with Paulina Firozi


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As the tax debate heads into a one-week, Thanksgiving-imposed timeout, the project hangs by a thread in the Senate. A handful of Senate Republicans will determine its fate. The challenge for Republican leaders is that those swing votes have conflicting priorities

On one side are senators demanding changes adding to the cost of the bill; on the other, deficit hawks are raising alarms about the price tag of a measure that arguably has burst its seams. 

Sen. Susan Collins (R-Maine) objects to the last-minute decision by Republican tax writers to include a repeal of Obamacare’s individual mandate — a critical source of revenue for the bill. And Sen. Ron Johnson (R-Wis.) wants more generous treatment for pass-through businesses. Meanwhile, Sens. Bob Corker (R-Tenn.) and Jeff Flake (R-Ariz.), among others, have said the bill’s deficit impact could cost their support. 

In a Sunday appearance on ABC’s “This Week,” Collins said the move to scrap the individual mandate will cause insurance premiums to spike, wiping out whatever middle-class benefit the bill might otherwise deliver. She stopped short of declaring herself opposed to the Senate bill, because she expects it to change, but she called the mandate repeal the “biggest mistake.” 

The moderate nevertheless laid out a path to winning her vote for the package knocking out that leg of the Obamacare stool, pointing to a pair of bills she wants adopted first: a proposal from Sens. Lamar Alexander (R-Tenn.) and Patty Murray (D-Wash.) to extend for two years federal subsidies, canceled by the Trump administration to help lower-income Americans afford coverage; and another she offered with Sen. Bill Nelson (D-Fla.) aimed at bringing down premium costs. 

“I'm worried about the impact on premiums,” Collins said. “And that's why we're going to need to pass legislation. And I would like to see that done before we go to the tax bill.”

Democrats, a few crucial Republicans and White House officials disagree over important aspects of the current Senate GOP tax plan. (Jenny Starrs/The Washington Post)

Passing those measures would require support from at least eight Senate Democrats, and party leaders have made clear they will be unwilling to help approve them to ease the passage of a tax package they uniformly oppose. (Alaska Sen. Lisa Murkowski, another swing Republican, also has voiced objections to scotching the individual mandate and pointed to the Alexander-Murray bill as a potential salve. But she said in a Friday statement that “one should not assume this is a precondition for my support for the tax bill.”)

Senate Republicans could also abandon the individual mandate repeal altogether — a pivot the White House would back if necessary to advance the tax bill, two key administration officials said Sunday. “If we can repeal part of Obamacare as part of a tax bill and have a tax bill that is still a good tax bill that can pass, that’s great,” White House budget director Mick Mulvaney said on CNN’s “State of the Union.” “If it becomes an impediment to getting the best tax bill we can, then we are okay with taking it out.” White House legislative director Marc Short seconded the view on “This Week,” noting the administration is “very comfortable” with the House version, which doesn’t include the mandate repeal. 
But yanking the provision would exacerbate a problem troubling other potentially critical Republican votes in the Senate. It generates more than $300 billion in sorely needed revenue. Meanwhile, Johnson acknowledges that addressing his demand will cost even more than tax writers are already shelling out. From the New York Times’s Jim Tankersley:

Mr. Johnson suggested in the interview that if the Senate did not force all companies to operate as pass-throughs, it should at least cut their taxes further to equalize their treatment with larger corporations. Such cuts, he acknowledged, would be expensive in terms of lost tax revenue, and Republicans must stay within the $1.5 trillion limit for additional deficits in order to pass the tax bill on a party-line vote.

The senator said he would have preferred if Republicans, in an earlier budget bill, had set that limit higher, at $2 trillion or $3 trillion.

Deficit hawks are working to wrench the bill in the other direction. Corker, for one, has been categorical in declaring he’ll oppose a tax bill that adds “one penny” to the deficit. Late last week, he said he is working with like-minded colleagues to rein in the Senate version’s cost, now estimated at $1.4 trillion. In fact, the bill costs much more than that, thanks to expiring provisions for wage earners. Politico’s Brian Faler writes: “They’re worried the bill includes more than 35 temporary provisions that Congress has no intention of actually allowing to ever expire, ballooning the cost far beyond its supposed sticker price. He declined to discuss specifics … That will be difficult to address, with the nonpartisan Committee for a Responsible Federal Budget estimating the Senate plan includes a whopping $515 billion in budget gimmicks aimed at artificially reducing its cost.”

Trump administration officials acknowledged the gimmickry in Sunday show appearances. Mulvaney, appearing on CNN’s “State of the Union,” said Republicans are “simply trying to manipulate the numbers and game the system so you can fall into this square peg.” 

The budget director chalked that up to static scoring of the bill, adding that he thinks the bill will more than pay for itself through the economic growth it unleashes. The administration so far has failed to produce an analysis justifying the claim. No independent study backs it up, either, and some paint a dire picture of the tax package’s impact on the nation’s fiscal health. For example, even factoring in new economic growth from lower rates, the Penn-Wharton Budget Model found the measure would add up to $6.9 trillion to the debt by 2040. 

Senate Republican leaders aim to bring the bill to the floor after the break. The GOP's rapid progress to date may belie the distance yet to go. 


Germany faces political crisis. FT's Guy Chazan: "Angela Merkel was pitched into the worst crisis of her career after talks on forming a new coalition government broke down, plunging both Germany and Europe into a new era of uncertainty and raising questions about the chancellor’s political future. A system long admired for its stability now moves into uncharted constitutional territory, with even seasoned political observers unsure how a functioning government will be formed. Ms Merkel sought to reassure the nation on Monday, saying she would do 'everything to ensure the country is governed well through these difficult weeks'.

The uncertainty in Germany could not have come at a worse time for Europe, which is seeking German leadership as never before. The EU faces difficult talks on Brexit and is looking to Berlin for a German response to Emmanuel Macron’s proposals for reform of the EU and the eurozone. Ms Merkel’s options are limited. She can try to form a coalition with the left-of-centre Social Democrats or to rule in a minority government with either the liberal Free Democrats or the leftwing Greens. Both scenarios are seen as unlikely. Instead, Germans could be moving towards fresh elections, barely eight weeks after they last went to the polls — a situation unprecedented in the country’s postwar history.

Ms Merkel was expected to meet the German president Frank-Walter Steinmeier on Monday to discuss the options. The former foreign minister is expected to play a central role in the constitutional wranglings that lie ahead as Germany seeks a way out of the impasse. Meanwhile, the economic effects of the crisis are already being felt. The euro fell 0.4 per cent to $1.1746 on Monday morning, while business leaders lined up to warn of the dangers of the country’s new period of instability. Some hoped a Jamaica coalition — so called because the colours of the four parties involved in talks matched those of the Caribbean nation’s flag — was still salvageable."

Merkel's mess: Bad news for Theresa May. Bloomberg: "While the theory proposed by some Brexit-backers that the German chancellor would ride to Britain’s rescue was always fantasy, Merkel has been an ally to May all the same. She is said to be wary of pushing the prime minister too hard for fear it would topple the British government. At a summit last month Merkel had the kindest words of all to offer May.

Diplomats in Brussels, and not just the British ones, have been saying since March that there would be no major progress on Brexit until after the German election. If the failure to pull together a coalition prompts another vote, it could be late Spring before the outcome is clear. Meanwhile, the Brexit clock keeps ticking down to exit day in March 2019."



— Trump: Flake's a No. The president made the declaration in a Sunday night tweet:

In fact, Flake's still undecided. A Flake spokesman, per Reuters: ”'Senator Flake is still reviewing the tax reform bill on its merits. How he votes on it will have nothing to do with the president,' a spokesman for the senator said in an email."

From The Atlantic's Ron Brownstein:

Dems smell blood. The Washington Post's Dave Weigel: “Democratic wins, and polling about the tax bill, have led the party to think that it can cleave millions of voters from the GOP... In Virginia, where the party’s bigger-than-expected wave swept out suburban Republican legislators, Republican gubernatorial nominee Ed Gillespie pitched a 10 percent “across-the-board” cut in state tax rates, with $1,285 in relief for the average family of four — $103 more than the cut promised by Republicans in Congress. But according to Geoff Garin, the pollster for Democratic Gov.-elect Ralph Northam’s campaign, the tax plan was 'a flop in the suburbs,' which is why Gillespie pivoted — also ineffectively — to attacks on cultural issues.”

Wall Street's fears. Vanity Fair's William Cohan: "'It’s a Ponzi scheme,' a Wall Street executive told me, dismissing the idea that a multi-trillion dollar tax cut for multinational corporations would trickle down throughout the economy and also pay for itself. It’s a view that’s widely shared among the bankers, hedge-fund managers, traders, and quants whose job it is to determine, with Vulcan accuracy, how the Republican tax bill that passed the House yesterday will actually affect the markets. It’s also more than a little ironic, given that the plan was spearheaded by two former senior partners of Goldman Sachs turned Trump shills—Gary Cohn and Steve Mnuchin—a pedigree that has done little to reassure Wall Street veterans who worry that the White House may accidentally nuke the economy in the name of 'tax reform.' 'Will this be the first tax cut in American history that actually results in a recession?' the executive asked."

Counterpoint: Wall Street will be riding a boom, Mnuchin says. Bloomberg's Sarah McGregor: "The Republican tax plan isn’t designed to help rich New Yorkers, but Wall Street can certainly look forward to some advantages, said Treasury Secretary Steven Mnuchin. 'There’s a lot of benefit to the New York economy to lowering the corporate tax to 20 percent,' Mnuchin said in an interview on Fox News on Friday. 'That’s a huge boom for the financial services industry -- they can hire more people, they can pay more people, they can create more jobs, they can be competitive.'"

Carried interest protected. NYT's Matthew Goldstein: "The authors of the Senate’s proposed $1.5 trillion tax cut bill did no more than their House counterparts to close a contentious tax loophole favored by managers of private equity firms and some real estate ventures. The Senate Finance Committee on Thursday adopted a provision similar to one included in the House’s tax plan that would extend the minimum holding period for investments that qualify for the tax break, known as the carried-interest loophole, to three years from one. Experts said the measure would not result in major changes to the tax bills of those who already benefit from the loophole. 'Maybe it’s just symbolic to say we addressed carried interest,' said Robert Willens, a tax and accounting expert in New York. 'Everyone has looked at that proposal for about a week, and it is not going to impede or change anyone’s behavior. Three years is not an unusual holding period for private equity.'"

Mnuchin flattered to be called a Bond villain. Appearing on “Fox News Sunday,” Treasury Secretary Steven Mnuchin said he’s breezing through the blowback from last week’s photos of him and wife Louise Linton visiting the Bureau of Printing and Engraving. Asked by host Chris Wallace what he made of people comparing the couple to Bond villains, Mnuchin said, “I never thought I'd be quoted is looking like villains from the James Bond. I guess I should take that as a compliment that I look like a villain in a great, successful James Bond movie. But, let me just say, I was very excited of having my signature on the money. It's obviously a great privilege and a great honor and something I'm very proud of being the secretary and look forward to helping the American people.” 

Here's how Mnuchin rendered his name for new currency, via CBS's Mark Knoller:

Exacerbating the trade deficit. NYT's Binyamin Appelbaum: "Trump has promised to cut federal taxes and reduce the nation’s trade deficit with the rest of world — two economic priorities that are in direct conflict with each other. A wide range of experts agree that cutting taxes is likely to increase the trade deficit, which measures the difference between what the United States imports from other countries, like televisions and fruit, and what it exports, like cars and meat.

In fact, a larger trade deficit is not a byproduct of the tax plan — it is the heart of the plan. The administration has said its $1.5 trillion tax cut will not balloon the federal budget deficit because the plan will generate enough economic growth to essentially pay for itself. The most optimistic projections of the likely economic benefits of the tax cuts are driven by increased trade deficits. 'I do expect a major trade deficit, absolutely, as part of this,' said Laurence J. Kotlikoff, a professor of economics at Boston University who supports the proposed tax cuts and whose analysis of the economic benefits has been cited by the White House. 'If this tax plan works, it works because the U.S. becomes more open to trade.'"

Higher ed in crosshairs. The Post's Nick Anderson: "Ending a tax deduction for interest paid on student loans. Raising taxes for more than 100,000 graduate students who receive tuition waivers. Imposing a levy on endowments at certain private colleges and universities. These actions are anathema to higher education leaders across the country. Yet they all appear in the House-approved Republican tax overhaul, evidence of a growing disconnect between large segments of the GOP and colleges that, for generations, have wielded enormous clout on Capitol Hill."

Cities fear trickle-down. The Post's Renae Merle and Peter Jamison: "In small towns and thriving cities, in Republican- and Democratic-leaning states, local leaders are warning that the $1.5 trillion tax legislation moving through Congress threatens to undermine their ability to raise money for government services, including police and schools. The Republican measures would eliminate or severely curtail taxpayers’ ability to lower their federal tax bill by deducting the cost of their state and local taxes. Without that offset, local leaders say, taxpayers will begin to seek relief closer to home, potentially making it more difficult to provide basic services.

The House passed a bill Thursday that would severely curtail the tax deduction, allowing people to deduct only up to $10,000 in property taxes from their federal returns, while the Senate is moving a bill forward that would eliminate it. 'I am hearing from our members across the country,' said Irma Esparza Diggs, director of federal advocacy for the National League of Cities. 'It’s not just an inside-the-Beltway conversation.'"

— Message confusion. NBC’s Benjy Sarlin has this great review of Trump administration officials taking all sides of the tax debate: "For months, the White House boasted the rich would not benefit from its tax plan. Now they're singing a different tune. Depending on the moment, the president and top aides have described the Republican plans in two very different ways: as a Robin Hood scheme that takes from the rich and gives to the middle class, or as a bonanza for CEOs that cuts taxes for the wealthy as well. President Donald Trump has led the shift in rhetoric…

The top White House advisers tasked with crafting and selling a tax plan have gone on a similar rhetorical journey… Gary Cohn, the top White House economic adviser, declared ‘the wealthy are not getting a tax cut under our plan’ in an ABC News interview in late September. Told by CNBC’s John Harwood in November that the claim was not true, he replied, "If someone's getting a tax cut, I'm not upset that they're getting a tax cut."

Small biz impact: It's complicated. NYT's Paul Sullivan: "The proposals for taxing small-business owners — whose companies are called pass-through entities, because the income passes through to their personal tax returns — hinge on the ownership of those entities. Those who make money passively — by owning part of a pass-through entity they do not run or receiving endorsements and licensing agreements through a passive vehicle — could structure their payments to achieve a lower tax rate. Those who are actively running a business that is structured as a pass-through — for instance, a limited liability company, an S corporation or a partnership — will not see as great a reduction in taxes and may even see an increase in certain states. 'It’s not how much you make,' said Edward Reitmeyer, partner at Marcum, a national accounting firm. 'It’s how you make it.'"



Mueller's wide-ranging request to DOJ. ABC's Mike Levine: "Mueller's team investigating whether ...Trump sought to obstruct a federal inquiry into connections between his presidential campaign and Russian operatives has now directed the Justice Department to turn over a broad array of documents, ABC News has learned. In particular, Mueller's investigators are keen to obtain emails related to the firing of FBI Director James Comey and the earlier decision of Attorney General Jeff Sessions to recuse himself from the entire matter, according to a source who has not seen the specific request but was told about it. Issued within the past month, the directive marks the special counsel's first records request to the Justice Department, and it means Mueller is now demanding documents from the department overseeing his investigation."

The White House's long winter. The Post's Ashley Parker and Carol D. Leonnig: "Six months into a special counsel’s investigation of Russian interference in the 2016 presidential election, White House aides and others in President Trump’s close orbit are increasingly divided in their assessments of the expanding probe and how worried administration officials and campaign aides should be about their potential legal peril, according to numerous people familiar with the debate. 

Some in the West Wing avoid the mere mention of Russia or the investigation whenever possible. Others take solace in the reassurances of White House lawyer Ty Cobb that special counsel Robert S. Mueller III will be wrapping up the probe soon and the president and those close to him will be exonerated. And a few engage in grim gallows humor, privately joking about wiretaps.

The investigation reached a critical turning point in recent weeks, with a formal subpoena to the campaign, an expanding list of potential witnesses and the indictments of former Trump campaign chairman Paul Manafort and his deputy, Rick Gates. Some within Trump’s circle, including former chief of staff Reince Priebus, have already been interviewed by Mueller’s investigators, while others such as Hope Hicks — the White House communications director and trusted confidant of the president — and White House counsel Donald McGahn are expected in coming weeks. One Republican operative in frequent contact with the White House described Mueller’s team 'working through the staff like Pac-Man.'"

Kushner denies WikiLeaks contact. CNN's Jeremy Herb and Evan Perez: "White House senior adviser Jared Kushner told congressional Russia investigators that he did not communicate with WikiLeaks and did not recall anyone on the Trump campaign who had, a source with knowledge of his testimony told CNN. But Kushner did receive and forward an email from Donald Trump Jr. about contact Trump Jr. had with WikiLeaks, according to a new report this week and a letter from the Senate Judiciary Committee. Kushner... was asked in July during his closed-door congressional testimony if he had any contacts with WikiLeaks or its founder Julian Assange and he responded that he had not, according to the source. He also told Congress he did not know of anyone on the campaign who had contacted WikiLeaks."

Mueller wants to question publicist. CNN's Marshall Cohen: "Special counsel Robert Mueller is in talks with the attorney for the British publicist who set up the 2016 Trump Tower meeting between Donald Trump Jr. and a Russian lawyer, according to a source familiar with the matter. Investigators want the publicist, Rob Goldstone, to come to the US to talk to the special counsel's team. No date has been picked yet, according to the source. The source said Goldstone has been invited to give a voluntary interview and has not been subpoenaed."

Trump to pay own, staff legal bills. Bloomberg's Shannon Pettypiece: "Trump has started paying his own legal bills related to the Russia probe, rather than charging them to his campaign or the Republican National Committee, and is finalizing a plan to use personal funds to help current and former White House staff with their legal costs. The Office of Government Ethics and a tax firm are working on a mechanism for Trump to contribute to staffers’ legal bills that would meet regulatory and ethical standards, White House lawyer Ty Cobb said in an interview. The White House is hoping the issue will be resolved shortly, said Cobb, who declined to elaborate further on the details of the plan."

Clues to the GOP platform change. Politico's Kyle Cheney: "As U.S. investigators probe whether ... Trump's campaign orchestrated a Russia-friendly change to the Republican Party platform last summer, three senior Capitol Hill aides — including Speaker Paul Ryan's chief of staff — may have answers about how the episode unfolded. The three staffers, who have not been accused of any wrongdoing, advised the GOP convention's platform committee on foreign policy matters and had front-row seats when a low-profile group of delegates, acting in conjunction with Trump campaign officials, spiked a proposal urging a tougher U.S. policy against Russian aggression in Ukraine.

That change has drawn scrutiny from the House and Senate intelligence committees as they investigate whether any Trump campaign officials cooperated with Russian meddling in the 2016 election. Some witnesses say they expect it to become a topic of interest in special counsel Robert Mueller’s parallel criminal probe. Spokespeople for the offices of two of the staffers told Politico they have not been in contact with Mueller or his team. But Ryan's top aide, Jonathan Burks, would neither confirm nor deny whether he had heard from the special counsel: 'I'm not going to have any comment,' he said."



  • The House and Senate are out this week for the Thanksgiving holiday.
  • The Senate Finance Committee’s subcommittee field hearing on the modernization of NAFTA will be held in San Antonio, Tex.

Coming Up

  • NYU hosts a conversation with Federal Reserve chairwoman Janet L. Yellen on Tuesday.

Politicians weigh in on taxes and the fate of the individual mandate:

Democrats, a few crucial Republicans and White House officials disagree over important aspects of the current Senate GOP tax plan. (Jenny Starrs/The Washington Post)

Fact Check: Will the GOP tax plan help ease the cost of childcare?:

Ivanka Trump claimed the GOP tax plan would ease the financial burden of childcare for families, but it doesn't even directly address the issue. (Meg Kelly/The Washington Post)

Watch Saturday Night Live's cold open on Donald Trump Jr.'s relationship with WikiLeaks:

Saturday Night Live addresses the allegations against Sen. Al Franken (D-Minn.):