THE TICKER

Back in June, House Speaker Paul Ryan warned those rooting for a tax code overhaul against getting whipsawed by punditry from the cheap seats.  

“You will hear that tax reform is coming along. You will hear that it is dead. Then you will hear it is back on track. Then you will hear it is on life support. Sometimes you will hear all of this in the same week, the same day, or heck, even the same hour,” the Wisconsin Republican said in his first major speech on the subject. “But I am here to tell you: We are going to get this done in 2017.”

Ninety days later, few would suggest the process is on track — and wrapping up work this year looks like an exceedingly long shot.

To recap, statement that the Big Six tax negotiators released at the end of July and billed as an update on their hunt for consensus reflected more about where they disagreed: It formally buried the border adjustment tax that Ryan and House Ways and Means Chairman Kevin Brady (R-Tex.) favored as a source of $1 trillion in new money to pay for lower overall rates. 

President Trump was meant to spend the August recess making the public case for action; instead, blowback from his response to the Charlottesville tragedy overwhelmed the month. Congressional staffers back in Washington aimed to start putting pens to paper for a September markup that will not be happening.
 

Now, at a moment when the principals driving the debate should be nailing down details, they are instead revealing that their areas of shared agreement may only be getting fuzzier. Consider: 

  • Ryan last week abandoned months of promises that the effort wouldn’t add to the deficit, telling the Associated Press that the most important goal of the effort is economic growth. As the AP’s Erica Werner wrote, “Asked twice whether he would insist the emerging tax plan won’t pile more billions onto the $20 trillion national debt, Ryan passed up the chance to affirm that commitment. GOP leaders made that ‘revenue neutral’ promise in a campaign manifesto last year and many times since.”
  • Senate Finance Committee Chairman Orrin Hatch (R-Utah) derogated the Big Six talks in which he’s participating, declaring at a Finance hearing that the group “will not dictate the direction we take in this committee,” and adding that his panel would not act as a rubber stamp. “Any forthcoming documents may be viewed as guidance or potential signposts for drafting legislation," he said. "But, at the end of the day, my goal is to produce a bill that can get through this committee. That takes at least 14 votes, and hopefully we’ll get more.” (And on Friday, Hatch told CNBC that the effort will be "much harder than health care.")
  • A framework coming at the end of the month will specify a corporate rate, Treasury Secretary Steven Mnuchin said Thursday, but it’s not clear what else. Brady said tax negotiators are still talking about what targets they can agree on. 
  • One particularly key figure outside the Big Six — President Trump — is injecting new uncertainty into the debate by courting Democratic support. That has GOP leaders working, “sometimes awkwardly, to project leverage over efforts to rewrite the nation’s tax laws,” as The Washington Post’s Sean Sullivan and Mike DeBonis write
  • To end-run Democrats, congressional Republicans need to adopt a budget, and there’s little evidence of emerging agreement on how to do that. As Brady told House Republicans at a meeting last Wednesday, according to Politico, “No budget, no tax reform.”
  • The Koch network, a potentially critical partner for the GOP in making the public pitch for an overhaul, is taking sides in an internal Republican debate over whether it should include an expensive new write-off for capital investments. The conservative powerhouse’s opposition to the border adjustment tax helped sink that pillar of the Ryan-Brady approach. 
  • The House is out this week; Senate Republicans look poised to spend the week returning to health care
     

Republicans have not even gotten to the tough stuff yet. The chore of finding new revenue is what generates all of the political pain in the process. The resistance to the BAT indicated the enduring truth of that. And the party hasn’t yet settled on any replacements. As Mike DeBonis wrote over the weekend, one proposal to gin up new funds — a repeal of the deduction for state and local taxes — is being met with howls of protest from Republicans in high-tax states.

“I intend to fight it with everything I know how,” Rep. Tom MacArthur (R-N.J.) told Mike.

But the battle over concrete proposals has to be joined before he can wage that fight. 
 

MARKET MOVERS

FED WATCH:

— The Fed meets Wednesday as the countdown is on to the end of Janet L.Yellen's first and potentially final term at the central bank's helm. CNNMoney's Donna Borak has three things to watch: "1. Will she stay or go?... 2. Is another rate hike coming?... 3. When will the Fed start getting its portfolio back to normal?" 

All about the dots. CNBC's Jeff Cox: "One factor, though, could stand out: The so-called dot plot, which charts where individual Fed members expect interest rates to be over the next few years. Policymakers update the chart every quarter, and market participants watch it closely for expectations on monetary policy. Until recently, the market thought it had the Fed figured out. With economic growth stable, the unemployment rate continuing to come down and inflation trending toward the 2 percent target, the Fed likely would continue on a path of steady, gradual rate increases.

However, recent statements from officials indicating that inflation may stay under the Fed's target rate for longer than they thought has kindled curiosity about what that will mean for the rate trajectory."

Yellen's future. CapAlpha's Ian Katz: "There’s been a lot of talk lately about Janet Yellen’s chances for being renominated as Fed chair. A few weeks ago we gave a 65-70 percent chance that the next chair will be someone other than Yellen or Gary Cohn. We’ll stick with that for now, but note that while Cohn’s chances seem to have fallen, Yellen’s have improved slightly in the past couple of weeks... We still believe Trump would prefer to choose his own person rather than renominate Obama’s. If he ever has a conversation with Yellen and asks her about loyalty or her commitment to keep interest rates low, Trump won’t be satisfied with her answer. Yellen believes fully in the importance of an independent Fed. She won’t commit to anything. Depends on the data, she’ll say."

Storm damage. Hurricanes Harvey and Irma already look to be taking a bite out of economic growth. The Wall Street Journal's Sarah Chaney: "Early evidence came Friday when the Federal Reserve reported that U.S. industrial production dropped a seasonally adjusted 0.9% in August from the prior month, its largest decline since the 2007-09 recession. The Fed said Hurricane Harvey was responsible for most of the decline by depressing oil drilling, petroleum refining and other industrial activity."

The storms are likely to reappear when companies report their quarterly earnings, too. CNBC's Nick Wells: "All the big hurricanes live again in the quarters following their landfall in the U.S., according to a CNBC analysis of earnings calls transcripts over the past 12 years."

The damage will top $150 billion, says Moody's. But who pays? CNNMoney's Julia Horowitz: "After any major natural disaster, a patchwork of public and private actors step up to cover costs. Payouts from insurers, along with a miscellany of local, state and federal aid programs, will help those affected to pay for rebuilding. Still, not everyone will be made whole again." Indeed, 40 percent of small businesses never open their doors again after a natural disaster, one recent study says

TRUMP TRACKER

RUSSIA WATCH:

Trump's lawyers are fighting  -- within earshot of a New York Times reporter at popular downtown D.C. lunch spot BLT Steak -- over how much to cooperate with the Mueller probe. The New York Times' Peter Baker and Ken Vogel scoop: "The debate in Mr. Trump’s West Wing has pitted Donald F. McGahn II, the White House counsel, against Ty Cobb, a lawyer brought in to manage the response to the investigation. Mr. Cobb has argued for turning over as many of the emails and documents requested by the special counsel as possible in hopes of quickly ending the investigation — or at least its focus on Mr. Trump. 

Mr. McGahn supports cooperation, but has expressed worry about setting a precedent that would weaken the White House long after Mr. Trump’s tenure is over. He is described as particularly concerned about whether the president will invoke executive or attorney-client privilege to limit how forthcoming Mr. McGahn could be if he himself is interviewed by the special counsel as requested.

The friction escalated in recent days after Mr. Cobb was overheard by a reporter for The New York Times discussing the dispute during a lunchtime conversation at a popular Washington steakhouse. Mr. Cobb was heard talking about a White House lawyer he deemed 'a McGahn spy' and saying Mr. McGahn had 'a couple documents locked in a safe' that he seemed to suggest he wanted access to. He also mentioned a colleague whom he blamed for 'some of these earlier leaks,' and who he said 'tried to push Jared out,' meaning Jared Kushner, the president’s son-in-law and senior adviser, who has been a previous source of dispute for the legal team."

Facebook has more over to Mueller than Congress. The Wall Street Journal's Deepa Seetharaman, Byron Tau and  Shane Harris: "The information Facebook shared with Mr. Mueller included copies of the ads and details about the accounts that bought them and the targeting criteria they used, the people familiar with the matter said. Facebook policy dictates it would only turn over 'the stored contents of any account,' including messages and location information, in response to a search warrant, some of them said. A search warrant from Mr. Mueller would mean the special counsel now has a powerful tool to probe the details of how social media was used as part of a campaign of Russian meddling in the U.S. presidential election."

Rep. Adam Schiff (D-Calif.), a member of the House Intelligence Committee, said Sunday that tech firms should testify before Congress: 

— Meanwhile, Sen. Dianne Feinstein (D-Calif.), the Senate Judiciary Committee's ranking member, said Donald Trump, Jr. should publicly testify under oath. “It’s Senator Grassley’s intent and it’s certainly my intent to have him before the committee in the open, and be able to ask some questions under oath,” Feinstein said on CNN’s “State of the Union."

President Mooch? This White House is done with Anthony Scaramucci, but Anthony Scaramucci may not be done with the White House. BuzzFeed's Steven Perlberg: "Anthony Scaramucci told a friend, in writing, that he wants to run to be the governor of New York or president of the United States. The correspondence, obtained by BuzzFeed News, contradicts Scaramucci's tweet on Friday calling a BuzzFeed News report on his political ambition 'fake news.' The story detailed how the bold former White House communications director, who lasted only 10 days in the Trump administration, had recently told friends he wants to run for office — mayor of New York City, governor of New York, or the presidency."

The Mooch still denies it though:

Not One Penny, a coalition of advocacy organizations protesting tax cuts for the wealthy, launched a new campaign Friday dubbed "Dump Mnuchin."
CNBC
For many customers, deciding whether to hold events at Trump-owned clubs has become a political question.
David A. Fahrenthold, Amy Brittain and Matea Gold
The chief of staff has limited the former academic's access to the Oval Office, but the president has often leaned on Navarro, even asking 'Where's my Peter?' when he's absent from meetings.
Politico
MONEY ON THE HILL

GOP abandons fiscal discipline. AP's Andrew Taylor: "The tea partyers and other conservatives who seized control of the House in 2010 have morphed into Ronald Reagan-style supply siders while the GOP's numerous Pentagon pals run roughshod over the few holdouts. Tax cuts in the works could add hundreds of billions of dollars to the debt while bipartisan pressure for more money for defense, infrastructure, and domestic agencies could add almost $100 billion in additional spending next year alone.

The bottom line is the $20 trillion national debt promises to spiral ever higher with Republicans controlling both Congress and the White House. 'Republicans gave up on caring about deficits long ago,' bemoaned Republican Sen. Rand Paul of Kentucky, who was elected in the 2010 tea party class."

— Fannie and Freddie in limbo. Hopes for overhauling the mortgage finance giants have dimmed. The Wall Street Journal's Andrew Ackerman and Juliet Chung: "Overhauling the two companies remains a back-burner issue for the Trump administration and Congress, crowded out by matters such as taxes, immigration and flood insurance... The delays leave in limbo hedge funds and distressed-debt investors which have bought up shares in the companies in the hopes they could score a large windfall."

POCKET CHANGE

Two Equifax execs quit. The Post's Hamza Shaban: "A week after Equifax disclosed it suffered a massive data breach that may have compromised sensitive information belonging to 143 million people, the credit reporting agency's chief information officer, David Webb, and chief security officer, Susan Mauldin, are retiring, effective immediately, the company said in a statement Friday evening... At least two congressional hearings on the Equifax breach have been announced. The first scheduled panel will take place on Oct. 3, when Smith is expected to testify. A bipartisan group of 36 senators have asked the Justice Department and the U.S. Securities and Exchange Commission to investigate reports Equifax executives sold stock after learning about the breach but before it was made public. The Federal Trade Commission took the unusual step of announcing it is conducting a probe into the Equifax breach."

How it happened. The Wall Street Journal's AnnaMaria Andriotis, Michael Rapoport and  Robert McMillan: "On March 8, researchers at Cisco Systems Inc. reported an online security flaw that allowed hackers to break into servers around the internet. Cisco urged users to upgrade their systems immediately with a newly issued fix. Equifax Inc. was among the companies using the flawed software.

On Friday, it said its technology experts at the time worked to identify and patch vulnerable systems. In late July, though, Atlanta-based Equifax discovered suspicious traffic on its system—and found the same security flaw still existed in some areas. The company’s security staff again addressed the problem, according to Equifax, but by then it was too late. From about mid-May to July 30, hackers ransacked vast troves of information at the credit-reporting company."

Veteran short-seller Carson Block sues. He's accusing the company of an "abysmal" handling of the hacking mess. FT's Ben McLannahan writes that Block had personal data compromised in the hack. Hit suit "filed on Friday accuses Equifax of negligence in failing to safeguard and protect his personal identifying information from criminals, as well as a failure to disclose the breach in a timely fashion. Mr Block’s firm, Muddy Waters, has no short position that would benefit from a fall in the stock. In the suit, filed in the Northern District of California, San Francisco division, he seeks damages of at least $500,000 for the “stress, nuisance and annoyance” of dealing with issues stemming from the breach."

Bank of America has shuttered 1,600 branches since the crisis. The Wall Street Journal's Rachel Louise Ensign and Coulter Jones: "The reductions are roughly equivalent to shutting all the Citigroup Inc. and Capital One Financial Corp. outlets in the U.S. The strategy would represent a stark change for any big lender, but it is a particularly striking departure for a bank built over decades on the idea of offering a coast-to-coast network in areas urban and rural."

SoFi scandal costs its chance to become a bank. FT's Ben McLannahan: "SoFi’s application to become a bank has almost no chance of approval in the wake of a sex scandal that forced out its chief executive, says a close adviser and former chairman of the Securities and Exchange Commission. SoFi, the biggest and brashest of a new breed of online lender in the US, applied to the Federal Deposit Insurance Corporation in June for a special charter from the state of Utah.

But last week’s departure of Mike Cagney, the co-founder, chairman and chief executive, has effectively killed the application, said Arthur Levitt, a former chairman of the SEC, who began advising the company two years ago... Mr Cagney told employees in a memo on August 11 that he would step down as chief executive by the end of the year, in the wake of a pair of lawsuits alleging sexual harassment and unfair work practices at the San Francisco-based company."
 

Good news/ bad news on wages. The good: Women are closing the pay gap with men, as the national disparity shrank by the largest amount since 2007, Danielle Paquette writes.The bad: African Americans are the only racial group in the U.S. still making less than they did in 2000, The Post's Heather Long writes

Recent trends have produced positive statistics, but forces undermining the middle class may reach back farther than many economists have thought.
New York Times
Come mid-2018, just one entity -- the Bank of New York Mellon Corp. -- will be responsible for ensuring almost two trillion dollars of securities financed by so-called repurchase agreements are cleared and settled each and every day.
Bloomberg
DAYBOOK

Today

  • The Center for Strategic and International Studies holds an event on trade policy with USTR Robert Lighthizer.

Coming Up

  • The Senate Finance Committee holds a hearing on tax reform on Tuesday.
  • The Federalist Society holds an event on funding the government on Friday.
THE FUNNIES

From The Post's Tom Toles: "Finally, the Democrats offer some healthy competition"

BULL SESSION

President Trump can't stop talking about Hillary Clinton: 

Trump supporters gather for so-called 'Mother of all Rallies':

Fact Check: Are American business's tax rates some of the highest in the world?:

Watch Sean Spicer's cameo at the Emmys: 

At the Emmys, Stephen Colbert says to tune out reality with TV: