THE TICKER

The GOP’s Alabama nightmare poses a growing menace to the party’s tax-cutting dreams. 

Five days after The Washington Post’s explosive report detailing four women’s allegations of sexual misconduct against Republican Senate candidate Roy Moore of Alabama, the dam of official Republican ambivalence toward how the former judge should proceed burst Monday. Led by Senate Majority Leader Mitch McConnell (R-Ky.), several Republican senators — including Sen. Cory Gardner (R-Colo.), who heads the Senate GOP campaign arm — called for Moore to step aside. The shift against Moore came as a fifth accuser emerged Monday, alleging that he sexually assaulted her when she was 16 years old (read the text of her allegations here). Moore continues to deny all the claims. 

McConnell says 'I believe the women' after Moore denies allegations:

The party for now looks more divided over whether to pledge to expel Moore from the Senate if he wins the Dec.12 special election. Booting him would require 67 senators, or at least 19 Republicans joining all the Democrats, a maneuver that last succeeded in 1862

It may not get that far. Polling since The Post’s revelations last Thursday show Moore locked in a neck-and-neck race with Democratic candidate Doug Jones. The days ahead will reveal how damaging the latest revelations prove for Moore’s chances. 

Either way, the timing could hardly be worse for the centerpiece of the Republican agenda that is a tax revamp.

Indeed, Republicans in the upper chamber confronted the possibility of their two-vote majority dwindling in half Monday at the same time that the Senate Finance Committee took up its tax bill. Leaders aim to finish marking up that proposal this week, setting up floor consideration the week of Nov. 27, following a week-long Thanksgiving break. Assuming the House bill passes, that would leave Republicans in both chambers little more than a week to iron out differences between their versions and vote again before the Alabama election. That timeline would be highly aggressive under the best circumstances. It may also overlap with a fight over government funding, which runs out Dec. 8. 

A Jones win would mean two Republican defections would doom the whole project, assuming Democrats hang together in opposition. And many more than that have made competing demands on the measure.

Sen. Rand Paul (R-Ky.), the lone Republican to vote against his party’s budget blueprint, has declared any bill that raises middle-class taxes a nonstarter. As Bloomberg's Sahil Kapur notes, he's joined by Sens. Ted Cruz (R-Tex.) and Pat Toomey (R-Pa.) in calling for the deepest cuts possible. But Sens. John McCain (R-Ariz.), Jeff Flake (R-Ariz.), James Lankford (R-Okla.) and Bob Corker (R-Tenn.) all have raised concerns about the deficit impact. Sens. Mike Lee (R-Utah) and Marco Rubio (R-Fla.), meanwhile, want a bigger child tax credit. Plus, McCain and Thad Cochran (R-Miss.) both are struggling with health problems that could keep them from Washington in the weeks ahead. 

Layer on top of that the uncertainty injected by short-timers Flake and Corker, both of whom cited President Trump’s grip on the party in their rationales for retiring. In an interview on former U.S. attorney Preet Bharara’s podcast last week, Flake sounded bearish on the ability of a riven GOP to accomplish anything meaningful in the immediate term. “Eventually we are going to have to come back if we want to, one, win reelections in the future and two, govern — actually accomplish something. But it’s not going to change by next year,” he said. The Arizona conservative pointed to the 97-vote bipartisan majority that approved the last major rewrite of the tax code in 1986. “We’re going to have to have that for some of the big issues, and I just don’t see that. That seems a galaxy far, far away from now.”

Then again, a Jones win may not even be the worst possible outcome for the tax overhaul. Before the scandal erupted, GOP leaders viewed Moore as a wild card in the tax debate. Here was Politico on Oct. 5: “It all has Republicans convinced Moore will govern in a similar way to how he’s campaigned: As a foil to McConnell and, potentially, to GOP priorities. And Republicans are privately adjusting their schedule in anticipation for Moore’s potential elevation to senator, now viewing the Dec. 12 election date as the deadline for passage of tax reform.” 

Unity on the tax agenda has papered over the bitter intraparty divisions brought to the surface in the primary that Moore won. For example, Breitbart, the all-but-official organ of the anti-McConnell wing, has treaded lightly taxes. But there’s no guarantee the tax armistice will hold. 

As recently as August — before he was edged out of his post as White House senior strategist — Breitbart's executive chairman, Stephen K. Bannon, was pushing a soak-the-rich approach to taxes that would have dramatically hiked the top marginal rate for the wealthy. The GOP tax plans have since veered in the other direction, directing much of their benefits to the top 1 percent. And Trump lobbed in a suggestion from his Asia trip on Monday, tweeting that Republicans should cut the top individual rate to 35 percent, further than either the House or Senate bills propose: 

Bannon has defended Moore to the hilt and framed the firestorm around his alleged sexual abuse as the fruit of a plot by establishment Republicans working in league with Democrats and the mainstream media (for the record, it isn’t — but that’s exactly what a co-conspirator working for The Washington Post would say, right?). McConnell hands privately scoff at the suggestionposes any threat to the party’s agenda. And yet, as Business Insider’s Josh Barro suggests:

— The revolt from the base if Moore wins and Senate Republicans engineer his removal could get ugly, indeed.

Democrats faced a similar crucible relatively recently. Republican Scott Brown’s victory in the 2009 special election to replace the late Sen. Edward Kennedy (D-Mass.) broke the party’s filibuster-proof grip on the Senate, imperiling the Democratic push for a landmark health-care overhaul.

The party, of course, regrouped and passed the Affordable Care Act. That was a different party in a starkly different moment, and Democrats still had plenty of padding in both chambers. Yet House Republicans appear on track to pass their tax bill this week. And no Senate Republicans have come out against their chamber’s version (despite a lot of fretting).

The Moore firestorm will test whether that GOP cohesion can hold. 

MONEY ON THE HILL

BANK REGS BREAKTHROUGH:

Senators reach deal on Dodd-Frank rollback. The Post's Renae Merle: "Sen. Mike Crapo [Idaho], the Republican chairman of the Senate Banking Committee, announced a bipartisan deal Monday to free dozens of large financial institutions from some of the most rigorous regulations put in place after the global financial crisis.

Currently, banks with more than $50 billion in assets are considered 'too big to fail' and undergo the strictest regulatory scrutiny, including a yearly stress test to prove they could survive another period of economic turmoil. The proposed legislation would raise that threshold to banks with $250 billion in assets, potentially allowing several high-profile financial institutions, including American Express, Ally Financial and Barclays, to escape the extra scrutiny. These banks have long complained that the regulations are excessive and saddle them with extra compliance costs they don’t deserve.

Crapo secured the support of several Democrats, including Sens. Joe Donnelly of Indiana, Heidi Heitkamp of North Dakota, Jon Tester of Montana and Mark R. Warner of Virginia, before announcing the deal. The legislation is the 'result of years of tough, bipartisan negotiations,' Warner said in a statement."

Dems split. Politico's Zachary Warmbrodt: "The release of the deal immediately drove a wedge between moderate Democrats and others in the party who have resisted making significant changes to the post-financial crisis regulatory regime. Sen. Sherrod Brown of Ohio, the top Democrat on the Banking Committee, said he opposed the proposal because it went too far in rolling back regulations. But with nine Republicans, eight Democrats and one independent senator signing on, the package had a significant head start on the way to advancing through the Senate, where bipartisan agreement is essential to passing most laws."

Brown's statement: "“I understand my colleagues’ interest in agreeing to this legislation, but disagree on the wisdom of rolling back so many of Dodd-Frank’s protections with almost no gains for working families. Banks made record profits last year and it looks like executives will get bigger bonuses this year.  Hourly wages have stagnated for 40 years, and too many Americans are still feeling the impact of the 2008 financial crisis.  Who needs help the most?”

Compass Point's Isaac Boltansky: "Operating without the support of a committee’s ranking member adds a layer of procedural complexity, but it is far from prohibitive. More broadly, we believe the support of key moderate Democrats – Sens. Tester, Warner, Heitkamp, and Donnelly – should propel a regulatory relief package to passage during this Congress."

CapAlpha's Ian Katz: "Though we remain optimistic a SIFI bill will pass Congress, we don’t see it happening this year. Between Senate Banking’s task of confirming Fed chair nominee Jay Powell, the tax reform plan and other priorities, legislation probably doesn’t get approved by the full Senate until at least February-March, and then goes to the House. From our initial look, the plan doesn’t have any significant goodies for the biggest banks -- other than the aforementioned fix for the custody firms -- which makes it easier to pass."
 

TAX FLY-AROUND: 

Coloring inside the lines. WSJ's Richard Rubin: "Senate Finance Committee Republicans, who began debate Monday on a major tax overhaul, must make significant revisions to their proposals in the days ahead to stay within rules preventing long-run budget deficits. As written, the Senate Republican tax bill doesn’t comply with what is known as “the Byrd Rule,” which prevents the Senate from passing tax and spending measures on simple majority votes if they increase budget deficits beyond 10 years. 'It literally cannot pass the Senate. It’s against the rules unless they have 60 votes,' said Marc Goldwein, senior vice president of the Committee for a Responsible Federal Budget.

Republicans haven’t said how they plan to change the bill to comply with the Byrd Rule. The most likely scenario is setting many of the tax cuts to expire after 2027, at the end of the decade-long budgeting period. It may take more than that. The committee debate is expected to run through the week, paving the way for full Senate consideration after Thanksgiving."

Trump to the Hill. The Post’s Damian Paletta and Mike DeBonis: “Trump plans to head to Capitol Hill on Thursday and make a final pitch to House Republicans just before they vote on a sweeping tax cut bill, hoping to keep lawmakers focused on his top legislative priority. Trump will speak Thursday with the Republican members of the House of Representatives, before a planned vote later in the day on the chamber’s tax bill. Some Republicans have raised objections to the bill, citing the potential for tax increases for people living in states such as New York and New Jersey. But GOP leaders are convinced they have enough votes to pass the measure, and Trump had made passing the tax cut bill his primary focus.”

The House GOP is increasingly confident: “Two GOP deputy whips, speaking on the condition of anonymity to describe internal doings, said they had not encountered any hard “no” votes during their initial survey of colleagues Monday night.”

Vote could come before CBO score: “Republicans are under growing pressure to pass the tax cut package quickly, and they are pushing forward without even collecting complete analysis by government scorekeepers. The Joint Committee on Taxation, for example, is supposed to analyze how the tax cut bill would impact the economy. But this committee has indicated “it is not practicable for a macroeconomic analysis to incorporate the full effects of all of the provisions in the bill, including interactions between these provisions, within the very short time available between completion of the bill and the filing of the committee report,” the Congressional Budget Office said on Monday. That means there might not be any official estimate of the economic impact of the bill before House lawmakers vote on it Thursday.”

Post-Thanksgiving Senate vote. The Hill's Naomi Jagoda: "McConnell... said Monday that the Senate plans to consider tax-reform legislation on the floor the week after Thanksgiving. He also said he hoped the Senate Finance Committee would be able to finish the markup on the tax bill that it will begin on Monday by the end of the week. 'Hopefully by the end of the week we'll have a Senate version of tax reform out and onto the floor ready to be considered the week after Thanksgiving,' McConnell said in a press conference in Kentucky after meeting with business owners."

The middle-class tax hike. AP: "Congressional analysts are estimating that the Republican Senate tax bill would increase taxes in 2019 for some 13.8 million U.S. households earning less than $200,000 a year. The nonpartisan Joint Committee on Taxation provided the analysis Monday as the Senate's tax-writing committee begins work on its version of the tax overhaul bill.

The legislation, promoted as a boon to the middle class, would steeply cut corporate taxes, double the standard deduction, and limit or repeal completely the federal deduction for state and local property and income taxes. The analysis of the Senate plan says 13.8 million households, or about 10 percent of all taxpayers, would face a tax increase of $100 to $500 in 2019. There also would be increases greater than $500 for a number of taxpayers, especially those with incomes between $75,000 and $200,000. By 2025, 21.4 million households would have tax increases."

The Swiss cheese effect. NYT's Patricia Cohen: "The rush to 'get it done' — particularly on the business side, where the most sweeping changes are planned — is alarming tax specialists who warn that new and unforeseen complexity, loopholes and glitches could come back to haunt tax collectors and taxpayers... Several veterans of previous tax battles argue what is different this time is the mix of breakneck speed and enormous scope... The effort to catch the giants under the new territorial system sets a financial bar that small and medium-size businesses can limbo under. Mr. Shay said accounting firms were likely to start marketing off-the-shelf tax shelters allowing companies to set up foreign offices in low-tax countries like Bermuda or Luxembourg to shrink their tax bills."

Donor backlash looms. CNN's Lauren Fox: "Republicans aren't hiding a key part of their motivation to pass tax reform in the weeks ahead: if they don't do something -- anything-- the donor class could abandon them and imperil their chances of keeping the majority in 2018. Republicans have pursued their tax agenda with breakneck speed in recent weeks all in the name of delivering a tax cut to the American people before the New Year, but politics is the major and motivating factor for a party struggling to overcome the perception that it has done little since their stunning election victory last November."

Silicon Valley hates this provision. CNBC's Evelyn Cheng: "Start-ups are worried about one part of the Senate's tax reform proposal that would hurt their ability to compete: taxing stock options when they vest, instead of when they are exercised, as is currently done. Companies, often Silicon Valley start-ups such as Twitter, typically compensate employees with the promise of being able to cash out on the company's stock in the future. Usually, the right to those shares is distributed over time, a process known as vesting. Stock options are currently taxed when they're exercised, or sold at a set price. The Senate bill if it became law 'would be the end of equity compensation in startups as we know it,' Fred Wilson, managing partner at venture capital firm Union Square Ventures, said in a blog post Monday."

Mnuchin: Firm on 20 percent. Wall Street Journal's Nick Timiraos: "Treasury Secretary Steven Mnuchin said the Trump administration wouldn’t support tax legislation with a corporate tax rate of more than 20% as part of any future compromise between the House and the Senate. In an interview at The Wall Street Journal CEO Council gathering on Monday, Mr. Mnuchin ruled out any increase in the corporate tax rate to above 20%. 'It’s not going up,' he said. 'I can tell you this is one of the things the president feels very strongly about.'"

Mnuchin, Ivanka hit the road. Politico's Katie Jennings:  "BAYVILLE, N.J. — Despite key differences between the House and Senate versions of the Republican tax reform bill, Treasury Secretary Steven Mnuchin said Monday the effort was 'very, very close.' 'There are some specific differences, but generally the two bills are very close and, more important, the objectives are the same, which is middle income tax cuts and making business competitive,' Mnuchin said at an event in Ocean County with Ivanka Trump, the president's daughter, and Republican Rep. Tom MacArthur."

Mnuchin tweeted:

Puerto Rico is seeking $94 billion in federal aid to help it recovery from the hurricane that devastated the territory in September, leaving much of the island still without power and worsening a financial crisis that had already pushed the government into bankruptcy.
Bloomberg
The judge told the panel to keep trying to reach a verdict in the New Jersey Democrat’s bribery trial.
Alan Maimon and Devlin Barrett
The public pronouncement comes about a month after Adelson met with Bannon in Washington.
Politico
MARKET MOVERS
U.S. stock indexes inched higher amid a flurry of corporate news. The Dow industrials and S&P 500 added 0.1%.
WSJ
If you haven’t been paying attention to the persistent flattening of the U.S. yield curve, you’re way behind it.
Bloomberg
The size and complexity of the company used to be General Electric’s pitch to investors. But its new chief is remaking the company, pushing “simpler and easier.”
NYT
TRUMP TRACKER

RUSSIA WATCH: 

Jr. & Julian: A text affair. The Atlantic's Julia Ioffe: "Just before the stroke of midnight on September 20, 2016, at the height of last year’s presidential election, the WikiLeaks Twitter account sent a private direct message to Donald Trump Jr., the Republican nominee’s oldest son and campaign surrogate. 'A PAC run anti-Trump site putintrump.org is about to launch,' WikiLeaks wrote. 'The PAC is a recycled pro-Iraq war PAC. We have guessed the password. It is ‘putintrump.’ See ‘About’ for who is behind it. Any comments?' (The site, which has since become a joint project with Mother Jones, was founded by Rob Glaser, a tech entrepreneur, and was funded by Progress for USA Political Action Committee.) The next morning, about 12 hours later, Trump Jr. responded to WikiLeaks. 'Off the record I don’t know who that is, but I’ll ask around,' he wrote on September 21, 2016. 'Thanks.'

The messages, obtained by The Atlantic, were also turned over by Trump Jr.’s lawyers to congressional investigators. They are part of a long—and largely one-sided—correspondence between WikiLeaks and the president’s son that continued until at least July 2017. The messages show WikiLeaks, a radical transparency organization that the American intelligence community believes was chosen by the Russian government to disseminate the information it had hacked, actively soliciting Trump Jr.’s cooperation. WikiLeaks made a series of increasingly bold requests, including asking for Trump’s tax returns, urging the Trump campaign on Election Day to reject the results of the election as rigged, and requesting that the president-elect tell Australia to appoint Julian Assange ambassador to the United States."

Pence denies knowledge. Politico's Matthew Nussbaum: The vice president "was not aware of communications between WikiLeaks and President Donald Trump’s son, Donald Trump Jr., during the 2016 campaign, his office said in a statement on Monday... 'The Vice President was never aware of anyone associated with the campaign being in contact with Wikileaks,' said Pence’s press secretary, Alyssa Farah, in a statement. 'He first learned of this news from a published report earlier tonight.'... The statement on Monday marks just the most recent time Pence has claimed to be out of the loop on critical information related to Trump associate’s communications that could be linked to the Russia probe."

A second special counsel? The Post's Matt Zapotosky: "Attorney General Jeff Sessions is entertaining the idea of appointing a second special counsel to investigate a host of Republican concerns — including alleged wrongdoing by the Clinton Foundation and the controversial sale of a uranium company to Russia — and has directed senior federal prosecutors to explore at least some of the matters and report back to him and his top deputy, according to a letter obtained by The Washington Post.

The revelation came in a response by the Justice Department to an inquiry from House Judiciary Committee Chairman Bob Goodlatte (R-Va.), who in July and again in September called for Sessions to appoint a second special counsel to investigate concerns he had related to the 2016 election and its aftermath.

The list of matters he wanted probed was wide ranging but included the FBI’s handling of the investigation into Hillary Clinton’s use of a private email server while she was secretary of state, various dealings of the Clinton Foundation and several matters connected to the purchase of the Canadian mining company Uranium One by Russia’s nuclear energy agency."

A startup is giving small investors a way to vote on public companies' ballot initiatives, defying GOP efforts to discourage shareholder proposals.
Politico
POCKET CHANGE
Steve Jurvetson had been one of Silicon Valley's top investors
Elizabeth Dwoskin and Danielle Paquette
THE REGULATORS

AT&T investigates. Bloomberg's David McLaughlin, Scott Moritz, and Sara Forden: "AT&T Inc. will try to dig into whether the White House influenced the Justice Department’s review of the company’s planned takeover of Time Warner Inc. if the government sues to block the deal, according to people familiar with the matter.

In the event of a trial over the $85.4 billion deal, AT&T intends to seek court permission for access to communications between the White House and the Justice Department about the takeover, said the people, who asked not to be named because the deliberations are private.

The Justice Department’s antitrust division is poised to file a lawsuit to stop the deal if it can’t reach an agreement with the companies. That has sparked speculation that President Donald Trump, a relentless critic of Time Warner’s CNN, is pushing the department’s leadership to oppose the combination, which had been expected to win conditional approval by the end of the month."

DAYBOOK

Today

  • The Center for American Progress holds an event “Small Businesses and America Can’t Afford the Republican Tax Deal” with remarks from Sen. Elizabeth Warren (D-Mass.).
  • The Heritage Foundation holds an event on investment security in the 21st century.
  • The House Financial Services Committee holds a mark-up.

Coming Up

  • The Bipartisan Policy Center holds the 2017 Housing America’s Families Forum on Wednesday.
  • The American Enterprise Institute holds an event on how the tax system can help working families afford child care on Wednesday.
  • The Cato Institute holds an event on the future of monetary policy on Thursday.
  • Treasury Secretary Steve Mnuchin presides over a meeting of the Financial Stability Oversight Council on Thursday.
  • The George Washington University Law School holds an eventon NAFTA renegotiation on Thursday.
  • The Cato Institute Policy Perspectives 2017 is scheduled for Friday.
BULL SESSION
Sen. Rand Paul (R-Ky.) returned to work at the U.S. Capitol more than a week after he suffered six broken ribs:

Puerto Rico estimates $94 billion in damages:

Roy Moore threatens to sue The Washington Post:

Trevor Noah on the sexual misconduct allegations against Roy Moore:

Watch Stephen Colbert chat with former vice president Joe Biden: