Want to understand the latest on tax reform and how what Washington is doing will affect your business and your pocketbooks? Tory Newmyer has you covered.
Congressional Republicans are reaching for a booby-trapped bag of cash as they scramble to try to pay for their tax overhaul.
House and Senate Republicans are moving to repeal the Affordable Care Act’s individual mandate — a surprise turn that would yield more than $300 billion in much-needed revenue even as it revives the toxic politics of the GOP’s summertime drive to gut the landmark law.
Senate GOP tax writers incorporated the high-stakes maneuver into the latest version of their plan (see full text here), released late Tuesday night. They applied the new revenue to making permanent the deeply-slashed 20 percent corporate rate at the heart of the tax plan; doubling the child tax credit to $2,000; and expanding access to a deduction for pass-through businesses. But the updated bill sunsets individual rate cuts at the end of 2025 to help the package comply with strict budget rules — a move that Democrats seized on to blast the GOP for prioritizing corporate interests over working people.
Senate Majority Leader Mitch McConnell (R-Ky.) appeared to lean into that characterization on Tuesday when he appeared at the Wall Street Journal's CEO Council meeting in Washington:
Yet there’s no certainty that Republicans will stick with the Obamacare gambit. They could drop it just as quickly as they picked it up, a testament to how freewheeling the decision-making on policy fundamentals remains. Already, there are signs it could explode the fragile consensus that Republican leaders have been trying to assemble among their caucus.
Senate Republican leaders decided to proceed with the strategy Tuesday after a survey at their weekly lunch showed it drew near-uniform if notional support from their members. House Republicans — further along overall as they aim for a floor vote this week on their version of a plan — aren’t sold on the idea.
Eliminating the individual mandate and having far fewer people signed up for insurance saves money because many of those people receive federal subsidies to buy coverage.
But the elimination would cause substantial political problems of its own.
The attack on former president Barack Obama’s signature legislative achievement is likely to rule out the already slim possibility of support from Democrats, and the prospect of adding millions to the ranks of the uninsured could trouble moderate Republicans who voted down previous repeal efforts.
The trio of Senate Republicans who sunk the first Obamacare repeal effort in July would again become wild cards:
- Sen. Susan Collins (R-Maine) said including themandate repeal would “complicate” the tax measure because of its effect on insurance premiums. But she signaled she might be able to support it if it moves in tandem with a bipartisan bill to preserve other pieces of the ACA.
- Sen. Lisa Murkowski (R-Alaska) likewise said approving the bipartisan Obamacare fix negotiated by Sens. Lamar Alexander (R-Tenn.) and Sen. Patty Murray (D-Wash.) would help, per Bloomberg News's Steven Dennis, while registering unease about the impact on premiums: “Are you going to have a situation where your premiums are now going to increase? Tell me how that’s making me a happier person in the middle class here. That’s a consideration I think is very real and needs to be weighed.”
- Sen. John McCain (R-Ariz.) said he wants to see the entire tax package before commenting on its components.
If all three of those senators — or two, depending on how other Republican votes line up — demand the Alexander-Murray compromise pass as a condition for their support of a tax package that includes an individual mandate repeal, the whole thing could fall apart. That’s because Alexander-Murray would need at least eight Democrats to clear its 60-vote threshold, and Senate Minority Leader Chuck Schumer (D-N.Y.) on Tuesday said Democrats won’t support it if Republican leaders are using it to advance their tax package.
Then, even if Senate Republicans managed to pass the health-care measure along with the tax package, the deal would meet resistance in the House. Conservatives there are leery of the Senate-forged compromise:
Talked to about a dozen House Republicans last vote series.— Mike DeBonis (@mikedebonis) November 14, 2017
None thought IM repeal Alex-Murray would fly in House.
Most said they just couldn't stomach A-M.
Moderates would balk at an unaccompanied repeal of the individual mandate. And for now, House Republican leaders don't look likely to add a major change ahead of an expected Thursday vote.
Stepping back from the whip count, the politics of the move are questionable. The specter of knocking out a pillar of the new health-care system drew a warning shot Tuesday from a number of healthy industry groups, including America's Health Insurance Plans, the American Hospital Association, and the American Medical Association. They admonished congressional leaders that the move would jack up premiums and reduced the rate of the insured (by 13 million, according to an estimate from the Congressional Budget Office). Republican tax proposals are under water by 14 points with voters, according to a recent CNN poll. But voters trust the party even less on health care. Exit polling in Virginia last week showed it was the top issue for voters as Democrats romped statewide.
