June 11-13 ... The event will be sponsored by Great America PAC, a super PAC that is devoted to supporting Trump.

'The event is not a fundraiser per se, but rather a reception aimed at cultivating new potential givers to the super PAC. Pickens, who helped to finance the Swift Boat Veterans for Truth campaign against John Kerry in 2004, is expected to be joined by Ed Rollins, a veteran Republican strategist and 1984 Ronald Reagan campaign manager. Great America PAC has invited a group of major GOP donors to the event." http://go.politicoemail.com/?qs=8b4ebb51bb795caf0de1a5847779612f4888cfbc697c8752e65bbe889d19eed1

ROUSEFF COULD BE GONE - Bloomberg: "This Wednesday may be the last day in office for President Dilma Rousseff, as Brazil's Senate gears up for a vote that would force her out and into an impeachment trial she appears unlikely to survive. The Senate debate is scheduled to last 10 hours and end by 10 p.m. local time, the chamber's speaker Renan Calheiros said before opening the session. Surveys by the country's major newspapers show the opposition has 50 or 51 votes, more than the simple majority of the 81 seats necessary to put her on impeachment trial

"Following more than five months of political turmoil that have exacerbated the worst economic recession in over a century and all but sidelined Rousseff's economic agenda in Congress, her departure may make Brazil's investment climate a bit more predictable, at least temporarily. The question is to what extent her replacement, Vice President Michel Temer, can live up to investor expectations of slashing a near-record budget deficit" http://go.politicoemail.com/?qs=8b4ebb51bb795cafb6d920f13eaec2dfae850ced9e227a1963f63ccdba4c4c74

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