| Happy Tuesday and welcome back to On The Money, where we're very mad about not getting invited to the wall of donuts at the All-Star Game tonight. I'm Sylvan Lane, and here's your nightly guide to everything affecting your bills, bank account and bottom line. See something I missed? Let me know at slane@thehill.com or tweet me @SylvanLane. And if you like your newsletter, you can subscribe to it here: http://bit.ly/1NxxW2N. Write us with tips, suggestions and news: slane@thehill.com, vneedham@thehill.com, njagoda@thehill.com and nelis@thehill.com. Follow us on Twitter: @SylvanLane, @VickofTheHill, @NJagoda and @NivElis. THE BIG DEAL--Fed chief lays out risks of trade war: Federal Reserve Chairman Jerome Powell told lawmakers Tuesday that mounting trade tensions between the United States and key economic partners could pose serious risks to the U.S. and global economy. In testimony at the Senate Banking Committee, Powell was cautious in his remarks and tried to avoid commenting directly on President Trump's policies, even as lawmakers from both parties pressed him on how deeply the U.S. could be harmed in a trade war. But Powell said escalating tariffs between the U.S. and others had already stunted business growth even though it was still too early to know the final impact. "If it results in lower tariffs for everyone, that will be a good thing for the economy," he said of Trump's trade policy. "If it results in a higher tariffs across a broad range of goods and services that remain that way for a long time, that will be bad for our economy and other economies, too." Powell, a Republican, also defended the global trading system that Trump has sought to upend, and he advocated for the eventual removal of tariffs. I'll tell you more here about Powell's testimony and the questions he faced from lawmakers. Why it matters: - Lawmakers, business groups and agriculture exporters have expressed worries that Trump's tariffs on steel, aluminum and Chinese goods -- and the retaliation they spur -- could cause widespread economic harm.
- Powell and Fed officials have noted recently that U.S. businesses have abandoned expansion plans due to rising costs and growing uncertainty driven by tariffs.
- Powell insisted that trade issues are not within the bank's mandate, but he said that high tariffs and trade barriers are typically harmful.
- The EU, Mexico, Canada and China have targeted agricultural and manufactured goods produced mainly by states that are home to Trump's electoral base. The retaliatory tariffs they imposed on corn, soybeans, cotton, pork, apples and other major crops could cause severe losses for U.S. farmers.
What comes next: Powell will testify before the House Financial Services Committee, and will likely face many of the same questions. The panel grilled Treasury Secretary Steven Mnuchin early last week and demanded answers from him about the goals and length of Trump's trade showdowns. ON TAP TOMORROW - U.S. Chamber of Commerce hosts event on financial technology, 9 a.m.
- Federal Reserve Chairman Jerome Powell testifies before the House Financial Services Committee on the Fed's semiannual monetary policy report, 10 a.m.
- Senate Finance Committee: Hearing on trade and commerce at U.S. ports of entry, 10 a.m.
- House Financial Services Committee: Hearing entitled "The Future of Money: Digital Currency," 2 p.m.
- House Ways and Means Committee: Hearing on the effects of tariffs on U.S. agriculture and rural communities, 2 p.m.
LEADING THE DAY Senate floats new Russia sanctions amid Trump backlash: The Senate is considering taking new legislative action to condemn Russia's election meddling as pressure builds on lawmakers to counter President Trump's much-maligned rhetoric this week. GOP senators are discussing passing a resolution or even new sanctions just days after 12 Russian intelligence officials were indicted for interfering in the 2016 presidential election and Trump caused uproar by refusing to denounce Moscow's election meddling during a summit in Helsinki. Pressing forward with sanctions legislation would likely spark a high-profile showdown with Trump months before the November midterm elections – marking a rare election-year break between the White House and Republicans on Capitol Hill. But lawmakers are under pressure to act in the wake of Trump's comments. The Hill's Jordain Carney tells us why here. Hatch threatens legislative action to rein in Trump tariffs: Sen. Orrin Hatch (R-Utah) on Tuesday blasted President Trump's trade policies and vowed to move forward with legislation that would rein in his trade authority if the imposition of tariffs don't subside. The Senate Finance Committee chairman urged the Trump administration to rethink its global trade strategy, arguing that billions in tariffs are hurting U.S. consumers and businesses and walling off foreign markets from American exports. "If the administration continues forward with its misguided and reckless reliance on tariffs, I will work to advance trade legislation to curtail presidential trade authority," Hatch said during a speech on the Senate floor. "I am discussing legislative options with colleagues both on and off the Finance committee and I will continue to do so," he said. The Hill's Vicki Needham tells us what to expect here. House passes bipartisan bill to boost business investment: The House on Tuesday passed a bipartisan package of 32 bills intended make it cheaper and easier for small businesses and startups to access capital markets and woo investors.
Lawmakers voted almost unanimously to pass the JOBS and Investor Confidence Act one day after the leaders of the House Financial Services Committee announced a deal following months of markups and negotiations. The package, named after the 2012 bill passed under former President Obama, contains several dozen bills focused on capital markets regulations, all of which passed the Financial Services panel or House with meager resistance. The deal also rolls back some Dodd-Frank Act banking rules with provisions that have also earned wide bipartisan support. "This is going to be an important day for small business," said Rep. Jeb Hensarling (R-Texas), chairman of the Financial Services Committee. "This is going to make a difference ultimately because small businesses will one day become big businesses." I'll tell you more about what's inside the deal here.
What comes next: The package now faces an uncertain future in the Senate. Hensarling has said that Senate leaders have promised to hold a vote on the House measure, but the bill would need support from 10 Senate Democrats to pass. Hensarling secured a pledge from Senate leaders to take up the House deal when he promised to support the upper chamber's bipartisan Dodd-Frank rollback, which President Trump signed in May. Muted support from the White House raised further questions about the bill's future. Press Secretary Sarah Huckabee Sanders said President Trump congratulated the House for passing the bill, but would seek "several technical and substantive changes to the legislation." MARKET CHECK: Reuters: "Wall Street stocks rose on Tuesday, with the Dow Jones Industrial Average posting its fourth consecutive session of gains after Federal Reserve Chairman Jerome Powell expressed an optimistic U.S. economic view and solid earnings bolstered the outlook for a robust reporting period. "The Dow Jones Industrial Average rose 55.53 points, or 0.22 percent, to end at 25,119.89, the S&P 500 gained 11.12 points, or 0.40 percent, to 2,809.55 and the Nasdaq Composite added 49.40 points, or 0.63 percent, to 7,855.12." GOOD TO KNOW - House Ways and Means Committee Chairman Kevin Brady (R-Texas) said Tuesday that he expects the House to vote on a second round of tax cuts in September.
- A bipartisan group of senators on Tuesday introduced a package of bills designed to make it easier for Americans to save for retirement.
- The White House's midyear budget projections see federal deficits surpassing $1 trillion in 2019.
- Senate Finance Committee ranking Democrat Ron Wyden (D-Ore.) on Tuesday said he will vote against President Trump's nominee to lead the IRS, Charles Rettig, unless he promises to undo guidance the agency released late Monday reducing donor disclosure requirements for certain tax-exempt groups.
- The attorneys general in New York, Connecticut, Maryland and New Jersey on Tuesday filed a lawsuit against the Trump administration challenging the constitutionality of the new cap on federal deductions for state and local taxes in the 2017 tax overhaul.
- The European Union and Japan signed an agreement on Tuesday that will lift close to 100 percent of tariffs on products exchanged between the two.
ODDS AND ENDS - The Consumer Financial Protection Bureau is accusing the Department of Education of getting in the way of its lawsuit against student loan giant Navient.
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