President Trump opened the congressional sprint toward a tax overhaul with what could be his closing argument. It’s also one well known to Republican lawmakers: Get this done now or face the wrath of voters soon.

The president made the case on a Sunday conference call with House Republicans. And he heads to Capitol Hill tomorrow for a lunch with Senate Republicans in the first such visit for the president.

House GOP leaders organized the call to discuss the chamber’s likely vote this week on the Senate budget. That spending blueprint adds $1.5 trillion to the deficit over a decade and scraps the $203 billion in mandatory cuts that House Republicans spent months haggling over. But resistance from fiscal hawks appears to be melting away as the party rallies around accelerating the drive toward a tax cut. 

“We are on the verge of doing something very, very historic,” Trump told GOP lawmakers on the call. 

More from the story John Wagner and I wrote yesterday

A senior administration official familiar with the call said Trump spoke for about 10 minutes and delivered what amounted to a pep talk, “cheering everyone on.” …
The official said Trump also touted action on the tax bill as a springboard to other accomplishments in coming months, including promised legislation to spur $1 trillion in investment in the nation's roads and other infrastructure, as well as welfare restructuring.

He also said passage of a tax bill would set Republicans up well for the 2018 midterm elections, the official said.

Cheerleaders from the president on down will need the promise of that reward to compensate for a lot of political pain in the weeks ahead as Republicans work to identify more than $3 trillion in revenue to pay for their sprawling wish list of cuts. Speed could help, too. And Republicans aim to go fast, indeed. 

The plan in the House calls for a budget vote this week, the unveiling of the legislative text next week, a markup in the Ways and Means Committee the following week, then floor consideration the week after that, which begins Nov. 13. Hitting those marks, no easy task, would get a package through the chamber by Thanksgiving. 

Trump signaled that he hopes a tax package will land on his desk well before the end of the year.

In an interview with Maria Bartiromo of Fox Business, said lawmakers should stay in Washington to keep working through the Thanksgiving holiday if they aren’t finished by then. "Well I think they should and I think they will," he said. "I think a lot of things are happening unless, you know, it’s going to be right after that. But I don’t even like them leaving. But I will say this, I want to get it by the end of the year, but I’d be very disappointed if it took that long."

Trump borrowed language from President Ronald Reagan in a USA Today editorial published Sunday, the  31st anniversary of that president’s tax overhaul. Another tax overhaul will make it “morning in America again” and unleash another “economic miracle for the middle-class,” Trump wrote.

As the Wall Street Journal’s Richard Rubin notes, the Reagan-era rewrite took 13 months. Republicans now are attempting to repeat the trick in 10 weeks. 


Hurricanes hit profits. "While the deadly storms in August and September slammed insurers who are now on the hook for billions of dollars in damaged property, many retailers, manufacturers and banks are also feeling the pain," Reuters's Noel Randewich writes. "Over half of S&P 500 companies reporting third-quarter results in recent weeks, including Harley-Davidson (HOG.N), Delta Airlines and Costco (COST.O), have said on conference calls with investors that the storms harmed their businesses to some degree, according to a Thomson Reuters analysis... Senior executives of least 48 S&P 500 companies have told investors on quarterly conference calls that their businesses had been negatively affected by the storms."

(But the impact on the broader economy wasn't so bad. Bloomberg's Sho Chandra: "Economists are coming full circle on their view of the U.S. economy’s performance last quarter. After cutting growth estimates in early September in anticipation of extensive damage from hurricanes Harvey and Irma, they’ve turned more optimistic as recent data have been fairly decent.")

Records breaking records. "No matter what happens lately, stocks just keep rising, with record closes piling up in U.S. benchmarks at a rate that is starting to defy precedent. The Nasdaq 100 Index has finished at all-time highs 62 different times this year, on par with the most ever in 1999, while the S&P 500 and Dow Jones Industrial Average are closing in on history, too," Bloomberg's Lu Wang writes. "The S&P 500 has produced 49 fresh highs this year, an annual rate that’s been surpassed five times since 1946. In all but one previous instance, stocks kept going up the next year, notching 20 additional highs on average, data compiled by Bloomberg show."


Trump narrows it down. The president appeared to trim his Fed chair list to three S— Jerome Powell, John Taylor, and Janet Yellen — in an interview with Bartiromo of Fox Business that aired yesterday. Here's their key exchange: 

Trump: Well as you know, I’ve been seeing a number of people, and most people are saying it’s down to two. Mr. Taylor, Mr. Powell. I also met with Janet Yellen, who I like a lot. I really like her a lot.  So I have three people that I’m looking at. And there are a couple of others. I said I will make my decision very shortly, pretty shortly.

Bartiromo:  Isn’t there a way that you can get Taylor and Powell in there?  Because you’ve got a vice chairman opening as well. You can actually put them both in there. Is that in your thinking?

Trump: It is in my thinking. And I have a couple of other things in my thinking. But I like talent.  And they’re both very talented people. And it’s a hard decision. It’s actually a very, very important decision. Most people have no idea how important that position is. That position is actually more — a lot of people say, “Get rid of the Fed. Take the Fed out.” The Fed’s a very important position. It’s also important psychologically. If the right person is in there, a lot of good things can happen. I think I’m doing a good job for businesses in that way.

You can watch it here, starting around the 14:20 mark: 

Yellen defends legacy. “The U.S. economy is much stronger today than it would have been without the unconventional monetary policy tools deployed by the Federal Reserve in response to the Great Recession,” she said in Washington on Friday. “While I believe that influencing short-term interest rates should continue to be our primary monetary policy lever in normal times, our unconventional policy tools will likely be needed again should some future economic downturn drive short-term interest rates back to their effective lower bound... One should recognize that the recovery could have been much slower in the absence of our unconventional tools."

And she said the central bank is making  "good progress" winding down its balance sheet.  

— Bond traders are obsessed. Bloomberg's Brian Chappatta: "The choice between Stanford University economist John Taylor and Fed Board Governor Jerome Powell has the potential to jolt the bond market in a year defined by low volatility and a tug-of-war between bulls and bears that’s kept yields in a tight range. Powell, considered the Republican Party’s alternative to renominating Janet Yellen, leads on betting website PredictIt. In a twist on Friday, traders were left to ponder a partnership atop the world’s most influential central bank: Trump told Fox Business News that pairing them at the Fed is a possibility."



December showdown: Greg Valliere of Horizon Investments, in a note to clients this morning: "Government funding will expire on Dec 8; that was the deal cut between Donald Trump, Nancy Pelosi and Chuck Schumer. This sets up a donnybrook, with Schumer using a 2018 funding bill as leverage for his pet causes: aid to health insurers, a "Dreamers" immigration bill, and the Democrats' spending goals. Schumer and his allies don't want to talk publicly about a government shutdown, but it's an option."

Million-dollar top bracket. Axios: "The Republicans on the House Ways and Means Committee — engaged in a high-pressure, high-stakes tax policy rewrite — are currently exploring not cutting the income tax rate for people who earn $1 million or more per year... Caveat: The million dollar bracket plans haven't been finalized and could change this week, as committee Republicans finalize their tax bill during meetings on Tuesday and Wednesday."

-- Trump, in the Fox Business interview, said this of a fourth bracket: "Actually we do have four brackets because we have a zero bracket and people aren’t including that," he said. "So, that would actually make it a fifth bracket as opposed to an eight bracket on the other side, on the other way."

Improving odds. Compass Point's Isaac Boltansky: "The next mile marker to watch will be the expected release of proposals by tax writers in each chamber by Thanksgiving recess. Given the procedural progress, and the renewed sense of urgency secured by seemingly avoiding a conference committee, we are increasing our odds of a tax package clearing in this Congress to 65% from 60%... Clearing the FY18 budget was a clear victory for Congressional Republicans, but its passage simply allows the far more complicated and contentious work of tax reform to begin in earnest. The fights ahead on state and local taxes, the mortgage interest deduction, and the impact on the middle class will be seismic. Furthermore, there are crucial questions regarding the economic and fiscal impact of this plan, which underscores the potential influence the CBO and outside interests could have in contouring the debate. All the while, it still remains to be seen if the White House has either the concentration or gravitas necessary for shepherding consequential legislation to passage."

Rothification ahoy. The New York Times reports that Republicans are looking at limiting tax-free contributions to 401(k) accounts to $2,400 a year. Jim Tankersley: "It is unclear if Republicans will ultimately include a cap on contributions in the tax bill that they are expected to release in the coming weeks. Such a move would almost certainly prompt a vocal backlash from middle-class workers who save heavily in such retirement accounts and from the asset management industry...  Reducing contribution limits would be, in effect, an accounting maneuver that would create space for tax cuts by collecting tax revenue now instead of in the future. Such a move would be likely to push Americans to shift their savings to so-called Roth accounts, where contributions are taxed immediately, and not when they are drawn out as benefits. That would increase federal tax receipts for the short run."

Money managers are already on alert. Bloomberg: "Wall Street has been girding for possible changes to the lucrative 401(k) industry, which in recent decades has funneled trillions of pretax dollars from workers’ paychecks into stocks, bonds and other financial assets. As of June 30, 401(k) plans held an estimated $5.1 trillion. Giant asset managers such as Vanguard Group and Fidelity Investments fear that cutting 401(k) tax deferrals to just $2,400 a year would reduce the American public’s notoriously low savings rate even more, jeopardizing their retirement income."

Trump chimed in this morning: 

Deficit swells. It's the worst in four years, as Republicans chase a $1.5 trillion tax cut. New York Times: "A Treasury Department report released on Friday showed that the budget deficit for fiscal 2017 grew by $80 billion, to $666 billion, as federal spending eclipsed revenues and economic growth remained tepid. The deficit also edged higher as a share of the economy, rising to 3.5 percent of gross domestic product from 3.2 percent last year... This year, spending on so-called entitlement programs such as Social Security, Medicare and Medicaid all grew, as did expenses incurred by the Federal Emergency Management Agency, which has faced heavy costs associated with hurricane relief efforts."

He says the president could take a more bipartisan approach to tax reform than Mitch McConnell.
The U.S. Chamber of Commerce is planning on ratcheting up its pressure on Senator Rand Paul following the Kentucky lawmaker’s vote against the budget.
There has been a lot of back and forth but notably no one has defended the $4,000 claim as a “very conservatively estimated lower bound” let alone endorsed the plausibility of the $9,000 claim.
Lawrence H. Summers

Wall Street's Harvey Weinsteins. The Post's Renae Merle: "Fidelity Investments, one of the world’s largest investment firms, has pushed out two high-level executives over the past few weeks amid sexual harassment complaints, according to two people familiar with the allegations. Former portfolio manager C. Robert Chow resigned earlier this month and Gavin Baker, a prominent tech fund manager, was fired by the company in September, according to the people, who were not authorized to speak publicly about the cases. Chow and Baker could not be immediately reached for comment. Their dismissals were first reported by the Wall Street Journal...

Wall Street, meanwhile, has long fought its reputation as a place where women and minorities struggle to succeed. None of the country’s leading publicly-traded banks — JPMorgan Chase, Citigroup or Bank of America — have ever been led by a woman.  Last year, Bank of America was accused of running a “bros club” that underpaid female executives. Women account for just 2 percent of financial industry chief executives, according to research by Catalyst, a nonprofit group. They hold about 29 percent of executive or senior-level positions in the industry."

"Zero tolerance." Fidelity convened an emergency staff meeting last week after the departure of another portfolio manager accused of bad behavior. Bloomberg: "Brian Hogan, head of the Boston-based firm’s equity group, held the discussion Oct. 16 with employees to stress the firm’s zero-tolerance policy for inappropriate workplace conduct, including sexual harassment, according to a person familiar with the matter."

New Economist cover: "Left Behind: How to Help Places Hurt by Globalization." "So rather than attempting to seed clusters, governments could instead focus on spreading know-how in order to increase the attractiveness of laggard regions to productive firms. Improving the investment climate in struggling areas could help. In 2015 the Economic Innovation Group, an American think-tank, published a report by two economists—Jared Bernstein, a Democrat, and Kevin Hassett, a Republican, who now heads Mr. Trump’s Council of Economic Advisers—which proposed a way of doing just this.  

The idea was to use tax incentives to create new financial vehicles, not unlike venture-capital firms, with a place-specific investment mission. The intention would be to provide access for investors to regional-investment opportunities, turning struggling parts of rich countries into domestic versions of emerging markets. Because a 'Cleveland Fund', say, would be run by a single manager or management team, its investments could be co-ordinated. Investment aimed at enticing businesses and attracting workers could be designed with each other in mind. Legislation based on the idea has been introduced in Congress, with bipartisan support."


Wells Fargo has fired four foreign-exchange bankers amid an investigation into that business by both the bank and regulators.

The great dealmaker? The Post's Philip Rucker, Sean Sullivan and Paul Kane explore what it's like to deal with Trump, from a lawmaker's perspective, and find that "after nine months of struggling to broker agreements, lawmakers in both parties increasingly consider him an untrustworthy, chronically inconsistent and easily distracted negotiator. As Trump prepares to visit Capitol Hill on Tuesday to unify his party ahead of a high-stakes season of votes on tax cuts and budget measures, some Republicans are openly questioning his negotiating abilities and devising strategies to keep him from changing his mind.

The president’s propensity to create diversions and follow tangents has kept him from focusing on his legislative agenda and forced lawmakers who might be natural allies on key policies into the uncomfortable position of having to answer for his behavior and outbursts... On Monday — just moments after Alexander and Murray released the blueprint for a short-term authorization of federal subsidies that help lower-income Americans afford coverage but that the administration had just halted — Trump said he supported the effort. A few hours later, however, the president was decidedly cool to it.

'There was a lot of momentum building for Lamar’s effort, until the president changed his mind after encouraging him twice to move ahead,' Sen. Bob Corker (R-Tenn.) said. 'You know, who knows where he’ll be? Maybe where he is this very second?'”

Impeachment remains on the margins for Democrats. The new ad seeks to move the needle.
David Weigel
The president's son has been navigating fundraisers like a seasoned politician. His father’s presidency has turned Donald Trump Jr. into a rainmaker for the Republican Party, allied conservative groups and, in at least one case, himself.


  • SIFMA’s annual meeting begins.
  • George Washington University hosts an event on Trump’s first year.

Coming Up

  • The Heritage Foundation holds an event on the “Business Perspective and Cost of Doing Nothing on Tax Reform” on Tuesday.
  • The Hill hosts an event on the future of housing with HUD Secretary Ben Carson on Wednesday.

From The Post's Tom Toles: "Republican defense of Russian election interference is starting to sound like an either oar excuse." 


Former presidents break tradition in denouncing Trump-era politics:

President Trump plans to release final batch of JFK files:

Who's leading the Democratic Party?

House Speaker Paul Ryan (R-Wis.) pokes fun at President Trump at the Al Smith dinner:

Northern Michigan University offers first degree in marijuana: