On The Money: Fed poised to give Trump boost with rate cut | Parties unable to reach deal in Trump tax return lawsuit | New York opens investigation into Capital One data breach

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Happy Tuesday and welcome back to On The Money, where we’d like to start with some good news about the environment for once. 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–Fed poised to give Trump boost with rate cut: The Federal Reserve is poised to cut interest rates on Wednesday, delivering President TrumpDonald John TrumpProfessor installs seesaws across US-Mexico border to form connection ‘on both sides’ What the world can expect from the Boris Johnson government Marianne Williamson: I am not a ‘wacky new-age nutcase’ MORE a long-sought boost to the economy.

Trump has pushed the Fed to loosen rates and stimulate the economy for more than a year, accusing the independent central bank of impeding his agenda and holding back growth.

The president has used his bully pulpit to exert unprecedented public pressure on the Fed and its chairman, Jerome Powell, who have remained defiant against his attempted political influence and dismissive of his attacks.


Powell and the members of the Fed’s policymaking arm, the Federal Open Markets Committee (FOMC), will conclude their monthly two-day meeting on Wednesday and are expected to deliver the first rate cut since 2008 during the height of the financial crisis.

The Fed is now poised to give Trump the cheaper money he desires. But the move could also herald the start of a new challenging stretch for the economy, with the Fed acting in part because of the damage and uncertainty created by Trump’s trade policies and a slowing global economy. I explain why here.

The background: The expected cut highlights how the nation’s economic outlook has soured amid slowing global growth, rising trade tensions and political risks that could derail almost a decade of uninterrupted recovery.

  • Last Friday, the Commerce Department released data showing a sharp decline in business investment that dragged economic growth down to 2.1 percent over the second quarter. 
  • Policymakers are see growing threats to the record stretch of prosperity Trump inherited from President Obama. It’s a critical challenge for Trump, who has staked his reelection in 2020 on the strength of the economy and extending that boom.

The rationale: A severe downturn in the U.S. appears well beyond the horizon, but the Fed is eyeing a rate cut as an insurance policy against the rising risks of global turmoil and Trump’s trade agenda.

While the labor market and consumer spending remain hot, long-term indicators like business investment and industrial activity have turned sour over the past three months. Economic threats are much more severe in the European Union and China, where central banks are preparing to ramp up stimulus to fend off looming recessions.

“FOMC members are attempting to offset damaging trade policy decisions that could hit us with a lag,” wrote Diane Swonk, chief economist at Grant Thornton, in a Monday research note.

“The Fed does not want to be blamed for the next recession.”


  • The Federal Reserve announces its July interest rate decision at 2 p.m., followed by a press conference with Chairman Jerome Powell at 2:30 p.m.


Trump, New York state, House Ways and Means unable to strike deal on tax return lawsuit:

The parties in a lawsuit concerning President Trump’s New York state tax returns said in a court filing Tuesday that they were unable to reach an agreement about how the case should proceed.

The court filing comes one day after a federal judge in D.C. ordered the parties —Trump, the House Ways and Means Committee and two New York officials — to try to reach a deal in order to prevent the case from becoming moot.

Trump filed a lawsuit last week in his capacity as a private citizen challenging a New York law that allows the chairmen of Congress’s tax committees to request public officials’ state tax returns from the New York Department of Taxation and Finance. Ways and Means Committee Chairman Richard NealRichard Edmund NealJudge orders Trump, New York, Ways and Means to try to reach deal on tax returns What to know about the fight over Trump’s tax returns On The Money: US growth slows to 2.1 percent | Trump vows response to French tech tax | Trump won’t give Apple tariff waivers | House panel releases documents on Nixon tax return request to bolster case against Trump MORE (D-Mass.) has not yet requested Trump’s state tax returns and has not yet decided if he will do so.

Trump also filed an emergency motion last week, asking the court to bar Neal from requesting his state tax returns until he can be heard in court. The Ways and Means Committee objected to this request, arguing that the panel’s decision about whether to use the New York law is protected from legal challenges under the Constitution’s speech or debate clause.

At a hearing on Monday, Judge Carl Nichols, a Trump appointee, directed the parties in the lawsuit to try to reach an agreement that ensures Trump’s claims don’t become moot before they can be litigated, treads lightly on constitutional concerns, and would have the case adjudicated only when more information becomes available.

In a joint status report filed Tuesday, the parties said that they were unable to reach an agreement “notwithstanding their best efforts.” They then laid out their respective positions in the document.

The Hill’s Naomi Jagoda breaks down the legal arguments here.

Trump warns China not to wait for 2020 election to make trade deal: President Trump is warning China not to wait until the 2020 election to reach a trade agreement

In a series of morning tweets on Tuesday, Trump said that China could get a “GREAT” deal if a Democrat wins the presidential election. He added, however, that if he wins reelection, the deal offered to China will be “tougher” than the one currently being negotiated. He also warned of the possibility of “no deal at all.”

“They should probably wait out our Election to see if we get one of the Democrat stiffs like Sleepy Joe. Then they could make a GREAT deal, like in past 30 years, and continue…to ripoff the USA, even bigger and better than ever before,” Trump said. 

The context: Trump’s attacks come as top administration aide and Beijing officials meet in Shanghai to reignite negotiations to end the yearlong trade war. In the lead up to the meeting, Trump touted a commitment from China to boost its purchases of U.S. crops, a longstanding goal of the president’s tariffs.

But it doesn’t appear that China has followed through, and Trump took issue with that in his Tuesday tweets.

“China is doing very badly, worst year in 27 – was supposed to start buying our agricultural product now – no signs that they are doing so. That is the problem with China, they just don’t come through,” Trump tweeted.

NY Attorney General opens investigation into Capital One data breach: New York Attorney General Letitia James announced Tuesday that her office is opening an investigation into the Capital One data breach that resulted in the personal information of about 100 million American customers being illegally accessed.

“My office will begin an immediate investigation into Capital One’s breach, and will work to ensure that New Yorkers who were victims of this breach are provided relief,” James said in a statement. “We cannot allow hacks of this nature to become every day occurrences.”

  • The beginning of the investigation comes one day after the Department of Justice announced that former Seattle-based software engineer Paige Thompson had been arrested in connection with the theft of personal information from servers storing Capital One data. 
  • Capital One noted that around 14,000 Social Security numbers of credit card customers were accessed, and about 80,000 linked bank account numbers of secured credit card customers were compromised. For Canadian customers, around one million Social Insurance numbers were compromised. 

Some lawmakers immediately vowed to take action in response to the breach. 


  • Senate Republican leadership is racing to lock down GOP votes for a massive two-year budget and debt ceiling deal that needs to pass before lawmakers leave for the August recess.
  • More than half of farm bailout payments meant to alleviate the effects of the U.S.’s ongoing trade war with China went to bigger, wealthier farms, according to a study from the Environmental Working Group.
  • Reuters: “Chinese tech giant Huawei Technologies warned on Tuesday a U.S. trade blacklisting will impact short-term revenue growth, even as its half-year revenue surged 23 percent thanks to soaring smartphone sales at home.”