The Finance 202: Some corporate interests swiftly align against tax overhaul – Washington Post
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House Republicans have finally released their tax package today. But an unusual array of corporate interests — which typically ally with Republicans in major legislative battles — are siding against it in what could be an ominous development.
The prominent naysayers include the National Association of Realtors and the National Federation of Independent Businesses, which immediately said they couldn’t support the overhaul that makes changes to both the individual and corporate side of the tax code. The National Association of Home Builders had already announced it’s opposition and vowed to fight the revamp with its considerable firepower. “We will do everything we can to defeat this thing,” said Jerry Howard, chief executive of the National Association of Home Builders, even before the plan made its debut to House Republicans this morning.
The U.S. Chamber of Commerce praised the release of the bill, but said in a statement that “a lot of work needs to be done.” And The BUILD Coalition — which represents financial services companies, real-estate developers, and farm interests — has come out against the bill’s proposed limitation of the deduction for interest on business debt.
— NFIB (@NFIB) November 2, 2017
The biggest problem for Republicans appears to be the decision to halve — rather than keep entirely intact — the deduction for mortgage interest. The Tax Cuts and Jobs Act would reduce that deduction to homeowners with $500,000 mortgages instead of the $1 million mortgages that are currently allowed. Property tax deductions would now be capped at $10,000.
Moderate Republicans from high-cost states like New York and New Jersey had fiercely opposed any changes to the state-and-local tax deduction and early reports had thought the final product would potentially eliminate it. But that was not the case, provoking opposition from them as well.
Rep. Lee Zeldin (R-N.Y.) is apparently one of the foes, per a Fox News reporter:
GOP NY Rep Zeldin: I am a No to this bill in its current form. We need to fix this State and Local Tax deduction issue.
— Chad Pergram (@ChadPergram) November 2, 2017
The overhaul would slash the corporate tax rate from 35 to 20 percent — a bid pushed by President Trump in order, he hopes, to lure American companies back into the country. It would collapse the individual side of the code from seven brackets to four. “We are just getting started, and there is much work left to do,” the president said in a statement, suggesting a less-than-full embrace of the House GOP’s first crack at a bill.
Other major proposals in the bill include, per my colleagues Mike DeBonis and Damian Paletta:
- Nearly doubling the standard deduction from $12,700 per family to $24,000.
- Creating a new “family credit” and raising the child tax credit from $1,000 to $1,600 per child.
- Eliminating deductions for medical expenses and property and casualty losses.
- Changing the way college-savings plans and tax-exempt churches and charities are taxed.
Yet Republican leaders proclaimed their members “excited” about the effort:
Democrats, not so much:
The initial pushback is not a good sign for Republicans desperate to obtain a legislative win as they head into the 2018 midterms.
Much haggling and negotiations lie ahead — and reports of the plan’s death, which will come with some frequency, are likely to be exaggerated. Nonetheless, the instant backlash suggests this will be an uphill battle.
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The rental truck used by Sayfullo Saipov, an Uzbek immigrant, who drove down a bike path for twenty blocks killing eight people and injuring several more, is hauled away on a New York City Police flatbed on Wednesday. (Ricky Carioti/The Washington Post)
NEW YORK TERROR ATTACK:
— Charges filed. NYT: “Federal prosecutors on Wednesday filed charges accusing the driver in the Manhattan truck attack of carrying out a long-planned plot, spurred by Islamic State propaganda videos, to kill people celebrating Halloween. The charges, filed just over 24 hours after the deadliest terror attack on New York City since Sept. 11, 2001, placed the case in the civilian courts even as President Trump denounced the American criminal justice system as ‘a joke’ and ‘a laughingstock.’ The charges describe the driver, Sayfullo Saipov, 29, as a voracious consumer and meticulous student of ISIS propaganda, and detail how he said he was spurred to attack by an ISIS video questioning the killing of Muslims in Iraq.”
Trump dispatched with the presumption of innocence late Wednesday to declare that Saipov should get the death penalty:
NYC terrorist was happy as he asked to hang ISIS flag in his hospital room. He killed 8 people, badly injured 12. SHOULD GET DEATH PENALTY!
— Donald J. Trump (@realDonaldTrump) November 2, 2017
That followed a day in which Trump used the attack to renew a push for his hard-line policies. David Nakamura and Ed O’Keefe: “The president said he would move to eliminate a popular “diversity lottery” for foreigners seeking U.S. visas and direct the State Department to ramp up “extreme vetting” of immigrants. He also suggested he would consider sending the suspect, Sayfullo Saipov, a legal permanent resident of the United States, to the U.S. military prison in Guantanamo Bay, Cuba.”
— Terror by truck. The method is now a go-to for ISIS, used seven times in Western cities over the last year. The Post: “The results of the Halloween attack underscore the reasons for its popularity, terrorism experts say: The tactic requires no special skill or instruction, or formal membership in a terrorist group. And it is nearly impossible to prevent or stop.” … Neighbors say they saw Saipov practice driving a truck around his suburban New Jersey neighborhood in recent weeks.
Jerome Powell. (Zach Gibson / Bloomberg)
— Powell gets the rose. The announcement is coming today. WSJ offers some historical perspective: “Mr. Powell’s nomination would mark the first time in nearly four decades that a new president hasn’t asked the serving Fed leader to stay on for another term, even though that person was nominated by a president of a different party. The last time a first-term president didn’t do that was in 1978, when President Jimmy Carter chose G. William Miller to succeed Arthur Burns… Reached by phone Wednesday, both Mr. Powell and Ms. Yellen declined to comment. A Fed spokeswoman also declined to comment.”
— Investors cheer continuity. Bloomberg’s Sarah Ponczek and Elena Popina: “Investors enjoying the fruits of a decade-long bull market in equities expect to find an ally in Jerome Powell… Barring the reappointment of Yellen, Powell was viewed as one of the best options for bulls, an extension of the dovish policies that helped the S&P 500 rise 45 percent during her tenure… Equities have been on an upswing since Bloomberg News reported Trump was leaning toward Powell on Friday, with the biggest exchange-traded fund rising three of four days. S&P 500 Index futures were little changed late Wednesday after the Wall Street Journal earlier reported that Trump intends to nominate the 64-year-old Fed governor on Thursday. The dollar and Treasuries showed little reaction.”
— Fed leaves rates alone. In the shadow of Thursday’s big announcement, the central bank on Wednesday left interest rates unchanged. WSJ’s David Harrison: “Officials have penciled in one more move for 2017 if the economy stays on track. The Fed has one more meeting scheduled before the end of the year, on Dec. 12-13. The central bank has raised its benchmark federal-funds rate four times since late 2015, in quarter-percentage-point steps, to a current range between 1% and 1.25%.”
The former Goldman Sachs president, now Trump’s top economic adviser, was a front-runner for the Fed job until August, when he publicly broke with the president over his handling of fatal neo-Nazi violence in Charlottesville, Virginia.
Goldman Sachs economists on Wednesday upgraded their forecast on U.S. nonfarm payrolls for October to a 340,000 increase from a 325,000 gain, based on the latest data on company hiring from ADP and factory activity from the Institute for Supply Management.
MONEY ON THE HILL
House Ways and Means Committee Chairman Kevin Brady (R-Tex.). (Alex Wong/Getty)
— Today’s remainning schedule for the tax bill. Courtesy of Speaker Paul Ryan’s (R-Wis.) press office:
- 1:30 pm: Speaker Ryan/Ways and Means members meet with President Trump at the White House.
- 2:30 pm: Speaker Ryan interview with Fox News’ The Daily Briefing with Dana Perino airs.
— More GOP infighting ahead. Bloomberg’s Anna Edgerton: “A leading House Republican conservative warned that the unveiling of the tax bill Thursday would unleash dissent ‘like you’ve never seen.’ But that doesn’t mean Republicans will fail, said Representative Mark Meadows, chairman of the House Freedom Caucus. ‘It may be a little messy, it may not be as fun as we would all have liked to have seen it be over the past few weeks,’ Meadows told reporters Wednesday after meeting with Senate Majority Leader Mitch McConnell. ‘But we’re going to get it done, and failure is not an option.'”
— Trump throws a curveball. Damian: “Trump on Wednesday said congressional Republicans should make a major change to their upcoming tax cut bill by including changes to the Affordable Care Act, an idea that has divided the GOP for months. The idea had already been rejected one day earlier by… Brady, who had said it risked bogging down the process. But Trump, in two Twitter posts Wednesday, pushed the idea, which has gained currency with some Senate Republicans. The biggest proponent of the idea is Sen. Tom Cotton (R-Ark.).”
Wouldn’t it be great to Repeal the very unfair and unpopular Individual Mandate in ObamaCare and use those savings for further Tax Cuts…..
— Donald J. Trump (@realDonaldTrump) November 1, 2017
….for the Middle Class. The House and Senate should consider ASAP as the process of final approval moves along. Push Biggest Tax Cuts EVER
— Donald J. Trump (@realDonaldTrump) November 1, 2017
— Mnuchin resists corporate fade-in. Bloomberg’s Saleha Mohsin and Jennifer Jacobs: “Treasury Secretary Steven Mnuchin is resisting a gradual phase in of the proposed 20 percent corporate rate out of concern the move wouldn’t boost economic growth as much as he’s anticipated, according to a Trump administration official and another person familiar with Mnuchin’s thinking. Mnuchin is worried that a slow reduction of the corporate rate from its current 35 percent would also make the U.S. less competitive, as other countries cut their rates faster and foreigners delay their investments in the U.S., said the official, who asked not to be named because the discussions are private.”
