On The Money: NY prosecutors subpoena eight years of Trump tax returns | Senators struggle to get spending bills off ground as shutdown looms | Progressive tax-the-rich push gains momentum | Trump faces dwindling leverage with China

Happy Monday 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–New York attorneys subpoena eight years of Trump tax returns: Prosecutors in New York are reportedly escalating their efforts to obtain President Trump’s tax returns as part of their investigation into hush money payments made to women who have alleged affairs with the president.

{mosads}State prosecutors from the Manhattan district attorney’s office sent subpoenas late last month to Trump’s accounting firm, Mazars USA, in an attempt to obtain eight years of the president’s personal and business tax filings as part of a broader effort to analyze his financial records, The New York Times reported Monday.

• The prosecutors are requesting Mazars USA provide both federal and state tax returns for Trump and the Trump Organization dating back to 2011.

• The office is investigating payments made to adult-film actress Stormy Daniels, who has claimed to have received payments in exchange for her silence during the 2016 election after allegedly having an affair with Trump.

The crucial point: The subpoena marks the latest effort from Democrats at multiple levels of government to obtain and examine Trump’s tax returns. But It could be challenging for Trump to try to block a subpoena in this instance because it’s part of a criminal investigation with a sitting grand jury.

 

ON TAP TOMORROW

• The Federal Reserve’s Federal Open Markets Committee (FOMC) begins its September meeting in Washington, D.C.

• The Senate Appropriations Subcommittee on Financial Services and General Government will hold a markup of its fiscal 2020 spending bill, 2:15 p.m.

• A Senate Judiciary subcommittee will hold a hearing on the enforcement of federal antitrust laws, 2:30 p.m.

 

LEADING THE DAY

Senators struggle to get spending bills off ground as shutdown looms: Senate government funding talks are off to a rough start with 10 working days to go until the shutdown deadline. 

The impasse raises questions about whether senators will be able to get any of the fiscal 2020 bills through the chamber this month, a setback for Republicans who wanted to clear a major package before October. 

Senators are stuck in a stalemate over major provisions, including the top-line spending figures for each of the bills, known as 302(b)s. The partisan breakdown has left lawmakers scrambling to resolve the impasse.

• Sen. John Cornyn (R-Texas) described the negotiations as “pretty fragile,” warning “if they break down we’re looking at potentially a long-term CR,” referring to a continuing resolution.

• Senate Majority Leader Mitch McConnell (R-Ky.), meanwhile, warned against getting “bogged down in too many foxholes,” adding that he’s “praying for Chairman Shelby and ranking member [Patrick] Leahy that the curtains will part here and we’ll figure a way to move forward.”

The Hill’s Jordain Carney explains how we got here.

 

Progressive tax-the-rich push gains momentum: The progressive push to raise taxes on the rich is gaining new momentum.

Since the start of the year, much of the debate around taxes among Democrats has been over how much and how best to raise taxes on the rich.

• Sen. Elizabeth Warren (D-Mass.), who has already proposed a wealth tax to raise funds for a variety of new government programs, on Thursday unveiled a plan to expand Social Security by creating two taxes on wage and investment income for wealthy Americans.

• Separately, Sen. Ron Wyden (Ore.), the top Democrat on the Senate’s tax-writing committee, rolled out his own proposal designed to prevent the rich from avoiding taxes on their investment gains.

The Hill’s Naomi Jagoda tells us more about how the rush to tax the rich is shaping the 2020 election. 

 

Trump faces dwindling leverage with China: China’s refusal to yield in trade negotiations with the U.S. has left President Trump with dwindling leverage as he seeks a deal that will have profound consequences for his reelection prospects.

President Xi Jinping and top Chinese officials have signaled a willingness to accept lagging economic growth under the weight of U.S. tariffs rather than appease Trump with major concessions.

As next year’s presidential election looms, Trump is facing growing political pressure to escape the trade war with something to show for it. But it’s far from clear that China feels pressure to give him anything.

“In political terms, the Chinese have more staying power than we do,” said William Reinsch, a senior adviser at the Center for Strategic and International Studies who served as a Commerce Department undersecretary in the Clinton administration.

“They don’t have an election, and they have a government that puts party control at the top of the priority list, more than the economy. So I think they’re prepared to wait us out, painful though it may be,” he said.

I break it down here.

 

Why China won’t budge: China’s export-driven economy has faltered in the year-plus trade war as U.S. tariffs exacerbate a broader domestic slowdown. The country’s central bank announced last week it would pump $128 billion of stimulus into the Chinese economy, two months after gross domestic product growth there slumped to 6.2 percent, the slowest rate in 26 years.

Even so, China experts say the political cost of appeasing Trump could be more damaging to Xi, who is seeking to cement his power in the Communist Party while expanding his influence over the world economy.

Unlike Xi, Trump faces growing political pressure to live up to his hawkish stances ahead of a difficult bid for reelection.

“There’s no question that the tariffs have done some harm to the Chinese economy. So it’s preferable to continue talking and try to avoid further escalation,” said Edward Alden, a senior fellow at the Council on Foreign Relations. 

“That’s very different from saying the Chinese are prepared to do a deal which would require them to make fundamental changes to the structure of their economy,” he added,

 

Democrats struggle to counterpunch: Democrats competing for the chance to challenge President Trump in 2020 are trying to thread the needle when it comes to discussing the U.S. trade war with China. In Thursday night’s debate, candidate after candidate trashed Trump for a trade policy they called erratic and misguided.

But none of the candidates said they would immediately scrap Trump’s tariffs if they took office. Instead, they pledged to seek a negotiated solution with China through a strategic approach that few were able to define. The Hill’s Niv Elis breaks it down here.

 

GOOD TO KNOW

• President Trump’s economic approval numbers are declining in key battleground states and he trails a generic Democrat in the race for the White House, according to a poll conducted by Priorities USA, the nation’s largest Democratic super PAC.

• The U.S. Chamber of Commerce on Monday released a paper that argues against financial transaction taxes (FTTs), which several Democratic presidential candidates have floated as part of their campaigns.

• The bipartisan leaders of the House Energy and Commerce Committee are launching an investigation into what role private equity firms may play in the problem of patients getting stuck with massive “surprise” medical bills.

 

ODDS AND ENDS

• Amazon has altered its search algorithm in a way that would boost profits for the online retail giant despite pushback against the decision from within the company, The Wall Street Journal reported on Monday.

• Nearly every state attorney general announced this past week that they will investigate Google and Facebook for potential antitrust violations, alleging the Silicon Valley giants have amassed too much power and taken advantage of consumers and competitors along the way.