Posts Tagged ‘House Republicans’

House Republicans Plan Legislative Hearings As First Step to Fight Opioid Crisis

February 20, 2018

Bills to be considered will focus on law enforcement, public health and prevention, and insurance coverage issues

Rep. Greg Walden (R-Ore.) questions witnesses during a House Energy and Commerce Committee hearing, concerning federal efforts to combat the opioid crisis last year.
Rep. Greg Walden (R-Ore.) questions witnesses during a House Energy and Commerce Committee hearing, concerning federal efforts to combat the opioid crisis last year. PHOTO: DREW ANGERER/GETTY IMAGES

House Republicans will begin a series of legislative hearings next week as the first step in an effort to pass bipartisan bills tackling the opioid crisis.

The plan from the House Energy and Commerce Committee, which will hold the first hearing on Feb. 28, will likely require additional funding from Congress, lawmakers said. Bills to be considered will focus on law enforcement, public health and prevention, and insurance coverage issues.

“It’s my top priority as chairman of the committee to get rid of this deadly epidemic,” committee Chairman Rep. Greg Walden (R., Ore.) said in an interview. “There’s going to be money—more money than has ever been spent.”

Two additional hearings will be held in March as lawmakers seek to push a measure through the House by the end of May. Republican committee leaders are already talking with Democrats and the Trump administration about the initiative and have received a positive response, Mr. Walden said.

Addiction experts are in wide agreement on the most effective way to help opioid addicts: Medication-assisted treatment. But most inpatient rehab facilities in the U.S. don’t offer this option. WSJ’s Jason Bellini reports on why the medication option is controversial, and in many places, hard to come by. Image: Ryno Eksteen and Thomas Williams

House Speaker Paul Ryan (R., Wis.) has agreed to bring proposals to the floor, Republican staffers said.

The legislative drive could get significant attention in coming months because Congress and the administration have faced criticism for not providing a comprehensive strategy, or enough money, to tackle opioids.

While lawmakers of both parties agree that opioid addiction is a crisis, ongoing disputes over the right approach could hamper the GOP push.

Democrats and some public health experts criticized President Donald Trump’s declaration in October that opioid epidemic is a “public health emergency” because it wasn’t accompanied by additional funding.

Some health care activists say the drug industry, which contributes heavily to lawmakers’ campaigns, has prevented Congress from doing more. And conservatives complain that Democrats haven’t proposed a way to pay for proposals that would spend billions of dollars to fight the opioid crisis.

Republicans hope new sources of funding will ease the path for their efforts. A bipartisan budget deal that passed this month would direct $6 billion over two years for opioid abuse treatment and mental health, although public health experts have said the amount falls short of what’s needed to address the problem.

Republicans have also said there is likely to be more money for the epidemic through the legislative process.

Energy and Commerce Committee members are working with the Department Health and Human Services, including such units as the Food and Drug Administration and the National Institutes of Health.

“There’s no silver bullet,” said Rep. Gregg Harper (R., Miss.), chair of the House Administration Committee. “This is really a multiyear, multi-Congress review and attack. There is a desire to help people. This is not a bipartisan issue—it’s a nonpartisan issue.”

The first hearing will examine law enforcement, including a bill from Rep. John Katko (R., N.Y.) would make it easier for certain offshoots of synthetic drugs to be categorized as controlled substances. The legislation has been opposed by civil rights groups that say it would result in overly harsh minimum prison sentences.

The committee will also consider a bill from Reps. Tim Walberg (R., Mich.) and Debbie Dingell (D., Mich.) that ensures doctors can get details of a patient’s past substance abuse history if consent is given.

Other possible bills could allow in-home hospice providers to destroy leftover opioids after a patient’s death. There may also be legislation that would lead to increased use of prescription drug monitoring programs and make it easier for states to share data on opioid use and overdose fatalities, congressional staffers said.

“We’ll start off with bills mostly on enforcement,” Rep. Michael Burgess (R., Texas) said in an interview. He added that legislation must ensure rural counties have the tools and information they need to combat the crisis.

At the same time, the committee will continue pursuing investigations into wholesale distributors who have provided oxycodone and other opioid pills in significant amounts, especially in rural areas, that can wind up on the black market. A hearing the week of March 19 will take place before the subcommittee on Oversight and Investigations.

In January, a bipartisan Heroin Task Force in Congress, comprised of about 100 lawmakers, released a broad legislative agenda for the year. The committee’s work will likely have some areas of overlap with that group.

Still, there is no guarantee the legislative push will go smoothly, since the parties disagree sharply on certain opioid-related matters.

Democrats have called for further expansions of Medicaid to provide treatment, for example, while some Republicans say Medicaid has fueled the crisis by providing coverage for opioids.

Write to Stephanie Armour at and Kristina Peterson at


House GOP Plans Spending Vote to Fund Military

February 6, 2018

Bill meant to extend government funding and avert shutdown is unlikely to pass the Senate; Democrats press for an equal increase for domestic programs

Image result for Carlos Curbelo, photos

WASHINGTON—House GOP leaders on Tuesday are expected to bring up for a vote legislation that would fund the Defense Department for the rest of the fiscal year, but keep the rest of the government running only through March 23, setting up a showdown with the Senate.

With the government’s current funding set to expire at 12:01 a.m. Friday, House Republicans are preparing to approve a bill that stands little chance of passing the Senate.

But House GOP lawmakers said Monday night their strategy was the only way they could secure enough votes to pass another short-term spending bill now—and that they expect the bill to change later in the week.

“Everyone understands that this will probably end up being a ping-pong situation” where a bill is bounced between the House and Senate,” Rep. Carlos Curbelo (R., Fla.) said Monday night as he left the House GOP’s closed-doors meeting. “And we’ll see where the ball lands.”

The House bill would fund the government through March 23, boost spending for the Defense Department for the full fiscal year, which goes through September, and fund community health centers for two years, lawmakers said.

Adding the extra defense money helped win over conservative House Republicans, whose votes will be needed. Most House Democrats are expected to oppose the short-term spending bill until a fight over immigration has been resolved.

“We’re in good shape to be able to pass it with Republican-only votes,” Rep. Mark Meadows (R., N.C.), chairman of the conservative House Freedom Caucus, told reporters Monday night.

Image result for mark meadows, photos

Rep. Mark Meadows (R., N.C.)

Senate Democrats support lifting military spending above limits established in the 2011 debt-limit fight, but they have pushed to secure an equal increase in spending for domestic programs in continuing negotiations over a two-year budget deal.

Senate Minority Leader Chuck Schumer (D, N.Y.) said earlier Monday that Democrats wouldn’t support a stopgap spending bill that only provides long-term funding for the military.

Sending a bill to the Senate “that just funded defense and cut programs crucial to the middle class, would be barreling headfirst into a dead end,” Mr. Schumer said on the Senate floor, warning that it could “jeopardize the positive discussions going on right now about the budget, immigration, disaster aid and more.”

Few lawmakers expect this week’s spending fight to culminate in a repeat of last month’s three-day partial government shutdown. But the week’s trajectory remains uncertain, largely because congressional leaders appear to be closing in on a long-term budget deal that has eluded them for months.

“Serious, bipartisan negotiations continue on long-term spending levels, along with other important issues,” Senate Majority Leader Mitch McConnell (R., Ky.) said on the Senate floor Monday. “I am optimistic these talks will bear fruit.”

If congressional leaders do reach an agreement this week to lift both military and domestic spending for two years, that could ease the concerns of many Republicans who want to provide more stable funding to the Defense Department.

And some Senate Democrats, many of whom had hoped to use their leverage on spending bills to secure an agreement on immigration, are starting to view the two issues as separate. As part of the agreement to reopen the government last month, Mr. McConnell agreed to bring an immigration bill to the Senate floor under a process that would be fair and neutral to both parties.

“I’m open to taking a look at a budget deal on its own,” Sen. Chris Murphy (D., Conn.) said Monday.

Lawmakers are negotiating in both chambers over how to address the fate of Dreamers, undocumented immigrants who were brought to the U.S. at a young age. President Donald Trump in September ended the Obama-era program shielding them from deportation, but gave Congress until March 5 to pass a replacement.

It isn’t clear how many House Democrats would support a spending agreement if Congress hasn’t yet passed any legal protections for the Dreamers, which many have said must be done first.

And conservatives are likely to balk at a budget deal that would significantly raise federal spending levels, though Mr. Meadows said it would depend on the specifics.

“If you plus up the size of government substantially, it certainly loses some conservative support,” he said.

If a two-year budget agreement isn’t reached this week, the Senate could vote to strip out the additional defense funding and return the bill back to the House.

The chamber is expected to adjourn for the House Democrats’ annual policy retreat on Wednesday afternoon, but lawmakers said they would expect to remain in town or return to Washington should they need to vote again on a modified spending bill to avoid another shutdown.

Write to Kristina Peterson at

GOP closer to big win with House tax vote; Senate unclear

November 17, 2017

The Associated Press

WASHINGTON (AP) — Republicans have stretched closer to delivering the first big legislative victory for President Donald Trump and their party, whisking a $1.5 trillion overhaul of business and personal income taxes through the House. Thorny problems await in the Senate, though.

The House passage of the bill Thursday on a mostly party-line 227-205 vote also brought nearer the biggest revamp of the U.S. tax system in three decades.

But in the Senate, a similar measure received a politically awkward verdict from nonpartisan congressional analysts showing it would eventually produce higher taxes for low- and middle-income earners but deliver deep reductions for those better off.

The Senate bill was approved late Thursday by the Finance Committee and sent to the full Senate on a party-line 14-12 vote. Like the House measure, it would slash the corporate tax rate and reduce personal income tax rates for many.

But it adds a key feature not in the House version: repeal of the Affordable Care Act’s requirement that everyone in the U.S. have health insurance. Elimination of the so-called individual mandate under the Obama health care law would add an estimated $338 billion in revenue over 10 years that the Senate tax-writers used for additional tax cuts.

U.S. President Donald Trump has emerged from a meeting with House Republicans on Capitol Hill, telling reporters on his way out, “the tax is going very well.” (Nov. 16)

The nonpartisan Congressional Budget Office has projected that repeal of the mandate would result in 13 million more uninsured people by 2027, making it a political risk for some lawmakers.

The Senate panel’s vote came at the end of four days of often fierce partisan debate. It turned angrily personal for Chairman Sen. Orrin Hatch, R-Utah, as he railed against Democrats’ accusations that the legislation was crafted to favor big corporations and the wealthy.

“I come from the poor people. And I’ve been working my whole stinking career for people who don’t have a chance,” Hatch insisted.

After the panel’s approval, Senate Majority Leader Mitch McConnell declared, “For the millions of hard-working Americans who need more money in their pockets and the chance of a better future, help is on the way.”

The analysts’ problematic projections for the Senate bill came a day after Wisconsin Sen. Ron Johnson became the first GOP senator to state opposition to the measure, saying it didn’t cut taxes enough for millions of partnerships and corporations. With at least five other Republican senators yet to declare support, the bill’s fate is far from certain in a chamber the GOP controls by just 52-48.

Even so, Republicans are hoping to send a compromise bill for Trump to sign by Christmas.

“Now the ball is in the Senate’s court,” Vice President Mike Pence said after the House vote. Speaking at a conservative Tax Foundation dinner in Washington, Pence said, “The next few weeks are going to be vitally important and they’re going to be a challenge.”

“We’re going to get it done” before year’s end, he said.

A White House statement that “now is the time to deliver” also underscored the GOP’s effort to maintain momentum and outrace critics. Those include the AARP lobby for older people, major medical organizations, realtors — and, in all likelihood, every Senate Democrat.

Despite controlling both chambers of Congress and the White House, the Republicans are still smarting from this summer’s crash of their effort to dismantle President Barack Obama’s health care law. They see a successful tax effort as the best way to avert major losses in next year’s congressional elections. House Republicans concede they are watching the Senate warily.

“Political survival depends on us doing this,” said Rep. Kevin Cramer, R-N.D. “One of the things that scares me a little bit is that they’re going to screw up the bill to the point we can’t pass it.”

The House plan and the Senate Finance bill would deliver the bulk of their tax reductions to businesses.

Each would cut the 35 percent corporate tax rate to 20 percent, while reducing personal rates for many taxpayers and erasing or shrinking deductions. Projected federal deficits would grow by $1.5 trillion over 10 years.

As decades of Republicans have done before them, GOP lawmakers touted their tax cuts as a boon to families across all income lines and a boost for businesses, jobs and the entire country.

“Passing this bill is the single biggest thing we can do to grow the economy, to restore opportunity and help those middle-income families who are struggling,” said House Speaker Paul Ryan of Wisconsin.

Ryan also said he’d seek to add tax breaks to help Puerto Rico recover from recent hurricanes to a House-Senate compromise.

Democrats said the tax measure would give outsized benefits to the wealthy and saddle millions of moderate-income Americans with tax increases. Among other things, the House legislation would reduce and ultimately repeal the tax Americans pay on the largest inheritances, while the Senate would limit that levy to fewer estates.

The bill is “pillaging the middle class to pad the pockets of the wealthiest and hand tax breaks to corporations shipping jobs out of America,” declared House Minority Leader Nancy Pelosi of California.

Thirteen House Republicans — all but one from high-tax California, New York and New Jersey — voted “no” because the plan would erase tax deductions for state and local income and sales taxes and limit property tax deductions to $10,000. Defectors included House Appropriations Committee Chairman Rodney Frelinghuysen, R-N.J., who said the measure would “hurt New Jersey families.”

Trump traveled to the Capitol before the vote to give House Republicans a pep talk.

Besides Johnson, Republican Sens. Susan Collins of Maine, Jeff Flake and John McCain of Arizona, Bob Corker of Tennessee and Lisa Murkowski of Alaska have yet to commit to backing the tax measure.

Congress’ Joint Committee on Taxation estimated the Senate plan would mean higher taxes beginning in 2021 for many families earning under $30,000 annually. By 2027, families making less than $75,000 would face tax boosts while those making more would enjoy cuts.

Republicans attributed the new figures to two provisions: one ending the measure’s personal tax cuts starting in 2026 and the other abolishing the “Obamacare” requirement that people buy health coverage or pay tax penalties.

Ending the personal tax cuts for individuals in 2026, derided as a gimmick by Democrats, is designed to pare the bill’s long-term costs to the Treasury. Legislation cannot boost budget deficits after 10 years if it is to qualify for Senate procedures that bar bill-killing filibusters.

Other features:

—Both chambers’ bills would nearly double the standard deduction to around $12,000 for individuals and about $24,000 for married couples and dramatically boost the current $1,000 per-child tax credit.

—Both would erase the current $4,050 personal exemption and reduce or cancel other tax breaks. The House would limit interest deductions to future home mortgages of up to $500,000, down from today’s $1 million. The Senate would end deductions for moving expenses and tax preparation.


Associated Press writers Kevin Freking, Richard Lardner and Matthew Daly contributed to this report.



House Passes GOP Bill to Overhaul Tax System

November 16, 2017

Measure would reduce corporate rate, cut individual rates for most households

WASHINGTON—The House of Representatives passed a bill that would usher in the most far-reaching overhaul of the U.S. tax system in 31 years, backing a plan that would lower the corporate tax rate to its lowest point since 1939 and cut individual taxes for most households in 2018.

The bill would repeal the alternative minimum tax, increase the child tax credit, abolish the estate tax by 2025 and transform the U.S. system for taxing multinational corporations. The plan would raise taxes on some people by removing personal exemptions.

The plan would raise taxes on some people by removing personal exemptions and deductions for state and local income taxes, medical expenses and student loan interest. On the whole, the bill would reduce federal taxes by $1.4 trillion over the next decade.

The 227-205 House vote was a victory for Speaker Paul Ryan (R., Wis.) and President Donald Trump, who rallied with Republicans in the Capitol before the vote. Republicans want to finish the new tax law before the year ends, and they are banking on it as an economic boon and the key to their political futures.

Thirteen Republicans voted against the bill; no Democrats voted for it.

“We are in a generational defining moment for our country,” Mr. Ryan said on the House floor before the vote, declaring that the bill would lead to faster economic growth and higher wages. “It is finally time that we get the general interest of this country to prevail over the special interests in Washington.”

The political imperative for the GOP, along with support from business groups and conservatives, spurred Republicans to move quickly, and Thursday’s vote came exactly two weeks after they revealed the first version of the bill.

Sen. Ron Johnson (R., Wis.) said he opposes the current tax bill, marking a setback to GOP efforts to quickly pass a bill. WSJ’s Gerald F. Seib explains where things now stand on the tax overhaul effort. Photo: Getty

But there are warning signs ahead as the focus turns to the Senate’s companion bill. Most of the House Republicans who voted no on Thursday were from New York, New Jersey and California. They opposed the new limits on the state and local tax deduction, and the Senate’s changes are even more severe, denying a $10,000 property-tax deduction that the House bill includes. That means Thursday’s margin may get even tighter if and when a final bill emerges.

The Senate’s passage of its own bill is no certainty either, as just three Republicans can block any plan. Sen. Ron Johnson (R., Wis.) already declared his opposition to the treatment of partnerships, S corporations and other so-called pass-through businesses. Sen. Susan Collins (R., Maine) has expressed concerns about the Senate GOP’s decision to pair the tax bill with a repeal of the mandate for individuals to have health insurance. And Sens. Jeff Flake (R., Ariz.) and Bob Corker (R., Tenn.) say they are worried about budget deficits.

More on Taxes

  • Many Breaks Expire Within Years
  • GOP Tax Plan: Live Coverage

For the moment, though, House Republicans were gleeful. Mr. Ryan hugged Majority Whip Steve Scalise (R. La.), who is responsible for rounding up votes, right after the totals were announced.

Democrats called the House tax plan a giveaway to wealthy business owners and warned that it would drive the country deeper into debt and serve as a prelude to future cuts in Social Security and Medicare. They highlighted what they called budget gimmicks in the bill, including the expiration of a crucial family credit in 2023 that would bring higher taxes in the future.

“They’re trying to sell a bill of goods to the middle class,” said Rep. Nancy Pelosi (D., Calif.), the House Democratic leader. “It preys on the middle class and those who aspire to it. It pillages and loots the middle class.”

The House plan would provide, on average, tax cuts for every income group in 2019, according to the nonpartisan Joint Committee on Taxation, which analyzes tax policy for Congress. About 8% of households would pay more in 2019 and that proportion would rise over time, according to JCT.

The House vote leaves Republicans exactly where they were on health policy earlier this year, with a bill passed by one chamber that won’t be accepted as written by the other.

There are some important differences between the House bill and its Senate counterpart, now headed for a floor vote after Thanksgiving. The Senate version features completely different rules on how the U.S. taxes multinational corporations and pass-through businesses.

Rep. David Schweikert (R., Ariz.) said he was “intrigued” by the Senate’s approach on international taxation.

“It might solve one or two of our issues,” he said.

The Senate proposal includes provisions that aren’t in the House bill at all, including temporary changes to alcohol taxation and a new tax credit for employers who provide family leave.

The Senate plan sets all of its individual tax cuts to expire after 2025. That helps their plan comply with a rule under the fast-track procedure they are using to pass the bill without needing Democratic votes. Under that process, the bill can’t increase budget deficits beyond 2027. The corporate tax changes would be permanent.

Senators on Thursday sparred over new analyses of who wins and loses under their plan. In 2021, because some low-income households wouldn’t purchase health insurance, they wouldn’t get subsidies in the form of tax credits. As a result, households earning between $10,000 and $30,000 would see higher tax burdens on average.

“This is absolutely not a tax increase and you guys know that,” Sen. Pat Toomey (R., Pa.) said to Democrats at a Finance Committee meeting.

And by 2027, after the individual tax cuts expire, households earning under $75,000 would have tax increases on average under the Senate plan, compared with current law, an element that has prompted fierce opposition from Democrats.

“I don’t know how anybody can go home now to the folks they represent and explain why it’s a good idea to hike taxes on parents who barely stay afloat to pay for a massive corporate handout,” said Sen. Ron Wyden (D., Ore.). “What is happening now is just shameful.”

Write to Richard Rubin at and Siobhan Hughes at


Senate GOP plan would delay corporate tax cut, protect mortgage interest deduction

November 9, 2017
The Washington Post
November 9 at 1:43 PM
Senate Republicans are forging their own path on the effort to overhaul the U.S. tax code, preparing a plan that would delay President Trump’s top business priority and blow up House Republicans’ carefully crafted compromise on state and local tax deductions.GOP Senate leaders on Thursday plan to unveil legislation that would delay cutting the corporate tax rate from 35 percent to 20 percent until 2019, four people briefed on the planning said. That’s a major departure from Trump’s insistence on immediate tax cuts that he says are necessary to spur the economy.

The one-year delay would lower the cost of the tax bill by more than $100 billion, and negotiators are trying to preserve as much revenue as they can for other changes. But it could also delay decisions by companies to move back to the United States from overseas or prompt them to hold off on other decisions as they wait for the corporate rate to fall

To try to prevent companies from waiting until 2019 to invest, Senate Republicans plan to allow companies to immediately deduct all capital investments in 2018, the people said.

Some Senate Republicans objected internally to the one year delay, but they were overruled.

From left: Republicans House Speaker Paul Ryan, Sen. Orrin Hatch and Senate Majority Leader Mitch McConnell (Melina Mara/The Washington Post) (Melina Mara/The Washington Post)

The Senate approach is much different than that of House Republicans, who are advancing a bill that would lower the corporate tax rate in 2018. But the House leaders are also having problems with the total cost of their bill, which has ballooned beyond the $1.5 trillion price ceiling needed to get the bill through the Senate.

Treasury Secretary Steven Mnuchin said in a Bloomberg interview Wednesday that the White House’s “strong preference” would be for the tax cut to go into effect next year, but the White House is not expected to threaten to block the bill over this change, those briefed on the planning said.

There are other notable differences between the Senate and House bills.

The Senate plan would keep the mortgage interest deduction largely intact, capped at the current level of $1 million, according to a Republican official who spoke on the condition of anonymity because the official was not authorized to speak publicly. In the House bill, people would only be allowed to deduct interest payments on their first $500,000 worth of home loans, a proposal that generated fierce opposition from the housing industry.

The Senate plan would also eliminate a provision that allows people to deduct state and local taxes on their federal tax returns. This change would raise around $1 trillion in revenue over 10 years and help Republicans offset other components of their tax bill, such as the lower tax rates they plan to pursue for businesses and individuals.

But it would also disproportionately affect residents of high-tax states like New York, New Jersey, California and Illinois — complicating House Republicans’ efforts to unite members behind their plan.

House tax legislation authors initially planned to entirely eliminate the state and local deduction in their tax bill, but after GOP lawmakers from such states revolted, a compromise was reached. The current House bill would now allow taxpayers to deduct up to $10,000 in property taxes but no longer allow state income tax deductions — a deal that was able to win over lawmakers from high-tax districts.

The Senate has very few GOP members from states with high state and local taxes, as such states tend to go Democratic in statewide elections.

The proposal to eliminate that deduction in the Senate bill would only apply to individuals and families, whereas businesses would still be allowed to deduct state and local taxes, as these would be protected as a business expense. Such a difference could further inflame Democrats, who have criticized the GOP tax cut effort as offering too many benefits for companies and stripping benefits away from individuals and families.

Among other differences, the Senate bill will retain seven income brackets for families, while the House bill proposes collapsing the existing seven brackets down to four.

The Senate bill would also continue allowing people to claim a tax credit for adopting children, to deduct payments on student loan interest and to deduct some medical expenses — a provision dropped from the House plan that could lead to significantly higher taxes for many households, particularly for the elderly.

The new Senate measure brings the broad GOP tax cut effort into sharper focus. Republicans are trying to rush a tax bill into law with little debate because they want to prove to voters they can deliver on major campaign promises before the end of the year.

They have also said a giant tax cut bill will spur more economic growth, add jobs and boost wages.

But the proposed tax plans would also slash a number of tax breaks used by families and businesses and — according to numerous estimates — add at least $1.5 trillion to the federal debt, which could create a drag on economic growth.

The House bill would immediately cut the corporate tax rate to 20 percent, offer families a five-year “flexibility credit” of $300 per parent, and expand the child tax credit. It would also collapse the seven income tax brackets paid by families and individuals down to four brackets, only taxing income above $1 million at the highest rate of 39.6 percent.

The House and Senate must pass matching bills before they can send the measure to President Trump to sign into law.

Republicans control 52 votes in the 100-seat Senate, meaning they can only lose two members if they want to pass a bill without Democratic support. A 50-50 tie would go to Republicans, as Vice President Pence would cast the tiebreaking vote.

It’s because of that delicate majority that many White House officials expect a tax bill — if it eventually becomes law — to more closely resemble the Senate bill. Senate Republicans will work to resolve differences among themselves in the next few weeks, but major changes made in the House could upend any agreement.

Senate lawmakers also must grapple with strict rules that regulate how a tax-cut bill is designed. To avoid a filibuster from Democrats, Republicans must write a bill that does not add more than $1.5 trillion to the debt over 10 years.

Republicans, such as Sens. Bob Corker (Tenn.), Jeff Flake (Ariz.) and James Lankford (Okla.), have said they would not support a tax plan that adds too much to the debt, creating a bloc of votes that would be able to kill the bill if they aren’t appeased.


GOP faces wrenching call: Running with or away from Trump — “Candidates will determine the outcome.”

November 9, 2017

The election outcome Tuesday exacerbated tensions within the party over how candidates should position themselves vis-à-vis the president.

Donald Trump is pictured. | Getty Images
Candidates tying themselves to President Donald Trump may do little to stem a rising tide of liberal enthusiasm. | Alex Wong/Getty Images

Sweeping losses in Tuesday’s elections have exacerbated a growing rift inside the GOP over whether the party’s candidates should embrace President Donald Trump in next year’s midterms — or make a clean break.

With Trump’s approval ratings cratering in swing states across the country, some senior party strategists are imploring lawmakers to abandon the president. Others argue that shunning Trump and his populist base is simply out of the question and that anything other than a full embrace of the president would spell electoral disaster.

In the Virginia gubernatorial race, Republican Ed Gillespie tried to have it both ways — with disastrous consequences. Gillespie, who privately agonized about the degree to which Trump should be involved in the contest, refused to campaign with the president. But at the same time, he trumpeted Trump’s culture war issues in ads.

White House advisers spent Wednesday combing through the election results and fuming about Gillespie’s have-it-both-ways approach. By keeping Trump at arm’s length, they said, Gillespie squandered an opportunity to motivate conservatives whose support he needed.

“He wouldn’t embrace the president, so the base that came out to vote for the president and that voted for me, didn’t come out,” said Prince William County Board of Supervisors Chairman Corey Stewart, a Trump campaign official who nearly defeated Gillespie in the June GOP primary. “The Trump-Stewart base just didn’t turn out.”

Others, however, said Gillespie — an establishment-minded former Beltway lobbyist who never felt entirely at ease highlighting populist issues — went too far in aligning himself with the president. By vowing to preserve the state’s Confederate monuments and to combat MS-13 gang violence, they argued, the candidate fired up Democrats in the state’s population centers and liberal northern suburbs.

“Be yourself and run your own campaign,” said GOP strategist John Weaver, a veteran of presidential campaigns. “Don’t embrace this nationalist approach.”

Trump, he added, “is a tremendous drag in a general election.”

Republicans running down-ballot have long grappled with how to deal with the president. But as Trump’s poll numbers wane and the midterm season grows closer, the debate has taken on greater urgency. While the president’s approval ratings have plummeted in moderate and liberal areas, his core base of supporters has remained steadfast.

The dilemma is expected to be a major topic of discussion next week at the Republican Governors Association annual meeting in Austin, Texas. And top House GOP campaign strategists, trying to preserve their now-tenuous majority, said they wanted to look more deeply into the Virginia results before drawing conclusions.

“It’s quite a predicament,” said Tony Fabrizio, a longtime GOP pollster who worked on the Trump campaign.

“You can’t be the anti-Trump guy in the primary. But you don’t want to be the 100-percent-for-Trump guy in the general,” he added. “When you go to one extreme or the other, that’s when you fall short.”

Gillespie spent months trying to perform a balancing act. He emerged from the June primary deeply frustrated, after Trump supporters nearly powered Stewart to an upset victory. Gillespie vented about his political operation and even considered a staff shakeup. The former national party chairman sketched out several possible paths forward, including a full-on embrace of the president.

But Gillespie — who in 2006 penned an op-ed in which he warned the GOP against becoming an “anti-immigration party” — never felt truly comfortable running under the Trump banner, people close to the campaign said. So he adopted a moderated approach, airing commercials that spotlighted Trump-centric issues like MS-13 and the Confederate monuments, while avoiding attaching himself to the president personally.

Gillespie’s team deliberated extensively about whether to bring in Trump for a campaign event in conservative southwest Virginia. The candidate ended up having Vice President Mike Pence hold a campaign rally and fundraiser for him. Gillespie never made a hard ask for the commander in chief.

In the end, Gillespie released about $500,000 worth of mailers highlighting the president’s endorsement of him. Trump also sent a batch of tweets highlighting his support. On Monday evening and then on Election Day, Trump released a robocall bashing Democratic candidate Ralph Northam. One wave of the calls was directed to southwestern Virginia.

White House officials were dismayed by Gillespie’s approach, convinced that he ultimately got the worst of both worlds — ginning up liberal turnout without ever fully motivating Trump’s core supporters.

“GOP candidates cannot keep Trump at arm’s length right up until the end and then expect to energize the base,” said conservative radio show host Laura Ingraham, an outspoken Trump backer. “It seems inauthentic because it is.”

Stewart, for his part, said he reached out to Gillespie multiple times after the primary in hopes of persuading him to run a more pro-Trump campaign. But he said Gillespie never expressed much interest.

Tying oneself to Trump, however, may do little to stem a rising tide of liberal enthusiasm. As they pored over voter figures on Wednesday, Gillespie’s strategists conceded they had been caught off guard by the wave of Democratic turnout.

“If you’re in a district or state with a high percentage of college-educated white voters, you should be quaking in your boots right now,” said Phil Cox, a Gillespie adviser and former executive director of the Republican Governors Association.

He noted that Democrats far outperformed turnout expectations in an off-year election.

As to the difficult question of whether Republicans should align themselves with the president, “There will be a political market test,” Cox said. “Candidates will determine the outcome.”


Five Big Sticking Points in the Republican Tax Plan — Handful of House Republicans already declared opposition

November 3, 2017


By Anna Edgerton, Erik Wasson, Sahil Kapu, and Laura Davison

 Updated on 
  • A handful of House Republicans already declared opposition
  • Other quiet whispers of concern question pass-through rules
GOP Faces Disappointment, Deadline on Tax Plan

After a display of unity for the unveiling of an ambitious plan to slash individual and corporate taxes, some House Republicans began late Thursday to pick out the parts of the tax legislation they don’t like.

The ink was barely dry on the first draft when at least four Republicans declared they would vote against the bill in its current form. While the early opponents represent high-tax states that would get slammed by the plan’s elimination of state and local income-tax deductions, several other areas began to emerge as points of contention as Republicans sifted through the 429-page bill.

“I’m trying to get my arms around it,” Mark Sanford, a Republican from South Carolina, said Thursday night. He smiled and didn’t respond when asked if he would vote for it.

The House GOP leadership team asked members over a barbecue dinner Thursday to understand the whole package before passing judgment. They promised a tax calculator that Republican lawmakers could use to show their constituents exactly how much they would save under the new system.

“It is not about individual provisions. It is about modeling how it all fits together and explaining how the package works for their districts,” Representative Patrick McHenry, the deputy GOP vote-counter from North Carolina, said on his way into Thursday night’s meeting.

That logic seems to be working with some members, even those who regularly defy party leadership like Dave Brat of Virginia. He heralded the tax plan as pro-growth and said as it’s written now, “leadership did a great job with this thing.” He said he plans to vote for it.

‘Lobbyists Are Storming’

President Donald Trump had his own warning for House Republicans Thursday night, tweeting, “The lobbyists are storming Capital Hill, but the Republicans will hold strong and do what is right for America!”

The draft bill presented Thursday is sure to look quite different as it goes through the legislative process. Ways and Means Chairman Kevin Brady offered technical revisions Friday and said in a statement that he’ll propose substantive changes when the committee begins considering it Monday.

It’s unclear how long it will take the committee to approve the bill; markups can last for hours or days, as panel members debate and vote on amendments. Then the measure would be sent to the House floor, where it could undergo additional changes. Republicans have said they hope to pass the bill in the House before Thanksgiving.

Republican Representative Mike Bishop of Michigan said he anticipates numerous amendments will be added to the bill as the committee does its work. “We don’t want to be resistant to good ideas,” he said.

But any changes could open the floodgates to others, and even slight tweaks could add to the legislation’s deficit-busting math.

Here are five of the biggest early sticking points.

State and Local Taxes

The provision to scrap most deductions for state and local taxes has been the most fiercely contested so far. That’s especially true of House Republicans from New York and New Jersey, where such taxes are among the highest. The bill drafters offered a compromise by keeping the deduction for property taxes, though it would be capped at $10,000.

“There is much to like in the legislation but the proposed cap on deductibility of state and local taxes makes the bill unacceptable at this time,” said Representative Leonard Lance. “Eliminating or rolling back state and local tax deductibility will hurt New Jersey’s hard-working middle-class families and our state economy.”

Other Republicans saying they’ll vote against a bill that eliminates SALT deductions include Representatives Peter King of New York, Lee Zeldin of New York and Frank LoBiondo of New Jersey. But New York Republican Chris Collins said he’s satisfied with the compromise and will “enthusiastically” support the bill.

Given that Republicans can only lose only 22 votes and still pass the bill, holdouts in those blue-state delegations may need to be appeased if implacable opposition mounts in other factions of the party. But the provision is one of the GOP’s most significant revenue raisers to balance its proposed cuts, and removing it could make the legislation breach the maximum $1.5 trillion threshold for raising the nation’s debt.

Mortgage Interest Deduction

The concerns of Northeastern Republicans are exacerbated by the GOP’s proposed cap on the home mortgage interest deduction. Taxpayers would only be allowed to deduct interest on mortgages up to $500,000 for any new primary home purchase, down from $1 million. That figure isn’t indexed to inflation.

“Nobody knew that was in there. They kept that from us and I don’t appreciate that,” New Jersey Representative Thomas MacArthur told reporters, saying that the cap is a setback for the bill. He said Friday he’s on board with the $10,000 property-tax deduction cap and is focused on raising the mortgage cap and indexing it to inflation.

The issue for some lawmakers from Southern states, where the cost of living is lower, may be the proposed elimination of the deduction for vacation homes. Mark Meadows, the head of the conservative Freedom Caucus, said that the change would affect his North Carolina district where such second homes are common. He listed that portion of the bill as a concern, but not a “red line” that would cause him to vote against it.

The bill’s potential impact on homeowners has already sparked strong outside opposition. William Brown, president of the National Association of Realtors, said in a statement that the bill “appears to confirm many of our biggest concerns.” He argued that “eliminating or nullifying the tax incentives for home ownership puts home values and middle class homeowners at risk.”

Republican Ways and Means member Mike Kelly of Pennsylvania said he expected a deal on interest deductibility benefiting car dealers to emerge during next week’s committee meeting.

Pass-Through Restrictions

Helping small businesses has been a constant theme of the Republican sales pitch for tax cuts. But there was significant concern from rank-and-file lawmakers that rules meant to limit abuse of a new 25 percent rate for companies that aren’t organized as “C” corporations could end up limiting the boon for small businesses.

The tax bill draft has two formulas available for these closely held firms, which are known as pass-throughs, as well as restrictions on what kinds of companies would qualify.

The National Federation of Independent Business said Thursday that it couldn’t support the current draft, saying its provisions wouldn’t provide enough help to small businesses. The nonpartisan Tax Foundation said the pass-through rules may not have the intended effect.

“Even with these guardrails, the provision is likely to create opportunities for tax arbitrage, and it adds complexity to the tax code,” the group said in a statement.

Republican Francis Rooney of Florida has previously expressed concern about the issue, along with Sanford and Meadows. Even Brat, who praised the overall bill, said the pass-through provision still needed some work.

“That’s my concern,” Brat said of a rule that would restrict income that can be filed at business and individual rates. “We need to make sure we fine tune that and get it right.”

Interest Deductibility

The legislation would limit the corporate interest deduction at 30 percent of a company’s earnings before interest, tax, depreciation, and amortization. That would work for a lot of businesses, Texas Representative Kenny Marchant said, but the Ways and Means Committee is looking at a carve-out for high-inventory, low-margin businesses, such as car and tractor dealers, he said.

Tom Reed, a New York Republican and member of the Ways and Means panel, acknowledged that the proposed change has caused concern.

“It’s a major expense to a lot of companies, and businesses across America,” he said. “I think what we landed on is something that’s a reasonable target.”

Senator John Thune of South Dakota, the No. 3 Republican, has said that corporate interest deductibility is important to many businesses and that’ll be a consideration for the Senate when it crafts its bill. Senate GOP opposition killed an original proposal by Speaker Paul Ryan to eliminate interest deductions entirely for the purpose of allowing full and immediate expensing, which raised hackles from debt-reliant companies.

‘Backdoor BAT’

A fight could arise over a proposed 20 percent excise tax on payments, including royalty payments, that U.S. companies make to their offshore affiliates. That provision is aimed at preventing companies from shifting their U.S. profits to offshore units in countries with lower tax rates.

Americans for Prosperity, an influential conservative group backed by billionaire industrialists Charles and David Koch, is criticizing the proposal, saying it could increase consumer prices.

AFP sought to compare the provision to the much-reviled “border adjusted tax,” or BAT, which Ryan pushed before a wave of opposition from retailers and others forced him to drop the concept last summer. AFP opposed that provision as well, saying it would raise prices.

On Thursday morning, the group was already announcing its opposition to the excise tax — and labeling it a “backdoor BAT” — before the tax bill was released.

“The concern is this becomes a consumer tax on common products,” Levi Russell, an AFP spokesman, said in an email.


Republicans Stick With Big Corporate Tax Cuts in House Bill

November 2, 2017

The Tax Cuts and Jobs Act seeks the biggest transformation of tax code in more than 30 years; leaves top individual tax rate at 39.6%

House Ways and Means Chairman Kevin Brady (R., Texas), who authored the Tax Cuts and Jobs Act, said, ‘We are following the Reagan example here.’
House Ways and Means Chairman Kevin Brady (R., Texas), who authored the Tax Cuts and Jobs Act, said, ‘We are following the Reagan example here.’ PHOTO: RON SACHS/CNP/ZUMA PRESS

WASHINGTON—House Republicans, seeking the biggest transformation of the U.S. tax code in more than 30 years, aim to permanently chop the corporate tax rate from 35% to 20%, compress the number of individual income tax brackets, and repeal the taxes paid by large estates starting in 2024, according to a detailed summary of the plan reviewed by The Wall Street Journal.

To partly offset that lost revenue, Republicans plan to curtail the deductions individuals take for state and local tax payments and the ones businesses get for the interest they pay on debt. But the plan being released Thursday morning stops short of touching other popular tax breaks that were being considered for change, such as the ability of individuals to park up to $18,000 a year in pretax funds into 401(k) savings accounts.

The plan, named the Tax Cuts and Jobs Act, calls for leaving the top individual tax rate at 39.6%, but pushing the income threshold for that rate to $1 million for married couples. The House Ways and Means Committee plans to consider the bill next week with the aim of turning it into law by Christmas and having most of it take effect in 2018.

Republicans view the tax bill as essential to their political futures and their best chance for a legislative victory in President Donald Trump’s first year in office. Mr. Trump will likely argue the bill meets many of his goals, but it still faces a challenging path to completion in a Congress contending with many competing interests.

Rates and Brackets

Republicans propose collapsing seven tax brackets into four brackets, with new rates and thresholds for where higher taxes kick in.

The tax bill, revised repeatedly in the final days before its release, already bears the marks of political compromises large and small, in addition to budgetary contortions needed to avoid creating larger and long-lasting budget deficits. For example, incentives for business investment lapse after five years and so does a new $300 per person credit for filers, their spouses and non-child dependents such as college students. Those expirations mean the tax cuts would shrink in future years unless Congress acts.

Those moves were necessary because a budget blueprint agreed upon by the Senate and the House constrains the tax overhaul to a cost of $1.5 trillion over a decade. They need to hit that target and avoid higher budget deficits beyond that to qualify for fast-track rules that could let them pass a bill without Democratic votes. But Republicans are seeking more than $5 trillion in rate cuts over a decade and need to find offsetting provisions, and critics will label some of their decisions as budgetary gimmicks. Republicans have spent months trying to solve that math problem, looking for tax breaks to repeal without disturbing the slim political coalition they need to pass a bill.

Republican leaders will now begin the hard work of selling their plan, starting with a meeting of lawmakers Thursday morning and a White House event in the afternoon. They are soliciting reaction from business groups, particularly on complicated and novel changes to the taxation of corporate foreign income and pass-through businesses such as partnerships. Those areas contain huge potential problems.

They intend to work quickly. The first crucible is in the House Ways and Means Committee, which will begin considering the plan next week. That theoretically shouldn’t be too hard, because Ways and Means Republicans have been huddling all week to hammer out the plan.

After that come the tougher challenges of cobbling together a House majority and melding this bill with a separate Senate plan scheduled for release as soon as next week. Democrats are likely to attack the plan as a budget-busting giveaway to the rich, and estimates, projections, and analyses will be debated furiously in the coming weeks.

President Donald Trump will be able to argue that the bill meets many of his tax-cutting goals.
President Donald Trump will be able to argue that the bill meets many of his tax-cutting goals. PHOTO: ALEX WONG/GETTY IMAGES

“We’ll be in listening mode all throughout the code,” said the bill’s author, Ways and Means Chairman Kevin Brady (R., Texas). “We are following the Reagan example here. Go bold. Listen. Make adjustments, but keep the process going forward.”

The plan hits many Republican goals. It nearly doubles the standard deduction, pushes people away from itemizing their deductions, lowers business tax rates, repeals the alternative minimum tax, and eliminates many tax credits, deductions, and exclusions, such as breaks for moving expenses and employee achievement awards.

Republicans used at least a few budgetary maneuvers to squeeze the plan inside its constraints. For instance, different inflation measures limit some costs. They also changed some provisions during negotiations to add revenue. A new one-time tax rate on U.S. companies’ stockpiled foreign profits will be significantly higher than in previous Republican plans, generating money to meet the $1.5 trillion target. The bill would apply a 12% tax rate to cash in foreign subsidiaries and a 5% tax rate to illiquid investments.


The bill collapses the current seven individual tax brackets into four: 12%, 25%, 35% and 39.6%. For married couples, the 25% rate starts at $90,000, the 35% rate starts at $260,000 and the top rate starts at $1 million. For individuals, those break points are $45,000, $200,000 and $500,000.

The new bottom tax rate covers more income than the current 10% and 15% brackets do, meaning lower taxes for many middle-income households. But many upper-income households could face a higher marginal tax rate under the House bill, which pushes some from a 33% bracket into 35%. Whether they see actual tax increases would depends on particulars, and full estimates aren’t available yet.


Meantime, there are political land mines scattered in the plan, some easy to see and others that businesses and advocates will likely unearth in the coming days.

For example, the proposal repeals an itemized deduction for medical expenses, a crucial provision to households with extraordinary health-care costs. It also repeals the tax credit for adoption and the deduction for student-loan interest.

The bill also limits the home mortgage-interest deduction. For new home purchases, interest would be deductible only on loans up to $500,000, down from $1 million today; existing loans would be grandfathered.

Because of the larger standard deduction, fewer people would have a tax incentive to make charitable donations. Many charity groups had pushed for a more widely available deduction, but Republicans decided not to expand the charitable deduction to people who don’t itemize their deductions.

Businesses would lose the ability to deduct certain executive compensation above $1 million, which they can now do for performance-based pay. Life insurers would lose some tax breaks. Banks with assets exceeding $50 billion would get no deduction for certain payments to the Federal Deposit Insurance Commission.

Tax-exempt bonds could no longer be used to build professional sports stadiums. Private universities with assets exceeding $100,000 a student would pay a new 1.4% excise tax on their net investment income. Businesses would no longer be able to deduct entertainment expenses, though today’s rules for business meals would remain.


One of the most closely watched areas is the taxation of pass-through businesses such as S corporations and partnerships. Republicans promised them a 25% rate, but also said they would create guardrails to prevent people from turning what would otherwise be wage income taxed at up to 39.6% into business income taxed at a lower rate.

Passive owners of pass-through businesses would get the 25% rate, but those actively involved in the business would have a different standard. The bill starts with the presumption that 70% of that pass-through income is attributable to labor and would be taxable at higher individual income-tax rates. For some that would create a blended top tax rate of about 35%, which those businesses and their influential trade groups may argue isn’t low enough.

For professional services firms, including lawyers and financial-services professionals, the default rate would be 100% labor income, meaning they would get none of the benefit of the 25% tax rate for pass-through businesses.

That proposal may add new layers of complexity to the tax code. Business aren’t bound by those default rates, and they will hire tax lawyers and accountants who will be allowed to argue to the IRS that the firms contain capital investments. That could entitle them to more income at the lower business rates.


There are big changes in store for multinational companies. U.S. companies would, generally, no longer pay taxes on their active foreign income, a move corporations and Republicans say is important in a competitive international landscape. To prevent companies from shifting profits abroad, the bill creates a new 10% tax on U.S. companies’ high-profit foreign subsidiaries, calculated on a global basis.

The plan also imposes new restrictions on foreign companies operating in the U.S. They would face a tax of up to 20% on payments they make abroad from their U.S. operations. That is designed to prevent them from loading up their U.S. operations with deductions and pushing profits to low-tax jurisdictions. Companies could lower those taxes by agreeing to have more of their operations in the U.S. tax system.

Many companies would face a new limit on their interest deductions, which would be capped at 30% of earnings before interest, taxes, depreciation and amortization, which is a measure of cash flow. Real-estate firms and small businesses would be exempt from that limit.


For individuals, one potential flashpoint is an expanded child tax credit, which isn’t as large or generous to low-income families as a version proposed by Sens. Marco Rubio (R., Fla.) and Mike Lee (R., Utah). The child credit, along with the larger 12% bracket, is crucial to limiting the number of low-income and middle-income families who see tax increases due to the bill. One reason they might see higher bills is because the bill eliminates personal exemptions, which filers can now use to reduce their tax bills.

The House bill takes the child credit from $1,000 to $1,600, below the $1,800 or $2,000 that Messrs. Rubio and Lee want. The House bill also creates a new $300 credit for each person in a filer’s family who isn’t a child, including the primary taxpayer and non-child dependents such as college students. Those $300 credits expire after 2022.


Under current law, in 2018, a married couple with two children making $60,000 would get a $13,000 standard deduction and four personal exemptions each worth $4,150. That means they would pay taxes on $30,400 of taxable income. Their base tax bill of $3,608 would be reduced by $2,000 in child tax credits for a total income tax of $1,608.

Under the House plan, the same married couple with two children would get $3,800 in tax credits, $3,200 for the two children and $600 for the two parents. The same family would get a $24,400 standard deduction but no exemptions, for $35,600 of taxable income. Their base tax bill of $4,272 would be reduced by the $3,800 in credits for a total income tax of $472.

The House bill also expands the child credit for the upper-middle class. Currently, the credit starts phasing out for individuals with incomes above $75,000 and married couples with incomes above $110,000. Under the House bill, those thresholds move up to $115,000 and $230,000.


The estate tax provisions also contain wrinkles. The estate-tax exemption, set for $5.6 million per person and $11.2 million per married couple, would double immediately. The tax would get repealed starting in 2024.

Even after repeal, heirs would continue to get something known as a “step-up in basis.” That means they would only owe capital-gains taxes on the difference between the sales price of an asset they inherit and the value of the asset at the previous owner’s death. Previous versions of estate-tax repeal had limited that benefit.

Write to Richard Rubin at


U.S. stocks on track to pull back, with tax bill on deck

U.S. stock futures inched lower on Thursday, with traders taking a cautious approach ahead of two potentially massive announcements, including Trump’s choice of Federal Reserve Chairman and the Republicans unveiling their tax bill.

U.S. stock futures inched lower Thursday, as traders took a cautious approach ahead of two closely watched events expected to finally land: Trump’s choice of Federal Reserve Chairman and the unveiling of a House Republican tax bill.

Investors were also watching the Bank of England, which is widely predicted to raise interest rates for the first time in a decade.

Tesla and Facebook are expected to be in focus after they issued earnings reports late Wednesday. After the market closes Thursday, attention should turn to earnings from tech giant Apple and coffee-chain Starbucks.

What are stock indexes doing?

Futures for the Dow Jones Industrial Average YMZ7, -0.04%  fell 14 points, or 0.1%, to 23,358, while those for the S&P 500 index ESZ7, -0.07%  gave up 1.80 points, or 0.1%, to 2,573. Futures for the Nasdaq-100 index NQZ7, -0.04%  lost 10.25 points, or 0.2%, to 6,230.25.

The S&P SPX, +0.16%  and Dow average DJIA, +0.25% hit intraday records during Wednesday’s session and ended higher, mere points shy of their all-time closing highs. The Nasdaq Composite Index COMP, -0.17%  slipped 0.2% on Wednesday on falls for biotech and large-cap tech stocks.

What’s driving the markets?

Today should see the arrival of the House Republican tax bill, which was postponed one day to Thursday to give lawmakers more time to iron out unresolved issues. Hopes for the passage of tax reforms in Washington, including corporate tax cuts, have buoyed investing in stocks.

Media reports said the Republicans were running into difficulties reaching consensus on the tax cuts and that the expected corporate tax cuts to 20% from 35% only would be temporary.

Brady says tax bill will only have TEMPORARY cut in the corp rate from 35% to 20%. Couldn’t not make permanent cut comply with Senate rules

— Damian Paletta (@damianpaletta) November 1, 2017Also in focus is the next Fed chair. President Donald Trump is expected to announce his pick later Thursday, with Fed Gov. Jerome Powell seen as the likely choice. The Wall Street Journal reported that the White House has already notified Powell that Trump intends to nominate him. That means the more hawkish John Taylor would be out of the race.

Read: What a Jerome Powell-led Fed may look like

Read: How the next Federal Reserve chair could affect you and your mortgage

Across the pond, the BOE was in the spotlight. The U.K. central bank is widely expected to raise its benchmark interest rate to 0.5% from the current record low of 0.25%, in which would be its first rate hike since July 2007.

Read: 5 things investors need to know as the Bank of England prepares for historic rate hike

What are analysts saying?

“It’s a busy old day for markets, with the GOP tax bill proposal due later, and the likely shake-up at the Federal Reserve. Jerome Powell is tipped, and that’s broadly a continuity choice, certainly not the hawkish shift that a Taylor appointment would entail. The real question is: given Donald Trump is a low interest rate guy, why not just stick with Yellen?,” said Neil Wilson, senior market analyst at ETX Capital, in a note.

“Who runs the Fed is less important than what Congress does on tax. Fed officials have yet to factor in any tax reform to their projections so any cuts will push the FOMC to be more hawkish,” he added.

“Should the [BOE] hold steady, market expectations would be disappointed, which would see the pound weaken. Key also will be the vote breakdown, the Bank’s updated inflation projections, and any signals regarding potential future hikes. These elements will provide greater context around the Bank’s decision and clues to the future direction of monetary policy,” said Alexandra Russell-Oliver, FX analyst at Caxton, in a note.

What are other markets doing?

The pound GBPUSD, -0.1887%  fluttered around $1.3250 ahead of the rate decision, compared with $1.3246 late Wednesday in New York.

Read: Here’s how a Bank of England rate hike could ‘kill’ the British pound

The dollar fell against most other currencies, with the ICE Dollar Index DXY, -0.18%  down 0.1% at 94.686 and on track to break a two-day winning run.

European markets swung between small gains and losses, while Asian markets closed mixed.

Oil CLZ7, +0.00%  and gold GCZ7, -0.01%  were both down 0.1%.

Which stocks are in focus?

Shares of Tesla Inc. TSLA, -3.15%  dropped 5.9% ahead of the open after the electric car maker late Wednesday reported a wider-than-expected loss.

Facebook Inc. FB, +1.44%  slipped 1% premarket even after earnings out late Wednesday beat forecasts. Lawmakers on Wednesday warned Facebook, Alphabet Inc.’s Google GOOG, +0.87% GOOGL, +0.92%   and Twitter Inc. TWTR, -0.05%  that they are considering tougher regulations on social-media sites over concerns of foreign intervention via their platforms.

Alphabet shares were down 0.2% before Thursday’s open, and Twitter was down 0.7%.

Qualcomm Inc. QCOM, +4.80%  lost 0.8% ahead of the open. The chip designer late Wednesday reported an 89% plunge in profits, largely due to a $778 million charge related to a fine by Taiwanese regulators and Apple Inc.’s AAPL, -1.27%  continued withholding of patent royalties on iPhones and iPads.

On Thursday, earnings from Alibaba Group Holding Ltd. BABA, +0.64%  , DowDuPont Inc. DWDP, +1.40% , Cigna Corp. CI, +0.31%   and Yum! Brands Inc. YUM, -0.19%   are expected ahead of the open. And after the market closes, Apple and Starbucks Corp. SBUX, +0.53%  are slated to report.

Read: Apple earnings: iPhone X supply is the question, but the answer may not matter

What economic data are in focus?

Weekly jobless claims are due at 8:30 a.m. Eastern Time, while productivity data and unit labor costs for the third quarter come out at the same time.


The 30 Republicans Holding Up Tax Reform

September 14, 2017

The Freedom Caucus threatens to side with Democrats and block the GOP majority.

By Karl Rove
The Wall Street Journal
Sept. 13, 2017 6:53 p.m. ET

No matter how persuasive President Trump is, it’s unlikely he can round up enough Democrats to get 60 votes in the Senate for tax reform. That means Republicans will need to use the Senate’s reconciliation process, which avoids the filibuster, to pass their plan with 51 votes. But first the House and Senate must pass a budget resolution—and soon.

A budget resolution sets spending levels and authorizes congressional committees to prepare bills fulfilling the blueprint. With the reconciliation plan in mind, this year’s resolution would set the size of the tax reform and then instruct the House Ways and Means Committee and the Senate Finance Committee to flesh out the provisions.

Gaining agreement on a budget resolution is always tough. No more than a handful of lawmakers from the opposition party ever vote for the majority’s resolution. It helps that Republicans control both the House and Senate, but the GOP must still resolve its internal philosophical disagreements.

House Republicans tend to insist on resolutions that balance the budget within 10 years. This means resolutions that pledge to slow substantially the growth of entitlement spending. Such promises are rarely fulfilled. But putting them in the budget blueprint fuels Democratic ads claiming Republicans will throw grandma off the cliff and deprive poor children of free school lunches. Knowing this, Senate Republicans tend to want resolutions that reach balance after 10 years. Another GOP tension is between defense hawks, who want increased military spending, and deficit hawks, who want all spending restrained or cut.

Then there are nerdy but important technical arguments, starting with how the resolution’s spending baseline is calculated. Beginning with a baseline of “current law” means assuming that a tax break currently authorized for only a year or two will actually expire instead of being reauthorized. But Congress renews some tax breaks annually and probably will keep doing so through the next decade. To account for this, many in the GOP want to calculate the baseline under “current policy.”

It sounds technical, but it quickly becomes political. Democrats demand “current law” because a higher baseline would make tax reform appear to raise the deficit more than it actually would. On the other hand a lower baseline would give tax reform more wiggle room: One GOP budget expert tells me that “current policy” would provide, on paper, $450 billion that could be used to lower rates and make the tax code simpler and fairer.

Dynamic scoring is another geeky fight. A tax reform that generates economic growth will offset some of the government revenue lost from cutting rates. Republicans want their bill evaluated with dynamic scoring because it takes this effect into account and makes reform more attractive. Democrats oppose it for the same reason.

Still, given time and leadership—both on Capitol Hill and from the White House—Republicans could cobble together a budget resolution setting up a strong tax reform, which in turn would juice the economy and redeem the GOP in the midterms.

The biggest obstacle is the House Freedom Caucus. This group of just over 30 Republican congressmen has already slowed up the process by threatening to vote with Democrats against the GOP budget resolution unless they can see and approve, in advance, every major provision of the tax-reform bill. The Freedom Caucus tried in late July to block the House Budget Committee’s passage of a resolution unless the border-adjustment tax was taken off the table—which it then was. Now the Freedom Caucus’s members say they’ll flake on the budget resolution if tax reform includes full, immediate expensing of business investment. But if that’s agreed to, they’ll have more demands.

These lawmakers say they want Congress to operate in “regular order,” with committees grinding away to write legislation instead of leadership handing it down. This is hypocritical bunk. What they want is for their caucus to dictate the details of tax bills to the House Ways and Means Committee, the Senate Finance Committee and the Republican majorities on both sides of Capitol Hill. Their approach is to make demands while threatening to join Nancy Pelosi in opposing the budget resolution unless they get their way.

If the Freedom Caucus acts on its threat, the budget resolution could be voted down, making tax reform impossible. No doubt, following their M.O., the group’s members would then blame the GOP leadership. Even if the resolution passes, the Freedom Caucus’s shenanigans may delay tax reform until 2018. These lawmakers are demonstrating once again that the freedom they most prize is freedom from the responsibility of governing.

Mr. Rove helped organize the political-action committee American Crossroads and is the author of “The Triumph of William McKinley ” (Simon & Schuster, 2015).

Appeared in the September 14, 2017, print edition.


CBO’s Health-Law Tally Sets Up Senate Fight — “Doing nothing is not an option.”

May 25, 2017

Congressional Budget Office’s estimate says bill would lower premiums

 No automatic alt text available.

CBO Scores House Health Bill on Pre-Existing Conditions
The Congressional Budget Office released its appraisal on Wednesday of the health overhaul bill approved by the House. What does it have to say about state waivers and how the less healthy would be affected? WSJ’s Jason Bellini has #TheShortAnswer.

The health-overhaul bill approved by House Republicans would leave 23 million more people uninsured while reducing the cumulative federal deficit by $119 billion in the next decade compared with current law, according to an estimate from the Congressional Budget Office.

The report by the nonpartisan CBO is likely to roil the current Senate talks over its version of the bill to repeal and replace former President Barack Obama’s 2010 Affordable Care Act.

The findings provide ammunition for the two competing factions that Senate Republican leaders need to pull together to pass a bill. Centrist Republicans, concerned about the number of uninsured, hope to make the House bill less far-reaching, while conservatives want to double down on measures the CBO suggests will lower premiums on average.

Percentage of U.S. residents under 65 without health insurance

Sources: U.S. Census Bureau (actual); Congressional Budget Office (projected)

The latest report doesn’t differ significantly from the CBO’s analysis of an earlier version of the House bill, which estimated 24 million fewer people would be insured through 2026 than under the current health law. Democrats said it confirmed that the GOP health push would harm millions of Americans.

Some Senate Republicans say privately that their efforts to forge an agreement that can attract at least 50 votes faces a tough road. A working group of 13 Republican senators is pushing to come up with a proposal by Congress’s August recess, and if they don’t make progress in coming months, that could forecast trouble.

In the meantime, lawmakers are likely to get pushback from voters at home during next week’s recess, as they did following the CBO’s last report.

“Regardless of any CBO score, it’s no secret Obamacare is collapsing under its own weight,” Sen. David Perdue (R., Ga.) said. “Doing nothing is not an option.”

Democrats, who strongly support the ACA, said the report confirmed that Republicans favor the wealthy and the healthy, while leaving others to fend for themselves. “Unless you’re a healthy millionaire, Trumpcare is a nightmare,” Senate Minority Leader Chuck Schumer (D., N.Y.) said Wednesday evening.

The White House disputed the CBO’s assessment, with a spokesman saying that “history has proven the CBO to be totally incapable of accurately predicting how health-care legislation will impact health-insurance coverage.”

The biggest change House leaders made to push through their bill was to add an amendment letting states opt out of some of the ACA’s provisions. The amendment would allow states to get waivers that could permit health insurers to sell less comprehensive coverage plans. They could also impose higher premiums on some people with pre-existing conditions who let coverage lapse.

The CBO found the legislation would reduce the cumulative federal deficit by $119 billion over roughly the next decade. In early March, it reported an earlier version of the bill would cut the deficit by $337 billion over the next decade.

Diminishing Returns

The original bill forecast deficit savings of nearly $340 billion. A first round of revisions did away with certain taxes a year earlier than planned and added funds to offset the cost of insurance for older adults not yet eligible for Medicare. The bill as passed by the House added funding for high-risk pools.

Cumulative effect on the deficit, in billions

Source: Congressional Budget Office

The most complex part of the CBO’s assessment involved the crucial question of what would happen to insurance premiums under the House bill. Compared to current law, premiums would increase by an average of about 20% in 2018 and 5% in 2019, the report concluded.

But in 2020, average premiums would differ based on whether states obtained waivers, with prices falling for many consumers. Some people would see average premium reductions of up to 30% in parts of the country through 2026, while others would see far smaller drops.

However, the report found that while healthier people would see lower premiums, in some parts of the country, where states opt out of some of the ACA’s rules, “less healthy people would face extremely high premiums.” It also noted that in some cases, lower premiums would be offset by higher out-of-pocket medical costs.

Republicans cheered the prospect of lower overall premiums cited by the report. “This CBO report again confirms that the American Health Care Act achieves our mission: lowering premiums and lowering the deficit,” House Speaker Paul Ryan (R., Wis.) said.

But Senate Republicans who have been critical of the House GOP bill said Wednesday that the CBO report reiterated why the House-passed bill came up short. “This bill does not do enough to address Nevada’s Medicaid population or protect Nevadans with pre-existing conditions,” said Sen. Dean Heller, a Nevada Republican who is up for re-election next year and opposes the House bill.

Related Video

Ohio Governor John Kasich is a vocal critic of the GOP’s plan to repeal and replace Obamacare, and he isn’t worried about speaking out against his own party. WSJ’s Shelby Holliday interviews Mr. Kasich about some of the top issues facing Americans.

The challenge for GOP leaders is that any proposal that tempers the House bill, for example by delaying or reducing its cuts to the Medicaid program, could spur a revolt among conservative Republicans who want a more aggressive and rapid implosion of the current health law.

Senate Majority Leader Mitch McConnell (R., Ky.) can lose no more than two of the 52 Republicans to pass a bill with no Democratic votes. He said Wednesday that it wasn’t clear how he would find the votes.

“I don’t know how we get to 50 [votes] at the moment. But that’s the goal,” Mr. McConnell told Reuters in a sentiment echoed later by other Republicans.

Conservatives in particular are focused on trying to find a way to bring down premiums, but have yet to coalesce around a method to do so. “We are moving in that direction but we’re not there yet,” said Sen. Ted Cruz (R., Texas). “That is the only way it is remotely possible to garner a majority from Republicans’ excruciatingly narrow majority in the Senate.”

Democrats and progressives are using the latest CBO report to argue the GOP plan would take coverage from millions of people, including many low-income elderly, while doling out benefits to high earners.

The House bill includes $662 billion in tax cuts, the Joint Committee on Taxation reported Wednesday. The largest tax cut, at $172 billion over a decade, would repeal a 3.8% tax on investment income of individuals with income over $200,000 and married couples with incomes over $250,000. The bill would make that tax cut retroactive to Jan. 1.

“This morally bankrupt bill will cause incredible pain for hard-working Americans, and that’s why its passage will haunt every single House Republican through Election Day,” said Tyler Law, a spokesman for House Democrats’ campaign arm.

The new CBO report, however, does back up GOP senators who say their legislation would drive down premium costs for many people who buy insurance on the individual market, rather than getting it through work or a government program.

The Republican plan brings down premiums in large part by allowing less-comprehensive health plans, which supporters say provide for more choice and detractors say will force less healthy people to pay more for more robust plans.

The Senate is likely to face a major battle over how to handle the Medicaid program for low-income Americans. Some Republicans have weighed keeping the ACA’s Medicaid expansion but imposing spending cuts on the program.

It is a politically dicey issue because 20 Senate Republicans hail from states that expanded the program under the ACA, and many of them want to protect state residents who benefited from that expansion. Much of the estimated increase in uninsured in the House bill stems from its proposals to cut back on the Medicaid expansion.

Senate Republicans are also looking at making the bill’s tax credits more generous for older people who would see higher premiums under the House version. Some are pushing shorter-term legislation to stabilize the current individual insurance markets under the ACA while they work on repeal, and others are weighing preserving a controversial requirement of the current law that mandates that most people pay a penalty if they don’t have coverage.

The discussions suggest that any Senate bill will largely differ significantly from the legislation passed by the House. That could complicate efforts to get buy-in from conservative House Republicans who almost torpedoed passage of the bill in that chamber, known as the American Health Care Act, arguing that it did not go far enough.

Write to Stephanie Armour at and Kristina Peterson at

Appeared in the May. 25, 2017, print edition as ‘Health-Law Tally Sets Up Senate Fight.’