He’s got history on his side, a new analysis suggests. “Ladling out corporate tax cuts bit by bit is a bad idea. Look at history,” Bloomberg’s Sarah Ponczek writes. “So goes an argument being pushed by analysts at Strategas Research Partners, who say Presidents Ronald Reagan and George W. Bush came to regret their gradualist approaches in 1981 and 2001. ‘Phasing in the corporate tax rate cut for five years is a terrible idea,’ the analysts, led by Daniel Clifton, head of policy research at Strategas, wrote in a note Tuesday. ‘Taxpayers will delay their economic activity in anticipation of the lower tax rate in future years.'”
— Colleges, charities on Senate menu. Politico’s Brian Faler: “Universities, charities, life insurance companies and others could all lose cherished tax breaks under a Senate plan to rewrite the tax code. Senate Republicans are considering a number of sure-to-be controversial changes, including imposing a new 2 percent excise tax on the endowment earnings of private universities, according to a summary POLITICO obtained.
They may reduce the tax breaks people receive for fringe benefits at work, such as a deductions for entertainment- and transportation-related expenses. Another proposal, apparently aimed at Silicon Valley firms, would limit write-offs businesses can take for providing meals to employees. Uber drivers, people who rent their homes through Airbnb and others participating in the ‘gig economy’ could see tougher income reporting requirements that make it harder for them to avoid paying taxes. Insurance companies could lose a host of tax breaks worth more than $31 billion.”
— WH blasé about delay. Politico’s Nancy Cook reports that the administration was okay with the fact that House Republicans missed their initial target of a Wednesday rollout, “provided it doesn’t extend into the weekend, according to three senior administration officials—and Trump even told Ryan he’d be fine if it takes until Friday, said two people briefed on their conversation.”
But Trump wouldn’t be accepting responsibility if another of his priorities goes down. Here he was Wednesday making clear he will blame Treasury Secretary Steven Mnuchin and National Economic Council Director Gary Cohn if the tax overhaul fails:
— Cut, cut, cut. ABC News: “Ryan’s office initially asked the White House for input because of the president’s knack for branding, according to a senior Hill aide. Trump has been insistent that the bill be called the ‘Cut Cut Cut Act’ according to the administration officials. Ryan and Brady have pushed back on the name of the bill. However, Trump has held firm.”
— A new $100 million force. Politico’s Alex Isenstadt: “Trump’s super PAC is drawing up plans to spend $100 million on an all-out push to sell tax reform and elect pro-Trump Republicans in 2018. The group, dubbed America First Action, is expected to host a fundraiser in the coming months that will be attended by Vice President Mike Pence and is in talks with the administration to get Trump to headline an event. It has tapped oil and gas mogul Harold Hamm, a Trump ally whose net worth exceeds $11 billion, to boost its fundraising campaign. And it is recruiting major Republican Party donors across the country.
Last week, America First officials met with top Trump advisers at the White House to brief them on a multimillion dollar campaign to promote tax reform and discuss how the legislative battle is likely to play out. But the stepped-up activity, which strategists revealed in interviews for the first time, is an abrupt change for the super PAC. The group has been dormant for much of the year, much to the frustration of the White House. America First has suffered from infighting, leadership shake-ups, and questions over its strategy and approach since its founding after the 2016 election.”
Former Rep. Scott Garrett (R-N.J.). (AP /Manuel Balce Ceneta)
— Garrett’s rough day. WSJ’s Andrew Ackerman: “Trump’s choice to head the Export-Import Bank didn’t appear to sway waffling Republican senators on a key panel into supporting him, putting his confirmation at risk. Lawmakers from both parties criticized Scott Garrett during a Senate Banking Committee hearing on Wednesday, saying his past votes to shut down the bank while serving in the House made him unsuitable to run the agency.
Mr. Garrett reversed his prior opposition to the agency in testimony before the committee, pledging to keep the bank ‘fully functioning.’ But lawmakers indicated they weren’t satisfied by his remarks. No Democrats on the committee are expected to back Mr. Garrett, meaning attracting enough Republican support is crucial to getting his nomination through the panel and advancing it to the full Senate. Industry groups that benefit from the Ex-Im Bank, which provides financing for U.S. exports, are pressuring lawmakers to oppose Mr. Garrett.
‘What would have made you change your mind about whether or not the Export-Import Bank should exist?’ asked Sen. Mike Rounds (R., S.D.) who said he had met with Mr. Garrett twice and hadn’t received a satisfactory answer. ‘This is critical, that you be able to share what has changed your mind.’… Mr. Scott bantered with Mr. Garrett during the hearing but later told reporters he was still undecided.”
President Trump. (Jabin Botsford/The Washington Post)
— Trump isn’t angry. He says so himself. The NYT’s Maggie Haberman and Peter Baker: “Trump projected an air of calm on Wednesday after charges against his former campaign chief and a foreign policy aide roiled Washington, insisting to The New York Times that he was not ‘angry at anybody’ and that investigations into his campaign’s links to Russia had not come near him personally. ‘I’m not under investigation, as you know,’ Mr. Trump said in a brief telephone call late Wednesday afternoon. Pointing to the indictment of his former campaign chief, Paul Manafort, the president said, ‘And even if you look at that, there’s not even a mention of Trump in there.’ ‘It has nothing to do with us,’ Mr. Trump said. He also pushed back against a report published Monday night by The Washington Post, which the president said described him as ‘angry at everybody.’ ‘I’m actually not angry at anybody,’ Mr. Trump told The Times.”
— He might be a little bit angry. Vanity Fair’s Gabriel Sherman: “Trump… has reacted to the deteriorating situation by lashing out on Twitter and venting in private to friends. He’s frustrated that the investigation seems to have no end in sight. ‘Trump wants to be critical of Mueller,’ one person who’s been briefed on Trump’s thinking says. ‘He thinks it’s unfair criticism. Clinton hasn’t gotten anything like this. And what about Tony Podesta? Trump is like, When is that going to end?’
According to two sources, Trump has complained to advisers about his legal team for letting the Mueller probe progress this far. Speaking to Steve Bannon on Tuesday, Trump blamed Jared Kushner for his role in decisions, specifically the firings of Mike Flynn and James Comey, that led to Mueller’s appointment, according to a source briefed on the call.
When Roger Stone recently told Trump that Kushner was giving him bad political advice, Trump agreed, according to someone familiar with the conversation. ‘Jared is the worst political adviser in the White House in modern history,’ Nunberg said. ‘I’m only saying publicly what everyone says behind the scenes at Fox News, in conservative media, and the Senate and Congress.'”
— Tech giants face more Hill heat. The Post: “Senators from both parties took tech company officials to task in a hearing Wednesday for failing to better identify, defuse and investigate Russia’s campaign to manipulate American voters over social media during the 2016 presidential campaign. In the second of three Capitol Hill hearings this week on Russian’s online information operation, members of the Senate intelligence committee challenged Facebook, Google and Twitter in strikingly direct terms that, at times, seemed to carry the implicit threat of legislation that could rein in the nation’s wildly profitable technology industry.
‘I don’t think you get it,’ said Sen. Dianne Feinstein (D-Calif.), whose home state includes all three companies. ‘What we’re talking about is a cataclysmic change. What we’re talking about is the beginning of cyber-warfare. What we’re talking about is a major foreign power with sophistication and ability to involve themselves in a presidential election and sow conflict and discontent all over this country. We are not going to go away gentlemen. And this is a very big deal.'”
Watch the summary of tech companies’ Senate Intelligence testimony, in three minutes:
One message senators delivered repeatedly to the lawyers sent to represent the companies: Next time, bring your CEOs.
The day wasn’t all bad for Facebook, at least. The company posted a 79 percent surge in profit to $4.7 billion, beating Wall Street expectations.
The Securities and Exchange Commission took a first step on Wednesday to head off the recent trend of celebrities endorsing new virtual currencies, warning that they could be breaking laws.
Here’s an example of what Russian Facebook ads you might have seen if you were a Hillary Clinton supporter. The Post’s Dan Keating, Kevin Schaul and Leslie Shapiro take a look at a few other examples of how people were targeted on Facebook based on interests, political leanings, location, age and other traits.
POST PROGRAMMING ALERT: The Post and Live Nation will bring the “Can He Do That?” podcast to a live audience at the Warner Theatre on Tuesday, Nov. 7. In this live taping, political reporters Bob Woodward, David Fahrenthold and Karen Tumulty will join host Allison Michaels to review the past year in President Trump’s White House and the biggest moments that made people wonder “Can He Do That?” Tickets can be purchased now at Live Nation. Attendees will also receive a free 30-day digital subscription to The Washington Post.
The Heritage Foundation holds an event on reforming the Financial Industry Regulatory Authority on Friday.
The House Financial Services Subcommittee on Capital Markets, Securities and Investment holds a hearing on “Legislative Proposals to Improve Small Businesses’ and Communities’ Access to Capital” on Friday.
The Washington Examiner holds an event on the tax bill with House Speaker Paul D. Ryan (R-Wis.) on Nov. 8.
From the New Yorker:
Here are the ads that Russian-linked groups posted on social media:
Donald Trump Jr.’s Halloween socialism lesson, according to the Internet:
Hillary Clinton chats with Trevor Noah on The Daily Show:
Samantha Bee says chief of staff John Kelly is not the adult in the White House:
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