The question driving the week: Can Republicans led by President Trump forge an agreement by Friday to head off a government shutdown, even if only temporarily? The short answer: With four days to go and no deal in sight, it’s not looking great.
As my colleagues Mike DeBonis, Ed O'Keefe and Sean Sullivan report, aides to the deputy leaders from both parties are gathering again today to restart talks in the hopes the lawmakers can hammer out a breakthrough on Wednesday. But they are working against the clock and a tangled mess of hot-button policy disputes toxified by Trump’s vulgar comments last Thursday and his flame-fanning over the weekend.
Business interests will be piling additional pressure on Republicans to strike a compromise with Democrats that averts a disruptive government shutdown — the first since October 2013 — while extending legal protection to young, undocumented immigrants, including about 800,000 enrolled in the Deferred Action for Childhood Arrivals program, many of whom are embedded in the workforce.
From Mike, Ed, and Sean’s story, which leads today’s print edition:
“There is also no guarantee that House GOP leaders will be able to rally a majority of their members to support a short-term spending measure, which multiple congressional aides and a senior Trump administration official said would probably last through mid-February.
Defense hawks, in particular, are livid at further delaying a planned boost in military funding. That could mean House Republicans would also need Democratic votes to pass a short-term deal — something the minority party may not be inclined to provide this time around.
On Capitol Hill, however, there are hopes that tensions will ease as the shutdown deadline approaches.”
Trump, rather than guiding his party through this thicket, has been digging them in deeper. After reportedly describing Haiti and African nations as “shithole countries” to congressional negotiators in an Oval Office meeting last week — one in which he also rejected a bipartisan deal on the matter as insufficiently hard-line — the president helped keep the controversy alive over the weekend, via Twitter:
Senator Dicky Durbin totally misrepresented what was said at the DACA meeting. Deals can’t get made when there is no trust! Durbin blew DACA and is hurting our Military.— Donald J. Trump (@realDonaldTrump) January 15, 2018
(In this new, inside account of the meeting from The Post's Josh Dawsey, Bob Costa and Ashley Parker, Trump comes off as bereft of any grasp of the debate over which he's presiding, even as his chaos-sowing involvement guarantees he'll own the blame for a negative outcome.)
Look for business interests to step into the breach this week, dialing up the sense of urgency for lawmakers to reach an agreement.
Texas business groups, for example, are highlighting the stakes for preserving the legal status of "dreamers," young illegal immigrants brought to the United States as minors whose legal protections Trump has revoked, pointing to 120,000 workers the state’s economy stands to lose, per Phil Prazan of KXAN in Austin. Tech leaders in the state are joining the Texas Business Association in pressing for action, he reports — relevant information for Sen. John Cornyn (R-Tex.), who's negotiating on behalf of Senate Republicans. Meanwhile, the National Association of Home Builders said Monday that immigrants made up nearly a quarter of construction workers in 2016, the highest proportion on record, as native-born workers increasingly shun the jobs.
A shutdown would step on the economic growth that Republicans hope will help them overcome strengthening political head winds as the midterm elections approach. S&P Global analysts have estimated a shutdown would cost the economy about $6.5 billion per week.
And Nobel Prize-winning economist Joseph Stiglitz is warning that such an event could spook investors, too, threatening the stock market rally. “The most significant political risk is the United States,” Stiglitz tells Bloomberg News’s Catherine Bosley. “Uncertainty is bad for the global economy. And among the uncertainties are these government shutdowns, which would be probably very bad for the markets.”
Others are fretting over the longer-term damage done to the U.S. tourism industry by the president’s slander of developing-world countries last week.
Foreign travel to the United States was off 4 percent in the first half of the year compared to the year prior, prompting concern that international attention to Trump’s comments could exacerbate the slide. The New York Times’s Martha C. White reports: “This week, the United States Travel Association plans to announce that industry groups are forming the Visit U.S. Coalition in an attempt to combat the slump through advocacy, lobbying, advertising and other methods. Members include the American Gaming Association, the U.S. Chamber of Commerce, and the American Hotel and Lodging Association.”
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— Bank bill gains steam. NYT's Alan Rappeport: "Buoyed by their success in rewriting the tax code, the Trump administration and Republican lawmakers have now set their sights on helping the financial industry, which has been engaged in a quiet but concerted push to relax many post-crisis rules and regulatory obligations, particularly for thousands of small- and medium-sized banks.
