Mar 3, 2019

Axios AM

🥞 Happy Sunday!

  • 📊 President Trump's job approval in the WSJ/NBC poll ticked up 3 points from December and January to 46% — similar to Clinton and Obama at this point. (WSJ)
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1 big thing: Debt is suddenly hot

Illustration: Aïda Amer/Axios

The truism that debt and deficits matter is fading away among policy elites, Axios editor-in-chief Nicholas Johnston writes:

  • The chorus is telling us don't worry, be happy: The Wall Street Journal: "Worry About Debt? Not So Fast, Some Economists Say" ... Foreign Affairs: Jason Furman and Larry Summers ... N.Y. Times: "How America Learned to Stop Worrying and Love Deficits and Debt."
  • The N.Y. Times' Neil Irwin captures the debtgeist: "Economic orthodoxy that ruled for decades held that fiscal responsibility was inherently good and the national debt a leviathan to fear. Now the intellectual and political currents are flowing — gushing, really — in the opposite direction."

That's after the national debt passed $22 trillion, the most ever — $2 trillion of that while Trump was in office.

  • And despite a strong economy, the deficit last year hit a six-year high.

This is a rare zone of agreement for left, right and center:

  • Rep. Alexandria Ocasio-Cortez has indicated openness to "modern monetary theory," the idea that deficits don't matter for countries that are running below their economic potential.
  • Trump didn't once mention the debt or budget deficits in this year's State of the Union address — nor did he mention it last year.
  • Warren Buffett, third richest man in the world (after Bezos and Gates), said in his most recent letter to investors: "Those who regularly preach doom because of government budget deficits (as I regularly did myself for many years) might note that our country’s national debt has increased roughly 400-fold" over the past 77 years.

Why it doesn't matter, from Axios Markets editor Dion Rabouin: inflation, which over the past decade or so has been a non-factor, even after back-to-back years of above-trend growth and government spending binges.

  • Economists have argued about the reasons, pointing at everything from the internet to the lack of unions to globalization to the way companies have invested their profits. But the end result remains the same.

The two arguments:

Debt matters ... Axios Future editor Steve LeVine warns against a "glib new gospel."

  • Steve emails: "If debt really doesn't matter, you should be able to print any amount of money without impact. But none of the glib economists will go that far. That's why I call them glib. Because they are suggesting that we go out and spend more when all they really can say is, well, inflation and interest rates are low now."
  • And Fed Chairman Jay Powell said in Senate testimony last week: "[I]t is widely agreed that federal government debt is on an unsustainable path. As a nation, addressing these pressing issues could contribute greatly to the longer-run health and vitality of the U.S. economy."

Debt doesn't matter ... Axios chief financial correspondent Felix Salmon: "There is no evidence from 240 years of American history that the level of the national debt has ever really mattered."

  • "The U.S. prints its own currency, and can borrow as much as it likes, increasingly from domestic investors. Per Buffett, deficit hawks have preached doom for decades. They have never been proven correct."

1 fun thing: A man named Ian Hammond proposes improving American's balance sheet by selling Montana to Canada. The price? Just $1 trillion.

2. Next from Cohen
Michael Cohen finishes more than five hours of testimony. (Andrew Caballero-Reynolds/AFP/Getty Images)

Michael Cohen's team is working to find drafts of a false statement he made to Congress about the Trump Tower Moscow project in 2017 "that would reflect who edited what, and turn them over to lawmakers," the WashPost reports.

  • Why it matters ... Cohen testified this week: "You need to know that Mr. Trump’s personal lawyers reviewed and edited my statement to Congress about the timing of the Moscow Tower negotiations before I gave it."
  • But the Post points out that drafts "might not implicate lawyers in knowingly passing along a lie — if their clients had not been truthful with them."

The Post adds: "[T]he House and Senate intelligence committees pressed Cohen this week on whether he had had any discussions about a possible pardon."

  • "Cohen has said publicly he never asked for — and would not accept — a pardon from Trump. But people familiar with the matter said his knowledge on the topic seems to extend beyond that statement."
3. Trump: Russia probe "looks like it's dying"
President Trump arrives at CPAC. (Carolyn Kaster/AP)

After his week from hell at home and abroad, President Trump sought solace by breaking the record for longest speech of his presidency, "basking in adulation" for 2 hours and 2 minutes at CPAC, the Conservative Political Action Conference.

  • Trump called the House intelligence chairman "little shifty Schiff."

And he drew laughter and applause when he used a vulgarity — twice, for good measure — in referring to the Russia investigation as "this phony thing that now looks like it's dying":

  • "[T]hey're trying to take you out with bullshit, OK? With bullshit."

Bob Costa points out in the WashPost's lead story that "[a]cquiescence to Trump is now the defining trait of the Republican Party":

  • "Any high-profile voices in the party objecting to Trump are increasingly scattered or silent, while the 'Never Trump' faction from the 2016 campaign has all but fallen into obscurity."

At CPAC, Trump took note of the meandering nature of his remarks:

  • "You know — I don’t know, maybe you know. You know, I'm totally off -script, right? Thank you, darling. You know I'm totally off-script right now. And this is how I got elected — by being off script. [Applause.] And if we don’t go off script, our country's in big trouble, folks. Because we have to get it back."
4. Pic du jour: 51 years later
Cuyahoga County Public Library via Facebook

A Facebook post this week by Cuyahoga County (Ohio) Public Library:

5. 2020 vision
Bernie Sanders pose before he spoke in Brooklyn yesterday. (Johannes Eisele/AFP/Getty Images)

Sen. Bernie Sanders delivered "the most personal remarks of his political career" as he launched his new campaign in Brooklyn, per CNN's Gregory Krieg:

  • Sanders spoke about his father's escape from Europe, where "virtually his entire family there was wiped out by Hitler and Nazi barbarism."
  • And he talked about the "three-and-a-half room, rent-controlled apartment" his parents and brother shared in Flatbush, Brooklyn.

The race entered a new phase this past week as governors tried to crack the senator scramble, AP's Bill Barrow writes:

  • "The opening months of the Democratic presidential primary have been dominated by senators ... Now come the governors."
  • "Washington Gov. Jay Inslee was the first ... Former Colorado Gov. John Hickenlooper is expected to join soon. Montana Gov. Steve Bullock and former Virginia Gov. Terry McAuliffe are considering bids."
6. Launch brings U.S. closer to passenger space flights
A life-size test dummy and a floating toy are shown in the Dragon capsule as the capsule made orbit yesterday. (SpaceX via AP)

For the first time, a commercially built and operated spacecraft designed to carry a human crew docked today at the International Space Station from U.S. soil, Axios science editor Andrew Freedman writes.

  • Why it matters: The launch brings the U.S. closer to restoring human spaceflight capabilities, through NASA's Commercial Crew program.
  • SpaceX and Boeing are building and testing the next generation of space taxis and cargo carriers to the space station.

NASA Administrator Jim Bridenstine tweeted: "A new generation of space flight starts now with the arrival of @SpaceX’s Crew Dragon to the @Space_Station."

7. Delicious read
Courtesy The New York Times

"Rembrandt in the Blood: An Obsessive Aristocrat, Rediscovered Paintings and an Art-World Feud ... No one had spotted a new painting by the Dutch master for four decades — until the scion of a storied Amsterdam family found two."

8. Ivanka's humor

Ivanka Trump spoke at last night's 134th Gridiron Club, staged by elite journalists for official Washington, and told the audience that she was appearing on behalf of her father.

  • "This isn't a joke," she said, per AP. "The opportunity to poke fun at the media is not something he passes up lightly."
  • For President Trump, she said, "every day is a Gridiron dinner."
  • "The press seems to think it’s ironic that I, born of great privilege, think people want to work for what they are given," she added, per the WashPost. "As if being Donald Trump’s daughter isn’t the hardest job in the world."
9. 134-year tradition takes on tense times

The Gridiron dinner signature is a series of skits sung by journalists and outside ringers, spoofing both parties and the press — "singe, don't burn" is the credo.

The opening number was set to "Bohemian Rhapsody":

Is this the real life? Is this just fantasy?
Caught in a bad dream, no escape from Sean Hannity.
Don’t miss that tweet, it’s our new foreign policy.
I’m just a poor hack, fact-checking frantically.
I’ll give them three or four Pinocchios — could be high, could be low.
Hard to say if I know, doesn’t really matter to them — to them.

The opening Democratic skit was set to "Seventy-Six Trombones" from "The Music Man":

Seventy six unknowns hit the campaign trail
With a hundred and ten embeds right at hand.

The opening Republican skit was set to Billy Joel’s "You May Be Right," with a cast member depicting Senate Majority Leader Mitch McConnell:

Midterms came we crashed our party .
Voters made us say we’re sorry.
Then we backed ourselves against his wall. ...
The Senate is a combat zone
I make decisions on my own.
10. 1 fun thing
Bill Hader plays Rep. Jim Jordan; Ben Stiller portrays Michael Cohen. (NBC)

The "Saturday Night Live" cold open reimagined the Cohen hearing.

"SNL" imagines another Cohen exhibit (NBC)