Stock Market Continues Its Slide

Donald Trump may soon learn the hard way why presidents almost never take credit for stock market gains on their watch. He has repeatedly claimed that the enormous gain in the Dow Jones index since his inauguration is due to his economic policies. Yesterday, the Dow dropped 1,175 points, the biggest drop in points (but not in percentage) ever. Its high this year was on Jan. 26, when it hit 26,616. Yesterday it closed at 24,346, a drop of 8.5% in a week.

This kind of thing is generally bad news for any president, since they tend to get most of the blame when the economy tanks. It is especially bad news for Trump, though. If he had consistently said: "The economy is doing well, but realistically, presidents don't have a lot of influence on the stock market," a crash wouldn't have hurt him as much. But he hugged the Dow Jones close and now he owns it.

Indeed, as the slide was taking place, Trump was in the midst of giving a speech celebrating the economy and how great the tax cuts have been for it. The timing just could not have been worse; Fox News, CNN, and other outlets literally cut away from Trump in the middle of his remarks (or, even worse for The Donald, did a split screen) in order to report on the market's sudden downturn. The White House recognized that there was now a fire to be put out, and so senior members of the administration strategized on Air Force One as the President returned to Washington. They decided that they really had no option but to present Monday's downturn as a blip on the radar screen, and so that is what they did. Deputy Press Secretary Hogan Gidley dismissed concerns that Trump will get blamed for the drop, and pointed out that the Dow is still way above where it was on Inauguration Day. This is absolutely correct; even with the slide during the past week, the Dow is still considerably higher (22.8%) than the 19,827 it was on Inauguration Day.

If this does indeed prove to be a blip—and that is well within the realm of possibility—then that explanation will do just fine. But if the market keeps dropping, particularly to a point lower than it was on January 20, 2017, then it will be back to the drawing board to try to find a rabbit for the president to pull out of his hair. If Team Trump can come up with a way to take credit for the stock market when it goes up, but pass the buck when it goes down, then that will definitely be a better magic trick than anything Harry Houdini ever came up with.

Some market watchers think the tax cut may be to blame for the market decline. According to conventional Keynesian economics, deficit spending (which the unfunded tax cut is) is a good idea when the country is in a recession, but not such a good idea when the economy is humming along as it is now. The danger is that the tax cut will bring back inflation, which will force the Fed to raise interest rates abruptly, throwing a wet blanket on the economy. Again, no one knows what will happen to the market tomorrow or next week, so this drop may well be temporary, but if it gets worse and hangs around until the midterms, Rep. Devin Nunes' (R-CA) memo will be small potatoes in comparison.

Another factor that may be playing a role here is Trump's decision not to appoint Janet Yellen to a second term. This is a break with tradition. Usually Fed chairs serve two terms. In particular, Yellen's policies were widely praised on Wall Street, but she is out the door now. The new Fed chairman is Jerome Powell, who may be tested fairly quickly. To the extent that Powell doesn't or can't fix things quickly, Trump is going to come in for criticism that he dumped a tested and steady hand for a newbie just so he could be rid of an Obama appointee. (V & Z)

House Intelligence Committee Votes to Release Schiff Memo

There are two rebuttals to the Nunes memo floating around in Washington. The one by Rep. Jerry Nadler (D-NY) does not utilize classified information, and so it was made public over the weekend. The one by Rep. Adam Schiff (D-CA) does have classified information, and so its release has to be approved by both the House Intelligence Committee and by Donald Trump. On Monday, the Intelligence Committee did its part, voting unanimously for release. Given that just last week, all the GOP members of the committee voted against the release of the memo, something has clearly changed. Possibly what has changed is that the Nunes memo did not prove to be nearly as earth-shattering as promised, and House Republicans would now prefer to claim "transparency" and to avoid being lambasted for hyper-partisanship and for abuse of their authority.

Now the matter is in Donald Trump's lap. On one hand, if he doesn't approve the release, then he will be the one who is lambasted for hyper-partisanship and abuse of his authority. On the other hand, the President is still trying to sell the Nunes memo as his "vindication," and he also blasted "Little Adam Schiff" on Monday, describing him as "one of the biggest liars and leakers in Washington." Odds are that he tells the Congressman to take his memo and shove it. (Z)

Trump Lawyers Don't Want Him to Get Caught in a Lie

Two weeks ago, Donald Trump said he was looking forward to talking to special counsel Robert Mueller. Last week, his lawyers said "not so fast." On Monday, the New York Times reported that their concern is—wait for it—that he just might get caught in a lie.

On its surface, this isn't much of a news story at all. Of course that is their concern; if they weren't worried about this, they should be fired immediately. To the extent that we do learn something new from the Times' reporting, it is this: Not only do Donald Trump's lawyers think he is a congenital liar, they believe the tendency is so ingrained that they don't feel they can get him to snap out of it for even an hour or two. Consequently, they currently plan to take their chances, and hope that Mueller won't dare to subpoena a sitting president. That's a gamble they are likely to lose.

On the other hand, it is not a sure thing that Mueller will subpoena Trump. If Supreme Court Justice Anthony Kennedy has an argument with his wife at breakfast on the day he has to decide whether a president can be subpoenaed, who knows how he might rule. Also a factor is that Chief Justice John Roberts cares a lot about the Court as an institution. He knows that in Jones v. Clinton the Court ruled 9 to 0 that presidents are not exempt from civil lawsuits. While a subpoena is different from a civil lawsuit, it would not look good for the Court to rule against a Democratic president and for a Republican one, so Roberts has to factor that into his vote, if it comes to that (which he surely hopes it does not). (Z & V)

Supreme Court Requires New Map of Pennsylvania Congressional Districts

The Pennsylvania Supreme Court ruled last month that the gerrymandered congressional district map violated the state Constitution and ordered the legislature to draw up a new one by Feb. 9 and submit it to Gov. Tom Wolf (D) for his signature. The current map has 13 Republican seats and 5 Democratic seats, even though the state is fairly evenly balanced. Republicans didn't like the decision and appealed it to the U.S. Supreme Court.

Yesterday, they got their answer from the high court when Justice Samuel Alito turned down the request and let the Pennsylvania Supreme Court decision stand. This means the Republican-controlled legislature is going to have to draw up a map much more favorable to the Democrats in order to get the governor to sign the bill. The net result is likely to be a shift of around four seats to the Democrats.

Alito could have referred the question to the full Court, but didn't. Most likely he calculated that there would not be five votes for a stay given that it's really a state matter, so rather than embarrass himself, he just made the ruling on his own as he is the justice who oversees the Third Circuit, which includes Delaware, New Jersey, and Pennsylvania. (V)

GOP Is Panicking in PA-18

PA-18 is a district that should not be competitive. It has a Cook PVI of R+11 and Donald Trump won it by 20 points. Still, recent polls show that State Rep. Rick Saccone (R) has only a small lead over attorney Conor Lamb (D)—perhaps as little as a point or two—in the upcoming special election to replace Republican Tim Murphy. It's not entirely clear why this is; it could be a response to Donald Trump, or to the scandal that forced Murphy to give up the seat, or to some weakness in Saccone, or to some appealing aspect of Lamb.

One thing that is certain, though, is that the GOP simply cannot afford to lose this seat. If they blow another election in deep-red territory, after having lost the U.S. Senate seat in Alabama, then no seat will be truly safe (ok, maybe Rep. Mac Thornberry's R+33 seat in Texas). They would enter the midterms in full-blown crisis mode, while Democrats would sense blood in the water, and would be in a frenzy. This being the case, the GOP is pulling out all the stops to elect Saccone. The Party has outspent the Democrats 5-to-1. The White House is in constant contact with Saccone, and Donald Trump and Mike Pence will both campaign for him in the Pittsburgh suburbs (aka Alabama). Republican strategist Corry Bliss, who heads the main super PAC for House Republicans, has sent dozens of campaign workers into the field, in the middle of winter, to canvass for Saccone.

These maneuvers, along with the underlying fundamentals of the district, will almost certainly mean that Saccone pulls it out in the end. If it's close—say, less than five points—that's not great and it will give the Democrats some hope, but a win is a win. However, if Lamb does somehow pull it out, even with the GOP going all-in, then the loss will be that much more disastrous. The special election is five weeks away, on March 13. (Z)

Trump Is Eager to Hit the Campaign Trail

By all evidence, the only part of politics that Donald Trump actually enjoys is campaigning. So, it's not a surprise that he's already laying out his midterm election plans, and deciding where he will try to help. A bit more surprising, however, is the four states that are already on his radar: Nevada, Minnesota, California, and South Dakota.

Let's take these in order from most to least understandable. South Dakota is not much of a surprise at all, as Trump's 54% approval rating there is higher than in all but three states. The only thing that is a tiny bit odd is that there is no Senate race this year. And there's not a lot of money to be had, either. Perhaps he thinks Rep. Kristi Noem (R) really needs the help in her bid for governor, although she won each of her last two House elections by a 2-to-1 margin.

Then there is Nevada. Trump is planning to head there during primary season, and he does still have the ability to rally the base. Sen. Dean Heller (R) has done a pretty deft job of holding Trump close enough to keep the base happy, but no closer. The problem is that if Heller manages to hold off primary challenger Danny Tarkanian, he still has a general election to win. He's got middling approval ratings (41%), Trump is doing only a bit better there (42%), and it's a state that Hillary Clinton won and that has a lot of Latino voters. The upshot is that Trump's presence could elevate Heller in the primaries only to drag him down during the general. It wouldn't be a big surprise if the Senator tries to find a delicate way to ask the President to stay away.

Minnesota is more curious. Since there will be two Senate races there, perhaps the President thinks he's getting two campaign appearances for the price of one. The difficulty is that Trump's approval rating there is dreadful (37%), and the state just jettisoned a senator who decided that his voters would not forgive his touching of some rear ends. The President, of course, bragged about grabbing something much more objectionable than that. It's also worth noting that the GOP is struggling to find good candidates to field in the two Senate races (more below). So, Trump might want to think twice about putting the Gopher State on his itinerary.

And finally, California. Trump has waited longer than any president since World War II to visit the Golden State, and with good cause. He's wildly unpopular; his 29% approval rating is lower than in any state except Massachusetts (27%) and Vermont (26%). Whenever he arrives, he is going to be greeted with massive protests up and down the state. California's jungle primary means there is probably not even going to be a GOP Senate candidate, the other statewide offices are also lost causes for the Republican Party, and most of California's Republican representatives will be holding on for their dear lives and trying to distance themselves from The Donald. The ones who will not be doing so have safe seats, and largely don't even need to campaign. In short, it's very hard to figure out exactly which California Republican would benefit from a presidential appearance. Maybe he's just heading west to shake down some wealthy Republicans for his campaign fund.

It has been a while since a president's presence during a midterm election has been such a mixed bag. Possibly George W. Bush in 2006, but the last real historical analogue might be LBJ in 1966 (Dick Nixon never had a midterm after Watergate really hit). There are certainly places where the President can help, but his staff may need surgical precision to separate those places from the ones where he'll be a net negative. And then, they will have to convince him without causing him to take offense and blow his top. Surely, the White House staff should place their bulk order for some Rolaids right now. (Z)

Bachmann Won't Run for Franken's Seat

Former Republican representative Michele Bachmann said that she was waiting for a sign from God indicating that she should run for the Senate seat vacated by Al Franken after he was accused of sexual harassment by multiple women. The seat is currently occupied by appointed Sen. Tina Smith (DFL-MN), but there is an election for it in November. The Deity apparently did not contact Bachmann, so she took this as her sign and has now declared that she is not running for the Senate. So far, no high-profile Republican has announced a challenge to Smith. (V)

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---The Votemaster and Zenger