Former McCain political advisor John Weaver summarized the argument against the whole package:
A tax "reform" bill which raises taxes on the middle class, strips millions of families of their health care, rewards the top 1 % & balloons the deficit is the final political nail in the coffin for the GOP. #BeltwayInsanity— John Weaver (@JWGOP) November 14, 2017
Congressional Republicans of course would dispute the characterization. But as their grab for the individual mandate may reveal, the rush for a win on taxes is forcing some ugly reckonings.
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— El-Erian for Fed vice chair? WSJ's Nick Timiraos and Kate Davidson: "The White House is considering economist Mohamed El-Erian as one of several candidates to serve as the Federal Reserve’s vice chairman, according to a person familiar with the matter. The process of selecting the central bank’s No. 2 official began this month after President Donald Trump nominated Fed governor Jerome Powell to succeed Fed Chairwoman Janet Yellen when her term expires next February, and the search was described by people familiar with the process as still in its early stages.
Mr. El-Erian, the former chief executive of Pacific Investment Management Co. and a former deputy director of the International Monetary Fund, is one of several candidates under consideration for the vice chair position, and no decisions have been made, according to the person familiar with the matter...
In recent years, Mr. El-Erian has voiced somewhat hawkish critiques of the Fed’s policy stance, including decisions to hold interest rates at ultralow levels despite signaling plans to raise them. In recent months, he has suggested that the Fed’s inflation target of 2% might be too high given structural forces holding down consumer prices."
— California Republicans fall in line. Mike DeBonis: "When the expansive Republican rewrite of the federal tax code hits the House floor this week, the final vote will happen in Washington, but its fate will have been decided on the other side of the country. The 14 House Republicans representing California districts are under intense pressure from constituents, local elected officials and, in many cases, prospective Democratic opponents over provisions that could raise taxes for many residents of the high-tax, high-cost-of-living state. But so far, only one — San Diego-area Rep. Darrell Issa — has come out against the bill as written; the others have either declared their support or say they are still reviewing the bill ahead of the House vote tentatively scheduled for Thursday."
House GOP irons out last-minute kinks. CNN's Lauren Fox: "While many House Republicans say they plan to vote for the House bill, Republican rank-and-file members are concerned about what comes next. Many are sounding the alarm on the Senate's plan for tax reform and warning they don't want to be left walking the plank on a tax bill only to see the Senate not act. Republican House members remember all too well the way that they passed their version of health care first -- only to see the Senate fumble the ball and fail to pass anything in the end."
Though not everyone is sold, especially those moderate non-California GOPers from high-tax states that would be hit hard by a cut in the state and local tax deduction. Here's New York Republican Rep. Peter T. King calling out his former colleague, White House budget director Mick Mulvaney:
From Sandy aid to tax reform @MickMulvaneyOMB tries to screw New York. Probably feels inferior because New York subsidizes his state of South Carolina.— Rep. Pete King (@RepPeteKing) November 15, 2017
— SHOT: "The most excited group out there are big CEOs, about our tax plan." - White House economic adviser Gary Cohn to CNBC's John Harwood last week.
The Post's Heather Long: "He laughed a little to lighten the mood, but it didn't cause many more hands to rise. Maybe the CEOs were tired. Maybe they didn't hear the question. It was a casual poll, but the lukewarm response seemed in tension with much of the public enthusiasm among corporations for a tax overhaul. The president and his senior team have kept saying that the tax plan would unleash business investment in the United States — new factories, more equipment and more jobs. But, perhaps as the informal poll suggested, there are reasons to be doubtful that a great business investment boom would materialize.
First, American businesses are already enjoying record profits. If they wanted to invest, they have plenty of money on hand to do it, says Howard Silverblatt, a senior analyst at S & P Dow Jones Indices, where he tracks all the financial decisions of S & P 500 companies. Second, executives themselves have indicated they probably won't use extra profits to invest. A Bank of America-Merrill Lynch survey this summer asked over 300 executives at major U.S. corporations what they would do after a “tax holiday” that would allow them to bring back money held overseas at a low tax rate. The No. 1 response? Pay down debt. The second most popular response was stock buybacks, where companies purchase some of their own shares to drive up the price. The third was mergers. Actual investments in new factories and more research were low on the list of plans for how to spend extra money."
— Voters are skeptical, too. NYT's Ben Casselman: "In a national survey of 9,504 adults conducted for The New York Times by the online polling firm SurveyMonkey, 78 percent of respondents said they did not believe they would receive a raise if their employer received a tax cut. Even many Republicans doubted they would benefit directly from a corporate tax cut: Roughly 70 percent of self-identified Republicans — and roughly 65 percent of people who said they strongly approved of President Trump’s performance in office — said they didn’t think they would get a pay increase."
— Entitlements endangered. NYT's Alan Rappeport: "Republican lawmakers have largely dismissed concerns about how their $1.5 trillion tax cut will add to the federal deficit. Now, some Democrats are warning the tax rewrite will ultimately be financed by gutting entitlement programs like Social Security and Medicare. The possibility of cuts to safety net programs appeared more likely on Tuesday, as the Congressional Budget Office warned that the tax bill could set off an arcane budget rule that would make deep cuts to Medicare over the next decade...
The Congressional Budget Office said on Tuesday that a law passed in 2010 would necessitate cuts to Medicare of as much as $25 billion next year. The pay-as-you-go law requires that legislation that adds to the federal deficit be paid for with spending cuts or other offsets. If that does not happen, automatic cuts to programs like Medicare kick in. The Medicare cuts, which are capped at 4 percent of the program’s annual spending, could reach almost a half trillion dollars over 10 years, according to the nonpartisan Committee for a Responsible Federal Budget."
— Flood insurance passes. WSJ's Andrew Ackerman: "The House on Tuesday voted largely along party lines to revamp the federal flood-insurance program, which expires in December and has struggled in recent years to keep pace with record disaster payouts. The measure passed with a 237-189 vote, largely with Republicans for it and Democrats against it. The bill includes provisions designed to spur more private-sector participation in the flood-insurance market as well as new penalties for homeowners who repeatedly receive federal insurance payouts for flood damage.
The bill would reauthorize the program for five years and impose a series of operational changes to the program. The Senate, which must now pass its own overhaul of the program, may not act until next year, according to congressional aides. Senate Banking Committee Chairman Mike Crapo (R., Idaho) has made the issue a priority, but has yet to unveil his version of legislation."
— Rich get richer. Fortune's David Meyer: "The richest 1% now owns more than half of all the world’s household wealth, according to analysts at Credit Suisse. And they say inequality is only going to get worse over the coming years, with millennials having a particularly tough time. The Swiss bank released its latest Global Wealth Report on Tuesday, together with a statement that contained the immortal phrase, 'The outlook for the millionaire segment is more optimistic than for the bottom of the wealth pyramid.' The research showed that there are increasing numbers of dollar millionaires...
Almost half of the new dollar millionaires are in the U.S. itself. 'So far, the Trump Presidency has seen businesses flourish and employment grow, though the ongoing supportive role played by the Federal Reserve has undoubtedly played a part here as well, and wealth inequality remains a prominent issue,' said Michael O’Sullivan, CIO for International Wealth Management at Credit Suisse."
— NAFTA angst. We might need to name the syndrome business leaders are experiencing as the Trump administration's NAFTA renegotiation tumbles forward. And if there's an anti-anxiety med for it, it should be called that NAFTAvan. The Post's David. J. Lynch: "U.S. business groups are pinballing between despair and panic as negotiations over a new North American Free Trade Agreement resume, with the Trump administration’s hard-line demands risking a worsening standoff and perhaps the eventual collapse of the talks. Corporate concerns were only inflamed by President Trump’s Asia trip, which showcased his “America First” trade policy and left the United States isolated as 11 other nations agreed to new trade liberalization measures. On the eve of this week’s NAFTA talks, the fifth of seven scheduled rounds, the uncompromising U.S. stance now risks scuppering a 23-year-old treaty that helped knit together a colossal continental economy, business groups said."
— Bonus SHOT:
Our great country is respected again in Asia. You will see the fruits of our long but successful trip for many years to come!— Donald J. Trump (@realDonaldTrump) November 15, 2017
CHASER: "Trump returns home from Asia with few clear wins," by Politico's Andrew Restuccia: "After a marathon series of bilateral meetings and photo-ops, the president failed to extract major new concessions from Asian leaders on his twin goals of arresting North Korea’s nuclear weapons program and rebalancing America’s trade relationship with China and other nations in the region—and made next to no public reference to human rights, Chinese territorial claims in the South China Sea or other touchy issues that have been raised in previous presidential visits."
— Spin Sessions. Matt Zapotosky and Sari Horwitz: "Attorney General Jeff Sessions on Tuesday again revised his account of what he knew about the Trump campaign’s dealings with Russians, acknowledging for the first time that he recalled a meeting where a foreign policy adviser mentioned having contacts who could possibly broker a meeting between then-candidate Donald Trump and Russian President Vladimir Putin.
Testifying before the House Judiciary Committee, Sessions said he now remembered adviser George Papadopoulos saying in March 2016 that he knew people who might be able to help arrange a Trump-Putin meeting. When Sessions was asked last month whether he thought surrogates from the Trump campaign had communications with the Russians, he said, 'I did not, and I’m not aware of anyone else that did, and I don’t believe it happened.' But at Tuesday’s hearing, Sessions said his memory had been refreshed.
'I do now recall the March 2016 meeting at the Trump hotel that Mr. Papadopoulos attended, but I have no clear recollection of the details of what he said at that meeting,' Sessions told lawmakers. 'After reading his account, and to the best of my recollection, I believe that I wanted to make clear to him that he was not authorized to represent the campaign with the Russian government or any other foreign government, for that matter.'
— Regulator warns against rollback. Reuters's Pete Schroeder: "The outgoing head of a key U.S. banking regulator is airing concern that banks and industry-sympathetic regulators may go too far in efforts to ease rules established after the 2007-2009 financial crisis. Martin Gruenberg, chair of the Federal Deposit Insurance Corporation, made a broad defense of the post-crisis regulatory landscape on Tuesday, arguing the rules have made U.S. banks safer without sacrificing profitability.
'The danger is that changes to regulations could cross the line into substantial weakening of requirements,' he said in prepared remarks to a forum on regulation and markets. 'Let’s be clear: Our largest banking organizations are not voluntarily holding the enhanced capital and liquid asset cushions required by current rules.'"
As does Warren. No surprise here. Sen. Elizabeth Warren (D-Mass.) came out against the deal some of her fellow Senate Democrats struck with Republicans to roll back Dodd-Frank regulations on dozens of larger banks:
This guy’s bank got a $1.4B bailout in 2008. Now GOP & Dem Senators want to roll back rules on his bank. That’s how DC works, & it stinks. pic.twitter.com/g6JVZnhns8— Elizabeth Warren (@SenWarren) November 14, 2017
— Wall Street penalties drop. Bloomberg's Matt Robinson and Benjamin Bain: "In its latest fiscal year, Wall Street’s top regulator sought the smallest amount of penalties since 2013, a drop that took place as the agency went months without permanent leadership and could show a softer approach to policing wrongdoing. The U.S. Securities and Exchange Commission tried to obtain $3.4 billion in fines and disgorgement from companies and individuals during the 12 months ended in September, according to data collected by Urska Velikonja, a Georgetown University law professor. The SEC filed 612 enforcement cases, also the fewest in four years, Velikonja’s research shows.
Although the data spans a transition atop the SEC, it may be early evidence that President Donald Trump’s more friendly tone toward corporations is having an impact on the regulator’s investigations into wrongdoing, according to Velikonja. She points out that since Clayton -- the former Wall Street deals lawyer appointed by Trump -- took over in May, the agency has pursued just two sanctions against large financial firms: a $35 million settlement with State Street Corp. and a $97 million case against Barclays Plc."
These are the GOP officials who have spent the most at Trump properties since the election, from The Washington Post's David Fahrenthold and Jonathan O'Connell:
- The Bipartisan Policy Center holds the 2017 Housing America’s Families Forum.
- The American Enterprise Institute holds an event on how the tax system can help working families afford child care.
- 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.
"Please stand; crazy court is now in Sessions," writes The Post's Tom Toles:
From The Onion:
Watch Sessions's House Judiciary testimony, in three minutes:
Inside the Twitter messages between Donald Trump Jr. and WikiLeaks:
Rep. Barbara Comstock (R-Va.) described incidents of sexual harassment in Congress at a House Administration Committee hearing:
Stephen Colbert on Attorney General Jeff Sessions's forgetful testimony: