THE TICKER

The Trump-Corker feud continued to reverberate Tuesday, with those focused on the bottom line wondering what impact the latest bout of Republican infighting will have on the party’s next big policy project. An early answer will come next week, when the Senate takes up a budget to fast-track a tax overhaul. 

Do Senate Republicans have the votes for the spending blueprint? Not yet. 

They probably will. But Republican leaders aren’t taking it for granted. As with anything else they tackle these days, a handful of defections spells doom. And they begin the counting by figuring they probably will lose Sen. Rand Paul (R-Ky.), the lone Republican to oppose a budget this year aimed at repealing Obamacare and an outspoken critic of the GOP tax framework.  

Leaders can afford to lose only one more. They’re worrying over a now-familiar cohort of Republican mavericks, a list that includes Sens. John McCain (R-Ariz.), Susan Collins (R-Maine) and Lisa Murkowski (R-Alaska), none of whom have declared a position. Part of McCain’s concern centers on boosting military spending beyond the limits imposed by the 2011 sequester. The Senate budget includes a provision to accommodate him by allowing for more defense spending if lawmakers reach a deal later to lift the budget caps. 

Collins and Murkowski have their own concerns. Both have said they want to protect entitlement health programs — which Senate Democrats charge that the spending blueprint would gut by about $1.5 trillion. And Collins, for one, remains preoccupied with a pending announcement about her future: She is set to announce Friday whether she plans to run for governor next year, setting up the possibility that she could soon join Corker in the short-timers caucus. 

All to varying degrees have expressed concerns about a return to regular order. Recall McCain’s dramatic July floor speech lamenting the Senate’s drift from bipartisan legislating, two days before he cast a decisive vote against his party’s Obamacare repeal drive.

The budget resolution that senators will consider next week seeks to guarantee a partisan process for a tax rewrite by unlocking special instructions that will allow Republicans to avoid the need for Democratic votes in the upper chamber. Also, the measure ditches a rule that Republicans adopted two years ago banning the Senate from voting on a bill until its official budget impact has been posted for 28 hours. 

“Let's be honest, the only reason for passing this budget resolution is to avoid the filibuster in the Senate over a potential tax bill. All the rest of the numbers in there mean nothing,” says Bill Hoagland, senior vice president of the Bipartisan Policy Center and a former top Senate budget aide. “This for all practical purposes destroys whatever vestiges of the congressional budget process remained after the last few years.”

It very well may not matter. Those who assume the Senate Republican votes will materialize when the time comes next week point to the urgent need for any kind of Republican win. “I do get a sense there’s a level of desperation among the members,” one top tax lobbyist tells me.

Members of the hard-line House Freedom Caucus, for example, dropped their demands for deeper spending cuts in their chamber’s budget in the interest of moving the tax debate forward. It narrowly passed this month. Assuming Senate Republicans find the votes for their blueprint next week, the erstwhile fiscal hawks in the House probably will have to back even further off their avowed principles.

Tax watchers expect, again in the name of speed, that House Republicans will have to swallow a Senate budget that drops $200 billion in mandatory spending cuts they adopted and instead authorizes $1.5 trillion in tax cuts. 

MARKET MOVERS

Trudeau: We're not your NAFTA problem. Reuters's David Ljunggren: "When Canadian Prime Minister Justin Trudeau meets [Trump] on Wednesday, he will try to persuade the U.S. leader to focus on Mexico as a source of potential problems at talks to update NAFTA. Although Trudeau officials were confident Trump would mostly target Mexico as the three nations started to renegotiate the North American Free Trade Agreement, Washington has slapped duties on Canadian Bombardier airliners and lumber exports in recent months and talked tough on dairy and wine. 

Foreign Minister Chrystia Freeland said Trudeau would 'explain really clearly to the President ... that Canada is not America’s problem'. Freeland, who says Canada buys more from the United States than China, Britain and Japan combined, told CTV television on Sunday that Trudeau’s message to Trump at their White House meeting would be 'We are your biggest client.'"

White House seeks $4.9 billion for Puerto Rico. Politico's Sarah Ferris: "The Trump administration on Tuesday sought an additional $4.9 billion in emergency hurricane aid to stave off what Puerto Rico’s governor recently warned could become a fiscal catastrophe. The Office of Management and Budget sent a formal request to House leadership Tuesday afternoon, revising its most recent recovery package request to nearly $35 billion. The extra $4.9 billion would 'address the immediate liquidity issue that Puerto Rico is having,' OMB spokesman John Czwartacki told POLITICO. It would allow the island government to make its payroll and fund pensions amid its worst natural disaster in decades."

TAX FLY-AROUND: 

Corker spat won't hurt tax rewrite, Trump says. Politico's Louise Nelson: "Asked Tuesday during a brief interaction with reporters whether his spat with Corker might damage the prospects for tax reform, one of his top legislative priorities, Trump said, 'I don’t think so.' 'We’re well on our way. The people of this country want tax cuts. They want lower taxes,' Trump said. 'People want to see massive tax cuts. I’m giving the largest tax cuts in the history of this country. In addition to that, there’ll be reform…And we’ll be adjusting a little bit over the next few weeks to make it even stronger.'"

 

Then again, it all might depend on whether Corker takes offense to the latest insult from the president. At 5-foot-7, the senator was apparently considered too short to be secretary of state:

Trump keeps repeating this tax myth. The president insists the United States is the highest taxed nation in the world. It isn't. Politico's Matthew Nussbaum: "He said it Tuesday during a meeting with former Secretary of State Henry Kissinger. He said it at a White House event last Friday. He's tweeted it, repeated it in television interviews and declared it at countless rallies. It is his go-to talking point, his favorite line as he tries to lead the Republican Party to a once-in-a-generation overhaul of the federal tax code. It is also false — something fact checkers have been pointing out since 2015, when Trump first began declaring it on the campaign trail. On Tuesday, White House press secretary Sarah Huckabee Sanders sought for the second time in less than a week to defend the comment by saying, in effect, that Trump did not mean what he said."

Trump has been tweeting this morning about one of his favorite topics — the stock market rally — arguing tax cuts would turbocharge it: 

The third one encapsulates a kink in the president's logic: Setting aside that the market rally only benefits some Americans, if stocks are zooming, what's the need for tax cuts?

IMF cuts U.S. forecast. The International Monetary Fund doesn't think tax cuts are happening. The Post's Heather Long: "The U.S. economy will still expand, the IMF predicts, just not as quickly as some had hoped. The IMF forecasts 2.2 percent growth in 2017 and 2.3 percent in 2018, a decline from April when the IMF projected 2.3 percent growth this year and 2.5 percent in 2018. 'The downward revision relative to April forecasts reflects a major correction in U.S. fiscal policy assumptions,' the IMF wrote in its latest World Economic Outlook report. Because of 'significant policy uncertainty,' the IMF economists felt they should not count on Congress and the president passing lower taxes."

— Also the IMF: Don't raise deficitsBloomberg's Randy Woods and Andrew Mayeda: IMF "is giving the Trump administration some unsolicited -- and possibly unwelcome -- advice on the Republican tax plan: don’t make your fiscal situation even worse. 'Given where the U.S. is, in terms of its overall debt level and the off-the-balance-sheet obligations going out into the future as the population ages, we feel that whatever the tax reform plan looks like, it should not increase the deficit,” IMF chief economist Maurice Obstfeld told reporters Tuesday after publishing the fund’s latest global economic forecasts. Over the medium term, “tax reform should be revenue enhancing,' he added."

Smaller companies would spend tax cuts on tech. And not on jobs, according to a Reuters survey. David Randall reports: "Small companies pay the highest taxes and they would be the main beneficiaries of such a Trump windfall. Reuters contacted the 100 largest companies by market value in the benchmark Russell 2000 index of U.S. small and mid-cap stocks as well as another 50 in the Russell 2000 with no analyst coverage. None of the 17 companies that responded to Reuters queries mentioned boosting their headcount. The administration has said the tax cuts would largely pay for themselves by spurring more investment and creating jobs. But companies say they look to spend on technology that will allow them to improve productivity or make acquisitions rather than hire more workers."

The Kansas pass-through experiment failed. Now Republicans are trying to take it national. The New York Times's Jim Tankersley: "With the state hemorrhaging government revenue, Kansas lawmakers rolled back the tax law this year, but congressional Republicans and President Trump are trying to take the experiment with pass-through preferences national, beyond Wichita and Topeka to cities with residents who measure incomes in seven, eight or nine figures. The Republican tax rewrite unveiled this month aims to jump-start economic growth in part by establishing a 25 percent tax rate on small businesses and other firms that operate as pass-through entities, a cut from the top rate of 39.6 percent that such business owners pay now.

But the abandoned experiment in Kansas points to how a carve-out intended to help raise growth and create jobs instead created an incentive for residents, particularly high earners, to avoid paying state income taxes by changing how they got paid."

Gains in Wal-Mart Stores and other consumer staples pushed major U.S. stock indexes higher. The Dow industrials added 0.3% to close at a record.
The Wall Street Journal
A buoyant and complacent stock market is worrying Richard H. Thaler, the University of Chicago professor who this week won the Nobel Prize in economics.
Bloomberg
"There's no value anywhere in the market. Everything trades at high levels," says David Kostin, the firm's chief U.S. equity strategist.
CNBC
TRUMP TRACKER

Corker speaks for his colleagues. "As the public feud between President Trump and Sen. Bob Corker stretched through its third day on Tuesday, a collective, if private, acknowledgment emerged that Corker was speaking for most Senate Republicans when he stood up to a Trump taunt," The Post's Paul Kane writes. "You wouldn’t know it from senators’ public pronouncements. After Corker tweeted on Sunday that the White House had been turned into 'an adult day-care center,' most Republicans were silent — deciding to ride out this moment with the belief that it would fade away. Their statements about the dispute have cited simple facts and avoided taking sides with either Trump or their Republican colleague from Tennessee. They do not intend to get drawn into the fight themselves, and there is no big wave of new GOP senators about to join Corker in his vast condemnation of the president."

Federal ethics watchdog alarmed. The New York Times's Eric Lipton: "The federal government’s top ethics officer sent a letter to all federal agencies late last week warning that he is 'deeply concerned that the actions of some in government leadership have harmed perceptions about the importance of ethics.' He urged all federal workers to redouble their commitment to acting honorably. The letter from David J. Apol, named acting head of the Office of Government Ethics in July by President Trump, does not include specifics about what actions by Trump administration employees have elevated his concerns...

The two-page memo was dated Oct. 5, six days after Tom Price, the secretary of Health and Human Services, announced his resignation after questions surfaced about his use of private and government planes, and inspectors general in at least three other agencies — Interior, Treasury and the Environmental Protection Agency — announced they were conducting their own investigations into plane travel and related issues."

Brookings: Trump could be impeached. A new study from the left-leaning think thank builds the case that the president obstructed justice. CNBC's Jeff Cox: "In the analysis, Brookings concludes that even though Trump had the authority to fire Comey, he could not do so if the intention was to get in the way of an ongoing investigation. 'Attempts to stop an investigation represent a common form of obstruction. Demanding the loyalty of an individual involved in an investigation, requesting that individual's help to end the investigation, and then ultimately firing that person to accomplish that goal are the type of acts that have frequently resulted in obstruction convictions,' Brookings analysts Barry Berke, Noah Bookbinder and Norman Eisen wrote. The analysis concludes that if special counsel Robert Mueller comes to the same conclusion, legitimate articles of impeachment could be drawn up."

Trump wants to both have his budgetary cake and eat it, too.
Philip Bump
"I mean, you look at some of these agencies, how massive they are, and it's totally unnecessary," he says.
Politico
Exclusive: Cyber-attack was far more widespread than firm admits, say sources, with data from as many as 350 clients in compromised system
The Guardian
POCKET CHANGE

Tech giants fend off Washington. A mega-story this year that's only getting bigger: "Last month, Google summoned about 200 staff from around the world for an annual policy meeting. One agenda item was very different this time: How to deal with the sudden drumbeat of calls in the U.S. to regulate the company for being too big," Bloomberg's Mark Bergen, Sarah Frier, and Selina Wang write. "The two-day retreat in Monterey, California, where employees from the $682 billion company plied Washington policy experts with questions about the pros and cons of its size, took place as Google confronts European antitrust claims and proposed U.S. legislation that would increase online publishers’ liability for content produced by others.

This week, the Alphabet Inc. unit disclosed new information that could further roil the regulatory picture: revelations that Russian-linked accounts used its advertising network to interfere with the 2016 presidential election. The news put Google in the company of Facebook Inc. and Twitter Inc., both of which are embroiled in the controversy surrounding Russia’s involvement in last year’s U.S. elections. Executives at all three companies are scrambling to respond.

Facebook has hired two crisis PR firms, and it plans to bring on as many as 1,000 people to screen ads. Top executives, including Chief Executive Officer Mark Zuckerberg, are phoning members of Congress directly. The company reported spending more than $3.2 million on lobbying in the first quarter of 2017, a company record. Google spent almost $6 million in the second quarter for its own record. Both companies, with Twitter, are working together to deal with issues related to the Russian ads."

Year after year, as Puerto Rico’s government drew ever closer to ruin, it cut hundreds of millions of dollars from roads, schools and other public works.
Bloomberg
MONEY ON THE HILL

Census in trouble. "Commerce Secretary Wilbur Ross plans to ask Congress for a major increase in funding Thursday to salvage the 2020 Census, a program beset by cost overruns, poor preparation and a population of Americans who are less likely than at any point in recent history to self-report their existence to the federal government," The Post's Michael Scherer and Tara Bahrampour report. "The Commerce Department now estimates that the decennial effort will cost $15.6 billion — $3.3 billion, or nearly 27 percent, more than earlier estimates by the Census Bureau, according to a document obtained by The Washington Post."

The Hollywood superproducer wrote checks to the Democratic Congressional Campaign Committee in 1993, 2011 and 2013 totaling $23,200, and the GOP is pouncing.
Mike DeBonis
THE REGULATORS

Basel breakthrough? Bloomberg's Boris Groendahl and Lorenzo Totaro: "A decade on from the last financial crisis, global regulators are close to putting the finishing touches on bank capital rules intended to prevent the next one. Negotiators in the Basel Committee on Banking Supervision last week came up with a plan to break a year-long deadlock that has delayed completion of the Basel III capital standards, according to people with knowledge of the talks. A final deal must be approved by the central bank governors and supervisors on the Basel Committee’s oversight body. The last big stumbling block in the talks is a measure that restricts how low banks can drive their capital requirements by measuring asset risk with their own statistical models."

The Federal Reserve’s internal watchdog is looking into whether a group of Fed economists’ ownership stake in a U.K. economic-forecasting company could create a conflict of interest.
The Wall Street Journal
DAYBOOK

Today

  • The House Ways and Means Subcommittee on Trade will hold a hearing on trade relationships in the Asia-Pacific region.

  • The House Financial Services Committee holds a markup of more than 20 bills.

  • The House Agriculture Committee holds a public hearing on the 2017 agenda for the Commodity Futures Trading Commission.

  • The Securities and Exchange Commission holds a Sunshine Act Meeting.

  • The Peterson Institute for International Economics holds an eventon the European financial stability.

  • AEI and CRN hold a conference on housing risk.

  • The Bipartisan Policy Center holds an event on retirement.

  • Bloomberg Government holds an event on the trend toward electronic payments.

  • The Hill hosts an event on cracking the tax code.

  • The Peterson Institute holds an event on “Challenges of the New Technological and Global Landscapes.” 

  • The Center for Strategic and International Studies holds an eventon the Multilateral Development Bank System.

  • Financial Services Roundtable holds an event on tax reform.

Coming Up

  • The Heritage Foundation holds an event on tax reform on Thursday.

  • The House Financial Services Committee holds a hearing on the future of housing on Thursday.

  • The SEC has a meeting of the investor advisory committee on Thursday.

  • The Carnegie Endowment for International Peace holds an eventon “Twenty Year after the Asian Financial Crisis” on Thursday.

  • The Peterson Institute for International Economics holds an eventon “Rethinking Macroeconomic Policy” on Thursday.

  • The FDIC hosts its 7th annual consumer research symposium on Friday.

  • The Brookings Institution is hosting an event on regional development banks on Friday

THE FUNNIES

From The Post's Tom Toles: "Trump gives new meaning to fighting dirty." 

BULL SESSION

White House press secretary Sarah Huckabee Sanders avoids feuling the Trump-Corker feud:

Unpacking Trump's friction with Tillerson:

Stephen Colbert on Trump's IQ Test: 

Watch the viral dance moves from BYU's Cosmo the Cougar: 

Watch Eminem's latest Trump-inspired verse: