A week after Fed officials at the U.S. Federal Reserve raised interest rates for the 2nd time since December and projected 2 more rate hikes in 2017, investors are now bracing for a climate of a tighter monetary policy for the world’s largest economy as attention shifts to anticipated fiscal stimulus in Washington D.C. to boost growth, consisting of tax cuts and infrastructure spending from U.S. Republican lawmakers that control the White House, the House of Representatives, and the Senate.
For now President Trump’s tax cuts for U.S. businesses and households are temporarily on hold and won’t be addressed until politicians first approve a new healthcare replacement plan for Obamacare that will need sharp cuts to offset the federal revenues that will be lost through Trump’s future tax cuts.
Revisions are already underway for the proposed American Health Care Act that could soon reach the House floor as early as Thursday for a vote, although obstacles still remain, including divisions among Republicans about embracing the new healthcare legislation alongside unabashed opposition from Democrats.
One of the proposed revisions of the American Health Care Act includes offering deeper healthcare tax cuts to seniors.
The American Health Care Act, which Republican House Speaker Paul Ryan has played a key role in shaping, results in higher costs for seniors, and faces an uphill battle in the Senate where Republicans hold a slimmer majority.
Speaking on NBC’s Meet the Press that aired on Sunday, Maine Republican Senator Susan Collins admitted that changes are needed to the American Health Care Act and “we have to do something about the fact that the House bill disproportionately affects older, rural Americans,” a demographic group that voted solidly for Trump in the 2016 presidential election.
“The Congressional Budget Office has estimated that a 64 year old who is earning $26,500 a year would see an increase in his or her costs from $1,700 to $14,600. That is unaffordable. And third, we have to do something about the Medicaid changes would shift billions of dollars of costs to the state, to hospitals, and to other people who are insured” Senator Collins said.
Sen. Collins voiced her support for giving an increase to veterans in Trump’s proposed budget, although she suggested a more gradual increase for military spending, and expressed dissatisfaction for President Trump’s proposal to slash funding for the National Institutes of Health (N.I.H.).
“We have been making tremendous progress in increasing N.I.H.’s budget and that has helped us to develop effective treatments and new cures for very expensive diseases. If we’re serious about reducing healthcare costs, the last thing that we should be doing is cutting the budget for biomedical research.” Senator Collins said.
Trump’s Proposed Budget Remains Under Scrutiny As His Approval Level Drops To New Lows
President Trump’s proposed budget continues to face scrutiny and contains deep cuts for federal government agencies such as the State Department, the EPA, Department of Agriculture, and the Labor Department but makes budgetary increases with the Defense Department, Department of Veterans Affairs, and the Department of Homeland Security.
President Trump’s approval rating has reached a new low in the latest Gallup poll and currently shows a recent -3 percent decline to 37 percent on 3/18/17, lower than his drop to 38 percent on 2/16/17.
President Trump and members of his administration have faced political backlash over their past connections with Russia ahead of the 2016 U.S. presidential election.
Both Michael Flynn and Jeff Sessions in Trump’s cabinet were criticized for failing to disclosure the extent of their past contacts with a Russian ambassador.
The U.S. intelligence community has widely declared that the Russian government undeniably played an important role in the hacking of the computers at different U.S. political organizations during the 2016 U.S. elections, including the computers of the Democratic National Committee.
President Trump met with German Chancellor Angela Merkel last Friday and tweeted on Saturday a false claim about Germany owning money to NATO and the U.S.
Trump tweeted on Saturday: “Despite what you have heard from the FAKE NEWS, I had a GREAT meeting with German Chancellor Angela Merkel. Nevertheless, Germany owes vast sums of money to NATO & the United States must be paid more for the powerful, and very expensive, defense it provides to Germany!”
Contrary to Trump’s claim on Twitter, Germany owes nothing to NATO or the U.S. but has fallen short in terms of meeting NATO’s target for member nations that asks for a 2 percent contribution of their GDP towards defense.
President Trump has tweeted other controversial material on Twitter, including an inflammatory March 4th tweet that accused former U.S. President Barack Obama of wiretapping Trump Tower during the 2016 election season.
Trump has failed to provide any proof of his wiretapping claim and both the House and Senate Intelligence Committees have offered statements last week that rejects President Trump’s claim.
On Monday F.B.I. Director James Comey will testify before a House Committee about the Bureau’s investigation about the role Russia played in the 2016 election season and he is expected to refute President Trump’s wiretapping claim at Trump Tower involving former U.S. President Barack Obama.
U.S. Economic Calendar
The U.S. economic is lighter this week and will focus on Existing Home Sales for February on Wednesday followed by New Home Sales on Thursday and Durable Orders for February due on Friday.
Speeches from several Fed members this week could help to clarify the Federal Reserve’s monetary policy stance just days after the U.S. Central Bank decided to boost interest rates for the 3rd time since June 2006.
On Monday U.S. Federal Reserve Bank of Chicago and CEO Charles Evans will be giving a speech followed by another one on Friday.
On Tuesday Kansas City Federal Reserve Bank President Ester George will speak about the economy and Federal Reserve Bank of Cleveland President Loretta Mester will speak on the outlook and communications.
On Thursday U.S. Fed Chairwoman Janet Yellen speaks at Federal Reserve System Community Development Research Conference in Washington.
On Friday U.S. Federal Reserve Bank of Chicago President and CEO Charles Evans will give a second speech for the week, the same day U.S. Federal Reserve Bank of St. Louis and CEO James Bullard and U.S. Federal Reserve Bank of San Francisco President and CEO John Williams will give speeches.
U.S. Data Calendar
Tuesday- Current Account Balance Q4
Wednesday- Existing Home Sales (February), MBA Mortgage Index, MBA Mortgage Applications Index, Crude Inventories
Thursday- New Home Sales (February), Continuing and Initial Claims, Natural Gas Inventories
Friday- Durable Orders (February)
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