On The Money: Trump trade chief sees tough work ahead on China | Cohen offers gripping testimony | Tells lawmakers Trump inflated assets | Deduction cap could hit 11 million taxpayers | Senate confirms top IRS lawyer

Happy Wednesday and welcome back to On The Money. I’m Sylvan Lane, and here’s your nightly guide to everything affecting your bills, bank account and bottom line.

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THE BIG DEAL–Trump trade chief warns of tough work ahead on China deal: President Trump’s top trade negotiator told lawmakers Wednesday that finalizing a trade agreement with China is just one step in a long battle with Beijing over alleged unfair trade practices.

U.S. Trade Representative Robert Lighthizer, testifying before the House Ways and Means Committee, downplayed hopes that the administration is close to resolving trade disputes with China. Lighthizer said that while the administration has made progress toward a deal to loosen Chinese trade barriers, the U.S. is still far from leveling the playing field.

{mosads}”We might be able to have an agreement that helps us turn the corner in our economic relationship with China,” Lighthizer said. But he warned that “there’s not going to be one negotiation” that solves the dispute altogether.

“I believe other problems are going to arise and they’ll have to be dealt with,” Lighthizer told the committee. I’ve got more on those problems here.

 

The context: Lighthizer’s appearance comes at a crucial stretch in U.S.-China trade talks.

Trump last week postponed an increase in tariffs on Chinese imports planned for March 1 to give negotiators more time to reach an accord.

The president said Monday that talks were going well and a deal between the White House and Beijing could come “very, very soon.”

There is broad bipartisan support in Congress for Trump’s efforts to tackle Chinese trade practices. But the protracted trade battle, now stretching almost a year, has taken a toll on U.S. farmers, ranchers and manufacturers who’ve lost foreign contracts amid the standoff.

 

Lawmakers react:

• “This administration had chosen to take a path of high-risk confrontation. It must hold out for a good deal,” said Rep. Richard Neal (D-Mass.), chairman of House Ways and Means Committee. “The future of America’s economic prosperity is in the balance.”
• “The damage could be fatal,” said Rep. Stephanie Murphy (D-Fla.) “When is this going to end? What will their sacrifices have allowed you to achieve?”
• “Let’s say you have amazing success, the angels sing, whatever happens. How do we future-proof an agreement?” asked Rep. David Schweikert (R-Ariz.). “What do we do so we’re not back having the same discussion a year or two from now?”

 

The endgame: The White House is seeking major concessions from Beijing in exchange for the removal of tariffs. The requests include greater protections against intellectual property theft, greater U.S. access to Chinese financial markets and major boosts to purchases of American crops.

“We are making real progress,” Lighthizer told lawmakers. He praised the president, adding that because of Trump’s “insight and grit, we are in the position to deal with this problem for the first time.”

But he also warned that even if China agrees to ease trade barriers, it could take years of work to make sure the deal is enforced.

“Our hope is to have specific language on specific issues that is enforceable through a very clear process,” Lighthizer said.

 

ON TAP TOMORROW

• The Senate Banking Committee holds a hearing on legislative proposals on capital formation and corporate governance, 10 a.m.
• The Cato Institute hosts an event entitled “Trade and American Leadership: The Paradoxes of Power and Wealth from Alexander Hamilton to Donald Trump.”

 

LEADING THE DAY

Cohen tells Ocasio-Cortez that Trump inflated assets for insurance purposes: Former Trump lawyer Michael Cohen testified Wednesday that President Trump inflated and deflated the value of his assets over the years, and provided Rep. Alexandria Ocasio-Cortez (D-N.Y.) with a list of Trump associates who could provide additional information.

Asked during his appearance before the House Oversight and Reform Committee if Trump ever provided inflated assets, Cohen answered that he had. The former longtime Trump lawyer added that lawmakers could find more related information and documentation at the Trump Organization and from executives Allen Weisselberg, Ron Lieberman and Matthew Calamari.

Cohen also confirmed to Ocasio-Cortez that Trump was interested in reducing his local tax bills by deflating his assets. The New York congresswoman cited a golf club near her home district as an example.

“You deflate the value of the asset and then you put in a request to the tax department for a deduction,” Cohen said, explaining the practice. The Hill’s Brett Samuels has more.

Washington riveted by Cohen testimony: Michael Cohen’s testimony dominated the day here in Washington. Click here to catch up with The Hill’s live blog of the hearing. And click here for our wrap-up of the dramatic day of testimony which saw Cohen lay into his former boss, President Trump.

 

Watchdog: Nearly 11 million taxpayers may be subject to limit on key deduction: Nearly 11 million taxpayers may be subject to the limits on the state and local tax (SALT) deduction in President Trump’s tax law, a Treasury Department watchdog estimated in a report released Tuesday.

The Treasury Inspector General for Tax Administration (TIGTA) estimated that if the $10,000 cap on the deduction had been in place in 2017, roughly 10.9 million taxpayers would have been unable to deduct about $323 billion in state and local tax payments on their federal tax forms.

{mossecondads}TIGTA said that its estimate is based on examining 2017 tax filings whose itemized deductions exceed the standard deduction amount under the new tax law and identifying the number of returns that claimed more than $10,000 in SALT deductions. The Hill’s Naomi Jagoda breaks down the report here.

Further reading: House Ways and Means Committee Chairman Richard Neal (D-Mass.) on Wednesday released an unredacted version of a report relating to the GOP tax law’s cap on the SALT deduction, after the report was released Tuesday with much of its contents kept hidden from the public.

 

GOOD TO KNOW

• The Senate on Wednesday confirmed President Trump’s nominee to be chief counsel at the IRS, giving the administration a full, permanent team in place at the agency.
• The Commerce Department is reportedly planning to open an investigation to determine whether Canadian, Mexican, and Chinese steel is being sold at unfairly-low prices.
• A Treasury Department official is pushing back on Democrats’ arguments that IRS guidance about tax withholdings from people’s paychecks was manipulated for political purposes, calling the claims “misinformed, baseless, and false.”
  Federal Reserve Chairman Jerome Powell said the central bank is close to a timetable on when it will stop reducing the amount of bonds and debt held on its balance sheet.

 

ODDS AND ENDS

• Michael Cohen during his testimony on Wednesday described the role he played in exaggerating President Trump’s net worth, and noted how it would help bolster the president’s ranking of the wealthiest people in Forbes magazine.
• Rep. Pramila Jayapal (D-Wash.) on Tuesday unveiled a revised Medicare for all bill, with more than 100 cosponsors, as the idea gains steam among leading Democrats.