| | | | |  | | By Victoria Guida and Katy O'Donnell | | Presented by |  | | | Editor’s note: Morning Money is a free version of POLITICO Pro Financial Services morning newsletter, which is delivered to our subscribers each morning at 5:15 a.m. The POLITICO Pro platform combines the news you need with tools you can use to take action on the day’s biggest stories. Act on the news with POLITICO Pro.
| | Elon Musk and Vivek Ramaswamy are threatening to turn Washington upside down, promising to overhaul the government and — this week — lobbying hard against the spending deal negotiated by House Speaker Mike Johnson. But one of your MM hosts, Victoria Guida, has broader questions about the role they intend to play as co-heads of the so-called Department of Government Efficiency, and you can read about it in her latest column. For now, there’s a lot of enthusiasm about DOGE, but it also seems like they’re trying to do too many things. How and if they pick their battles will be key. “DOGE could have real value if it zeroes in on things that should be dealt with, like federal buildings sitting unused, outdated technology systems or the estimated $247 billion in improper payments that went out in fiscal year 2022,” Victoria writes in the column. “But there’s comparatively less value for these two un-elected business guys to answer foundational questions about what we as a society should value.” Most importantly, given the practical limits of DOGE’s power — for one, it is not actually a government agency – it will need buy-in from lawmakers, from the incoming Cabinet and, of course, from President-elect Donald Trump. There’s a lot to dig into with DOGE. For example, some of the stated goals could conflict with each other. They want to increase efficiency and decrease waste, but in some cases it costs more money to root out fraud than it does just to pay it. (As an aside, the Treasury Department in recent years has deployed artificial intelligence to try to uncover fraud). For the improper payments found by GAO, “the largest amount is Medicaid, which is a joint federal-state program, so reducing improper payments is not just a matter of what the federal government can do itself,” said Doug Elmendorf, a professor of public policy at the Harvard Kennedy School and a former head of the Congressional Budget Office. “Moreover, cracking down on improper payments might require more employees or contractors, rather than fewer.” Similarly, it might make sense to make upfront investments in better technology that will lead to savings over the long term but more costs in the short term. Some DOGE supporters in Congress argue that it’s a matter of using resources more wisely, rather than actually increasing spending. But regardless, priorities matter. There seems to be real political enthusiasm in a lot of corners of Washington about DOGE. The question is whether they’ll be able to harness it. Happy Thursday — Sam is off, and your next MM host will be Michael Stratford. Send tips: mstratford@politico.com.
| | A message from Capital One: Capital One recently announced our historic, five-year, $265 billion community benefits plan in connection with our proposed acquisition of Discover to advance economic opportunity and financial well-being. This plan is twice as large as any other community commitment developed in connection with a bank acquisition and demonstrates that the combined Capital One and Discover will create an opportunity to provide more lending, investment, and services for underserved communities than either institution would undertake individually. Important information: CapitalOneDiscover.com | | | | | The second revision of third-quarter GDP is out at 8:30 a.m. … White House National Economic Adviser Lael Brainard speaks at a Brookings event on supply chains at 10 a.m. … Mercatus holds a webinar with former SEC Deputy General Counsel Andrew Vollmer and former SEC Commissioner Joseph Grundfest to discuss climate-change disclosure rules, shareholder proposal and proxy adviser rules, and crypto enforcement and regulation at 1 p.m. … The Neighborhood Reinvestment Corp. meets at 2 p.m. … A bullish, hawkish Powell — Fed Chair Jerome Powell’s message in his press conference Wednesday after the Fed cut rates another quarter-point was that the economy is doing great, and the central bank wants to see more progress on inflation before cutting again. That doesn’t necessarily mean that overall inflation has to go down though, according to the Fed’s projections. They show headline inflation ticking up and core inflation (which excludes food and energy) dropping — alongside two rate cuts next year. The rise in the inflation forecast is at least partially because of Trump — “some” Fed officials factored in fiscal policy proposals while some didn’t, Powell said. But he also repeatedly expressed confidence about the strength of the economy. “I feel very good about where the economy is,” he said. “I expect another good year next year.”
| | | | You read POLITICO for trusted reporting. Now follow every twist of the lame duck session with Inside Congress. We track the committee meetings, hallway conversations, and leadership signals that show where crucial year-end deals are heading. Subscribe now. | | | | | Stocks drop 1,100 points after Fed presser — “The Dow Jones Industrial Average fell more than 1,100 points after the Federal Reserve signaled it might keep interest rates higher than investors expected in 2025,” WSJ reports. “The blue chip index gave up an early gain and fell for a 10th consecutive session, its longest losing streak in five decades, after Fed officials pared rates by a quarter percentage point and disappointed investors by signaling just two more cuts next year.” First in MM — Democratic Sens. John Fetterman, Cory Booker and Andy Kim sent a letter to Anthony Ibargüen, chair of the Philadelphia Federal Reserve Bank Board of Directors and Presidential Search Committee, urging a fair and transparent process to select the next president and CEO of the Philadelphia Federal Reserve Bank, following reports about the opacity of the process. “We urge the Philadelphia Fed to engage in a transparent, public process leading to a new President & CEO who will represent the diversity and strength of the Third Federal Reserve District,” the lawmakers wrote. “The selection committee has enormous responsibility in selecting a new President & CEO who will truly represent the economic interests of everyone in the Third District.” Johnson’s spending nightmare hints at GOP problems next year — “Speaker Mike Johnson is dealing with a nightmare before Christmas. And it won’t be his last,” our Jordain Carney and Benjamin Guggenheim report. “GOP leaders are now considering a plan B to avert a shutdown deadline on Friday as conservatives, Elon Musk, Donald Trump and JD Vance have excoriated the original spending plan, which included several add-ons like $100 billion in disaster aid and a one-year farm bill extension. Trump and Vance, while objecting to the current bill in a long statement, also surprised lawmakers by demanding that Congress address the debt ceiling now and explicitly opening the door to a shutdown.” SEC sherpa — Our Declan Harty scoops: “Shelby Begany Telle, an attorney for a leading private equity industry group, is helping guide Trump’s pick for SEC chair through the Senate, according to two people familiar with the matter.”
| | | | A message from Capital One:   | | | | | Banks seek preliminary injunction of CFPB overdraft rule — The Consumer Bankers Association filed a motion Wednesday for a preliminary injunction in the United States District Court for the Southern District of Mississippi, Northern Division to bar the CFPB's final rule on overdraft services from going into effect. “By attempting to reclassify overdraft services as credit, the CFPB's rule would not only fundamentally alter the way overdraft services operate, but will require banks to underwrite consumers that in many cases cannot be underwritten under conventional methods,” CBA spokesman Weston Loyd said. “As a result, this would harm Americans who are in need the hardest by limiting their access to liquidity through overdraft services. CBA is committed to addressing this illegal overreach and government price-setting agenda to ensure American consumers retain access to the financial support overdraft services provide.”
| | | | POLITICO Pro's unique analysis combines exclusive transition intelligence and data visualization to help you understand not just what's changing, but why it matters for your organization. Explore how POLITICO Pro will make a difference for you. | | | | | | | | First in MM: The American Financial Services Association’s latest Consumer Credit Conditions Index suggests consumer finance companies’ sentiment about the business climate improved in the third quarter.. More respondents reported strengthened overall business conditions compared to the previous three-month period than reported weakened conditions, and respondents said they expect overall conditions to further improve during the next six months.
| | A message from Capital One: Capital One recognizes the critical role small businesses play in their communities. We have long been committed to empowering underserved entrepreneurs, helping to ensure that small business owners have equal access to critical resources. As part of our proposed acquisition of Discover, our community benefits plan commits over $15 billion to small businesses and businesses in low- and moderate-income communities to improve access to credit and capital.
Important information: CapitalOneDiscover.com | | | | | | | Follow us on Twitter | | | | Follow us | | | | |
