The corporate powerhouses that led the unsuccessful push for a border adjustment tax this year are coming back to tax writers with a humbler ask: Whatever you do to cut the corporate rate, at least make it permanent.
The American Made Coalition — a group headlined by Boeing, Dow Chemical, General Electric and Pfizer — is sending a letter today urging key negotiators in Congress and the Trump administration to make sure that a trimmed rate stays on the books for the long haul. “Few businesses will make significant new investments if these changes are set to expire,” they say in their letter to the “Big Six” leaders working on a tax overhaul.
The coalition has other priorities, too. Member companies want the United States to move to a territorial tax system, which would largely exempt corporate earnings abroad from U.S. taxation. And they take a veiled shot at the notion of a new international minimum tax, a measure that would force American companies to pay some U.S. taxes only on their foreign income. Members of the Senate Finance Committee have explored such a levy as a means of funding a broader tax code rewrite.
In that sense, the evolution of the coalition’s aims reveals, writ small, how the broader ambitions behind a tax rewrite have shrunk this year. The heady collection of multinationals — the chief executives signing onto today’s letter include Archer Daniels Midland’s Juan Luciano, Eli Lilly’s David Ricks, Raytheon’s Thomas Kennedy and S&P Global’s Douglas Peterson — launched in February to make the public case for a BAT. The provision, championed by House Speaker Paul D. Ryan (R-Wis.) and House Ways and Means Committee Chairman Kevin Brady (R-Tex.), would have raised roughly $1 trillion to finance a permanently lowered corporate rate. But retailers and others that stood to get pinched successfully mobilized against it, and tax-writers haven't managed to replace the revenue it would have generated.
That’s left Republicans where they stand today: with limited apparent progress toward a framework. As my colleagues Damian Paletta, Sean Sullivan and Kelsey Snell report this morning:
In private talks with top congressional Republicans, Trump advisers are pressing to eliminate or reduce several popular tax deductions, including the interest companies pay on debt, state and local income taxes paid by families and individuals, and the hugely popular mortgage-interest deduction.
Several officials from the White House and Capitol Hill confirmed that those options are being considered. But that is where the agreement ends…
All of it has forced negotiators to consider scaling back their plan. And that’s before any plan has even been presented to the rank and file.
“It is always difficult because it means, what do you cut?” said Senate Finance Committee Chairman Orrin G. Hatch (R-Utah). “Everything on the books has a constituency, and that’s one of the problems.”
GOP lawmakers pretty much have no idea what's going on with the "Big Six," the group of lawmakers and White House officials hashing out a tax agreement behind closed doors. Treasury Secretary Steve Mnuchin and National Economic Council head Gary Cohn are headed to Capitol Hill today to talk taxes with the Senate Budget Committee and Mitch McConnell (R-Ky.), according to Politico. Republicans seem incredulous that Trump is still bent on a 15 percent corporate tax rate, while negotiators are looking more closely at something between 20 and 25 percent, report Colin Wilhelm and Aaron Lorenzo: "'The president’s been out there talking about a 15 percent rate, the House has talked about 20, but to get it down from 35 to 20 it’s about $100 billion per point,' said Sen. John Thune (R-S.D.), the third ranking Senate Republican."
Meanwhile, the American Made coalition has narrowed its sights in trying to influence whatever deal is crafted, while seeking to minimize members' own tax burden. Under special budget rules Republicans intend to use to pass a package without Democratic support, lawmakers could slash the rate without worrying about finding any offsetting revenue. But that would render the cut temporary and therefore limit its appeal to businesses engaged in long-term planning.
The companies in their letter warn against trying to “impose onerous new taxes on U.S. business competing abroad.” Tax-writers will read that as a warning that the companies will fight an effort to impose a so-called international minimum tax on their foreign earnings. The provision, floated a few years ago both by then-President Obama and then-Ways and Means Chairman Dave Camp (R-Mich.), could encourage American companies to keep operations at home, says Eric Solomon, former assistant secretary for tax policy at the Treasury Department. But if structured wrong, Solomon says, it could also put American companies at a competitive disadvantage abroad.
Another drawback: It will evidently invite opposition from deep-pocketed foes. So does every other proposal to raise significant chunks of new revenue, making the GOP’s challenge harder.
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— The S&P 500 hit a record, as fears of North Korean nukes and Irma's wrath subsided. The Wall Street Journal's Corrie Driebusch and Marina Force: "The gains sent the Dow up 259.58 points, or 1.2%, to 22057.37, its biggest one-day gain in six months. The last time the Dow closed above 22000 was Aug. 16, and before Monday it hadn’t posted a 1% gain since April...
The absence of news from Pyongyang supported stocks and the dollar, while weighing on haven assets, analysts say... Meanwhile, concerns about Hurricane Irma’s impact on the U.S. economy decreased. A reduction in the storm’s strength and a shift in its expected course—there was no direct hit on Miami—meant insured damage estimates were likely to be less than originally anticipated by some analysts."
— Goldman: Fear of market correction is guarding against one. CNBC's Jeff Cox: "Correction calls have abounded lately, based at least in some part because it's been so long since one has occurred. The S&P 500 has gone 14 months without a 5 percent drop and 19 months since the last full-blown correction, or drop of 10 percent. Goldman analysts, who have been skittish about market values all year, believe the streaks will continue. One of two key factors the firm cites is that investors now are fearful, thus negating any worries about the kind of euphoria that can kill a bull market."
THE BIG CLEAN-UP BEGINS:
— Irma's near miss: The bill for Irma cleanup could be as cheap, relative to $200 billion expectations, as $49 billion. Bloomberg: "Florida is drenched, tattered -- but fortunate... 'Miami and Miami Beach, we didn’t dodge a bullet, we dodged a cannon,' Miami Beach Mayor Philip Levine said in an interview Monday morning...
The hurricane dwindled to a Category 2 before reaching the Tampa Bay area. That could keep damages under $49 billion, with insured losses at about $19 billion, sparing insurance companies, [Enki Research disaster modeler Chuck] Watson said. Bloomberg Intelligence analyst Jonathan Adams puts insured losses now at $13 billion, down from an earlier estimate of $33 billion." (Here's how 20 miles could have made that $151 billion difference.)
— Houston debates how to rebuild. The nation's 4th largest city is famous for its aversion to planning. That may be about to change as the city considers what it should look like, post-Harvey. “If Houston does not change, it will not survive from an economic standpoint,” Jim Blackburn, co-founder of Rice University’s Severe Storm Prediction, Education and Evacuation from Disaster Center, tells The Wall Street Journal.
— Early retirement: Congress may make it easier for storm victims to tap their 401(k)s. The Post's Thomas Heath: Kevin Brady "said he is considering legislation that would suspend a 10 percent penalty that was designed to discourage people from tapping their 401(k) retirement savings before they retire as early as age 59.5."
— Dinner and taxes: Trump is hosting six senators — three from each party — for a working dinner at the White House tonight. The Post's Ashley Parker and Ed O'Keefe: "The dinner is set to include three moderate Democrats — Sen. Joe Donnelly (Ind.), Heidi Heitkamp (N.D.), and Joe Manchin III (W.Va.), as well as three senior Republican members of the Senate Finance Committee: Chairman Orrin G. Hatch (Utah), Patrick J. Toomey (Pa.) and John Thune (S.D.), according to aides in both parties who weren’t authorized to speak publicly about the dinner. One aide suggested the White House planned to announce the meeting early Tuesday.
The dinner comes as lawmakers and the White House continue working to launch the long-stalled debate on tax reform. Republican leaders have said that they don’t expect to begin passing legislation in the coming weeks but that the House and Senate tax-writing committees are set to begin holding hearings on the details."
— Sen. Bob Corker (R-Tenn.) is considering stepping down when his second term is up in 2018. The Post's Sean Sullivan and Mike DeBonis: "Corker is an influential Republican who at times has clashed with President Trump. If he retires, it would probably put a seat that analysts expect to stay in GOP hands into a more uncertain state. It would also mark the end of the tenure of a well-respected member of the Republican Party’s mainstream governing wing, which has frequently collided with Trump and his nationalist, populist allies." (Politico reports that Hatch is likewise considering his options and will decide on whether to seek an eighth term by the end of the year.)
And Rep. Dave Trott (R-Mich.) is retiring. The second-term lawmaker is the fourth House Republican to call it quits — all hailing from competitive districts. The Detroit Free Press: "Trott, 56, is one of the 10 wealthiest members of Congress. In a 2015 listing of wealthy members of Congress, the Washington political publication Roll Call estimated his wealth at more than $73 million, placing him sixth. Trott had long been touted as an up-and-coming hopeful before running for Congress in 2014, having worked for former U.S. Rep. Bill Broomfield in the 1980s and volunteering for former U.S. Rep. Joe Knollenberg when he worked for the Oakland County Republican Party."
Trott also served on the House Financial Services Committee, where he was well-regarded by industry types. "He knew more about financial services than half the committee pulled together," one lobbyist tells me. Trott came to Washington as part of a class of relative moderates then-Speaker John Boehner (R-Ohio) recruited in the 2014 midterms to help him push back against the influence of his hard-right flank. The next few months will reveal whether his decision to quit represents a one-off or the leading edge of a tide of retirements by Republican lawmakers who decide they've got better things to do than serve in government, despite total GOP control.
— Trump lawyers wanted Kushner out. The Wall Street Journal's Peter Nicholas, Rebecca Ballhaus and Erica Orden: "Some of President Donald Trump’s lawyers earlier this summer concluded that Jared Kushner should step down as senior White House adviser because of possible legal complications related to a probe of Russia’s involvement in the 2016 presidential election and aired concerns about him to the president, people familiar with the matter said.
Among their concerns was that Mr. Kushner was the adviser closest to the president who had the most dealings with Russian officials and businesspeople during the campaign and transition, some of which are currently being examined by federal investigators and congressional oversight panels. Mr. Kushner, Mr. Trump’s son-in-law and confidant, has said he had four such meetings or interactions." The paper reports that press aides to the legal team went so far as to draft a statement explaining Kushner's departure.
— Ivanka Trump had breakfast with Janet Yellen. The First Daughter met the Fed chairwoman in July, after reading a Yellen speech on women participating in the economy and reaching out. The Los Angeles Times' Jim Puzzanghera: "The Fed chair often meets with administration officials and members of Congress. But a sit-down with a member of the First Family is highly unusual for the chief of the nation's independent central bank. The breakfast came as Yellen's four-year term is set to expire in February. She has not said publicly if she is interested in a second term but Trump has said he is considering renominating her."
Bloomberg View executive editor Tim O'Brien weighed in:
Ivanka deployed her extensive knowledge of monetary policy, inflation and the labor market to ascertain whether Yellen was up to the job. https://t.co/sWCQLDjreH— Tim O'Brien (@TimOBrien) September 11, 2017
And Vox's Matthew Yglesias:
Ivanka mostly focused on rates versus level targeting (and Optimal Control) but also speculated about nominal wage targeting. https://t.co/JK79eHhPAa— Matthew Yglesias (@mattyglesias) September 11, 2017
— Ex-Deutsche Bank subprime trader faces civil fraud charges. Reuters' Sarah N. Lynch: "Paul Mangione, the former trader, is accused in the complaint of misrepresenting information about the loans underpinning two residential mortgage-backed securities that were sold to investors. The government’s case against the former trader, filed in a federal court in Brooklyn, came after the bank in January reached a $7.2 billion settlement in a related case over risky mortgage securities sold to investors."
A quarter of Americans were born after 9/11, writes Philip Bump:
From The Post's Tom Toles: "Schumer and Pelosi seem to have a new best friend"
- The House Financial Services Subcommittees on Financial Institutions and Consumer Credit and Monetary Policy and Trade hold a joint hearing on “Examining the Relationship between Prudential Regulation and Monetary Policy at the Federal Reserve.
- The Bipartisan Policy Center holds an event on curbing money laundering and terrorist financing.
- The Senate Finance Committee holds a hearing on health care cost and coverage.
- Sen. Ted Cruz (D-Tex.) will give an address on tax reform at an event by the Tax Foundation on Wednesday.
- The Senate Finance Committee holds a hearing on individual tax reform on Thursday.
- The American Enterprise Institute holds an event on trade deficits and the Trump administration on Friday.
Watch President Trump's full remarks in remembrance of 9/11:
Fact Check: Has the House passed more bills than it did during any recent president's first year?
White House calls Harvey response 'the best integrated' effort in U.S. history:
Insurance industry avoids Irma catastrophe:
A look at Key West after Hurricane Irma:
Watch Seth Meyers on President Trump's handling of Irma's aftermath: