Senate Republicans look like they will have the votes to pass a budget later this week. That’s key to their goal of passing a tax code overhaul. The debate over the spending blueprint, however, reveals some of the fault lines that will continue to vex the party’s push toward a breakthrough win.
That the Senate GOP stands on the threshold of adopting a budget is no small feat. It wasn’t clear as early as Tuesday morning that the party could thread the needle between competing demands from its military boosters and spending hawks. Specifically, Sen. Rand Paul (R-Ky.) continues to make demands for spending cuts that Republicans leaders won’t heed — and on Tuesday he engaged in some intramural sniping with Sens. John McCain (R-Ariz.), whose backing of the budget will help push Republicans across the finish line, and Lindsey Graham (R-S.C.).
Paul wants to scrap $43 billion in overseas war funding that McCain and Graham are pushing for, arguing the break the spending caps imposed back in 2011. On a conference call with reporters Tuesday, he suggested his Republican colleagues are “hypocrites” who are only parading as conservatives.
Graham responded on Twitter:
And he followed up later, warning Paul that a vote against the budget would make him the “Democratic Party’s MVP of 2017.” McCain dismissed the junior senator from Kentucky entirely: “I’ve had to worry about a lot of senators. Rand Paul’s not one of them.”
The fighting this week amounts to sound and fury. Paul voted for the motion to proceed to the budget. McCain announced Tuesday evening that he will vote for the blueprint itself, reasoning in a statement that it “provides a path forward on tax reform.” Added McCain: “I have long supported efforts to fix our burdensome tax system and hope Congress will produce meaningful reform that simplifies the tax code, strengthens America’s middle class and boosts our economy.”
That, plus the last-minute return of another ailing colleague, Sen. Thad Cochran (R-Miss.), means a Paul defection on the budget vote later this week won’t threaten to bring it down. Longer term, Paul could prove more of a problem. As Politico’s Burgess Everett writes, “Paul’s influence over Trump is real; they speak frequently and play golf together. On health care, Paul’s communications with Trump forced GOP leaders to abandon initial plans to repeal Obamacare with no replacement, setting the stage for a months-long comedy of errors that culminated in failure to repeal the law.”
President Trump has demonstrated all year that he is unable to dive into policy details to help forge consensus among divergent Republican factions.
And he’s unwilling to abandon proven falsehoods in making the case for a tax overhaul. He’s still repeating the debunked claims, for example, that the United States is the highest-tax nation in the world and that he’s set to deliver the biggest tax cut in history. Voters called Trump untrustworthy by a 23-point margin in one recent poll — a problem considering that in a September survey by ABC and The Washington Post, only 28 percent said they supported Trump’s tax plan, while 44 percent oppose it. Only 10 percent think it favors the middle class over the wealthy, a criticism that’s already landing with Republican lawmakers.
Here was Marco Rubio on Tuesday, arguing for a provision he says will make the plan more beneficial to middle-class families:
Given Trump’s deficiencies both as a policy technician and public pitchman, the least he can do is preserve goodwill with key Republican lawmakers, who, after all, will be doing the heavy lifting on his tax proposal. He’s failing on that score, too.
Most recently, on Monday, he backed Stephen K. Bannon’s war on Republican incumbents — before disavowing that endorsement a couple of hours later. And Tuesday, with McCain’s support for the budget still in question, Trump threatened to lash out at the Arizona senator — the same figure who delivered the decisive vote against the last GOP drive to repeal Obamacare — in the wake of a speech he gave obliquely criticizing the president’s worldview.
“Yeah, well, I hear it. And people have to be careful because at some point I fight back," Trump told conservative radio host Chris Plante. “I'm being very nice. I'm being very, very nice. But at some point I fight back, and it won't be pretty.” If he could marshal that fight for his agenda, Republicans might be starting from a stronger position.
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— The final five. The list of Fed chair finalists is set: Janet Yellen, Kevin Warsh, John Taylor, Jerome Powell and Gary Cohn — and Trump intends to announce his pick within two weeks. The Wall Street Journal's Peter Nicholas and Kate Davidson: Trump "said Tuesday he soon will choose a Federal Reserve chairman, having narrowed his search to five finalists. 'Honestly, I like them all, I do,' the president said at a news conference in the Rose Garden. 'I have a great respect for all of them.' A White House official said earlier Tuesday that Mr. Trump is expected to make a decision before his trip to Asia, which begins Nov. 3... After Mr. Trump interviews Ms. Yellen on Thursday, he will have met and discussed the job with all five candidates, the official said."
It's Powell, Reuters poll says. "Jerome Powell likely will be the next Federal Reserve chairman, according to a slim majority of economists in a Reuters poll - but most of them said current Fed Chair Janet Yellen would be the best option. Just over half the 40 economists who participated in the survey, taken in the past few days, tipped Fed Governor Powell to be appointed chair by U.S. President Donald Trump when Yellen’s current four-year term ends on Feb 1, 2018... When asked who would be the best choice, around two-thirds said Trump should allow Yellen to remain in place. Powell was in second place with seven of 37 votes."
— Never mind: The United States won't be labelling China a currency manipulator, despite Trump's constant campaign trail pledges to do so. The Wall Street Journal's Josh Zumbrun: "The U.S. Treasury again declined to label China a currency manipulator, though it continued to criticize Beijing for its large trade surplus and restrictions on foreign investors. 'Treasury remains concerned by the lack of progress made in reducing the bilateral trade surplus with the United States,' the department said of China in its semiannual report on international exchange rates. 'China should take concrete steps to level the playing field for American workers and firms.' The Treasury Department’s report, released Tuesday, is the document in which Washington could formally criticize Beijing for manipulating the yuan lower in an effort to boost its exports... The U.S. also is trying to encourage China to work with it in cracking down on trade and finance flows to North Korea. The U.S. gave China credit for allowing the yuan to rise this year and noted that China’s trade surplus has been narrowing."
— NAFTA talks skid. "Trump has tried to bring his abrasive dealmaking style to the North American Free Trade Agreement negotiations, but the fourth round of talks ended Tuesday without any sign that Canada and Mexico were planning to knuckle under to U.S. demands," The Post's Damian and Steven Mufson write. "Ministers from both nations said that the U.S. proposals unveiled over the past week went well beyond their countries’ own red lines, though they agreed to remain at the negotiating table and extend talks through the end of March 2018. In a reflection of Trump’s stance, U.S. Trade Representative Robert E. Lighthizer exchanged sharp words with his Canadian and Mexican counterparts at a briefing Tuesday afternoon, saying he was 'disappointed' that they were 'reluctant to give up unfair advantages.' He asserted that 'trade deficits do matter and we intend to reduce them.'"
And yes, Trump noticed:
— Mulvaney sees timeline slipping. The budget director "warned that not passing a budget resolution this week would likely result in tax legislation being delayed until next year," Bloomberg's Alexis Leondis and Kevin Cirilli write. "'There’s still a chance it gets done this year but more likely it goes over into the beginning of next year' if a budget isn’t approved this week, Mulvaney said during a Bloomberg TV interview Tuesday. 'The longer we wait to get tax reform, the longer the benefits take to kick in.' Mulvaney added that he’s been talking to his friend Senator Rand Paul -- a potential holdout -- and Paul is figuring out 'a way to get to yes.'”
— Focusing on the wrong guy. Vox's Tara Golshan makes the case against fixating on Paul: Trump "spent the weekend with... Paul... playing golf, in another chapter of a reportedly growing friendship between the two... Paul is far from a helping hand on Capitol Hill. Rather, he’s repeatedly exacerbated many of the divides within the Republicans Party — and is signaling he will do the same on tax reform... But Paul is already positioning himself at the extreme of any possible adjustments. He came out of his golf outing signaling that the Republicans’ proposed 20 percent federal corporate tax rate (already a substantial cut from the current 35 percent) is too high."
— Cohn: No conditions on repatriated money. Trump's top economic adviser tells Yahoo Finance's Nicole Sinclair that companies will be able bring their foreign profits home with no strings attached: "We’re not going to put conditions on it... We need to get the money back into the United States. There’s trillions of dollars offshore.” More from Cohn: “If they buy back stock, okay so they buy back stock.. That money is money that’s been in the economy, it’s going to be reinvested in the economy. And we’re going to have a double tax event: We’re going to have a tax event on the repatriation and a tax event when they buy back shares or they issue a dividend. It’s exactly what we’re fine with because the government’s going to get money and we’re going to see capital reinvested back in the system.”
Note: A comprehensive analysis of the last repatriation holiday, in 2004-2005, found it failed to boost domestic investment, hiring or research and development.
Trump this morning is calling out Democrats again, even as he's set to meet later today with those on the Senate Finance Committee:
The Democrats will only vote for Tax Increases. Hopefully, all Senate Republicans will vote for the largest Tax Cuts in U.S. history.— Donald J. Trump (@realDonaldTrump) October 18, 2017
— Going local to defend the state and local break. Bloomberg's Ben Brody: "Advocates for preserving a federal income-tax deduction for state and local levies released data aimed at showing how people in ZIP codes across the country would fare if the break is repealed, as President Donald Trump and congressional leaders have proposed... In posting the “calculator” to its website Tuesday, the coalition also released an analysis of ZIP codes in the top 20 Republican-held House districts that use the deduction most. Offices for Representatives Barbara Comstock of Virginia, Peter King of New York, Rodney Frelinghuysen of New Jersey and Pete Roskam of Illinois were among the top 20."
— Child tax credit is the key. Or so says the New York Times's Ernie Tedeschi: "Many of the policies proposed in the framework remain ambiguous. Yet it is those policies, in particular the details of the child tax credit expansion, that will determine whether most American families win or lose... Of the policies explicitly mentioned in the G.O.P. framework, expanding the child tax credit holds the most potential for reaching lower-income families. But simply expanding the current credit delivers only modest benefits. That’s because the regular child tax credit is nonrefundable, which means that it’s valuable only to families with federal income tax liability (the additional child tax credit does allow some families with three or more children to claim part of the regular child tax credit as a refund, but the benefit is capped and often uneven)."
— Spicer interviewed. The former White House press secretary spent most of Monday answering questions from special counsel Robert S. Mueller III's team. Politico's Annie Karni and Josh Dawsey: "During his sitdown, Spicer was grilled about the firing of former FBI director James Comey and his statements regarding the firing, as well as about Trump’s meetings with Russians officials including one with Foreign Minister Sergei Lavrov in the Oval Office, one person familiar with the meeting said. Spicer declined to comment. His attorney, Christopher Mead, did not respond to multiple calls and emails requesting comment... Mueller’s team has been tight-lipped about its process. But Spicer’s Monday meeting shows that Mueller is starting to ramp up interviews with current and former Trump administration officials. Former chief of staff Reince Priebus met with Mueller last Friday."
— Kushner hires Charlers Harder. Vanity Fair's Gabriel Sherman: "According to sources familiar with the matter, the person in Trump’s orbit who may have the most to be worried about in Priebus’s testimony is Jared Kushner. Priebus has knowledge of Kushner’s proximity to the controversial decision to fire Comey during a weekend at Trump’s golf club in Bedminster, New Jersey, in early May, which, hypothetically, is the lynchpin of an obstruction case against the president and his advisers... 'He’s all over us,' Kushner told one official in February, according to two sources briefed on the conversation. 'He was freaked out about Comey from day one,' one Trump adviser said... Kushner’s attorney Abbe Lowell declined to comment. On Monday evening I was contacted by Charles Harder in his capacity as a legal representative for Kushner. He, too, declined to comment. (Harder, who has represented Hulk Hogan and Melania Trump, recently severed ties with another client, Harvey Weinstein.)"
— Dems getting frustrated. Bloomberg's Steven T. Dennis and Billy House: "Some Democrats in Congress are growing impatient with how the GOP is handling probes into Russian meddling in the U.S. election. Democrats on the Senate Judiciary Committee say they want to see more urgency in that panel’s efforts, while a leading House Democrat says the Trump administration is trying to pressure Congress into ending its investigations prematurely.
Dianne Feinstein, the top Democrat on the Judiciary panel, said Tuesday she’s 'concerned' about her panel’s Russia probe, led by Chairman Chuck Grassley of Iowa, and wishes a subpoena had already been issued for former Trump campaign manager Paul Manafort. 'I have to sit down with Grassley," said Feinstein of California... Asked if she’d like to see subpoenas issued by now for Manafort, she said 'What do you think?' She later added, 'Yes, I would’ve.' Grassley said last month that Manafort may face a subpoena because his lawyers weren’t returning the panel’s calls."
— Freakanomics, but for economic nationalists: A White House document links the manufacturing decline with a rise in abortions. Damian with the scoop: "White House officials working on trade policy were alarmed last month when a top adviser to President Trump circulated a two-page document that alleged a weakened manufacturing sector leads to an increase in abortion, spousal abuse, divorce and infertility, two people familiar with the matter said. The documents, which were obtained by The Washington Post, were prepared and distributed by Peter Navarro, director of the White House Office of Trade and Manufacturing Policy. They were presented without any data or information to back up the assertions, and reveal some of the materials the Trump administration reviewed as it was crafting its trade policy. Two administration officials confirmed the authenticity of the documents, which have emerged as the administration has threatened to withdraw from a free trade agreement with South Korea and is taking a hard-line stance against Canada and Mexico in renegotiating the North American Free Trade Agreement...
The documents list what Navarro alleges are the problems that have resulted from a 'weakened manufacturing base.' Some of the consequences are economic, including 'lost jobs,' 'depressed wages,' and 'closed factories.' But a separate sheet claims 'Socioeconomic Costs' of the decline of the country’s manufacturing industry, such as 'Higher Divorce Rate,' 'Increased Drug/Opioid Use,' “Rising Mortality Rate,' 'Higher Abortion Rate,' among many others. 'We don’t comment on purported internal documents,' said a White House official, who would only comment on the condition of anonymity."
From The Post's Aaron Blake: "This chart should really worry Republicans about 2018:"
- Georgetown University hosts its first annual FinTech Week.
- The Peterson Institute for International Economics holds a book release on "The Paradox of Risk: Leaving the Monetary Policy Comfort Zone" on Thursday.
- The Brookings Institution holds an event on Trump’s deregulatory agenda on Friday.
From The Post's Tom Toles: "Drug czar nominee story leaves nation shocked. Shocked."
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