Posts Tagged ‘Ted Cruz’

States Worry You May Claim 529 Tax Exemption for K-12 School Tuition

February 16, 2018

Officials fear big hit to tax revenues by letting more parents use the savings plans for education costs

Congress expanded the accounts to cover up to $10,000 a year in expenses for kindergarten through 12th grade as part of a broad tax overhaul.
Congress expanded the accounts to cover up to $10,000 a year in expenses for kindergarten through 12th grade as part of a broad tax overhaul. PHOTO: JEFF ROBERSON/ASSOCIATED PRESS

State officials across the country are increasingly worried that a provision in the new tax law extending college savings accounts to K-12 expenses will blow an unexpected hole in their budgets.

At least 30 states provide their own tax breaks to people who put money into 529 savings plans, which allow families to save money for education tax-free and whose scope is defined by the federal government.

In December, as part of a broad tax overhaul, Congress expanded the accounts to cover up to $10,000 a year in expenses for kindergarten through 12th grade.

State budget officials are now concerned that a large number of parents will use 529 accounts to pay private-school tuition, giving them a new write-off for their state taxes.

That could result in potentially millions of dollars in lost tax revenue at a time when most states are struggling to close budget deficits.

“I’m worried that families could use these accounts to avoid paying state taxes,” said Illinois state treasurer Mike Frerichs, a Democrat. “This is only going to put a deeper hole in the budget.”

The dispute is in part between state and federal officials, but it also often breaks down along party lines. Many Republicans favor tax breaks for families who send children to private or religious schools, which they see as a way to help parents, while Democrats worry that such breaks subsidize wealthy people and exclusive schools.

Not Just for College AnymoreCongress in December expanded 529 savingsplans to pay for K-12 expenses, putting statesthat offer generous 529 tax benefits in a bind.States with largest income tax lost due tochange in federal tax law, estimatesSource: The American Enterprise Institute
N.Y.Ind.Pa.Ill.La.Mo.Mich.Ga.IowaVa.$0 million lost$50$100$150$200

The expansion of 529 savings accounts, added to the tax bill at the last moment through an amendment from Sen. Ted Cruz (R., Texas), was a victory for advocates of private-school choice, who have struggled to push through other priorities such as a national voucher program.

Fifty senators voted against Mr. Cruz’s amendment, including two Republicans, forcing Vice President Mike Pence to break the tie in favor of the measure. Opponents of the policy view the expansion as a backdoor way of creating a voucher system, as it directs public resources toward private, often religious schools.

The Cruz provision is projected to cost the federal government $500 million over nearly a decade, but it could cost the states much more, research suggests. Across the country, about 6.3 million children attended private elementary or secondary schools in 2017, compared with 52 million children enrolled in public schools.

Some critics say the GOP-led Congress is essentially imposing a social policy on the states—a criticism Republicans have frequently directed at Democrats.

“It’s not federalist at all,” said Nat Malkus, deputy director of education policy at the American Enterprise Institute, a center-right think tank. “I don’t think that the federal government should be cavalierly making problems for states by messing with state taxes.”

Some proponents of expanding tax benefits to private schools, including Education Secretary Betsy DeVos, also say the Cruz approach isn’t the most efficient, since it will primarily benefit wealthier families who can already afford to send their children to private schools.

“It’s a step in the right direction,” Mrs. DeVos told reporters in December. “But it doesn’t address the needs of parents who are from lower incomes, and does not empower them in significant ways.”

Some red states have embraced the change. In Missouri, state officials have launched a social-media campaign to tell residents they can use 529 accounts, and the state’s $8,000-a-person tax deduction, for primary and secondary school expenses.

“Anything we can do to make education more affordable and let people save more of their own money is a good thing in my book,” said Missouri’s state treasurer, Eric Schmitt, a Republican.

Under the new tax law approved by Congress, the standard deduction is going up and the personal exemption is going away. But these changes won’t be visible until your 2019 returns. WSJ’s Richard Rubin explains the recipe behind the changes that are coming to your tax bill.

Other states are expressing concern, some more publicly than others. In Indiana, where the state offers a $1,000 tax credit to anyone putting money in a 529 account, the state could lose $117 million a year, according to an estimate from Mr. Malkus. Pennsylvania could stand to lose $92 million.

New York is one of eight to specify that its education tax breaks go solely for college expenses. But pressure is growing on state officials from some parents and lawmakers to open up the state’s $10,000 tax deduction to private K-12 expenses.

Some state officials fear that they take that step, parents of the 465,000 New York children enrolled in private schools could simply deposit money intended for tuition into a 529 account and withdraw the money days later, rather than letting the money accrue over time to use for college expenses. The change could cost New York $120 million a year, according to Mr. Malkus’s estimate.

The New York State Division of the Budget didn’t respond to a request for comment.

Some states contend Mr. Malkus’s estimates of their potential tax losses are high, but he stands by his work.

In several other states that don’t automatically extend tax benefits in accordance with the new federal law, state lawmakers have proposed legislation to do so. So far this year, bills have been proposed in Wisconsin, Alabama, Illinois and Iowa, among others.

Iowa’s state treasurer, Mike Fitzgerald, a Democrat, said he has concerns about his state’s bill, but added that publicity around the federal changes is creating political pressure. “The press is telling everyone, ‘Look at this sweetheart deal you’ve got now,’ ” he said.

https://www.wsj.com/articles/states-worry-you-may-claim-529-tax-exemption-for-k-12-school-tuition-1518780605

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Poor Chuck Schumer

January 30, 2018

The Senate Minority Leader made it to the top, but at the worst possible moment.

Senate Minority Leader Chuck Schumer on Capitol Hill, Dec. 19, 2017.
Senate Minority Leader Chuck Schumer on Capitol Hill, Dec. 19, 2017. PHOTO: ALEX BRANDON/ASSOCIATED PRESS
.

In only one year as Senate minority leader, Chuck Schumer has managed to pull off some large but dubious achievements.

The biggest came last week, when New York’s senior senator became the only Democrat in recent memory to lose a government shutdown fight. The way he lost was as distinctive as the loss itself. Having vowed on a Friday not to agree to a funding bill until Congress had a bipartisan agreement to protect the so-called Dreamers (immigrants who came to America illegally as children), by Monday he was crying uncle. By Tuesday angry protesters appeared outside his Brooklyn apartment building, shouting that Mr. Schumer had sold the Dreamers out.

In short, Mr. Schumer’s hard-line start and surrender finish produced the worst of all worlds. To begin with, he provoked more ridicule from a president who seems to enjoy taunting him, especially on Twitter . And Mr. Trump continues to do so, recently tweeting that a legislative solution for the Dreamers “has been made increasingly difficult by the fact that Cryin’ Chuck Schumer took such a beating over the shutdown that he is unable to act on immigration!”

Meanwhile, Mr. Trump also offered a framework for an immigration deal that contains genuine concessions, such as a path to citizenship for all 1.8 million people who qualified for DACA—not just the 800,000 who had enrolled. The president has also suggested, plausibly, that Mr. Schumer refuses to cut a deal because the Democrats prefer to exploit the plight of the Dreamers rather than reach a genuine bipartisan solution.

On the eve of Mr. Trump’s first State of the Union, it puts him in an interesting place. Here’s a what-if: What if Mr. Trump looked up at the gallery full of Dreamers during his address and said, “I have offered a good-faith compromise that would not only resolve your place in America but open to you the precious gift of American citizenship. All I ask is that Chuck Schumer and Nancy Pelosi meet me halfway”?

Still, as trying as Mr. Trump must be, even worse for Mr. Schumer is the split in his own party. It might roughly be characterized as between those looking at 2018 and those looking to 2020.

In the 2018 midterms, Democrats will be defending 26 Senate seats—10 of them in states Mr. Trump carried. Most of these Democrats were irritated by how Mr. Schumer’s stand opened them up to accusations (and the inevitable attack ads) that they’re willing to shut down the government to protect illegal immigrants. So upset were these Democrats by Mr. Schumer’s uncompromising stand that before the weekend was out they had abandoned him for a deal with Majority Leader Mitch McConnell to reopen the government.

In the opposite corner are the 2020 Senate Democrats, i.e., those eyeing a White House run. They sense, correctly, that their party’s base is in full resistance mode. It is no coincidence almost all these Democratic senators—including Kamala Harris, Cory Booker, Bernie Sanders, Elizabeth Warren and Kirsten Gillibrand —voted against ending the shutdown. Some are further embellishing their purist credentials by voting against almost every Trump nominee.

Indulging anti-Trump absolutism is not without its price. Notwithstanding the prevailing orthodoxy that Republicans will be overwhelmed by a blue wave in the 2018 midterms, vulnerable Democratic incumbents such as North Dakota’s Heidi Heitkamp and Indiana’s Joe Donnelly don’t seem so sure.

Republican leaders faced this same dynamic themselves, notably in 2013 when Texas Sen. Ted Cruz persuaded enough Republicans that if they would only shut down the government, they could force Mr. Obama to agree to defund his signature legislative achievement, ObamaCare. Republicans who opposed the shutdown found themselves traduced as RINOs—Republicans in name only. It too ended in humiliating retreat.

Of course, it’s one thing for an individual senator to push his caucus into a futile gesture. It’s quite another for a party leader to do so.

The irony is that by nature Mr. Schumer inclines more to deal-making than suicidal last stands. His problem is that Mr. Trump is an even more polarizing figure for Democrats than President Obama was for Republicans, and what these Democrats want now is to resist. But if Mr. Schumer allows the Democratic zeal for resistance to take the form of rejecting every Trump offer for compromise, Mr. Schumer may well pull off another miracle by making Donald Trump look like the reasonable one in Washington.

For years, Mr. Schumer has been climbing the greasy pole, finally reaching the top last year when he replaced retiring Sen. Harry Reid as leader of the Senate Democrats. Normally the priority of a minority leader would be to regain control of the chamber in which he serves. Alas for poor Mr. Schumer, his tragedy is to have reached the top at precisely the worst moment, caught between a Republican president who can’t stop demeaning him and a Democratic Party that seems determined to ensure he remains a minority leader.

Write to mcgurn@wsj.com.

Appeared in the January 30, 2018, print edition.

https://www.wsj.com/articles/poor-chuck-schumer-1517270982

Qatar Doubles Down on PR Campaign Appealing to U.S. Jews and D.C. Insiders

January 18, 2018

A visit to the emirate by Alan Dershowitz, meetings with Jewish organizations and promises of a new attitude toward Israel: Qatar is working hard to change its image as a Hamas-supporting state, but some in Washington remain unconvinced

By  

Qatar Emir Sheikh Tamim bin Hamad al-Thani, left, shaking hands with U.S. President Donald Trump in Riyadh, May 21, 2017.
Qatar Emir Sheikh Tamim bin Hamad al-Thani, left, shaking hands with U.S. President Donald Trump in Riyadh, May 21, 2017.Jonathan Ernst / Reuters

WASHINGTON – Qatar has recently expanded its public relations effort aimed at improving its image in the United States, including within the Jewish community.

The wealthy emirate, often criticized for having ties to Hamas, has invited influential American public figures – some of them with close ties to the Trump administration – to visit and meet with its senior leadership, which denies providing support to the Gaza Islamist group and other terror organizations.

Last week, prominent New York attorney Alan Dershowitz published an article on the Hill website, following his visit to Qatar at the invitation of the country’s powerful emir, Sheikh Tamim bin Hamad al-Thani. Dershowitz wrote that he was surprised to hear the Qatari response to many of the accusations hurled at the Gulf state, and urged the Trump administration and Congress to reexamine the issue.

Also last week, Qatar hosted former Arkansas Governor Mike Huckabee, a leading right-wing media commentator and father of White House Press Secretary Sarah Huckabee Sanders. Huckabee tweeted that he found Doha, Qatar, to be “surprisingly beautiful, modern, and hospitable.”

skip – Mike Huckabee tweet

Another recent visitor to the tiny emirate, whose wealth comes from its huge natural gas reserves, was conservative radio host John Batchelor. He took his popular audio show to Qatar last week at the behest of the country’s leadership, where he was joined by Thaddeus McCotter, a former Republican congressman from Michigan.

The emirate has also flown in representatives of various Washington think tanks on Qatar-funded trips.

Dershowitz, Huckabee and Batchelor all seem to be visiting as part of the Qatari leadership’s efforts to change its reputation among American politicians as a “problematic” nation associated with its support for Hamas and the Muslim Brotherhood. Qatar hosts some of Hamas’ senior leaders and funds the international media network Al Jazeera, whom neighboring Arab countries have accused of supporting Islamist movements and of destabilizing their regimes.

As part of the attempt to push back against these allegations, Qatar has hired the services of Nick Muzin, a public relations adviser who previously worked as a senior staffer to Republican Sen. Ted Cruz.

skip – Nick Muzin tweet

An Orthodox Jew, Muzin has used his contacts within the Republican Party and the Jewish community to find an ear for Qatar’s arguments in Washington and New York – at a time when the emirate is facing a severe crisis because of attempts by Saudi Arabia to isolate it economically and diplomatically.

When Qatar’s hiring of Muzin’s Stonington Strategies firm was first revealed last summer – for a reported monthly fee of $50,000 – it raised eyebrows in Jewish and conservative circles because of Muzin’s professional background. Cruz, his former boss, has called for the Muslim Brotherhood to be designated a terrorist organization, yet Qatar is considered a major Brotherhood supporter in the Arab world.

Who are the good guys?

Muzin’s first attempts to organize meetings for the Qatari emir and crown prince with Jewish-American leaders ran into public opposition and became a source of debate in the Jewish press. Fast forward a few months, though, and it seems the Qatari public outreach effort is slowly beginning to change some minds in Washington and elsewhere.

Dershowitz’s article – titled “Why is Qatar being blockaded and isolated?” – is a good example, especially in light of the author’s reputation as a staunch supporter of Israel.

He wrote he had “just returned from a private visit to Qatar, at the invitation of and paid for by the Emir. I do not represent Qatar’s government and, to be honest, I was initially reluctant to accept his invitation because I had heard that Qatar was contributing to Hamas, which is a terrorist group, and that it was supporting Iran, which is the largest exporter of terrorism in the world. But then I did my own research and concluded that the Qatar issue was more complex and nuanced. So I wanted to see for myself.”

Alan Dershowitz, left, with Israeli Prime Minister Benjamin Netanyahu in 2010.
Alan Dershowitz, left, with Israeli Prime Minister Benjamin Netanyahu in 2010.עמוס בן גרשום / לע”

One of the first things that surprised him, Dershowitz wrote, was that as soon as he got to Doha, Qatar’s capital, “I was surprised to read that an Israeli tennis player had been welcomed by the Qatari government to participate in a tennis tournament.” Dershowitz compared this recent event to Saudi Arabia’s refusal last month to allow Israeli chess players to attend the world chess championship held in Riyadh. “Moreover,” he added, “Saudi officials criticized Qatar for allowing an Israeli tennis player to participate in its tournament, and for ordering ‘the Israeli flag to be raised.’”

“This episode,” he concluded, “made clear to me that the Saudis were not necessarily the good guys in their dispute with Qatar.”

After going over Qatar’s reaction to allegations that it supports Hamas and other terror organizations (allegations that Qatar’s leadership denies), Dershowitz wrote: “After hearing these different accounts, I observed that Qatar is quickly becoming the Israel of the Gulf States, surrounded by enemies, subject to boycotts and unrealistic demands, and struggling for its survival. I heard a lot of positive statements regarding Israel from Qatari leaders as well as hints of commercial relationships between these isolated nations.”

In a conversation with Haaretz on Tuesday, Dershowitz emphasized that he has “not come to any firm conclusions” about Qatar’s ties to Hamas, Iran and other problematic actors in the region. He did, however, leave the emirate with “somewhat more nuanced” views, as “there appear to be two sides to the story.”

A group of Palestinian women holding Qatar flags and banners during a demonstration in support of Qatar, in Khan Yunis, Gaza, June 14, 2017.
A group of Palestinian women holding Qatar flags and banners during a pro-Qatar demonstration in Khan Yunis, Gaza, June 14, 2017. The gulf state’s support of Hamas remains a big stumbling block.Ali Jadallah / Anadolu Agency

Dershowitz explained that he asked the emir and other senior Qatari officials to assist with the release of two Israeli citizens currently being held in Gaza, as well as the return of the bodies of two slain Israeli soldiers, Oron Shaul and Hadar Goldin, killed in action during the 2014 Gaza war. “They told me they’re trying,” he said, stopping short of providing more details on the sensitive subject.

Coincidentally, on Monday – shortly after the publication of Dershowitz’s article and the culmination of Huckabee’s Qatar visit – U.S. President Donald Trump talked with the emir by phone. A White House readout of that conversation stated: “The President thanked the Emir for Qatari action to counter terrorism and extremism in all forms, including being one of the few countries to move forward on a bilateral memorandum of understanding.” It continued: “The leaders discussed areas in which the United States and Qatar can partner to bring more stability to the region, counter malign Iranian influence, and defeat terrorism.”

One person unmoved by Dershowitz’s article was Jonathan Schanzer, vice president of the D.C. think tank Foundation for Defense of Democracies. He has written extensively in recent years about Qatar’s ties to Hamas and other terror organizations. “Stick to what you know,” Schanzer tweeted Dershowitz. “Happy to brief you sometime on Qatar. Doha is bad news.” And in a subsequent tweet, Schanzer added: “The man [Dershowitz] defends Israel until he’s blue in the face and then normalizes Hamas’s top patron.”

Dershowitz responded, “Happy to hear facts. Not conclusions. I make up my own mind based on facts.”

skip – Jonathan Schanzer tweet

skip – Alan Dershowitz tweet

Schanzer told Haaretz on Wednesday that “there is nothing wrong with analysts and intellectuals traveling to Qatar to learn about the situation there. The problem is that during those visits, they’re not hearing the other side of the story. They are getting the government line and then they go home. They need to hear also from Qatar’s critics. There is a lot of material they should become aware of about Qatar’s ties to Hamas, Al-Qaida, the Taliban, the Muslim Brotherhood and other problematic actors.”

Schanzer previously called to designate Qatar as a state sponsor of terrorism for its ties to these groups. “If you really want to see all sides of the story,” he told Haaretz, “you’re not going to get it in Doha.”

The problem with Qatar

Qatar is not only inviting opinion formers to Doha – it is also working to bring its arguments to Washington. Last week, the Qatari minister in charge of aid and assistance to Gaza, Mohammed al-Emadi, visited the U.S. capital, where he met with, among others, members of Congress and diplomats. Emadi came to Washington partly because he is the rare example of an Arab diplomat who, according to press reports, works on a regular basis with Israeli security officials as part of Qatar’s efforts to help reconstruct the Gaza Strip following the 2014 war. By presenting him to decision-makers and influencers in the U.S. capital, the emirate is hoping to convince them it has a positive impact in Gaza and is working with Israel to improve the situation there.

“The frustration with Qatar,” said an Israeli official who asked not to be identified because of the sensitivity of the issue, “is that they do some good things in Gaza. But at the same time, there are problems arising from their use of Al Jazeera and their ties with Hamas. It’s a complicated situation. They are one of the only countries in the world that truly cares about improving the situation in Gaza. They’re also one of the only countries that has ties to all the bad guys in the region – Hamas, Sunni Islamists and Iran.”

A Qatari woman walking in front of the city skyline in Doha, Qatar.
A Qatari woman walking in front of the city skyline in Doha, Qatar.Kamran Jebreili/AP

Zionist Organization of America President Morton Klein told Haaretz that he has discussed Qatar’s policies with Muzin, whom he has “known and worked closely with for a number of years – ever since he was an important staffer for Sen. Cruz.” Last September, Klein refused to meet with the Qatari leadership, accusing the regime of funding “Islamic terrorists who aim to murder Jews, Americans, Christians and even fellow Muslims.”

This week, though, Klein said that while he still has many doubts about Qatar’s role in the region, he is open to hearing the arguments being fleshed out by Dershowitz and others. “I think Dershowitz’s article was totally reasonable,” Klein said. “I think we should check out their claims. If they’re true, then there’s no reason not to go there and engage in dialogue with them. But if they’re lying, then we should have nothing to do with them.”

Klein added, though, that Qatar has to stop airing incitement on Al Jazeera if it ever wants to win the trust of the United States and Israel.

With regards to his conversations with Muzin, Klein said the PR maven “made it clear to me that he wouldn’t take on the job of working for Qatar unless he was assured by the leaders of Qatar that their goal is to make Qatar a more free and civilized society, and to do something about the problems with Al Jazeera.”

Qatar still faces significant criticism on Capitol Hill. Last October, two Republican members of Congress published an article titled “It’s Up to Congress to Hold Qatar Accountable.” Reps. Dan Donovan and Brian Fitzpatrick – both members of the House Foreign Affairs Subcommittee on the Middle East and North Africa – wrote that “Qatar is the master of playing all sides. The same country that served as the U.S. Central Command headquarters during the invasion of Iraq and still hosts a critical American air base today also sponsors Hamas’s anti-Israel agenda, gives sanctuary to terrorist leaders and spreads its wealth to terrorist and extremist groups throughout the Middle East.”

In November, a Democratic consulting firm, Bluelight Strategies, which has also worked with Qatari opposition leaders opposing the country’s regime, circulated a political memo among Democrats in Congress urging them to attack Republicans and the Trump administration for turning a blind eye to Qatar’s ties with Hamas and other terror groups. The memo, titled “Emerging GOP Vulnerability on Terrorism, Iran and Israel,” highlighted the Trump administration’s confusing policy regarding the Gulf crisis, and urged Democrats to speak out on the issue: “The more the Trump administration and Congressional Republicans are called out for embracing Hamas state sponsorship of terrorism, the more the message will penetrate.”

This view of Qatar as a country that tries to have it both ways is still prevalent in Washington and, as of now, it remains the main challenge standing in the way of the emirate’s charm offensive.

A man walking past a branch of Qatar National Bank (QNB) in Riyadh, Saudi Arabia, June 5, 2017.
A man walking past a branch of Qatar National Bank (QNB) in Riyadh, Saudi Arabia, June 5, 2017. Qatar is looking to make friends in Washington after the Saudis triggered a diplomatic crisis.\ Faisal Nasser/REUTERS

Senate Passes Sweeping Revision of U.S. Tax Code

December 2, 2017

Republican-backed plan lowers corporate rate to 20% and reduces individual rates

Senate staff talk on the first floor of the Capitol in Washington on Friday.
Senate staff talk on the first floor of the Capitol in Washington on Friday. PHOTO: ALEX EDELMAN/ZUMA PRESS

WASHINGTON—The Senate passed sweeping revisions to the U.S. tax code past midnight Saturday after Republicans navigated a thicket of internal divisions over deficits and other issues to place their imprint on the economy.

The bill, which included about $1.4 trillion in tax cuts, would lower the corporate rate to 20% from 35%, reshape international business tax rules and temporarily lower individual taxes. It also touched other Republican goals, including opening the Arctic National Wildlife Refuge to oil drilling and repealing the mandate that individuals purchase health insurance, which would punch a sizable hole in the 2010 Affordable Care Act. But some objectives, such as repealing the alternative minimum tax, fell by the wayside in last-minute wrangling.

“In the end it all came together and we’re pretty excited about what we’ve been able to accomplish for the American people,” Senate Majority Leader Mitch McConnell (R., Ky.) said in an interview Friday. “We’ve got a corporate rate at 20% that we think makes us competitive in the world again and provided substantial middle-income tax relief.”

The bill passed 51-49, with all but one Republican voting for it and all Democrats voting against. The sole Republican, Sen. Bob Corker of Tennessee, stated his opposition before the vote, citing worries it would expand budget deficits.

The bill’s ultimate passage would mark a legislative victory for President Donald Trump and his fellow Republicans. Mr. Trump has made the tax overhaul a centerpiece of his economic policy goals, focusing on a rewrite of business taxes, which he has argued make the U.S. uncompetitive internationally. The bill could also give lawmakers something to campaign on in the 2018 midterm elections.

Democrats blasted the bill, calling it an unacceptable giveaway to corporations and the wealthy. They also criticized last-minute Republican adjustments and waved handwritten amendments around the Senate floor to show how hastily the changes were being made.

“A flurry of last-minute changes will stuff even more money into the pockets of the wealthy and the biggest corporations while raising taxes on millions in the middle class,” Sen. Chuck Schumer of New York, the chamber’s Democratic leader, said.

The House and Senate still need to reconcile competing versions of the tax plan, something GOP leaders hope to do by Christmas. The House and Senate bills overlap in many ways, and lawmakers expressed optimism about getting a final deal done.

“The bills are not all that different,” Mr. McConnell said. “We tried to move ours somewhat in the House direction.”

Senate Republicans called their bill an economic booster shot, their best chance to create faster sustained growth and higher wages. But it comes with risks. Congress’s own nonpartisan analysis found that the economic benefits would be modest and fade over time.

The Joint Committee on Taxation estimated that the tax cuts wouldn’t pay for themselves, as Republicans promised. Instead the analysis found they would increase deficits by $1 trillion over a decade, even after accounting for economic growth.

Reconcile This

The House and Senate tax bills differ in some important ways which will need to be sorted out in a conference committee of lawmakers from both chambers before final passage.

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Investors, for now, are more excited about the prospect of lower corporate taxes than about the risks associated with larger government deficits. The Dow Jones Industrial Average rose 673.60 points for the week, or 2.9%, to 24231.59. Yields on 10-year Treasury notes, which might be expected to rise if bond investors were worried about deficits, remain comfortably low, below 2.5%.

Senators began voting on amendments late Friday night and that continued into early Saturday. They defeated, 29-71, an attempt by Sen. Marco Rubio (R., Fla.) and Mike Lee (R., Utah) to expand the child tax credit for low-income families, which would have been paid for by setting the corporate tax rate at 20.94%.

Vice President Mike Pence broke a tie in favor of a proposal from Sen. Ted Cruz (R., Texas) to allow the use of 529 savings accounts to pay for elementary and secondary school costs, including private-school tuition.

Saturday’s vote came after a week of long hours and frantic rewriting and deal-making. The GOP tax effort wobbled late Thursday after the Joint Committee on Taxation analysis raised the concerns of budget hawks about deficits. An attempt to add deficit countermeasures in the bill failed to clear parliamentary rules.

Mr. McConnell and his team salvaged the measure with a series of last-minute deals to sway wavering senators.

Sens. Steve Daines (R., Mont.) and Ron Johnson (R., Wis.) won bigger tax breaks for pass-through businesses such as partnerships and S corporations. Sen. Jeff Flake (R., Ariz.) secured more aggressive depreciation rules to encourage business investment after 2022.

Sen. Bob Corker (R. Tenn.) speaks to members of the media at the Capitol in Washington on Friday.
Sen. Bob Corker (R. Tenn.) speaks to members of the media at the Capitol in Washington on Friday.PHOTO: ALEX WONG/GETTY IMAGES

Sen. Susan Collins (R., Maine) scored a $10,000 deduction for property taxes, an expanded but temporary deduction for people with large medical expenses, and a promise of future bipartisan health-care legislation to mitigate the effects of repealing the individual health-insurance mandate.

“This bill will provide much-needed tax relief and simplification for lower- and middle-income families, while spurring the creation of good jobs and greater economic growth,” Ms. Collins said.

To help pay for some of those changes, Republicans increased a new tax on companies’ stockpiled foreign profits to 14.5% for cash and 7.5% for illiquid assets, from 10% and 5% in a previous version.

Senate Republicans abandoned other goals. They preserved the alternative minimum tax instead of repealing it. They backed off a plan to abolish the estate tax. They retained seven tax brackets instead of collapsing them into three as planned. And after years of warning about the rising national debt and promising a tax overhaul that would be revenue-neutral, they chose to proceed despite warnings the measure would add to deficits in the long run.

Lawmakers released the final changes—moving around hundreds of billions of dollars—a few hours before the last vote, and there was no updated analysis of the bill’s impact on taxpayers and the economy as Republicans moved toward voting on it.

“The Republicans have managed to take a bad bill and make it worse. It was chock-full of special-interest giveaways before tonight,” Mr. Schumer said.

The bill would overhaul much of the U.S. tax system in ways that tax experts are only beginning to understand.

Mr. Trump and some Republicans set the 20% corporate tax rate as an immovable objective and despite some occasional doubts, the GOP stuck with it. That is a win for domestic retailers and manufacturers who have spent years building the political case for a lower tax rate.

Pass-through firms, which pay their business taxes through individual returns rather than corporate returns, won major concessions. They would get a 23% deduction from individual rates. More than half of U.S. business income goes to pass-throughs, and more than half of that goes to the top 1% of households.

Tax analysts said this deduction opens new and unprecedented avenues for tax avoidance, with individuals likely seeking to declare as much of their income as possible as lower-taxed business profits.

Even in a bill that provides sizable tax cuts to many, some taxpayers are set to lose. The bill would prevent individuals from deducting state and local income taxes. That is likely to raise federal taxes on upper-middle-class wage earners in high-tax states, such as California, Connecticut, Maryland, New Jersey and New York. They are all represented by Democrats in the Senate.

The standard deduction would be nearly doubled and the child tax credit would rise, while personal exemptions would be repealed. For many households, that combination would modestly increase the amount of earnings that aren’t subject to income tax.

The bill also would push millions of households out of itemizing deductions. That would reduce the incentive to deduct mortgage interest and charitable contributions. But nonprofits, home builders and real-estate agents were unable to sway Republicans to reverse course on the measure.

Debt-reliant businesses would lose, too, under a provision that limits interest deductions to 30% of income.

Republicans said those changes were necessary to lower the rate and make other changes that would encourage investment in the U.S.

“The reforms that we make in this bill allow American companies to compete and win against those other countries around the world,” Sen. John Thune (R., S.D.) said.

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

https://www.wsj.com/articles/senate-passes-sweeping-revision-of-u-s-tax-code-1512197717

Related:

Senate passes Republican tax plan in major win for Trump and party leaders

December 2, 2017

By  Erica Werner and Damian Paletta
The Washington Post

December 2 at 1:51 AM

Senate Republicans passed a $1.5 trillion tax bill early Saturday morning that bestows massive benefits on corporate America and the wealthy while delivering mixed blessings to everybody else.

After a frantic round of negotiations, Republicans came together in near unanimity behind the landmark legislation. The final vote was 51 to 49, with Sen. Bob Corker (R-Tenn.) the lone GOP holdout. Democrats unanimously opposed the bill.

The measure still has to be reconciled with an earlier House-passed version before being sent to President Trump. Yet in getting the bill through the Senate, Republicans succeeded where they failed earlier this year, when their efforts to repeal the Affordable Care Act collapsed in mortifying fashion.

This time, urged on by donors and fearful of facing voters in next year’s midterm elections without a legislative achievement to show, Republicans said time and again that failure was not an option.

“The American people wanted change,” said Sen. John Barrasso (R-Wyo.). “We were able to deliver.”

The centerpiece of the GOP plan is a move to lower the corporate tax rate from 35 percent to 20 percent, starting in 2019. The Senate tax bill would also temporarily cut tax rates for families and individuals until 2025.

But the bill would kill a number of tax benefits. It would subject fewer people to the estate tax, a levy charged on massive inheritances, but stop short of eliminating that tax altogether.

The most recent review of the bill by the Joint Committee on Taxation, Congress’s nonpartisan tax analysts, found that only 44 percent of taxpayers would see their burden reduced by more than $500 in 2019 but that high earners would fare much better than the poor under the bill.

And the bill makes other changes that reach far beyond the tax code itself. It repeals the individual mandate from the Affordable Care Act, a major change that was added in recent weeks as part of a broader GOP effort to dismantle the Obama-era law. The individual mandate creates penalties for many Americans who don’t have health insurance, but the repeal would leave 13 million more people uninsured. It authorizes oil drilling in the Arctic National Wildlife Refuge in Alaska. And by curtailing deductions for state and local taxes, it will put pressure on some state and local spending on education, transportation and public health programs.

The tax package still must clear a couple more hurdles before it can become law. There are numerous differences between the House and Senate versions, ranging from when certain tax cuts expire to how the estate tax is handled, and though none are seen as show-stoppers, complications could arise. There will be major implications for the taxes paid by families and individuals based on how those discussions go. And the negotiations over the tax bill will proceed as Congress simultaneously faces a Dec. 8 deadline for government funding to expire.

Nonetheless, GOP leaders still aim to get a final bill on Trump’s desk before Christmas.

U.S. Sen. Ron Johnson talks to reporters after a vote in the Senate on Nov. 30 in Washington. (Mark Wilson/Getty Images)

For Trump, a victory on the tax plan would stand as a signal triumph, in sharp contrast with the political troubles besetting the White House on other fronts, especially with the Senate action coming on the same day that former national security adviser Michael Flynn pleaded guilty to lying to the FBI about his contacts with the Russian ambassador.

In a span of hours Friday, Senate GOP leaders secured the final few votes they needed, from Sens. Ron Johnson (R-Wis.), Jeff Flake (R-Ariz.) and Susan Collins (R-Maine).

The concessions made to get them on board forced GOP leaders to add more than $250 billion in tax cuts for individuals and businesses to their plan. To offset some of these costs, they had to abandon efforts to fully repeal the alternative minimum tax for individuals and companies, instead scaling it back.

The AMT was put in place in the 1980s as a way to prevent wealthier Americans from using tax deductions to avoid paying taxes.

Flake announced his “yes” vote after he said he had secured leadership backing for two priorities: one related to how businesses can deduct major investments like equipment purchases and the second involving a solution for immigrants brought illegally to the United States as children.

“Having secured both of those objectives, I am pleased to announce I will vote in support of the tax reform bill,” Flake said in a statement.

Flake said his deficit concerns were allayed by a new approach to the bill’s expensing deduction, which allows businesses to write off the full cost of investments in equipment and facilities. The change calls for gradually phasing out the break after five years instead of abruptly canceling it. That adds $34 billion to the cost of the bill, but Flake said it would save money in the longer term by making lawmakers less likely to extend the break in the face of pressure from business interests.

Flake also said the administration and Senate leaders had agreed to work with him toward a resolution for immigrants brought illegally to this country as children. Known as “dreamers,” these immigrants were granted temporary protections under the Obama administration, which Trump has announced he will revoke in March.

Flake is a longtime proponent of reforming immigration laws and wants permanent protections for dreamers. He said Vice President Pence had committed to working with him on the issue, though without offering a timeline or a specific solution.

Johnson came on board after leadership sweetened the deal for certain businesses whose owners pay taxes through the individual code rather than at corporate rates. Johnson retains partial ownership in one such “pass-through” business, and the issue has been a key concern.

“I appreciate the Senate leadership’s willingness to work to close the gap between pass-through businesses and C corporations,” Johnson said. The term C corporations refers to those businesses that file their taxes on the corporate side of the code.

Senate GOP leaders had proposed allowing pass-through owners to deduct 17.4 percent of their income from their taxes and then pay taxes on the remaining income. Johnson and Sen. Steve Daines (R-Mont.) argued for days that this was not generous enough for these businesses, and GOP leaders reluctantly raised the deduction level to 20 percent, which added roughly $60 billion to the size of the tax cut. But Johnson continued holding out, and on Friday he said the deduction had been raised to 23 percent, securing his support.

That meant that he and Daines were able to extract $114 billion in tax cuts for these firms in just a few days.

Collins said leadership had promised her the bill would protect certain deductions individuals use to lower their tax bills, including on matters related to medical expenses and tax payments to state and local governments. Collins also said leadership had agreed to support passing two bipartisan bills to help stabilize the health insurance system set up under the Affordable Care Act.

Senate leaders had little margin for error, since they can lose only two GOP votes and still prevail in the closely divided chamber. Democrats are unanimously opposed to the bill, and took turns Friday delivering scorching floor speeches slamming it as a giveaway to the rich.

And as evening wore into night Friday with Republicans still fine-tuning the final language of the bill, Democrats exploded in outrage when Sen. Claire McCaskill (D-Mo.) said she received a list of planned changes from a lobbyist and not from Republicans in the Senate who were keeping all their decisions closely held.

A few minutes later, a 479-page draft of the changes leaked out to the public. It included several pages of hand-written changes to the bill. Democrats, who were effectively powerless in trying to stop the bill’s passage, tried to cast the last-second changes as boondoggles for corporations which had not been debated or explained.

Some of the hand-written changes were crammed in the margin and hard to decipher.

Sen. Jon Tester (D-Mont.) posted a video of himself on Twitter acting incredulous as he slammed the bill down on a table.

“This is your government at work,” he said in disgust.

Friday’s progress was a turnaround for Republicans after the bill hit snags Thursday. An unfavorable economic analysis had inflamed Corker, who was demanding assurances that the bill will not add to the deficit. Corker wanted a “trigger” added to the bill to kick in and raise rates if growth projections weren’t met, but the Senate parliamentarian ruled his plan unworkable under the complex rules governing the legislation.

The result was a tense standoff Thursday evening, as Johnson, Flake and Corker threatened a last-minute objection to stop the tax bill from passing. This forced GOP leaders to scramble to try to accommodate some of their concerns, before the lawmakers finally relented.

Negotiations went through the night, but on Friday it emerged that Corker’s demands had not been met. There will be no “trigger” in the bill, nor any other mechanism to make up for a $1 trillion deficit increase that congressional scorekeepers say will result from the bill, even when taking into account economic growth.

Corker was grim-faced as the outcome became clear.

“I am disappointed. I wanted to get to yes,” he said in a statement. “But at the end of the day, I am not able to cast aside my fiscal concerns and vote for legislation that I believe, based on the information I currently have, could deepen the debt burden on future generations.”

Sen. James Lankford (R-Okla.), who had also pushed to address deficit issues, said he was disappointed there would be no mechanism to do so but insisted the bill would produce more growth than most analysts have suggested.

“I think it’s a stronger bill with a safety net, the just-in-case piece. But that’s not what we have,” Lankford said. “I’m going to be ‘yes’ either way. It’s walking the tightrope with a net or without a net. You prefer to have a net, but I think it’s going to work.”

With the bill on the floor, senators offered amendments from both sides Friday, but they were largely disposed of in predictable partisan fashion.

GOP leaders had feared trouble from an amendment pushed by Sens. Marco Rubio (R-Fla.) and Mike Lee (R-Utah) to further expand the child tax credit for low-income families. To do so, they proposed slightly increasing the corporate tax rate, moving it back up to 22 percent, a change opposed by fellow Republicans. GOP leaders were concerned Democrats would vote for the amendment and that it would pass, creating a new headache for leadership.

But in the end the Rubio-Lee amendment failed by a wide margin, 71-29. Rubio and Lee had scaled their measure back in an effort to draw GOP support, but that didn’t work. Instead they drove away Democrats, who were mostly not eager to add a bipartisan veneer to a bill they oppose anway. A more robust Democratic version of the amendment also failed.

There was a moment of drama during amendment debate over a measure by Sen. Ted Cruz (R-Texas) to bring the Senate bill in line with the House version by expanding the use of education savings accounts to allow them to apply to expenses for religious schools and homeschooled students. The amendment stood at a vote of 50-50 after Collins and Sen. Lisa Murkowski (R-Alaska) joined all Democrats in voting “no.” Vice President Pence was summoned and broke the tie in favor of Cruz.

https://www.washingtonpost.com/business/economy/johnson-to-back-senate-tax-bill-putting-gop-leaders-close-to-securing-passage/2017/12/01/0226ff98-d6a2-11e7-b62d-d9345ced896d_story.html?utm_term=.e276a70b24e0

Steve Bannon Invites Pro-Israel Groups To Join His “Anti-Establishment Insurgency”

November 18, 2017
BY CAROLINE B. GLICK
 NOVEMBER 16, 2017 21:44

 

Bannon invited the pro-Israel activists to join what he referred to as the “insurgency movement against the Republican establishment and against the permanent political class in Washington, DC.”

Bannon and the anti-Israel establishment

Then White House Chief Strategist Steve Bannon boards a vehicle as US President Donald Trump prepares to depart Mar-a-Lago estate in Palm Beach, Florida, US, April 9, 2017.. (photo credit:REUTERS/CARLOS BARRIA)

Bannon invited the pro-Israel activists to join what he referred to as the “insurgency movement against the Republican establishment and against the permanent political class in Washington, DC.”

Bannon argued that it is because of the Republican establishment that then president Barack Obama was able to implement the nuclear deal with Iran.

Bannon is correct. Had a non-establishment senator such as Ted Cruz chaired the Senate Foreign Affairs committee in 2014 and 2015 instead of Senator Bob Corker, in accordance with the US constitution, Obama’s radical nuclear deal would have been treated like a treaty. It would have required the approval of two-thirds of the Senate and it would have gone down in flames.

Instead, Corker stood the Constitution on its head, co-sponsoring the Iran Nuclear Agreement Review Act, which required two-thirds of the Senate to reject the deal in order to block its implementation.

As for US financing of Palestinian terrorism, the blame lies mainly at the feet of the permanent political class – particularly the denizens of the State Department.

With the support of Democratic and establishment Republican lawmakers, for more than 20 years the State Department has successfully watered down or canceled legislative initiatives to end US support for the terrorism-supporting, PLO -led Palestinian Authority. State Department officials have similarly led every effort to water down or cancel Congressional initiatives that strengthen the US alliance with Israel.

For instance, it was the State Department that fought tooth and nail to overturn the 2002 law that permitted US citizens born in Jerusalem to list their place of birth as Israel. It was the State Department that insisted the 1996 law requiring the transfer of the US embassy to Jerusalem include a presidential waiver.

The power of the State Department and its colleagues in the permanent bureaucracy to maintain US policies that are substantively anti-Israel and pro-PLO is being exerted today in the lead up to the publication of Trump’s “peace plan” for Israel and the Palestinians.

According to a report published in The New York Times last weekend, sourced to White House officials, Trump intends to announce his “peace plan” in January.

Later reports disputed that claim, saying the plan would be announced in March.

Whatever the case, according to the Times’ story, Trump’s “peace plan” will look similar to – and be substantively indistinguishable from – “peace plans” adopted by the last three presidents.

Like Bill Clinton, George W. Bush and Obama, according to the Times’ account, Trump’s plan will be based on the assumption that for peace to be concluded between Israel and the PLO , a Palestinian state must be established on land now controlled by Israel.

Trump’s plan will reportedly also discuss the partition of Jerusalem and address the Palestinian claim that the 450,000 Israelis living beyond the 1949 armistice lines in Judea and Samaria must be expelled from their homes and communities for peace to be achieved.

In a manner similar to Bush’s “Roadmap to Peace,” analysts told the Times that Trump’s plan will include two stages. In the first stage, Israel will be required to block construction of homes for Jews in united Jerusalem and Judea and Samaria; to transfer control over land in Area C to the PA ; and to restate its commitment to the establishment of a Palestinian state.

This account was disputed by White House officials.

But, despite the denials, there are indications that the Times’ account is accurate. For instance, Prime Minister Benjamin Netanyahu has justified all his recent moves to curtail construction for Jews in Jerusalem, Judea and Samaria, to provide funding to the PA and to suspend initiatives to expand Jerusalem’s municipal borders as necessary to prevent a fissure in US-Israel relations.

Trump’s team is led by his senior adviser and sonin- law, Jared Kushner, and run by his chief negotiator, Jason Greenblatt. Members of Greenblatt’s team include deputy national security adviser Dina Powell and US Ambassador to Israel David Friedman.

According to the Times, Greenblatt and his team “are consulting with Donald Blome, the consul general in Jerusalem, and others from the State Department and the National Security Council.”

And this is where the problem begins.

Ahead of Trump’s visit to Israel in May, Channel 2 reported that Blome lobbied heavily for Trump to cancel his plans to visit the Western Wall. While Trump did visit the Wall, Blome – supported by National Security Adviser H.R. McMaster – blocked Netanyahu from accompanying Trump on his visit.

In a press briefing, McMaster refused to say that the Western Wall is located in Israel.

Secretary of State Rex Tillerson referred to Tel Aviv as the “home of Judaism” on the plane ride to Israel.

Secretary of Defense James Mattis said at his Senate confirmation hearing that Tel Aviv is Israel’s capital.

In other words, Blome, Tillerson, McMaster and Mattis have all embraced the view that the US should not treat Israel with the same respect it treats other countries – let alone other allies. Instead of deserving respect, Israel, in their view, deserves unique reproach to the point where even acknowledging its capital city and basic geographic facts is considered unacceptable.

This then brings us back to the “peace plan” that Greenblatt and Kushner are putting together in consultation with Blome, the State Department and McMaster’s National Security Council.

If Greenblatt and Kushner compose a “peace plan” that satisfies the State Department and its governmental counterparts, and if Trump adopts it as his official position, they will guarantee that he will fail to advance the cause of peace; will harm Israel; will empower the PLO ; and diminish the US’s standing as a power in the Middle East.

This is the guaranteed outcome of any plan that is supported by the State Department because any plan that the State Department and its allies support will be based upon the core assumption regarding the Arab-Israel conflict that the State Department embraced in 1993.

In 1993, Israel and the PLO concluded a peace deal in Oslo based on the European assumption that Israel is to blame for the Arab-Israel conflict.

According to the European narrative, the Arab conflict with Israel – and indeed, all the pathologies of the Arab world – are rooted in the Palestinian conflict with Israel.

The Palestinian conflict, in turn, owes to the absence of a Palestinian state. And there is no Palestinian state because Israel refuses to surrender sufficient land to the PLO to appease it.

Until 1993, this was not the US’s position.

From 1967 through 1993, the US position was that the Palestinian conflict with Israel was a function of the Arab conflict with Israel. The Arab conflict was rooted in the Arab world’s rejection of Israel’s right to exist in secure and recognized borders – or really, in any borders. So long as this remained the position of the Arab world, there would be no peace between Israel and its neighbors.

Israel’s peace treaties with Egypt and Jordan are based on this pre-Oslo process assumption.

But when it assumed leadership of the Oslo process, the US also embraced the European narrative it was predicated on: Everything is Israel’s fault.

The US’s continued funding of the PA , despite its support for terrorism, owes to the State Department’s adherence to the European narrative. The US’s refusal to treat Israel with the respect due an ally by, among other things, locating its embassy in its capital, owes to the State Department’s power to dictate US policy.

We saw that power brought to bear in 2003 with the drafting of the Roadmap.

In 2002, Bush said he would not support Palestinian statehood unless new Palestinian leaders who didn’t support terrorism took over the PA from Yasser Arafat.

Rather than take Bush’s position seriously, the State Department emptied it of all meaning.

US officials crowned Arafat’s deputy of 40 years, Mahmoud Abbas, as a reformer and peacemaker, despite the utter absence of any evidence pointing to this conclusion.

Having done so, the State Department declared that reform had been achieved. In support of that reform, they expanded US support for the PA and intensified US pressure on Israel.

Bush’s State Department was able to subvert Bush’s position because neither then secretary of state Colin Powell nor then national security adviser Condoleezza Rice supported it. Both were more than happy to pretend that the US policy toward Israel and the Palestinians had shifted toward Israel, when the opposite was the case.

We see a similar situation unfolding today with Trump.

While Trump has not called for new leadership, he has called for an end to Palestinian financing of terrorism. This demand will clearly not be met now that the PLO has reached a power-sharing agreement with the Hamas terrorist regime in Gaza. Every cent transferred to Gaza is a cent that supports terrorism.

And yet, according to the Times account, and judging by Netanyahu’s behavior, the Trump administration is preparing a “peace plan” that will bring no peace but will harm Israel and empower the PLO .

The thing of it is that it is hard to imagine that Trump is engaged sufficiently in discussions of the issue to be aware of what is likely taking place. Bush certainly was not aware that his positions were being undermined by his advisers.

This brings us to Greenblatt and Kushner.

Whereas Rice and Powell were consummate Washington insiders whose careers were made in the bosom of the foreign-policy establishment, Greenblatt, Kushner and Friedman are all consummate outsiders. They owe the establishment nothing. Dina Powell is the only member of Trump’s team who is an establishment figure.

Trump brought in his team of outsiders to run his Middle East policy because he understood – and repeatedly remarked on the fact – that Washington’s foreign policy establishment has failed for decades to develop successful Middle East policies.

If we are to believe the Times story and heed the signals Netanyahu has sent, Kushner and Greenblatt have surrendered to the establishment and are poised to conclude a peace plan that will be substantively identical to those of the past three administrations.

And, as a consequence, it will fail just as badly as the policies of the past three administrations.

Bannon is right that pro-Israel forces should fight to diminish the power of the Washington foreign- policy establishment – first and foremost the State Department – to empty the term pro-Israel of substance. The question is whether that fight needs to be directed at the White House or whether Trump’s team of outsiders is willing and able to stand up to that establishment and adopt a policy not based on hostility toward Israel and support for Palestinian terrorists and, therefore, not guaranteed to fail.

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Unruly GOP Tax Factions Put Senate’s Tax Plan in Jeopardy

November 13, 2017

Bloomberg

By Sahil Kapur

  • Groups include fiscal skeptics, tax-cut fans and wildcards
  • Senate leaders will have to corral 50 votes quickly to succeed
Senate Majority Leader Mitch McConnellPhotographer: Al Drago/Bloomberg

Senate Majority Leader Mitch McConnell is about to face a legacy-defining test of whether he can keep his unruly caucus in line to deliver President Donald Trump’s coveted goal of “massive tax cuts” in 2017.

He needs 50 of 52 members, and they have a variety of competing demands. Some want to limit new deficits, while others want to deepest tax cut possible; some prioritize family tax breaks while others want to give businesses a boost; some have parochial concerns while others tend to be notoriously difficult to win on major pieces of legislation.

Senate Majority Whip John Cornyn says he wants a floor vote the week of Nov. 27. That’s two weeks away. Here are the factions McConnell and his team have to navigate:

The Fiscal Skeptics

The tax plan going before the Senate Finance Committee Monday would increase the federal deficit by about $1.5 trillion over the next decade — before accounting for any economic growth that it might spur. That complicates the plan’s prospects among some Republicans.

Tennessee’s Bob Corker, Arizona’s Jeff Flake and Oklahoma’s James Lankford have all warned against fiscal recklessness in the bill.

Corker says he doesn’t want a “penny” in new deficits or he’ll vote against the bill. Lankford says it should be revenue-neutral in the first decade and beyond. Both say they’re willing to assume “reasonable” economic growth that would cushion the deficit impact.

After the Senate plan’s rollout Thursday, Flake fired a warning shot: “I remain concerned over how the current tax reform proposals will grow the already staggering national debt,” he said.

Corker and Flake plan to retire next year, freeing them from political pressure to support their party or please GOP donors.

The Senate plan will change, but for now, one analysis says it would increase the deficit. On Friday, a conservative-leaning policy group, the Washington-based Tax Foundation, projected that plan would boost the deficit $516 billion over a decade, even after assuming economic growth.

The Businessmen

Georgia’s David Perdue is the former CEO of both Reebok and Dollar General. South Dakota’s Mike Rounds is a former partner for an insurance and real estate firm. For both, the business side of the tax plan is paramount.

If any new revenue measures went after businesses to boost offsets, that could be a problem for them.

So far, Congress’s proposal to cut the corporate tax rate to 20 percent from 35 percent has gotten the most attention among business provisions. The House bill would deliver that cut next year, but the Senate plan would delay it until 2019. That won’t sit well with Perdue, who has said that “delays on tax would damage our economy.”

“We need to have a sense of urgency like never before in order get this done this year,” he has said of tax cuts.

Rounds said last month that he wants an “equitable” 25 percent tax rate for partnerships, limited liability companies and other so-called pass-through businesses — a provision that doesn’t include income limits on which firms get the low rate.

But the Senate plan would go a different route, providing a 17.4 percent deduction for such businesses’ non-wage income. That break would not be available to many types of service businesses — except for those whose taxable income falls below $150,000 for joint filers or $75,000 for all others.

The Cut, Cut, Cut Corps

President Donald Trump is reported to have suggested that the name of the tax legislation should be the “Cut, Cut, Cut” Bill. He might find common cause with Pennsylvania’s Pat Toomey, Texas’s Ted Cruz and Kentucky’s Rand Paul.

All three senators have emphasized that they want the steepest and longest-lasting tax cut possible. Deficits are of less concern to them; they believe Congress should focus on boosting the economy and deal with deficits by cutting spending.
Toomey downplayed the tax plan’s estimated $1.5 trillion cost, saying Sunday on NBC’s “Meet the Press” that the legislation would lead to “greater economic growth, a larger economy, and therefore, more revenue to the federal government.”

Paul, a libertarian purist who’s not fond of compromise, has called for a tax bill in which “everyone gets a tax cut” — ideally “at least 15% for every taxpayer.” McConnell and other GOP leaders have already said they can’t meet that standard, acknowledging that under a broad overhaul there will be outliers who see a tax hike.

Cruz last month urged his party to be “unapologetic” for tax cuts, arguing on CNBC that “we should be going much bigger and bolder” than the $1.5 trillion limit.

The Family Guys

Utah’s Mike Lee and Florida’s Marco Rubio insist their main tax priority is to double the Child Tax Credit from $1,000 to $2,000. The Senate plan would raise it to $1,650. Both senators say that’s not enough.

“While we are glad to see an increase to the child tax credit, like the House bill, it is simply not enough for working families,” they said in a joint statement. The two senators also want to apply the credit against payroll taxes as well as income taxes.

Simply raising it to $1,650 costs $582 billion over 10 years, according to Congress’s Joint Committee on Taxation. Going higher would only worsen the red ink, unless tax writers find other offsetting revenue.

Would Lee and Rubio scuttle a tax bill if they don’t get their way? That’s unclear, but they have staked out a position, and any retreat would come with some political cost.

“The Senate is not going to pass a bill that isn’t clearly pro-family,” the pair said in their statement.

The Moderates

Maine’s Susan Collins and Alaska’s Lisa Murkowski showed they’re not afraid to deal Trump or Republican leaders a devastating defeat this year when they cast pivotal votes to block an Obamacare repeal bill.

Collins has made a few tax-related demands that have already been met — including no repeal of the estate tax and no increase in the lowest individual income tax rate of 10 percent. But she also said people making over $1 million shouldn’t get a tax cut, and the Senate proposal would cut the top rate modestly to 38.5 percent from 39.6 percent.

Murkowski has said little about the tax effort so far, and she tends to be cryptic about her intentions on major legislation before casting her vote. Republican leaders gave her an enticement in the budget vehicle for the tax debate: a fast-track vote to permit oil drilling in Alaska’s Arctic National Wildlife Refuge.

The Wildcards

Senator John McCain of Arizona showed his vote can’t be taken for granted with a momentous thumbs-down on the Senate floor that killed Obamacare repeal in July. He has a mixed record on taxes, having voted against Republican tax-cut efforts in 2001 and 2003, citing deficit concerns. McCain, 81 and battling brain cancer, has demanded a bipartisan process through regular order on a tax overhaul.

He tweeted Thursday that he’s “pleased” with the tax effort so far. “I’ve long believed we need to fix our burdensome tax system & am reviewing the Senate bill to ensure it benefits the people of #Arizona,” he wrote.

A different kind of maverick is giving Republican leaders heartburn lately, and he’s not even a senator — at least not yet.

Roy Moore, the GOP nominee for a Dec. 12 special election Alabama, is fending off allegations that he had sexual contact with a 14-year-old girl almost four decades ago. The former judge has denied those allegations, and others that he pursued dates with three other teenagers when he was in his 30s.

Recent polls show Moore slipping in the race against Democrat Doug Jones. A loss would cut the GOP’s margin for error in half — to just one senator.

One way to avoid that problem: Get both the House and Senate to hammer out compromise legislation before Moore — or his Democratic opponent — is sworn in.

https://www.bloomberg.com/news/articles/2017-11-13/these-unruly-gop-tax-factions-will-put-senate-s-plan-in-question

Scalias All the Way Down

October 13, 2017

While the press goes wild over tweets, Trump is remaking the federal judiciary.

Image result for justice is blind with scales, photos

Ask most Republicans to identify Donald Trump’s biggest triumph to date, and the answer comes quick: Supreme Court Justice Neil Gorsuch. That’s the cramped view.

The media remains so caught up with the president’s tweets that it has missed Mr. Trump’s project to transform the rest of the federal judiciary. The president is stocking the courts with a class of brilliant young textualists bearing little relation to even their Reagan or Bush predecessors. Mr. Trump’s nastygrams to Bob Corker will be a distant memory next week. Notre Dame law professor Amy Coney Barrett’s influence on the Seventh U.S. Circuit Court of Appeals could still be going strong 40 years from now.

Mr. Trump has now nominated nearly 60 judges, filling more vacancies than Barack Obama did in his entire first year. There are another 160 court openings, allowing Mr. Trump to flip or further consolidate conservative majorities on the circuit courts that have the final say on 99% of federal legal disputes.

This project is the work of Mr. Trump, White House Counsel Don McGahn and Senate Majority Leader Mitch McConnell. Every new president cares about the judiciary, but no administration in memory has approached appointments with more purpose than this team.

Mr. Trump makes the decisions, though he’s taking cues from Mr. McGahn and his team. The Bushies preferred a committee approach: Dozens of advisers hunted for the least controversial nominee with the smallest paper trail. That helped get picks past a Senate filibuster, but it led to bland choices, or to ideological surprises like retired Justice David Souter.

Harry Reid’s 2013 decision to blow up the filibuster for judicial nominees has freed the Trump White House from having to worry about a Democratic veto during confirmation. Mr. McGahn’s team (loaded with former Clarence Thomas clerks) has carte blanche to work with outside groups like the Federalist Society to tap the most conservative judges.

Mr. McGahn has long been obsessed with constitutional law and the risks of an all-powerful administrative state. His crew isn’t subjecting candidates to 1980s-style litmus tests on issues like abortion. Instead the focus is on promoting jurists who understand the unique challenges of our big-government times. Can the prospective nominee read a statute? Does he or she defer to the government’s view of its own authority? The result has been a band of young rock stars and Scalia-style textualists like Ms. Barrett, Texas Supreme Court Justice Don Willett and Minnesota Supreme Court Associate Justice David Stras.

Senate Republicans have so far blown their major agenda items, but they’ve remained unified on judges. They agreed to kill the Senate filibuster for Supreme Court nominees so as to confirm Justice Gorsuch; have confirmed six other judicial nominees; and stand ready to greenlight dozens more. This is a big shift from divisions the party had over the Bush 41 and Bush 43 nominees.

Because Mr. Trump’s picks have largely spent their careers focused on administrative law and constitutional questions, few have gotten bogged down by controversial cultural rulings. They do have paper trails, but mostly on serious and technical issues. This helps reassure Republicans even as it deprives Democrats of the fodder they’d need to stage dramatic opposition.

Conservatives praised Mr. McConnell last year for refusing to consider Judge Merrick Garland, whom Mr. Obama had nominated to the Supreme Court. Less well known is the sheer number of federal judgeships Mr. McConnell sat on as the Obama administration wound down. Mr. Trump took office with 107 lower-court vacancies, more than any of the past five presidents save Bill Clinton. The GOP challenge now is to break Democratic obstruction and get those posts filled.

Former Trump aide Steve Bannon is vowing to primary at least six GOP senators next year, saying he will support only candidates who refuse to back Mr. McConnell for another stint as leader. But Mr. Bannon’s claim that Mr. McConnell represents the “swamp” is lazy scapegoating. Yes, health-care reform failed—thanks to three showboating Republican senators. And yes, the House gets more done. But only the Senate is in the long-term personnel business.

The Trump judicial reset was never guaranteed. Mr. McConnell just happens to have a steely passion for remaking the judiciary. Previous majority leaders Trent Lott (best friends with trial lawyers) and Bill Frist (nice, nice) would never have gotten Justice Gorsuch confirmed. Those guys were the “establishment.”

Ted Cruz, Mike Lee, Jodi Ernst, Deb Fischer, Dan Sullivan, Cory Gardner, Marco Rubio, Tom Cotton —this is the new generation of Republican senators. They were all elected in recent cycles. They are reformers, far removed from the earmarking, logrolling, crony, backroom days of washed-out Republicans who inspired the tea party.

The country has moved, as has Congress. The proof is in the extraordinary class of judicial nominees now coming through. Mr. Trump will keep baiting the media with shiny objects. In the background, government is being redone.

Write to kim@wsj.com.

Susan Collins adds to Republican woes as she comes out firmly against Obamacare replacement — Probably killing Graham-Cassidy

September 26, 2017

Another Republican repeal effort on the verge of collapse

By Jeremy B White San Francisco

The Independent US

In a major blow to the latest Republican healthcare effort, Sen Susan Collins said on Monday she could not support her colleagues’ measure.

Republicans seeking once again to fulfil their promise of repealing a federal healthcare law could afford few defections, and the loss of Ms Collins – a centrist from Maine – likely deprived them of the needed vote margin to move their bill.

If the loss of Ms Collins does doom the initiative, the collapse will be the latest failure in a string of abortive Republican efforts to translate a perpetual campaign promise – the repeal of Obamacare – into legislation. The party has failed to do so despite controlling the presidency and both houses of Congress. Ms Collins’ “no” vote also helped stymie a high-profile push in July.

Hoping to win enough votes to advance the measure, Republicans had sought to lure holdouts like Ms Collins and Alaska Sen Lisa Murkowski. Leadership was scrambling to cobble together enough votes after other members of the caucus – including Senators John McCain, Ted Cruz and Rand Paul – declined to support the measure.

In a statement explaining her decision, Ms Collins cited “sweeping changes and cuts to the Medicaid program”, which provides health insurance to low-income Americans; provisions that would allow states to set rules potentially leading insurers to charge higher premiums to people with pre-existing conditions; and a wall of resistance from health industry representatives.

An effort to ease Maine’s loss of funding would not go far enough, Ms Collins said, because “huge Medicaid cuts down the road more than offset any short-term influx of money”, and she faulted the political calculus behind trying to win her vote.

“If Senators can adjust a funding formula over a weekend to help a single state”, she said, “they could just as easily adjust that formula in the future to hurt that state”.

Critics of the Republican repeal effort have complained of a rushed and opaque process that hasn’t left enough time to analyse proposals. On the same day that Ms Collins said she could not support the latest bill, the Congressional Budget Office released a partial analysis that offered ammunition to detractors.

The legislation would slash federal subsidies to help individuals buy health insurance, allocating funding via new block grants to states, and would trim the budget deficit by at least $133 billion, the nonpartisan analyst said.

But millions fewer people would have health insurance covering “high-cost medical events”, the analysis concludes. The loss in coverage would be driven by “substantially lower” Medicare enrollment, fewer people buying coverage because of a loss in federal subsidies, and a lack of penalties for not having insurance.

The rejection by Ms Collins capped an emotional and tumultuous day at the Capitol, where disabled protesters staged a “die-in” outside the office of Senate Majority Leader Mitch McConnell’s office to decry what they said would be a loss of vital healthcare services should the legislation pass. The Capitol Police said they arrested 43 demonstrators.

http://www.independent.co.uk/news/world/americas/us-politics/healthcare-latest-republicans-obamacare-repeal-susan-collins-no-a7967091.html

Qatar in bid to boost ties with Israel, US — “Public affairs and marketing effort”

September 7, 2017

Gulf News

Doha hires a PR company to improve its relations with the Jewish community worldwide

Image Credit: AP
FILE Picture: A traditional dhow floats in the Corniche Bay of Doha, Qatar. While Israel has always feigned disagreement with Qatar, reportedly over its pro-Palestinian coverage of Al Jazeera TV — a closer look exposes a much more complex relationship than what appears on the surface.
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Published: 12:54 September 7, 2017Gulf News

Gulf News

Dubai: Qatar has reportedly hired a public relations company to improve relations with the Jewish community worldwide while strengthening relations with the United States.

According to O’Dwyer’s PR News, the news outlet for public relations, public affairs and marketing communications, Qatar hired Stonington Strategies for $50,000 (Dh183,663) a month for the campaign.

 

 

Stonington is headed by Nick Muzin, a doctor, lawyer and Republican strategist who is active in Jewish affairs.

“Engagement with Qatar can only be in the best interests of the United States and the Jewish community,” Muzin was quoted as saying by the news outlet.

Under the contract, Muzin will “advise on ways to build a closer relationship with the United States and improve ties with the Jewish community worldwide.”

“He will explore opportunities for political, cultural and economic cooperation with the US and Israel, especially in the areas of trade, real estate, job creation and technology.”

Among Muzin’s responsibilities while he served as deputy chief of staff for Texas Senator Ted Cruz during his GOP primary run, was outreach to the Jewish community.

While Israel has always feigned disagreement with Qatar, reportedly over its pro-Palestinian coverage of Al Jazeera TV — a closer look exposes a much more complex relationship than what appears on the surface.

Recently, a leaked report emerged in the Israeli daily Yedioth Ahronoth, saying that Tel Aviv was toying with the idea of closing down Al Jazeera’s Occupied Jerusalem bureau — comparing it to Nazi propaganda.

That has not happened, however — the story is increasingly appearing to be aimed at giving Qatar a facelift in the Arab world by appearing to be a foe of Israel.

In fact, Tel Aviv remains supportive of the Qatari regime, albeit discretely.

The two countries have maintained cordial relations, with former President Shimon Peres twice visiting Qatar.

The first was in 1996 when he inaugurated Israel’s trade mission to Qatar, followed by a 2007 trip to appear on Al Jazeera’s popular Doha Debates.

Former Israeli Foreign Minister Tzipi Livni visited Doha in 2008, meeting with Shaikh Hamad, and in January 2008 Defence Minister Ehud Barak met with former Qatari Prime Minister Abdullah Bin Khalifa Al Thani in Switzerland.

Qatar unilaterally closed the Israeli Trade Mission in Doha in 2000, during the highest violence of the second intifada, but low-profile trade links remain open between Tel Aviv and Doha, which Qataris hope to tap into now, as other Gulf markets have been sealed off since June.

Doha also signalled that Israeli athletes would be welcome to participate in the Fifa games, and a stadium was named after the Qatari capital in the Israeli city of Sakhnin in the Galilee.

Four years ago, Qatar transported 60 Yemeni Jews to Israel, at the direct request of the Israeli Government, giving them a connection via Doha, while in 2015 they hosted talks between Israel and Hamas.

This relationship can be very useful to break Qatar’s current isolation and save Tamim’s government from collapse.

In turn, Qatar has proved willing to jump to Israel’s assistance at any time by triggering conflict in the Middle East when needed or mediating with non-state players who have the ear of Qatari royals, like Hezbollah and Hamas.

http://gulfnews.com/news/gulf/qatar/qatar-in-bid-to-boost-ties-with-israel-us-1.2086394

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