THE TICKER

Want the latest news on tax reform along with sharp analysis on what it all means? Get Tory Newmyer’s daily newsletter.

Addressing a black-tie crowd at the National Building Museum on Thursday night, Vice President Pence hailed congressional progress toward what he said would be the “biggest tax cut in American history.”

As he spoke, less than a mile away the Senate Finance Committee was racing to wrap up work on a tax bill that will hand large cuts to the wealthiest while raising taxes on those earning between $10,000 and $75,000 over the next decade. That’s according to a new analysis from the Joint Committee on Taxation. (And Pence’s claim, which President Trump also has made repeatedly, is false, as my colleague Glenn Kessler has demonstrated)

Republicans are making rapid strides toward approving a tax package, the cornerstone of their agenda. The House passed its version of a bill with some room to spare Thursday just two weeks after it was introduced. Senate prospects are less assured, considering the party’s narrower margin and blowback from a critical number of Republicans there, although the Finance Committee approved its plan along party-lines late Thursday night.

But if internal disagreement doesn’t stymie it first, the party’s argument for the project is on a collision course with the nonpartisan scorekeepers’ assessment of it.

From The Washington Post’s Mike DeBonis and Damian Paletta’s report on Thursday’s action:

The House bill delivers more than 80 percent of its overall cuts to corporations, business owners and wealthy families who are subject to the federal estate tax, according to estimates released by the Joint Committee on Taxation. But most middle-class Americans would see an immediate tax cut because of a lowering of individual tax rates, the near-doubling of the standard deduction and a larger child tax credit.

But under the House bill, many households that itemize their deductions — taking advantage of write-offs for state income taxes, medical expenses and more — could see immediate tax increases. In future years, the benefits of the bill for individuals wane because of the phaseout of a key tax credit and because the bill would change how the government calculates inflation, moving them more quickly into higher tax brackets.

The Senate plan has significant problems of its own when it comes to lower- and middle-income workers. To comply with the chamber’s budget rules, the bill prioritizes permanent corporate cuts over breaks for individuals that sunset after a decade. But those at the bottom of the income scale would see tax hikes sooner than that. My colleague Heather Long explains:

Tax increases for households earning $10,000 to $30,000 would start in 2021 and grow sharply from there, JCT found. By 2027, most Americans earning $75,000 a year or less would be forced to pay more in taxes, while people earning more than $100,000 a year would continue to pay less. The report generated intense debate on Capitol Hill.

Most of the hit to poor and working-class Americans would come from the Senate Republicans’ push to insert a major health care change into the tax bill. Republicans are repealing the requirement that all Americans buy health insurance or face a penalty, a move that would lead to 13 million more uninsured Americans, the Congressional Budget Office has said. Many of those people earn modest incomes and currently receive tax credits and subsidies from the government to help them afford insurance. If the Senate GOP bill becomes law, premiums are expected to rise and millions would likely opt not to buy insurance anymore, meaning their tax breaks would go away, explained Thomas Barthold, head of the JCT.

Voters may not have studied the JCT’s distributional tables, but they certainly get the point. A Quinnipiac poll released this week showed they disapprove of the GOP tax plan by 52 to 25 percent. And by 59 to 33 percent, they think the proposals benefit the wealthy at the expense of the middle class.

The Post’s Glenn Kessler:

I have covered lots of tax bills and have never seen a distribution like this. Imagine the attack ads….. pic.twitter.com/LncXFz9dk8

— Glenn Kessler (@GlennKesslerWP) November 16, 2017

Republican voters unsurprisingly view their party’s tax agenda much more favorably than the broader electorate, approving of it by 60 to 15 percent, the survey found. That may be all Republican lawmakers care to consider as they stoke a sense of urgency behind notching a quick win on a tax package.

But the Quinnipiac poll also found that Democrats have a 13-point edge over Republicans on the generic congressional ballot — a result that tracks with a recent Marist poll showing Democrats with a 15-point advantage. As the Cook Political Report’s Amy Walter wrote Thursday, “Do not ignore what’s right in front of us. A wave is building. If I were a Republican running for Congress, I’d be taking that more seriously than ever.”

You are reading The Finance 202, our must-read tipsheet on where Wall Street meets Washington.
Not a regular subscriber?

SIGN UP NOW
MARKET MOVERS
Wall Street’s main indexes rose sharply on Thursday boosted by earnings-related gains in Wal-Mart and Cisco, while a tax bill expected to boost corporate earnings passed its first, if smallest, hurdle.
Reuters
In 2018, Goldman Sachs Group Inc. is doubling down on the global economy.
Bloomberg
MONEY ON THE HILL

House GOP leaders applaud with their fellow Republicans ollowing the passage of the Tax Cuts and Jobs Act on Thursday. (Chip Somodevilla/Getty Images)

TAX FLY-AROUND:

How they voted. The NYT has this breakdown.

From The Post’s Ed O’Keefe:

THIRTEEN House Republicans votes against GOP tax reform plan: pic.twitter.com/JpFxtKcVIq

— Ed O’Keefe (@edatpost) November 16, 2017

HuffPost’s Jennifer Bendery:

Among those who voted no on House GOP tax reform bill: Rep. Darrell Issa (R). “I didn’t come to Washington to raise taxes on my constituents and I do not plan to start today.”

— Jennifer Bendery (@jbendery) November 16, 2017

NYT’s Shane Goldmacher:

Andrew Cuomo says New York Republicans who voted for tax bill are “treasonous”

— Shane Goldmacher (@ShaneGoldmacher) November 16, 2017

The takeaway: The roster of House Republicans opposed to the bill flashes a warning signal: 12 of the 13 who voted against it hail from high-tax states, whose residents would lose some of their ability to deduct state and local taxes from their federal burden. House GOP leaders initially proposed eliminating the break altogether, settling on a compromise to stem a revolt by their members from California, New Jersey, New York and beyond. Yet the Senate version relies on full SALT repeal, causing no static for Republicans in the upper chamber who don’t represent the high-tax blue states but, left untouched, could doom the package in the House.

Here’s how the House and Senate bills otherwise compare, via the NYT’s Alan Rappeport. And here’s Heather Long’s rundown of what’s in the House bill.

AEI’s Jim Pethokoukis:

Goldman Sachs: “We recently raised our subjective odds of enactment of tax reform to 80%, but developments since then have prompted questions as to whether the probability has decreased. We don’t think so.” | #Stickin

— James Pethokoukis (@JimPethokoukis) November 16, 2017

Ryan’s big win. Politico’s John Bresnahan: “President Donald Trump got a boost Thursday with passage of the House tax bill, but the biggest winner may be Speaker Paul Ryan. Loathed by the Breitbart wing of the Republican Party — which sees Ryan and Senate Majority Leader Mitch McConnell as Trump’s biggest obstacle to making America great again — the Wisconsin Republican scored a major victory in Thursday’s 227-205 vote to pass a massive tax-cut package that dramatically alters the U.S. tax code.

While the Senate still has to pass its own version of the bill, and the two chambers then have to cut a deal to resolve key differences, it’s a win for Ryan. Like repealing and replacing Obamacare, Ryan can claim the House has done its job, and it’s over to you, Mitch McConnell. And it’s worth pointing out that even in the Trump era, the biggest legislative win so far for Trump is an issue that Ryan has been working on for virtually his entire career.”

Fortune’s Chris Matthews (sarcastically):

It’s weird that the stock market is up on the prospect of corporate tax cuts. Don’t investors know that the savings are just getting passed on to workers in the form of higher wages?

— Christopher Matthews (@crobmatthews) November 16, 2017

CNBC’s Sara Eisen (not sarcastically):

Coke CEO James Quincey tells us he’s not looking boost jobs and wages if able to repatriate $20b overseas cash at lower rate but would boost dividend.. and invest some in the US business

— Sara Eisen (@SaraEisen) November 16, 2017

Republicans warned. Mike DeBonis: “The leader of the most prominent super PAC charged with electing Republicans to the House next year delivered a blunt warning to GOP lawmakers ahead of Thursday’s House vote on a $1.5 trillion tax bill: If you want our help, you had best vote for this bill. Corry Bliss, who runs the Congressional Leadership Fund, which has close ties to House Speaker Paul D. Ryan (R-Wis.) and high-dollar GOP donors, said in an interview that Republicans who vote against the Tax Cuts and Jobs Act on Thursday should not assume they would have the group’s support going into a grueling midterm election year. ‘CLF will never spend a dollar attacking a Republican,’ Bliss said. ‘But CLF is going to raise and spend $100 million to protect the Republican majority. CLF, like any organization, will allocate resources to friends and family first.'”

Bloomberg’s Steven Dennis:

Next stop for the Senate tax bill after tonight: Votearama after Thanksgiving.

Senators are in dealmaking mode.

Enormous pressure to pass *something.*

— Steven Dennis (@StevenTDennis) November 16, 2017

Dems’ Very Bad Day. Democrats mostly criticized Sen. Al Franken (D-Minn.) after allegations that he initiated inappropriate sexual contact with USO performer Leann Tweeden.

The Post’s Dave Weigel: “And it has all happened at the start of a tax-cut fight that Franken was supposed to help lead. The Democrats’ multilevel campaign to stop Republican-backed tax cuts, which has included ad buys, news conferences and activist pressure, was dealt a blow by Franken essentially being forced to take the bench. The senator had taken an increased, unique role in Democratic messaging this year, with a best-selling memoir, frequent use of social media and a new openness to national interviews.”

Sen. Bob Menendez (D-N.J.), however, got a reprieve from corruption charges after a Newark jury declared a mistrial, though Mitch McConnell says an ethics inquiry will kick off and the Justice Department could retry the senator. But Menendez seemed pretty confident yesterday, saying: “For those who were digging my political grave so they could jump into my seat, I know who you are and I won’t forget it.’’

Meanwhile Trump, who has yet to say anything about the allegations of sexual impropriety by Alabama Senate candidate Roy Moore, evidently couldn’t resist the opportunity to knock a political opponent, though “glass houses” doesn’t seem to cover it:

The Al Frankenstien picture is really bad, speaks a thousand words. Where do his hands go in pictures 2, 3, 4, 5 & 6 while she sleeps? …..

— Donald J. Trump (@realDonaldTrump) November 17, 2017

.And to think that just last week he was lecturing anyone who would listen about sexual harassment and respect for women. Lesley Stahl tape?

— Donald J. Trump (@realDonaldTrump) November 17, 2017

More from Trump this morning:

Great numbers on Stocks and the Economy. If we get Tax Cuts and Reform, we’ll really see some great results!

— Donald J. Trump (@realDonaldTrump) November 17, 2017

If Democrats were not such obstructionists and understood the power of lower taxes, we would be able to get many of their ideas into Bill!

— Donald J. Trump (@realDonaldTrump) November 17, 2017

Home builders, Realtors still oppose House bill.The Hill’s Vicki Needham: “The National Association of Home Builders (NAHB) and National Association of Realtors (NAR) expressed continued concerns about the bill they say will hurt homeowners by rendering housing tax deductions ineffective that would likely drive down home values and push up prices.”

Grad students taxed. The House bill would hike taxes by 400 percent. CNBC’s Abigail Hess: “Grad students … often afford advanced degrees by earning a tuition waiver. In these instances, graduate students will work for the university by teaching classes and/or conducting research in exchange for free tuition. According to the American Council on Education, roughly 145,000 graduate students receive this kind of tuition reduction. Some programs provide graduate students with a modest stipend for food and housing. For instance, Ryan Hill, a fourth-year PhD student at MIT, receives a $30,000 living stipend and a tuition waiver allowing him to forgo paying $50,000 in tuition. He currently pays taxes on his $30,000 stipend, but under the proposed House tax bill, his tuition waiver would also be taxed — meaning he would be taxed as if he was earning $80,000 a year.”