But unlike the $1.5 trillion tax overhaul, which passed along party lines, the effort to loosen the post-crisis rules is somewhat bipartisan. A group of Senate Democrats has joined Republicans to support legislation that would mark the first major revision of the 2010 Dodd-Frank Act, a signature accomplishment of President Barack Obama that has been deemed “a disaster” by... Trump... Senator Mitch McConnell, the majority leader and Kentucky Republican, is expected to bring the bill to the Senate floor within the next month."
— Fed, FDIC noms at Banking next week. American Banker's Ian McKendry: "The Senate Banking Committee has set a Jan.23 date to examine the nominations of Jelena McWilliams to lead the Federal Deposit Insurance Corp. and Marvin Goodfriend to be a governor on the Federal Reserve Board, according to people familiar with the matter. McWilliams was chief counsel at the Senate Banking Committee under former chairman Sen. Richard Shelby, R-Ala., and is currently chief legal officer at Fifth Third Bank. She is also a former Fed lawyer. Industry insiders who know her have praised her as the pick to succeed Chairman Martin Gruenberg, whose term expired in November but who has continued to serve at the FDIC."
— Banks to pay more before benefiting. Washington Examiner's James Langford: "The tax break expected to slash what three of the biggest Wall Street banks have to pay the Internal Revenue Service may cost them more than $20 billion first. A reduction in the top corporate rate to 21 percent from 35 percent, which will buoy lenders' bottom lines in 2018, also lowers the value of paper assets that some have held on to for years. 'Deferred tax assets,' or losses from previous years that can be used to reduce payments later, will now have to be marked down because they're worth less under the lower rate that's a signature feature of the [law]... That may curb earnings by $17 billion at Citigroup and up to $1.7 billion at Goldman Sachs, both of which are based in New York and are slated to report fourth-quarter earnings this week. Profit at Charlotte, N.C.-based Bank of America may be reduced by $3 billion, estimated Jason Goldberg, an analyst with Barclays."
— One-two punch to charities. Politico's David Rogers: "Back in 2011, when Republicans still talked about deficits, a bipartisan budget commission proposed to save tens of billions a year by revamping the charitable deduction for federal income taxes. The plan was to substitute a 12 percent tax credit available only to those who gave more than 2 percent of their adjusted gross income. The precise numbers were subject to fine-tuning, but the framework set three goals: lower the deficit, put middle-class donors on more equal footing with the wealthy and establish some minimum standard for generosity to qualify for a tax benefit.
This being Washington, the idea went nowhere. But what’s surprising now is how far Republicans are taking the country in the very opposite direction. For the first time in their lives, millions of middle-class donors will be effectively shut out from claiming any charitable deduction under the GOP’s new tax law. At the same time, the wealthy will get a still larger share of the tax benefit, even when sacrificing a smaller share of their income."
— Is it already working? Politico's Danny Vinik: "The truth is we just don’t know: It’s way too early to determine whether the law has had a significant impact on the economy. Perhaps Wal-Mart did raise its hourly wage due to the tax law, as it claimed. Or maybe it just needs to compete for workers in a labor market that has gotten increasingly competitive even before the law. Maybe the corporate stock buybacks were a result of the tax law—but maybe not. These stories are anecdotes, great for PR but almost meaningless if you’re looking at the real impact of a sweeping, long-term reform...
The most closely watched data point will be wage growth. Republicans have promised that the corporate tax cuts will filter down into larger paychecks for workers, which are sorely needed: Even as the economy has continued to recover over the past few years, and the unemployment rate has fallen to just 4.1 percent, nominal wage growth has been stuck around 2.5 percent. But even if wages grow, it will be hard to know if the tax law “worked”—a surge in wage growth might just mean that the tightening labor market is finally pushing up workers’ incomes. Economists will attempt to disentangle those two factors, but that will be difficult to do, making wage growth a poor metric to measure the success of the law."
— The real trade fight. Axios's Jonathan Swan: "The Trump administration is at war with itself over a highly controversial plan to impose massive tariffs on steel and aluminum. Using an arcane law, the plan would describe the global glut of both metals as a national security threat to the United States. Trump's senior advisers — Gary Cohn, Steven Mnuchin, Rob Porter, James Mattis and Rex Tillerson — think it would be a calamity if the president uses this law, called Section 232, to introduce steel and aluminum tariffs. They argue it would alienate allies in Europe and Canada, blow up the World Trade Organization, and send shockwaves through global markets. Meanwhile, trade advisor Peter Navarro and Commerce Secretary Wilbur Ross support the potential tariffs, arguing the American steel industry will collapse without them. Their voices are lonely ones, but still quite powerful — in large part because they validate Trump's deeply held convictions."
— NAFTA trio to reunite in Davos. Bloomberg's Josh Wingrove: " The three ministers leading negotiations to revamp Nafta will get two chances for face-to-face talks this month, including one near the slopes of Davos.U.S. Trade Representative Robert Lighthizer, Mexican Economy Minister Ildefonso Guajardo and Canadian Foreign Minister Chrystia Freeland are due to attend the World Economic Forum in Switzerland, which begins on Jan. 23, the same day the sixth round of North American Free Trade Agreement talks get underway across the Atlantic in Montreal. Freeland expects to raise the subject of Nafta informally on the sidelines of Davos, spokesman Alex Lawrence said in a statement. The three ministers are also tentatively scheduled to hold a trilateral meeting in Montreal on Jan. 28, he said. The ministers didn’t attend the last two negotiating sessions in Mexico and Washington, after attending previous rounds."
— Kushner warned about Wendi Deng Murdoch. WSJ's Kate O’Keeffe and Aruna Viswanatha: "U.S. counterintelligence officials in early 2017 warned Jared Kushner... Trump’s son-in-law and senior adviser, that Wendi Deng Murdoch, a prominent Chinese-American businesswoman, could be using her close friendship with Mr. Kushner and his wife, Ivanka Trump, to further the interests of the Chinese government, according to people familiar with the matter. U.S. officials have also had concerns about a counterintelligence assessment that Ms. Murdoch was lobbying for a high-profile construction project funded by the Chinese government in Washington, D.C., one of these people said.
The project, a planned $100 million Chinese garden at the National Arboretum, was deemed a national-security risk because it included a 70-foot-tall white tower that could potentially be used for surveillance, according to people familiar with the intelligence community’s deliberations over the garden. The garden was planned on one of the higher patches of land near downtown Washington, less than 5 miles from both the Capitol and the White House... Neither Ms. Murdoch, Mr. Kushner nor Ms. Trump has been accused of any wrongdoing."
— Dimon walks back Trump prediction. CNBC's Javier E. David: "JP Morgan Chase CEO Jamie Dimon walked back a previous prediction that President Donald Trump would only serve one term, telling Fox Business in an interview that the Democrats don't appear to have a particularly deep bench of contenders for the 2020 general election. When asked by Fox Business' Maria Bartiromo on Friday about a comment he made suggesting Trump could be defeated after four years, Dimon said flatly that 'I wish I hadn't said it, I was talking probabilistically.' He spoke favorably about the passage of comprehensive tax reform, and speculated that Trump could also make headway with plans for infrastructure and education. Predicting presidential candidates, he stated, is '…not my job. My job is to help get good public policy done, help the economy grow and help finance cities…I am not a political expert.'"
- The House Committee on Rules holds a hearing on the Home Mortgage Disclosure Adjustment Act and the World Bank Accountability Act of 2017.
- The House Financial Services Committee holds a markup of various bills on Wednesday.
- The Senate Finance Committee holds a hearing on United States Trade Representative nominees on Wednesday.
- The Senate Banking, Housing and Urban Affairs committee holds an executive session to vote on Jerome Powell to be chairman of the board of governors of the Federal Reserve System and Randal Quarles to be reappointed as a member of the board of governors of the Federal Reserve System on Wednesday.
- The American Enterprise Institute holds an event on “New thinking about poverty and economic mobility” on Thursday
- The Cato Institute Policy Perspectives 2018, including a discussion on “A Fiscal Rule to Tame Federal Debt?”, takes place on Thursday.
- The SEC-NYU Dialogue on Securities Markets – Shareholder Engagement will be held in New York on Friday.
From The Post's Tom Toles:
When asked about his comments about Haiti, El Salvador and African nations, President Trump declared: "I am not a racist:"
Here's a brief history of presidents using profanity:
Jimmy Fallon debuts “Fire and Fury," a parody of the classic “Fire and Rain:"
Watch a car in Santa Ana hit a median and fly into the second story of a building: