Posts Tagged ‘Republicans’

Fusion’s Russia Fog

January 4, 2018

The Steele dossier hit men now claim to be political victims.

Let’s see. The Clinton campaign hires Fusion GPS, an opposition research firm, to investigate the Trump campaign. Fusion hires a former British spy, Christopher Steele, who produces a dossier based on Russian sources full of rumor, hearsay and an occasional fact to allege collusion between the Kremlin and Trump campaign. The dossier gets to the FBI, which uses it to justify opening a counterintelligence probe of the Trump campaign, perhaps including a judicial warrant to spy on Trump officials. Then Fusion has Mr. Steele privately brief select media reporters, ensuring that the dossier’s contents become public before the election

 

 

And now Fusion GPS complains about being a sufferer? Only in Washington, other folks.

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That’s the sob tale spun by way of Fusion GPS founders Glenn Simpson and Peter Fritsch Wednesday in a New York Times op-ed that fits the Steele file for disinformation. The Fusion duo painting themselves as valiantly running to “highlight Mr. Trump’s Russia ties” by way of offering the FBI with “intelligence reports” that corroborated “credible allegations of collusion between the Trump camp and Russia.”

For exercising their “right under the First Amendment,” Fusion laments that it’s been matter to Congressional harassment and a “succession of mendacious conspiracy theories,” together with by way of us. Oh my.

Fusion is gifted at generating dust for rent, together with for Russians to smear human-rights activist Bill Browder.

The drawback is the veracity of its paintings, and the cofounders don’t identify a unmarried instance of their op-ed of one thing that proves the file’s declare of collusion between the Trump marketing campaign and Russia. Eighteen months after the file hit Washington, the FBI, particular recommend Robert Mueller and Congress have additionally presented no public validation of its collusion allegations.

The Fusion boys pat themselves at the again for “having handed over our relevant bank records,” however the company stonewalled Congressional committees for many of 2017, refusing to disclose the names of its purchasers (the Clinton marketing campaign and the Democratic National Committee) or even suing to stop get right of entry to to its financial institution data. In court docket paperwork, Fusion has additionally admitted to paying newshounds all through the election, regardless that it refuses to expose the names, quantities or functions of the bills.

As Mr. Browder notes on Twitterthe Fusion op-ed additionally “conveniently omits” that it “worked for Russian gov’t interests trying to repeal Magnitsky Act [sanctions] at the same time [it] was working on the dossier.” Mr. Simpson met together with his Russian consumer, Kremlin-connected legal professional Natalia Veselnitskaya, prior to and after she sat with Donald Trump Jr. in Trump Tower in June 2016.

Mr. Simpson continues to assert he knew not anything about her Trump assembly and that she knew not anything of his Steele file paintings—regardless that you’ll must take his phrase for the twist of fate. As for Fusion’s deep fear about “an attack on our country by a hostile foreign power,” the company’s fear about Russia—and its human-rights abuses, for which the Magnitsky sanctions had been imposed—would appear to forestall at its checking account.

Far from being victimized, Fusion has been safe by way of a Beltway press corps stocked with allies who depend at the company for scoops. Fusion additionally has pals within the FBI and Justice Department who’ve a mutual passion in blockading Congress from finding how the file used to be used to research the Trump marketing campaign.

Toward that finish, the New York Times reported at the weekend that the true Rosetta Stone of the Trump-Russia probe used to be a drunken dialog in May of 2016 by way of junior Trump staffer George Papadopoulos.

This narrative would have us consider that the FBI hinged its probe on a person it didn’t hassle to interview till 2017, and about whom it didn’t transient Congress till months after the election.

By the way in which, the FBI or Justice Department assets who leaked this tale nearly no doubt broke the legislation in disclosing categorised details about main points accumulated by way of intelligence companies concerning the conferences and conversations of Mr. Papadopoulos, a personal citizen. Yet the FBI and Justice nonetheless refuse to inform Congress how they used the Steele file.

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Fusion now says it needs Congress to free up transcripts of Mr. Simpson’s interviews with committees, a transformation from his refusal remaining 12 months to look in public consultation prior to the Senate Judiciary Committee. By all way, expose all of it, in conjunction with FBI agent-source studies at the Steele file and the surveillance warrant programs that Justice refuses to free up.

Americans deserve to grasp what in point of fact came about remaining 12 months—now not simply settle for the obfuscation of Fusion’s political hit males.

Appeared within the January four, 2018, print version.

https://www.wsj.com/articles/fusions-russia-fog-1515024911

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Republicans Can’t Avoid ObamaCare in 2018

January 3, 2018

Give states the flexibility to turn their entitlement programs into competitive insurance markets.

Sen. Bill Cassidy (R., La.) at a health-care news conference in September 2017.
Sen. Bill Cassidy (R., La.) at a health-care news conference in September 2017. PHOTO: ALEX WONG/GETTY IMAGES

Republicans failed to repeal and replace ObamaCare in 2017. So what should they do in 2018? Some, like Senate Majority Leader Mitch McConnell, worry that they won’t be able to do much with their 51-49 majority. Others, like Sen. Lindsey Graham, want to give health care another go.

Congress has no choice but to revisit the issue. The growth in spending on health-care entitlements like Medicaid and Medicare threatens to overwhelm the Treasury, starving the federal government of the funds it needs to pay for everything else, including education, welfare and national defense.

Sen. McConnell said last month that any bill to reform entitlements will need to be bipartisan. He’s right that getting Republicans and Democrats to cooperate is the most sustainable way to pass such legislation. But with the “resistance” in full swing, bipartisanship may be a pipe dream. On the other hand, if Republicans want to tackle health care alone, they will need to take a different approach from the one that failed in 2017.

First, Republicans need to recognize the limits of their power. Repealing most of ObamaCare’s insurance regulations would require 60 votes to break a Democratic filibuster. The recent tax reform passed with 51 votes under the Senate’s budget-reconciliation process, but that tactic can be used only on provisions that directly relate to taxing and spending. Further, Republicans are not united on federal health spending and can’t muster even 50 votes to pass meaningful reductions. The only way they will get anywhere is if they can make a credible case that their reforms will improve the quality and affordability of health coverage.

Second, Republicans need to understand how the policy landscape has already changed. The tax-reform bill repealed ObamaCare’s individual mandate. In October President Trump signed an executive order reviving alternative forms of short-term health insurance. These changes give Americans a reasonable if imperfect escape valve from ObamaCare’s costliest regulations.

There is thus not much to gain by spending 2018 trying to replace ObamaCare’s insurance exchanges. Republicans can instead liberalize the individual insurance market by restoring flexibility that states lost under ObamaCare. A good strategy would be to build on bipartisan efforts such as those from Sens. Lamar Alexander and Patty Murray.

But where Republicans have the greatest opportunity is in reforming Medicaid. In 2016 the federal government spent $42 billion on ObamaCare’s exchanges. It spent $358 billion on Medicaid. States and localities pitched in another $208 billion, for a total national Medicaid expenditure of $566 billion in 2016. By 2025 the Centers for Medicare and Medicaid Services estimate that national Medicaid spending will reach $929 billion, a nominal increase of 64%.

That’s a lot of money. By comparison, the Congressional Budget Office projects federal defense spending in 2025 of $726 billion, a nominal increase of 24% from 2016 levels. All other discretionary spending—food stamps, unemployment benefits, veterans’ health care, you name it—is forecast that year to total $705 billion, up only 18%.

For now, at least, Washington can borrow money to pay its share of the Medicaid tab, but states can’t do that. State legislatures, trying to meet their ever-expanding Medicaid obligations, are instead cutting funding for schools, roads and police. Despite numerous studies showing that Medicaid recipients have no better health outcomes than people with no insurance, ObamaCare dramatically expanded the program, adding 13 million to the Medicaid rolls so far.

Republicans can address a core component of America’s entitlement problem—and replace a core plank of ObamaCare—by centering their 2018 efforts on these problems. One idea would be to revive and modify last summer’s bill from Sens. Graham and Bill Cassidy, which proposed preserving nearly all of ObamaCare’s additional health-care spending but converting those funds into “block grants” that states could use as they saw fit.

The problem was that Graham-Cassidy would have also wiped out most private individual insurance markets. Specifically, the bill would have given states the incentive to replace ObamaCare’s tax credits—the subsidies that help low-income people purchase private insurance—with even worse “public options” like Medicaid. In other words, states could have used Graham-Cassidy to expand government control of health care further, with worse outcomes.

A new version of Graham-Cassidy, focused solely on Medicaid, could give states the flexibility to convert their health-care entitlements into competitive insurance markets. Congress could pair that reform with repeal of ObamaCare’s taxes on things like insurance premiums and medical devices—taxes that increase health-care costs.

Several GOP bills, including Graham-Cassidy, have included “per capita allotments,” tying long-term Medicaid spending to various measures of inflation. That’s a good idea, provided that states first get the flexibility to reduce waste and fraud and to focus Medicaid resources on the people who most need them.

Long-term savings from Medicaid reform, using the chassis of Graham-Cassidy, would significantly reduce Washington’s liabilities. That could help Speaker Paul Ryan fund his ambitious reconsideration of the broader welfare state. Most important, helping states fix their Medicaid programs could improve health outcomes for poor and vulnerable Americans.

Now that would be a legacy to run on in 2018.

Mr. Roy is president of the Foundation for Research on Equal Opportunity, and a former policy adviser to Mitt Romney, Rick Perry and Marco Rubio.

Appeared in the January 3, 2018, print edition.

https://www.wsj.com/articles/republicans-cant-avoid-obamacare-in-2018-1514938806

The Republicans’ Fake Investigations — From The Men of Fusion GPS

January 3, 2018

From The New York Times

Credit Harry Campbell

A generation ago, Republicans sought to protect President Richard Nixon by urging the Senate Watergate committee to look at supposed wrongdoing by Democrats in previous elections. The committee chairman, Sam Ervin, a Democrat, said that would be “as foolish as the man who went bear hunting and stopped to chase rabbits.”

Today, amid a growing criminal inquiry into Russian meddling in the 2016 election, congressional Republicans are again chasing rabbits. We know because we’re their favorite quarry.

In the year since the publication of the so-called Steele dossier — the collection of intelligence reports we commissioned about Donald Trump’s ties to Russia — the president has repeatedly attacked us on Twitter. His allies in Congress have dug through our bank records and sought to tarnish our firm to punish us for highlighting his links to Russia. Conservative news outlets and even our former employer, The Wall Street Journal, have spun a succession of mendacious conspiracy theories about our motives and backers.

We are happy to correct the record. In fact, we already have.

Three congressional committees have heard over 21 hours of testimony from our firm, Fusion GPS. In those sessions, we toppled the far right’s conspiracy theories and explained how The Washington Free Beacon and the Clinton campaign — the Republican and Democratic funders of our Trump research — separately came to hire us in the first place.

We walked investigators through our yearlong effort to decipher Mr. Trump’s complex business past, of which the Steele dossier is but one chapter. And we handed over our relevant bank records — while drawing the line at a fishing expedition for the records of companies we work for that have nothing to do with the Trump case.

Republicans have refused to release full transcripts of our firm’s testimony, even as they selectively leak details to media outlets on the far right. It’s time to share what our company told investigators.

We don’t believe the Steele dossier was the trigger for the F.B.I.’s investigation into Russian meddling. As we told the Senate Judiciary Committee in August, our sources said the dossier was taken so seriously because it corroborated reports the bureau had received from other sources, including one inside the Trump camp.

The intelligence committees have known for months that credible allegations of collusion between the Trump camp and Russia were pouring in from independent sources during the campaign. Yet lawmakers in the thrall of the president continue to wage a cynical campaign to portray us as the unwitting victims of Kremlin disinformation.

We suggested investigators look into the bank records of Deutsche Bank and others that were funding Mr. Trump’s businesses. Congress appears uninterested in that tip: Reportedly, ours are the only bank records the House Intelligence Committee has subpoenaed.

We told Congress that from Manhattan to Sunny Isles Beach, Fla., and from Toronto to Panama, we found widespread evidence that Mr. Trump and his organization had worked with a wide array of dubious Russians in arrangements that often raised questions about money laundering. Likewise, those deals don’t seem to interest Congress.

We explained how, from our past journalistic work in Europe, we were deeply familiar with the political operative Paul Manafort’s coziness with Moscow and his financial ties to Russian oligarchs close to Vladimir Putin.

Finally, we debunked the biggest canard being pushed by the president’s men — the notion that we somehow knew of the June 9, 2016, meeting in Trump Tower between some Russians and the Trump brain trust. We first learned of that meeting from news reports last year — and the committees know it. They also know that these Russians were unaware of the former British intelligence officer Christopher Steele’s work for us and were not sources for his reports.

Yes, we hired Mr. Steele, a highly respected Russia expert. But we did so without informing him whom we were working for and gave him no specific marching orders beyond this basic question: Why did Mr. Trump repeatedly seek to do deals in a notoriously corrupt police state that most serious investors shun?

What came back shocked us. Mr. Steele’s sources in Russia (who were not paid) reported on an extensive — and now confirmed — effort by the Kremlin to help elect Mr. Trump president. Mr. Steele saw this as a crime in progress and decided he needed to report it to the F.B.I.

We did not discuss that decision with our clients, or anyone else. Instead, we deferred to Mr. Steele, a trusted friend and intelligence professional with a long history of working with law enforcement. We did not speak to the F.B.I. and haven’t since.

After the election, Mr. Steele decided to share his intelligence with Senator John McCain via an emissary. We helped him do that. The goal was to alert the United States national security community to an attack on our country by a hostile foreign power. We did not, however, share the dossier with BuzzFeed, which to our dismay published it last January.

We’re extremely proud of our work to highlight Mr. Trump’s Russia ties. To have done so is our right under the First Amendment.

It is time to stop chasing rabbits. The public still has much to learn about a man with the most troubling business past of any United States president. Congress should release transcripts of our firm’s testimony, so that the American people can learn the truth about our work and most important, what happened to our democracy.

California Poses Problem for GOP as 2018 Dawns

January 1, 2018

Party policies ranging from taxes to immigration cast a shadow over midterm prospects

California is the nation’s most populous state, home to 53 seats in the House, reservoir of 55 Electoral College votes—and a growing political problem for Republicans as the 2018 midterm election year dawns, Gerald F. Seib writes.

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California is the nation’s most populous state, home to 53 seats in the House of Representatives, reservoir of 55 Electoral College votes—and a growing political problem for Republicans as the 2018 midterm election year dawns.

GOP fortunes have been declining for the last two decades in California, a trend that may be accelerating. The recently passed tax-cut bill, with its limits on deductibility of state and local taxes and mortgage interest, seemed almost designed to strike at high-tax states with pricey real estate such as California. As a result, two of the 12 GOP House votes against the measure came from California representatives, while some of the state’s Republicans who voted for the measure did so with misgivings.

Meanwhile, President Donald Trump’s immigration policies are widely unpopular in a state with a large population of Hispanics and Asian-Americans. Both the state and the city of San Francisco are suing the administration over its attempt to cut federal funds to so-called sanctuary cities, which decline to help federal authorities find and deport illegal immigrants.

The president’s decision to withdraw from the Paris climate accords, and his tendency to dismiss fears of global warming, cut against the grain in California, home of some of the country’s most environmentally attuned citizens. Republican efforts to undo Obamacare also are an irritant in a state that has tended to strongly support the law.

Add it all up and a bad situation for Republicans could easily get worse. Democrats already hold both of California’s Senate seats, its governorship, virtually all statewide offices and 39 of its 53 House seats.

Now even some of the 14 House seats California Republicans do hold are in jeopardy in this year’s midterm election, when control of Congress hangs in the balance. Half of those Republican incumbents come from districts carried by Democrat Hillary Clinton in the 2016 presidential contest.

The Cook Political Report rates eight of the 14 House districts Republicans hold as highly competitive this year, and calls three of them tossups, meaning Democrats’ chances of seizing them are roughly equal to the GOP’s chances of retaining them.

In short, in a year in which Democrats will be gunning to take over 24 House seats to win back control of the House, California sits atop their target list.

“These Republican incumbents are still in a very difficult position,” says Dan Schnur, a former Republican political consultant who now is a professor at the University of Southern California’s Annenberg School of Communications.

He wrote a piecein the Los Angeles Times recently asserting that California Republicans “have been left hanging by their national party leadership, whose focus seems to be squarely on the needs of their colleagues in more conservative parts of the country.” The Los Angeles Lakers, he noted, have more players on their roster than California Republicans have representatives in Congress.

Mr. Schnur thinks the new tax cut, despite provisions that are problematic in California, may prove a marginal benefit to some of the California Republicans, because it will help energize the GOP base and shift the focus of debate toward economic issues and away from the social issues that separate many Californians from the national Republican party.

Still, he adds, “the biggest challenge for these suburban Republicans is more cultural than it is legislative. They’re are a lot more uncomfortable with Trump’s behavior than they are with his policy agenda.” Immigration, he adds, looms as “the biggest challenge for Republican incumbents.”

Even if Republicans manage to hold their own in this year’s midterm elections, the state is likely to remain a forbidding land for the GOP in presidential politics.

It’s hard to believe now, but California was, not so long ago, a bedrock for Republican presidential ambitions. Its stash of electoral votes “gave Republicans a near lock on the presidency in the 1970s and 1980s,” notes the Almanac of American Politics.

That began turning in the 1990s. Among other factors, Gov. Pete Wilson won re-election while supporting Proposition 187, a ballot measure designed to ban state aid to illegal immigrants. Republican fortunes among Hispanics began to decline, and the party’s broader fortunes followed suit.

By 2012, then-President Barack Obama carried California with 60% of the vote. In 2016, Mrs. Clinton won 62% of the vote, and 900,000 more raw votes than did Mr. Obama four years earlier.

Four of California’s counties switched from Republican to Democrat in 2016, including Orange County, long a bastion of Republican party conservatives.

Orange County hadn’t gone Democratic since the time of Franklin Roosevelt. Now the two conservatives who represent the county in Congress, Reps. Dana Rohrabacher and Darrell Issa, are among the House’s most imperiled incumbents — and were the two Californians who voted against the just-passed tax bill.

Write to Gerald F. Seib at jerry.seib@wsj.com

 https://www.wsj.com/articles/california-poses-problem-for-gop-as-2018-dawns-1514819328

Dispute Over Political Strategy Erupts Inside the White House

December 22, 2017

An Oval Office meeting involving President Trump and his top advisers on Wednesday devolved into a heated exchange between his former campaign manager and the White House political director, people briefed on the discussion said.

The meeting centered on the midterm elections and came as Republicans face a daunting landscape next year, particularly after a bruising loss in the Alabama special election this month. It also came as the White House faces an expected string of departures from the West Wing, including that of a deputy chief of staff, Rick Dearborn, on Thursday. Mr. Dearborn, who was close to Jared Kushner and Ivanka Trump during the transition, had been overseeing a broad cross section of departments, including the political department, which was a source of contention during the meeting.

The meeting prompted the political director, Bill Stepien, to call an official at the main political group supporting Mr. Trump, America First Policies, to say its counsel should be involved at future gatherings.

It also underlined the turf battles and strategic disagreements that have long been characteristic of Mr. Trump’s circle, dating to his presidential campaign.

A White House spokeswoman declined to comment.

The initial meeting included Mr. Trump; Mr. Stepien; John F. Kelly, the White House chief of staff; Kellyanne Conway, the White House counselor; and Hope Hicks, the communications director. Also in attendance were Corey Lewandowski, Mr. Trump’s former campaign manager, and Brad Parscale, both of whom are advisers to America First Policies.

Mr. Lewandowski aggressively criticized the Republican National Committee, as well as several White House departments, five people briefed on the discussion said. He told the president that his government staff and political advisers at the party committee were doing little to help him, three of the people briefed on the meeting said. He pointed to, among other thinned-out departments, the Office of Public Liaison.

One attendee, speaking on the condition of anonymity because the discussion was intended to be private, said Mr. Lewandowski took pointed aim at the political operation led by Mr. Stepien. Another attendee insisted that Mr. Lewandowski lashed out at nearly every department but the political shop.

Mr. Lewandowski called the White House team too insular, and he said it had done little to tend to fellow Republicans or to conduct outreach with outside groups and supporters. Asked for an example, Mr. Lewandowski said he knew of a senator who had not been invited to the White House Hanukkah party, one attendee said.

Mr. Trump, who often pits advisers against one another, appeared to be receptive to the argument. “A lot of people” have been telling the president that his White House team needs improvement, a person briefed on the meeting said.

After the meeting, Mr. Lewandowski and Mr. Stepien got into an argument outside the Oval Office, continuing the exchange elsewhere on the White House grounds. They eventually reached a cordial place, three people briefed on the exchange said.

But on Thursday morning, Mr. Stepien called a leading official at America First Policies, Brian O. Walsh, and said its counsel needed to be present for future meetings, according to a person briefed on the events.

“America First Policies exists for one reason: to support the president of the United States and his agenda,” Mr. Walsh said. “Everything else is just noise. We commend the president for getting tax reform passed and making America great again.”

Mr. Stepien appears to be the latest front in a rotating cast of advisers surrounding Mr. Trump over the last three years. A series of election defeats, coupled with legislative inertia through much of the year, has made him the target of criticism, primarily from outside the White House.

But Mr. Stepien has his defenders, among them Mr. Kelly, who two attendees at the Oval Office meeting said was put off by Mr. Lewandowski’s criticism. So were other attendees of the meeting, according to two people present, although Mr. Trump did not appear to be one of them.

Mr. Lewandowski declined to comment.

Democrats Against Tax Reform — Democratic left turn isn’t good for the country

December 19, 2017

Unlike the past, the GOP has had no help passing these tax cuts.

Democrats Against Tax Reform
PHOTO: ISTOCK/GETTY IMAGES

Republicans are poised this week to cut taxes for most American workers and businesses, fulfilling a core campaign promise. But before the House and Senate vote, it’s worth noting that they may do so without a single Democrat in support. How has the party of the Kennedy tax cuts of the 1960s and the co-writers of the Reagan reform in the 1980s become implacably opposed to pro-growth tax policy?

A little history shows how remarkable this is. The Kennedy marginal tax-rate cuts were pushed by White House economist Walter Heller and powered the economic expansion for another half-decade. In the 1981 tax debate, William Brodhead of Michigan and other Ways and Means Democrats offered an amendment that cut the top rate on investment income to 50% from 70% in the first year.

The 1986 tax reform was driven as much by Democrats as by Ronald Reagan. Dick Gephardt and Dan Rostenkowski helped move it through the House, and Bill Bradley was a leading architect in the Senate. Thirty-three Democrats voted for the bill that passed the Senate 74-23 and cut the top marginal income tax rate to 28%.

Bill Clinton raised taxes in 1993, but after his re-election he compromised with Newt Gingrich in 1997 to cut the capital-gains tax rate to 20% from 28%. That drove investment and growth through the rest of the decade. Even as recently as 2001, a dozen Democrats in the Senate and 28 in the House compromised with George W. Bush to cut the top income-tax rate to 35%.

Yet this year not a single Senate Democrat seems willing to vote to cut the top rate a mere 2.6-percentage points to 37% or reform a corporate tax code that Democrats have long recognized is anti-competitive. Had they engaged with Republicans to provide 60 votes, they surely could have influenced the bill.

They might have saved most of the state-and-local tax deduction that helps Democratic states keep taxes high. Now Democrats in New Jersey and California are left to moan that perhaps they’ll have to stop raising taxes on high-earners. Or perhaps Democrats could also have proposed eliminating the corporate tax in return for a long-time progressive priority like a carbon tax. Instead they chose total resistance, and policy irrelevance.

Part of the explanation is ideological. The Democrats as a party moved sharply left during the Obama years—on economics nearly as much as on identity politics. They have made income inequality their main economic priority rather than growth, and the fact that the slow-growing Obama economy increased inequality hasn’t changed that obsession.

One result is that there isn’t a pro-business Democrat left in the Senate, except perhaps on energy policy in fossil-fuel states like West Virginia and North Dakota. Democrats are now the party of Thomas Piketty, the French economist who thinks tax rates should return to pre-Kennedy levels to reduce inequality.

Democratic economists who might have offered an alternative view have no choice but to go along if they ever want to serve in another Democratic administration. They all saw what Elizabeth Warren and the Democratic left did to block Larry Summers from getting the job of Federal Reserve Chairman.

The other explanation is the political calculation that opposition will help Democrats retake the House and Senate in the 2018 midterm elections. President Trump is unpopular, and they figure his polarizing behavior will drive enough Democrats in the polls to save Senate incumbents even in states that Mr. Trump carried in 2016. Heidi Heitkamp (North Dakota), Joe Donnelly (Indiana) and Claire McCaskill (Missouri) figure that the safer play is to oppose all things Trump and mobilize the base vote.

Perhaps that bet will pay off, but then they are also betting that tax reform will fail to increase growth and wages. If it does succeed in spurring the economy, they will have had no stake in that success. Republicans will surely point that out, especially if the popularity of the tax bill rises once voters see the results in higher after-tax income.

Whatever the political results next year, this Democratic left turn isn’t good for the country. The U.S. has historically prospered when there is a growth wing in both major political parties. A Democratic growth wing is all the more important because the GOP is developing an income-redistribution wing led by Florida Senator Marco Rubio that has watered down the growth elements of this tax reform and almost scuttled it.

After the slowest expansion in decades and tepid wage growth, Americans should want this tax reform to succeed and it’s a shame Democrats are rooting for failure.

Appeared in the December 18, 2017, print edition.

https://www.wsj.com/articles/democrats-against-tax-reform-1513552419

As 2018 Nears, Both U.S. Parties Sail Into Tricky Political Winds

December 18, 2017

GOP faces stiff headwinds, but the map is a challenge for Democrats

Democrats face structural impediments to retaking control of Congress in next year’s midterm elections.
Democrats face structural impediments to retaking control of Congress in next year’s midterm elections. PHOTO: AARON P. BERNSTEIN/BLOOMBERG NEWS

A senior Republican in Congress was musing about the Washington landscape a couple of days ago, as his party neared the finish line on a landmark bill to rewrite the nation’s tax system.

The Republican Congress and President Donald Trump have been more successful this year than is generally acknowledged, he argued. In addition to that tax bill, Republicans have rolled back regulations, confirmed a swath of conservative judges and begun ramping up spending on defense—all actions immensely pleasing to their base.

Then he turned to the party’s political condition. “Politically,” he said, “it’s a very dangerous time.”

As that paradoxical assessment suggests, leaders of both parties face an extraordinarily complex political picture as the year draws to a close and 2018 midterm elections approach.

The Republicans’ tax-bill success, likely to be finalized in the next couple of days, will re-energize a party base discouraged by earlier setbacks and help ease doubts about whether the GOP can get things done when fully in charge.

Yet Republicans face a significant challenge in selling that tax bill to a public that appears broadly skeptical of its virtues and fairness. They also have suffered significant defeats in recent high-profile elections, are led by a polarizing president whose popularity continues to sag, and see slumping poll numbers nationally.

Meanwhile, Democrats face their own set of mixed indicators. They have those big recent election victories, in Virginia and Alabama, to energize their base and their donors. Fired-up candidates are lining up to run as Democrats next year, and a new Wall Street Journal/NBC News poll finds voters saying by a double-digit margin they want Democrats to control Congress after next year’s elections.

What the Tax Bill’s Passage Will Mean for 2018 Politics
Senate Republicans have lined up behind the final version of a tax-overhaul bill, setting the stage for final passage this week. WSJ’s Gerald F. Seib explains the immediate political impact the bill will have. Photo: AP

Yet Democrats also face structural impediments in the current political system that will make it harder for them to achieve the kinds of gains such poll numbers suggest, and they confront a potentially destabilizing internal philosophical divide that could easily grow in coming months.

The big question is what this complicated equation will add up to in 2018. Those midterm elections now will begin occupying an increasing amount of Washington’s time and energy because both sides know their outcome will shape the last two years of the current Trump presidential terDemocrats would need to take over 24 seats now occupied by Republicans to win control of the House, and a mere two seats to take the Senate. The broad political indicators suggest both are possible.

In the new Journal/NBC News poll, voters indicate by 50% to 39% that they want Democrats to win control of Congress next year, while Mr. Trump’s job approval stands at 41%. Those numbers look an awful lot like those just before the 2006 midterm elections, when Democrats took back control of Congress and delivered a painful blow to Republican President George W. Bush.

Yet 11 months remain before the midterms, ample time for big events—think North Korea—to alter the landscape. Moreover, the political system is significantly more complex than it was in 2006, making it hard to figure out whether traditional barometers tell us what they once did.

“There are some structural limits that could temper the advantages” Democrats now appear to enjoy, says Doug Sosnik, a longtime Democratic strategist and top adviser to former President Bill Clinton.

In the race for control of the Senate, it is the Democrats’ misfortune that they have to defend 24 seats next year, while Republicans must defend only eight. Moreover, 10 of those Democratic seats are in states Mr. Trump won, five in states he won by double-digit margins.

In the House, Republican-led redistricting efforts have left many GOP members in districts so solidly red that they likely will be able to survive even a midsize national Democratic wave. Indeed, the authoritative Cook Political Report lists just 40 House Republican seats as highly competitive—that is, in races that are toss-ups or only lean one way or the other. Even in a good year for them, Democrats’ opportunities will be limited, and they’ll have to make good on most of them to prevail.

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Charlie Cook, who oversees the political report that carries his name, summarizes the situation this way: “Republicans could hardly face tougher headwinds, nor could Democrats face a tougher map.”

The best news for Democrats, Mr. Sosnik says, is evidence from Virginia and Alabama of high enthusiasm for them among crucial voting blocs, particularly African-Americans and suburban women.

The challenge for Democrats is to avoid seeing that enthusiasm damped by an internal fight between progressive activists, who think they are delivering the energy, and moderates, who think they are delivering the centrist and independent votes needed for broad victories. Democrats’ hope for a big wave will require both—and that won’t be easy.

Write to Gerald F. Seib at jerry.seib@wsj.com

https://www.wsj.com/articles/as-2018-nears-both-parties-sail-into-tricky-political-winds-1513608285?mod=e2twp

A Tax Reform for Growth

December 16, 2017

The GOP bill will spur investment and make the U.S. more competitive.

Sen. Marco Rubio speaks during a news conference on Capitol Hill in Washington, Sept. 26.
Sen. Marco Rubio speaks during a news conference on Capitol Hill in Washington, Sept. 26. PHOTO: PABLO MARTINEZ MONSIVAIS/ASSOCIATED PRESS

House and Senate conferees signed their tax agreement on Friday, and the bill that seems headed for passage next week is—Minor Miracle Dept.—better than what either body first passed. The bill’s corporate reform is far superior to its muddled rewrite of the individual code, but on balance this is the most pro-growth tax policy in decades.

The bill’s biggest achievement is reforming at long last the self-destructive U.S. corporate tax code. The top U.S. rate of 35%—highest in the developed world—will fall to 21% on Jan. 1. Cash currently held overseas will be taxed at a 15.5% one-time “deemed” repatriation rate, and America will move to a territorial system that allows money to be taxed where it is earned. The bill includes rules to prevent companies from concealing taxable income, especially on intangible assets such as intellectual property. And it sweeps away billions of dollars worth of industry-specific loopholes that misallocate capital.

All of this will go a long way to restoring American competitiveness that has eroded over several administrations. Even Barack Obama acknowledged this problem, though he declined to do anything lest some large business end up with a tax cut.

The same economists who presided over the weakest recovery since World War II now say none of this is needed with the economy finally growing at 3%. But the faster growth never materialized when they were in power, and this expansion has been notable for slow business investment and weak productivity growth.

This GOP tax reform—including five years of 100% immediate business expensing—is aimed directly at that weakness to keep the expansion going even as the Federal Reserve raises interest rates. This isn’t a demand-side “sugar high.” These business tax changes are supply-side reforms that will increase the economy’s productive capacity.

Reducing the cost of capital should raise business investment and invite a capital inflow to the U.S. More investment means more hiring and more productive workers, which is what increases wages. Especially with a tight labor market, the share of income that goes to workers should increase. After eight years of trying to redistribute income through higher taxes and more subsidies, why not try a return to growth economics?

***

The individual tax reform isn’t nearly as ambitious. The GOP has rearranged some furniture to try to give everyone a tax cut while trying not to change the distribution tables of who pays taxes. The one bow toward simplification is nearly doubling the standard deduction to $24,000 for married couples, which means most taxpayers will elect not to itemize.

Far more confusing is the reform for business owners who declare income on personal returns, known as “pass-throughs,” which won a 20% deduction for some business income. Smaller businesses deserve tax relief but the deduction contains considerable risk of gaming.

For instance: A salaried manager at a corporation would pay a top marginal rate of 37%, yet a store owner gets a lower rate. This favors some industries over others, and the better route would have been cutting the top rate to the 1986 reform rate of 28%. Some lawyers, accountants and other professional services can claim some income against the deduction. And you bet they will: Look out for the college basketball coach who tries to become an LLC.

Yet Republicans deserve credit for at least trimming the top rate on individuals to 37% from 39.6%. The conferees dumped the House’s bubble bracket that slammed some folks with a 45.6% top rate. The 2.6-point top rate cut won’t increase the incentives to work by all that much, though the move is significant as a matter of principle that tax reform means lower rates for everyone. And lowering the top rate took political courage amid tendentious attacks from left and right.

A lower top rate also offers relief to productive earners in high-tax states who will lose most of the state-and-local tax deduction. That subsidy for progressive politicians in Sacramento and Albany will be capped at a $10,000 write-off for property, income and sales tax. A full repeal would have been better policy, but the accommodation brings along Republican Members in New York and California.

The worst individual tax policy is the doubling of the tax credit for children to $2,000 from $1,000. This costs half-a-trillion dollars and contributes nothing to growth because it doesn’t change incentives. Up to $1,400 of the credit will also be refundable after Florida Senator Marco Rubio staged a hostage crisis on Thursday, and this means checks in the mail to households with no income tax liability. Mr. Rubio demanded this change as the price of his vote even after his child-credit amendment lost on the Senate floor, 29-71.

The long-term politics of the credit are worse. Mr. Rubio concedes such households don’t owe income taxes but says they need relief from payroll taxes, which fund Social Security and Medicare. But the way to do that is to propose cutting payroll tax rates. Mr. Rubio’s backdoor raid means the payroll tax will be the new pot of cash to redistribute income, and entitlement reform could become that much harder.

The House and Senate compromised on the mortgage-interest deduction, which will now be capped at $750,000, down from $1 million under current law. This is a small victory over the housing lobby, but Republicans couldn’t even eliminate the deduction for second homes. Republicans also won’t repeal the death tax, though the exemption will be doubled to about $11 million. A menu of energy subsidies survives, and so does the loathsome alternative minimum tax that requires families to calculate two sets of tax assumptions.

Some of these survive due to political support and others are ways to pay for cuts elsewhere and comply with the Senate’s budget rules. One asterisk is that the cuts for individuals expire after 2025, though the political pressure to extend them will be immense, especially for middle-income families.

In better news, the bill will repeal the Affordable Care Act’s individual mandate that punishes Americans for declining to buy health insurance that they can’t afford or don’t want. This chips away at ObamaCare’s command-and-control model, and may open the door for larger reform.

***

Republicans have been promising to reform the tax code for decades, and Speaker Paul Ryan deserves particular notice for years of intellectual and political spadework. The House campaigned on tax reform with its Better Way agenda, and Donald Trump made it a 2016 theme. This bill fulfills that promise.

For eight years the Democrats put income equality over growth and ended up with less of both. Now Republicans are poised to enact a tax bill that on the whole makes broad prosperity the priority. Next week the House and Senate will call the roll and we’ll see which politicians in Washington still think America is one of the world’s great underdeveloped countries.

Appeared in the December 16, 2017, print edition.

https://www.wsj.com/articles/a-tax-reform-for-growth-1513383270

GOP Is Poised to Pass Sweeping Tax Overhaul

December 16, 2017

Republicans secure support for major legislation that would revise business taxes and cut top rates but would cost residents in high-tax states

Republican Sens. Bob Corker, left, and Marco Rubio, right, said Friday they would support the massive tax overhaul that the GOP has proposed, putting the party on the verge of voting on the bill next week.
Republican Sens. Bob Corker, left, and Marco Rubio, right, said Friday they would support the massive tax overhaul that the GOP has proposed, putting the party on the verge of voting on the bill next week. PHOTO: JOSHUA ROBERTS/REUTERS

WASHINGTON—Republicans stood on the verge of delivering the most significant changes to the U.S. tax code in more than three decades, after a series of last-minute deals appeared to remove the last big obstacles to passage next week.

The plan would deliver $1.5 trillion in tax cuts over a decade and reorder large chunks of the U.S. economy. The GOP, ending a year in full control of the Congress and White House, is delivering lower tax rates for individuals, business owners and corporations. However, those individual cuts would expire after 2025, the end of some deductions will sting residents of high-tax states and independent analysts say the plan will increase budget deficits.

On Friday, Republicans picked up the backing of Sens. Marco Rubio (R., Fla.) and Bob Corker (R., Tenn.). Mr. Corker was the only Republican who voted no on the Senate’s first version. The bill needs 50 votes to clear the Senate. With Mr. Corker’s support it could wind up with 52. The House will vote first, on Tuesday, and passage looks likely. The bill seems likely to land on President Donald Trump’s desk soon.

The bill largely follows an outline Republicans had been working off all year, marked by a sweeping overhaul of the regime for business taxation and lower tax rates for individuals that would be partially offset by the end of some deductions.

Sources: Internal Revenue Service (current); Conference Committee (proposed)

The plan would sharply lower business taxes, cutting the 35% corporate tax rate to 21%. Multinational corporations would get a new regime for paying U.S. taxes on their foreign income and a one-time tax on profits they have stockpiled overseas. That tax would be 8% on illiquid assets and 15.5% on cash, higher than many companies hoped.

Pass-through businesses, such as partnerships and S corporations, would get a steep tax rate cut in one of the most novel—and potentially porous—pieces of the GOP tax plan. They would get a 20% deduction applied to taxable income, available to all businesses owned by individuals making less than $157,500 and joint filers making less than $315,000. The break would be phased out above those thresholds for professional service businesses such as law or accounting firms. Business owners in some cases could qualify for tax breaks based on their capital investment.

For individuals, the top rate would come down, too, from 39.6% to 37%. The other brackets would be 10%, 12%, 22%, 24%, 32% and 35%. An exemption on the 40% estate tax would be doubled to more than $11 million per person, though Republicans fell short of repealing the tax as some wanted.

The bill would cut taxes for most households, though those reductions wouldn’t be universal or permanent. Many of the individual tax cuts are expected to expire after 2025. Republicans say future Congresses would extend them, making the actual fiscal cost larger than advertised.

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It’s Taxmas! The Winners and Losers of the GOP Tax Bill
WSJ’s Richard Rubin takes us to a weird, wacky Santa’s workshop to explain who’s getting Christmas presents and who’s getting coal with the GOP tax bill. Photo/Illustration: Adam Falk/The Wall Street Journal

But not everybody wins. Some households, particularly residents of high-tax states who would lose the ability to fully deduct state and local taxes, would pay more. The bill would cap that deduction at $10,000. The GOP plan also would nearly double the standard deduction for individuals while repealing the personal exemption. That combination would in turn reduce incentives to use mortgage and charitable deductions that help to fuel American borrowing and giving.

Republicans appear poised to overcome objections from home builders, real-estate agents, charities and lawmakers from high-tax states opposed to the mix of deduction and exemption changes.

Republicans also aim to use the tax bill to achieve a health-policy aim, repealing the individual mandate to have health insurance, a centerpiece of the Affordable Care Act. That could lead to millions fewer people getting insurance. Republicans also tacked on a provision allowing oil drilling in the Arctic National Wildlife Refuge.

The final version jettisoned some controversial provisions Republicans had considered advancing. Those include the tax-free status of graduate student tuition waivers and private activity bonds and deductions for medical expenses, student loan interest and teachers’ out-of-pocket expenses.

The bill also preserves the ability to use tax-exempt bonds for professional sports stadium bonds—a priority for Mr. Trump, a GOP aide said.

INSIDE THE BILL

The final Republican tax proposal, released Friday evening, would

  • Eliminate the requirement that most individuals carry health insurance or pay a penalty to the IRS;
  • Open Alaska’s Arctic National Wildlife Refuge to oil and gas drilling
  • Allow the use of tax-advantaged 529 plans for elementary and secondary schools, instead of just higher education
  • Retain the deduction of mortgage interest for second homes
  • Retain the individual alternative minimum tax, a parallel tax system for high-income individuals and households, but eliminate the corporate alternative minimum tax
  • Preserve the Adoption Tax Credit
  • Retain the exemption for the value of graduate-school tuition waivers

Official estimates of the House and Senate bills showed that the plans would modestly accelerate economic growth, though not enough to pay for the tax cuts. After accounting for the added revenue the bill is expected to produce by boosting overall economic growth, the GOP plans would add more than $1 trillion to budget deficits over the next decade, according to the Joint Committee on Taxation, the official nonpartisan scorekeeper for tax legislation in Congress.

Those estimates had caused Mr. Corker to cite deficit concerns this month when he voted no on the bill on the Senate floor. On Friday, he reversed course, even though he said he thinks it is possible that the bill could add $500 billion to deficits, he said he was willing to vote yes.

“Every bill we consider is imperfect and the question becomes: Is our country better off with or without this piece of legislation,” he said in a statement. “I think we are better off with it. I realize this is a bet on our country’s enterprising spirit, and that is a bet I am willing to make.”

One of the final changes was a boost in the child tax credit to secure the vote of Mr. Rubio. The Senate bill already doubled the credit to $2,000 per child from $1,000 and made $1,100 of that refundable, meaning it was available to households that don’t pay income taxes.

Mr. Rubio and Sen. Tim Scott (R., S.C.) negotiated a change to increase the amount of refundability to $1,400. They didn’t make another change Mr. Rubio wanted, to make more of the credit available to the lowest-income families.

To offset the cost, they decided to make the credit unavailable for parents of 17-year-olds. That is the same as current law, but it would reverse the Senate’s plan for expansion. The child credit would begin phasing out for households making $400,000, up from $110,000 for joint filers in current law.

Democrats watched from the sidelines and seem unlikely to provide any votes in the House or Senate next week. They warned that the bill was a fiscally irresponsible giveaway to GOP donors and the product of a rushed, closed process.

“Republicans approved an agreement for a tax plan that until now they have refused to share with the American public,” said Rep. Richard Neal (D., Mass.) the top Democrat on the House Ways and Means Committee. “They have developed a tax cut plan that has been rejected by two-thirds of the American people because the public sees this for what it is—a giveaway to the well-off and well-connected that the middle class will be forced to foot the bill for down the road.”

Democrats urged the GOP to slow down, to wait for Sen.-elect Doug Jones (D., Ala.) to be seated. Republicans charged ahead.

“Americans deserve a new tax code for a new era of American prosperity,” House Ways and Means Committee Chairman Kevin Brady (R., Texas) said.

Write to Richard Rubin at richard.rubin@wsj.com and Siobhan Hughes at siobhan.hughes@wsj.com

https://www.wsj.com/articles/gop-is-poised-to-pass-sweeping-tax-overhaul-1513376474

Democrats Are Walking Into a Trumpian Trap — Living in the “House of Outrage”

December 15, 2017

Opinion

Doug Jones supporters celebrate victory. Credit Bob Miller for The New York Times

Take a walk with me, dear reader, into the yard, down the street — anywhere, really, just so that we can step outside of our house of outrage. It’s a roomy house, with space for everyone from woke progressives to disillusioned conservatives. It’s a good house, filled with people united in a just and defiant cause. It’s a harmonious house, thrumming with the sound of people agreeing vigorously.

And lately, we’ve started to believe we’re … winning.

We breathed relief Tuesday night when Roy Moore went down to his well-earned political death, like Jack Nicholson’s Joker at the end of Batman. We roared when Robert Mueller extracted a guilty plea from a cooperative Michael Flynn, and the investigative noose seemed to tighten around Donald Trump’s neck. We cheered when Democrat Ralph Northam trounced Ed Gillespie after the Republican took the low road with anti-immigrant demagogy.

It’s all lining up. Democrats have an 11-point edge over Republicans in the generic congressional ballot. The president’s approval rating is barely scraping 37 percent. Nearly six in 10 Americans say the United States is on the “wrong track.” Isn’t revenge in 2018 starting to taste sweet — and 2020 even sweeter?

Don’t bet on it. Democrats are making the same mistakes Republicans made when they inhabited their own house of outrage, back in 1998.

You remember. The year of the wagged finger and the stained blue dress. Of a president who abused women, lied about it, and used his power to bomb other countries so he could distract from his personal messes. Of a special prosecutor whose investigation overstepped its original bounds. Of half the country in a moral fever to impeach. Of the other half determined to dismiss sexual improprieties, defend a democratically elected leader and move on with the business of the country.

Oh, also the year in which the Dow Jones industrial average jumped by 16 percent, the unemployment rate fell to a 28-year low, and Democrats gained seats in Congress. Bill Clinton, as we all know, survived impeachment and left office with a strong economic record and a 66-percent approval rating.

If nothing else, 1998 demonstrated the truth of the unofficial slogan on which Clinton had first run for president: It’s the economy, stupid. Prosperity trumps morality. The wealth effect beats the yuck factor. That may not have held true in Moore’s defeat, but it’s not every day that an alleged pedophile runs for office. Even so, he damn well nearly won.

1998 also showed that, when it comes to sex, we Americans forgive easily; that, when it comes to women, we don’t always believe readily; and that, when it comes to presidents, we want them to succeed. However else one might feel about Mueller — or, for that matter, Ken Starr — nobody elected them to anything.

Which brings us back to Trump. Democrats may like their polling numbers, but here are a few others for them to consider.

The first is 3.3 percent, last quarter’s annual growth rate, the highest in three years. Next is 1.7 percent, the core inflation rate, meaning interest rates are unlikely to rise very sharply. Also, 4.1 percent, the unemployment rate, which is down half a percentage point, or nearly 800,000 workers, since the beginning of the year. Finally, 24 percent, which is the rise in the Dow Jones industrial average since Trump became president — one of the market’s best performances ever.

Democrats will find plenty of ways to explain that these numbers aren’t quite as good as they sound — they are not — or that we’re setting ourselves up for a big crash — we might well be — or that the deficit is only getting bigger — it is, but so what? Politically speaking, none of that matters. Trump enters 2018 with a robust economy that will, according to the estimate of the nonpartisan Joint Committee on Taxation, grow stronger thanks to the tax bill.

What about the outrage over the president’s behavior? Kirsten Gillibrand and other Senate Democrats have called on Trump to resign following new accusations of sexual harassment and assault. Good luck getting him to agree. Tom Steyer and other liberal plutocrats want the president impeached and thrown out of office. Good luck electing 67 Democrats to the Senate.

Every minute wasted on that whale hunt is a minute the Democrats neglect to make an affirmative case for themselves.

Which leaves us with Mueller. All of us in the house of outrage are eager for the special counsel to find the goods on the president and Russia, obstruction, financial shenanigans, anything. The clues seem so obvious, the evidence so tantalizingly close.

Yet we should also know that the wish tends to be the father of the thought. What if Mueller comes up short in finding evidence of collusion? What if the worst Mueller’s got is one bad tweet that, maybe, constitutes evidence of obstruction? And what if further doubts are raised about the impartiality of the investigation? The president’s opponents have made a huge political bet on an outcome that’s far from clear. Anything less than complete vindication for our side may wind up as utter humiliation.

Dear reader, I too live in the house of outrage, for all the usual reasons. Just beware, beware of growing comfortable in it. As in 1998, it just might turn out to be a house of losers.