The cost for cities. Bloomberg’s Elizabeth Campbell: “The Republican-led House Thursday passed its version of a tax-code overhaul that pulls the tax-exemption from investments in so-called private activity bonds that finance projects like airports, water facilities and roads, promising to make financing tens of billions of dollars worth of public works each year more expensive. And, like the Senate’s plan, it would do away with advanced refundings, a technique municipalities frequently use to refinance their debt when interest rates fall…

It will mean a lot to local governments. Advanced refundings saved them an estimated $11.8 billion in the five years through 2016, according to data compiled by the Government Finance Officers Association. The proposed tax changes would likely result in higher interest costs for municipal borrowers and strain their budgets, according to S&P Global Ratings.”

The provision would hurt airports, too. More, from Bloomberg’s Mark Niquette: “The House measure would eliminate a form of tax-exempt debt called private-activity bonds. That would leave Los Angeles World Airports, which runs LAX, with the choice of scaling back projects in its $14 billion modernization plan or finding $500 million in new revenue because of higher borrowing costs, Chief Financial Officer Ryan Yakubik said in an interview. ‘Certainly, it had been made clear that infrastructure was a great priority, and that finding ways to do that was important,’ Yakubik said. ‘This doesn’t seem pointed in that direction.'”

Private jet loophole. The Hill’s Josh Delk: “The latest version of the Senate Republican tax reform bill includes a break for companies that manage private jets. A measure in the Tax Cuts and Jobs Act would lower taxes on some of the payments made by owners of private aircraft to management companies that help maintain, store and staff those planes for owners. The language would exempt owners or leasers of private aircraft from paying taxes on certain costs related to the upkeep and maintenance of the jets, according to a description from the Joint Committee on Taxation.”

Trump: Welfare reform next. The Hill’s Scott Wong: “Trump told House Republicans that he wants Congress to tackle welfare reform after it finishes work on a sweeping tax bill that would slash the corporate rate. The remarks came during a rare Capitol Hill visit by Trump ahead of a House vote on the tax bill, which lawmakers are expected to approve in a party-line vote. A confident, jovial Trump said he expected the Senate to also pass tax reform and eventually deliver a bill to his desk, which would give Republicans their first major legislative victory of the Trump era.”

Kimberley Fritts, the Podesta Group’s longtime chief executive, has launched a new lobbying shop from the ashes of Tony Podesta’s old firm.
Politico
THE REGULATORS

OMB Director Mick Mulvaney. (Andrew Harrer/Bloomberg)

Mulvaney for CFPB?The Post’s Renae Merle and Damian Paletta: “Trump is considering naming Mick Mulvaney, director of the Office of Management and Budget, to run the Consumer Financial Protection Bureau on an interim basis, potentially setting up the watchdog agency for a massive overhaul, according to a person briefed on the planning. Mulvaney, who once called the CFPB a “joke,” would replace Richard Cordray, one of the few remaining Obama-era banking regulators, who announced Wednesday that he plans to step down as the agency’s director by the end of the month. If given the job, Mulvaney would probably lead both agencies until a permanent head of CFPB is chosen and confirmed by the Senate, said the person, who was not authorized to speak publicly about the matter. The offices of the OMB and the CFPB are across the street from each other in Washington.”

Politico’s Jake Sherman:

Unreal. Mulvaney was quite rough on CFPB while in Congress. Just like Scott Garrett was on ExIm before he was nominated to lead that. https://t.co/EdgwnbFLgB

— Jake Sherman (@JakeSherman) November 16, 2017

Otting confirmed. Politico’s Victoria Guida: “The Senate voted to confirm Joseph Otting as comptroller of the currency on Thursday, putting the former banker in charge of a regulator he once battled with over his firm’s foreclosure practices. The vote was 54-43, with two Democrats voting in favor of President Donald Trump’s nominee.

Otting was CEO of OneWest Bank, a lender co-founded by Treasury Secretary Steven Mnuchin that drew criticism over its handling of foreclosures after the financial crisis. The bank was scolded by its federal regulator in 2011 for not properly overseeing the loans of thousands of people at risk of losing their homes and was bound by a consent order for four years. Now, it will be Otting’s job to punish such violations by national banks. His background has sparked a fierce backlash against the nomination from Senate Democrats.”

That’s a shift from the Obama administration, which relied more on consent decrees to cease antitrust behavior without ensuring compliance.
Washington Examiner
The Federal Election Commission voted unanimously to start a rulemaking process to require disclaimers for small political ads that run online.
Hamza Shaban
TRUMP TRACKER

RUSSIA WATCH:

White House Senior adviser Jared Kushner. (Reuters /Kevin Lamarque)

Kushner dodges.Karoun Demirjian: “Trump’s adviser and son-in-law Jared Kushner received and forwarded emails about WikiLeaks and a ‘Russian backdoor overture and dinner invite’ that he kept from Senate Judiciary Committee investigators, according to panel leaders demanding that he produce the missing records … Charles E. Grassley (R-Iowa) and ranking member Dianne Feinstein (D-Calif.) sent a letter to Kushner’s lawyer Abbe Lowell on Thursday charging that Kushner has failed to disclose several documents, records and transcripts in response to multiple inquiries from committee investigators.

In the letter, Grassley and Feinstein instruct Kushner’s team to turn over “several documents that are known to exist” because other witnesses in their probe already gave them to investigators. They include a series of ‘September 2016 email communications to Mr. Kushner concerning WikiLeaks,’ which the committee leaders say Kushner then forwarded to another campaign official. Earlier this week, Trump’s son Donald Trump Jr. revealed that he had had direct communication with WikiLeaks over private Twitter messages during the campaign.

Committee leaders said Kushner also withheld from the committee ‘documents concerning a ‘Russian backdoor overture and dinner invite’ ‘ that he had forwarded to other campaign officials. And they said Kushner had been made privy to ‘communications with Sergei Millian’ — a Belarusan American businessman who claims close ties to the Trumps and was the source of salacious details in a dossier about the president’s 2013 trip to Moscow — but failed to turn those records over to investigators.”

Former Obama administration official Ron Klain:

Jared. It has always been Jared. It is always Jared. Worked with Cambridge Analytica, At the Trump Tower mtg. Pushed Flynn in. Pushed Comey out. Jared, Jared, Jared. https://t.co/h369AOBFGw

— Ronald Klain (@RonaldKlain) November 16, 2017

Hicks marks the spot. Politico’s Darren Samuelsohn: “Special counsel Robert Mueller’s team is preparing to interview the woman who’s seen it all: Hope Hicks. She’s been part of Donald Trump’s inner circle for years, first at Trump Tower and then as an omnipresent gatekeeper and fixer who could get emails or other communications directly to the boss during the 2016 campaign.

As a senior White House adviser and now as communications director, she’s been in the room for moments critical to Mueller’s probe, which has grown to include the president’s response to the Russia investigation itself. Hicks’ history with Trump makes her one of the more useful witnesses for Mueller as he looks for insights into the president’s habits and moods. She also is one of the few people well positioned to recount the president’s reactions at various moments as the Russia scandal has sidetracked his presidency — including the Mueller appointment itself.

Mueller’s decision to request an interview with Hicks — who hasn’t been named in any criminal wrongdoing — also indicates he’s reached a critical point in the overall investigation, according to former prosecutors and veterans of past White House investigations. Typically, conversations with such senior-level aides are saved for near the end of a probe.”

POCKET CHANGE
Meredith Corp. has made a takeover bid for storied magazine publisher Time Inc. in the range of $17 to $20 a share, according to people familiar with the situation.
WSJ
The cable giant is discussing acquiring the Fox movie studio, the FX network, regional sports channels and a vast overseas TV distribution business.
NYT
Bitcoin has picked up right where it left off, hitting another record high to close in on $8,000 just days after a plunge of as much as 29 percent tested the confidence of advocates of the cryptocurrency.
Bloomberg
DAYBOOK

Today

  • The Cato Institute Policy Perspectives 2017 is scheduled.
BULL SESSION

Fact Check: Are poor Americans carrying the tax burden of the individual mandate?:

Here’s what Sen. Al Franken (D-Minn.) has said about sexual violence:

Late-night comedians Stephen Colbert, Trevor Noah and others had a lot to say about the allegations against Franken:

Actress Meryl Streep spoke out about her own experiences with violence at an annual award show by the Committee to Protect Journalists:

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>