THE TICKER

The GOP tax bill that emerges from negotiations as soon as this week could prove less sweet for the Mars family than the candy-making magnates hope. 

House Republicans, backed by some deep-pocketed outside interests, are angling for the final package to include a full repeal of the estate tax, long a conservative bête noire that falls on a vanishingly tiny slice of the population. But Senate GOP leaders will draw a red line on their proposal to double its exemption to $22 million for couples, a Republican Senate aide tells me, saving $68 billion over the House version. 

GOP leaders intend to argue full repeal is a nonstarter by pointing to senators who won't swallow it. It’s a dynamic that probably will repeat itself across the rest of the disagreements Republicans aim to iron out this week. 

House Republicans have set the pace for the tax rewrite all year, with the bill they passed tracking, despite important changes, the “Better Way” blueprint they released in June 2016. But in the conclusive tug-of-war between the chambers this week, their Senate counterparts will look to maximize their pull by pointing to the party’s razor-thin margin in the upper chamber. 

Sen. Susan Collins (R-Maine) underlined the threat in a Sunday appearance on CBS’s “Face the Nation,” telling host John Dickerson that leaders can’t take her support for granted. “I always wait until the final version of the bill is brought before us, before I make a final decision on whether or not to support it,” Collins said. “There are major differences between the House and Senate bills. And I don't know where the bill is going to come out.”

Senate Republicans can only lose two votes and still pass a bill — a margin that will shrink by half if Democrat Doug Jones wins the special election in Alabama on Tuesday to fill Attorney General Jeff Sessions’s old Senate seat. The winner of that race may not be seated until next year, however. 

The final chapter of a process defined by its breakneck speed probably has twists left in store. As my colleague Erica Werner reports in a story that posted Sunday night: 

“The melding process underway has opened the door to another frenzy of 11th-hour lobbying as special interests, including President Trump’s rich friends, make one last dash for cash before the final bill speeds through both chambers of Congress and onto Trump’s desk. Passage is expected the week before Christmas…

Many lobbyists, Democrats and other observers expect to find the final version of the plan, which could be filed late this week, just as full of surprises as the various iterations that have appeared. But as they gun for a legislative win that has eluded them this year, Republicans show little interest in slowing down to take a closer look.”

And some recently discovered problems need fixing. The Wall Street Journal’s Richard Rubin identifies one: "Some high-income business owners could face marginal tax rates exceeding 100% under the Senate’s tax bill, far beyond the listed tax rates in the Republican plan. That means a business owner’s next $100 in earnings, under certain circumstances, would require paying more than $100 in additional federal and state taxes."

The New York Times’s Patricia Cohen finds another, for which there is no apparent fix in the works: "In most places, a dollar is a dollar. But in the tax code envisioned by Republicans, the amount you make may be less important than how you make it. Consider two chefs working side by side for the same catering company, doing the same job, for the same hours and the same money. The only difference is that one is an employee, the other an independent contractor… Economists and tax experts across the political spectrum warn that the proposed system would invite tax avoidance. The more the tax code distinguishes among types of earnings, personal characteristics or economic activities, the greater the incentive to label income artificially, restructure or switch categories in a hunt for lower rates."

What won’t meaningfully change is that a bill President Trump, his team and party have sold as a middle class boon in fact delivers the bulk of its benefits to corporations and the wealthy. If you missed it, The Post’s Damian Paletta over the weekend laid out how the measure missed its mark so profoundly. Read it here

MARKET MOVERS

Key question for the Fed: What's next? Business Insider's Pedro Nicolaci da Costa: "Federal Reserve policy has become sufficiently predictable that this week’s interest-rate hike matters a lot less than any hints the central bank may give about the pace of rate increases next year and beyond.

A December rise in the federal funds rate to a range of 1.25% to 1.50% has long been baked into Wall Street estimates. Economists will therefore be paying closer attention to the Federal Open Market Committee’s policy statement, its latest economic forecasts and Janet Yellen's last press conference as the central bank chair. The meeting will take place on December 12 and 13...

Fed Governor Jerome Powell is set to replace Yellen when her term ends in February, and several remaining open seats on the Fed’s board are making it more difficult than usual for Fed watchers to gauge the future of monetary policy. In this context, the Fed’s often dismissed 'dot-plot' of officials’ own estimates for future rate hikes could gain added importance."

NYT's Binyamin Appelbaum: "Fed officials already expected the economy to keep growing in 2018, and unemployment to keep falling. But economic reports in recent months have exceeded expectations, including Friday’s estimate by the Commerce Department that employers added 228,000 jobs in November. That has raised the possibility that the economy is continuing to gain strength... On the other hand, inflation remains oddly sluggish, up just 1.6 percent over the 12 months ending in October. That has prompted a debate among Fed officials. Most, including Ms. Yellen, expect inflation and wages to rise as worker availability dwindles. But a minority sees no harm in patience... 

The pending tax cut is a complicating factor. Monetary policy influences economic conditions gradually. In adjusting interest rates, the Fed must anticipate the evolution of those conditions. It also faces political pressure from Republicans who do not want the benefits of their tax legislation to be offset by faster rate increases."

Dealers said volume was high for a new contract, even though it was tiny relative to more established futures. And the trading halts took effect just as Cboe had outlined in its rules. Transactions stopped for two minutes after a 10 percent gain from the opening price, and for five minutes after a 20 percent jump.
Bloomberg
To BlackRock Inc.’s Rick Rieder, lost in the discussion about the flattening U.S. yield curve is the fact that shorter-dated Treasuries are the cheapest on a relative basis in a decade.
Bloomberg
The dollar was steady in early Asian trade on Monday, underpinned by expectations of higher U.S. interest rates, while bitcoin seized the spotlight as futures
Reuters
MONEY ON THE HILL

TAX FLY-AROUND:

Trump's closing argument. Bloomberg's Jennifer Jacobs: "Donald Trump will deliver a closing argument for the proposed Republican tax overhaul in a speech on Wednesday, said a person familiar with the matter. The president’s speech will take place in Washington, said the person, who wasn’t authorized to speak publicly about the event. It comes as House and Senate negotiators are working to iron out differences in the versions of the bill passed in their respective chambers, with the goal of having the legislation on Trump’s desk for a signature before year-end."

Trump started the cheerleading on Twitter over the weekend: 

Rubio warns on child tax credit. Washington Examiner's Joseph Lawler: "Florida Sen. Marco Rubio warned Friday that there are "going to be problems" if the tax bill conference committee settles for a corporate tax rate higher than 20 percent without including his child tax credit proposal in the bill. The Republican was rebuffed last week in his attempt to amend the Senate tax cut bill to set the corporate rate at 20.94 percent in exchange for making the $2,000 child tax credit available to more low-income families."

More Rubio: GOP can't be country-club party. Heather Long: "Rubio... warned his colleagues that the GOP is in danger of solidifying its image as the party that only cares about the very wealthy, which he dubbed the country club set. 'Good time to revisit a landmark 1977 speech given by President Ronald Reagan in which he called for a 'New Republican Party' that will not be and cannot be one limited to the country club-big business image,' he tweeted Friday morning. 'The New Republican Party . . . is going to have room for the man & the woman in the factories, for the farmer, for the cop on the beat.'"

Collins confident on deal. Washington Examiner's Kyle Feldscher: The Maine Republican "said she has a written agreement from Speaker Paul Ryan and Senate Majority Leader Mitch McConnell to honor the promises made to her for her vote on tax reform. Collins has seemingly been left in the lurch this week after House conservatives refused to say they’d back some of the promises made to her during tax reform negotiations.

Collins said Sunday she has no reason to think the congressional leaders will back out of their promise. 'I'm absolutely confident, I have it in writing, a statement by both Mitch McConnell and Speaker Ryan,'  she said. While the tax reform bill is negotiated in conference committee, Collins said she’s been given no reason to worry that her deal has been tossed aside. 'I’ve had a lot of conversations, not only with my colleagues in the Senate but with my colleagues from the House side and with the White House, I've talked to the president three times about this issue, and once again I have no reason to believe that that commitment will not be kept,' she said."

Americans don't like the bill, part 1,732. USA Today's Susan Page: "A new USA TODAY/Suffolk University Poll finds just 32% support the GOP tax plan; 48% oppose it. That's the lowest level of public support for any major piece of legislation enacted in the past three decades, including the Affordable Care Act in 2009.  Americans are skeptical of the fundamental arguments Republicans have made in selling the bill: A 53% majority of those surveyed predict their own families won't pay lower taxes as a result of the measure, and an equal 53% say it won't help the economy in a major way... Overall, only 35% believe that the bill will boost the economy, and 31% that their own families' tax bills will be lowered as a result. Nearly two-thirds, 64%, say the wealthy will get the most benefits; just 17% say the middle-class will."

Middle class may not notice cut. Bloomberg's Sahil Kapur: "A funny thing happened when Congress approved a tax cut for the middle class eight years ago: Most Americans didn’t notice. The 2009 economic-stimulus bill contained a one-year tax break worth $800 for married couples in 95 percent of working households -- a little over $15 a week. A February 2010 poll found that just 12 percent said their taxes had been reduced. More than half, 53 percent, said they saw no change. A remarkable 24 percent thought their taxes had increased...

That 2009 tax cut contains warning signs for President Donald Trump and congressional Republicans. Their tax plans would deliver about the same level of initial relief to households with incomes between $40,000 and $100,000 -- roughly $800 on average -- according to data from Congress’s Joint Committee on Taxation. If those numbers hold, and if history’s any guide, Trump’s working-class voters may not feel the tax cut he has repeatedly promised them."

Unleashing churches and charities. WSJ's Julie Bykowicz: "A provision in the tax code overhaul before Congress could lead to an infusion of new players in elections, including churches and charities, and prompt a significant shift in the way political campaigns are financed.

The House tax bill would allow churches and other nonprofits to advocate for candidates and take political positions without jeopardizing their tax-exempt status, rolling back what’s known as the Johnson Amendment. The Senate plan doesn’t take that step, meaning it will be one of many items up for debate as lawmakers work to pass a law that President Donald Trump can sign before the year’s end. The conference committee is set to hold its first meeting Wednesday...

It is unclear if Republican senators will agree to add it to the final bill, but it they do Democratic senators are preparing to fight the move by invoking the Byrd rule, which prohibits the Senate from considering nonrevenue matters as part of any reconciliation bill."

Fear over end of medical deduction. The Post's Heather Long: "The House tax bill would eliminate the deduction, while the Senate bill would keep it (and even make it a bit more generous). It’s a key difference that must be reconciled before the final legislation goes to President Trump... 

The medical deduction started in 1942 to help Americans deal with what lawmakers at the time called the 'extraordinary' costs of medical care, the kind that hit when someone in the family has cancer or needs round-the-clock care. Currently, anyone can deduct medical expenses that account for more than 10 percent of their adjusted gross income (income minus deductions and exemptions). The Senate bill would expand that to 7.5 percent of income for this year and next. In 2015, 8.8 million Americans used the deduction. Over half were older than 65, according to AARP."

Bad news for aspiring homeowners. CNN Money's Kathryn Vasel: "There's a housing affordability crisis unfolding in many parts of the country.

And the situation could get worse under potential changes to the federal tax code. Lawmakers may take a scalpel to a set of tax benefits designed to entice developers to build affordable housing and public facilities -- like schools and hospitals -- in poor neighborhoods. Meanwhile, nearly 39 million households can't afford their housing, according to a report out this summer from the Harvard's Joint Center for Housing Studies...

The House tax plan eliminates private activity bonds. These tax-exempt bonds are issued by state and local entities, and the money from them is loaned to for-profit and non-profit private companies to fund eligible projects, including health care centers and libraries. The affordable housing market also relies heavily on these bonds, which would be preserved in the Senate plan. If the bonds lose their tax-exemption status, more than 780,000 fewer affordable rental homes would be built or preserved over the next 10 years, according to Novogradac & Co."

POCKET CHANGE
White House economic adviser Gary Cohn said he and other administration officials are monitoring the meteoric rise in cryptocurrency bitcoin, while adding that he didn’t see any serious threat in the phenomenon.
Bloomberg
The British prime minister struck a landmark deal to conclude the first phase of Brexit talks, but the question of how to avoid a hard Irish border may need to be further clarified before an agreement with the EU on a full divorce deal.
WSJ
TRUMP TRACKER

Infrastructure's next. WSJ's Ted Mann: "The White House is preparing to roll out a long-delayed infrastructure rebuilding plan in January, as President Donald Trump’s advisers bet that voters want a $1 trillion road-and-bridge-building plan—even though it is opposed by some lawmakers. Mr. Trump’s advisers are putting finishing touches on a plan to direct federal spending of $200 billion or more—funds it would propose to offset with cuts elsewhere in the federal budget—to leverage hundreds of billions more from local governments and private investors to pay for road, rail, water and utility upgrades.

White House officials have said for months they hoped to turn to infrastructure once Congress has enacted an overhaul of the tax code, which has occupied the Republican establishment and its business allies for the past several months. More recently, Republicans have signaled they plan to focus on another posttax priority, a revamp of the nation’s welfare system. They also hope to revisit a repeal of the Affordable Care Act next year. Big legislation can be more difficult in an election year, but Mr. Trump’s political advisers say they believe they​have public support. That runs counter to widespread doubts in Washington that Congress will want to craft a major spending initiative on the heels of a tax package that could raise the deficit by more than $1 trillion."

And targeting the safety net. Politico's Andrew Restuccia, Sarah Ferris, and Helena Bottemiller Evich: "The Trump administration and Republicans in Congress are hoping to make the most sweeping changes to federal safety net programs in a generation, using legislation and executive actions to target recipients of food stamps, Medicaid and housing benefits. The White House is quietly preparing a sweeping executive order that would mandate a top-to-bottom review of the federal programs on which millions of poor Americans rely. And GOP lawmakers are in the early stages of crafting legislation that could make it more difficult to qualify for those programs.

In the meantime, the Trump administration has already begun making policy shifts that could have major ramifications. Federal health officials are encouraging states to impose work requirements on able-bodied adults on Medicaid — a major philosophical shift that would treat the program as welfare, rather than health insurance. The Agriculture Department said last week that it would soon give states greater control over the food stamp program, potentially opening the door to drug testing or stricter work requirements on recipients of the $70 billion program long targeted by fiscal conservatives...

While candidate Donald Trump pledged to protect some safety net programs, conservatives have long wanted to devolve control of social programs to the states and impose stricter work and drug testing rules. Now that they control both ends of Pennsylvania Avenue, Republicans believe they have a once-in-a-generation opportunity to overhaul those programs, which they have long argued are wasteful, are too easily exploited and promote dependency."

RUSSIA WATCH: 

Watch: Republicans question the FBI's integrity as the Mueller probe intensifies:

Mueller flags hottest Manafort docs. Bloomberg's David Glovin: "Special Counsel Robert Mueller’s investigators have spent the last six months sifting through financial records related to Paul Manafort and Rick Gates. Now it’s Manafort’s and Gates’s turn.

Mueller disclosed on Friday that he’s gathered a huge collection of bank records and other documents as part of his prosecution of Manafort, the former campaign manager for President Donald Trump, and Gates, his onetime business associate. The cache is so enormous -- 400,000 items in all -- that Mueller labeled at least 2,000 documents as “hot” to draw the Manafort defense team’s attention to the most important ones.

The collection, which prosecutors expect to provide to Manafort’s lawyers by Dec. 11, underscores how much financial and legal pressure is being brought to bear on the two. Manafort and Gates face money laundering and conspiracy charges as part of Mueller’s probe into Russian influence on last year’s election, and their legal teams must now review every document and many of the related transactions before trial next year."

Trump data firm chief to testify. Bloomberg's Billy House: "The chief executive officer of a data firm that worked for President Donald Trump’s campaign is set to testify in private before the House Intelligence Committee as part of its probe into Russian election interference on Dec. 14, according to a person familiar with the panel’s schedule. Lawmakers likely will ask Alexander Nix, CEO of the data and analysis firm Cambridge Analytica, whether he sought material from WikiLeaks publisher Julian Assange that was stolen from computers of the Democratic National Committee and John Podesta, who managed Democrat Hillary Clinton’s presidential campaign. Nix said at a November technology conference in Lisbon that in “early June 2016,” he contacted WikiLeaks after Assange publicly claimed he had Clinton emails and planned to publish them. Assange previously told the Associated Press that WikiLeaks had rejected a “request for information” from Cambridge Analytica."

CHART TOPPER

From The Post's Christopher Ingraham: "Americans are drowning in debt. Here’s where they have it the worst:"

DAYBOOK

Today

  • The Center for Strategic and International Studies holds an event on the costs and consequences of exiting NAFTA.

Coming Up

  • The House Financial Services Committee holds a markup on various measures on Tuesday.
  • The Wilson Center holds an event on NAFTA on Tuesday.
  • The Washington International Trade Association holds a discussion on agriculture, trade and American leadership on Tuesday.
  • The Heritage Foundation holds an event on NAFTA renegotiations on Tuesday.
  • The House Foreign Affairs Subcommittee on Terrorism, Nonproliferation and Trade holds a hearing on the future of NAFTA on Tuesday.
  • The FDIC holds a teleconference on resources for community banks on Tuesday.
  • The House Ways and Means Oversight Subcommittee holds a hearing on IRS reform on Wednesday.
  • The Bipartisan Policy Center holds an event on low-income tax credit and health on Wednesday.
  • The House Financial Services Committee holds a hearing on “"Examining the Operations of the Committee on Foreign Investment in the United States” on Thursday.
THE FUNNIES

From The Post's Tom Toles:

BULL SESSION

During a rally in Pensacola, Fla., President Trump told Alabamians to “get out and vote for Roy Moore:"

U.S. Ambassador to the United Nations Nikki Haley said the women who have accused President Trump of sexual misconduct “should be heard:"

Watch SNL's Weekend Update on Trump's decision to recognize Jerusalem as the Israeli capital:

Saturday Night Live's Christmas-themed cold open takes on allegations against Al Franken, Roy Moore and President Trump: