The Constitution is the guide which I never will abandon.
-George Washington
FREEDOM AT LAST: The House is scheduled to vote this evening on the AHCA and President Trump and Speaker Ryan are pulling out all the stops with some serious last minute dealing - and our sentiment is that legislation will likely squeak through. Late into the night, OMB Director Mick Mulvaney was working with his former Freedom Caucus comrade Rep. Mark Meadows in a push to win over the Freedom Caucus, by removing a list of essential benefits that health plans have to cover. But the shift may take a toll on the moderate side of the party with the head of that faction, Rep. Charlie Dent, coming out against the bill with the result of too many people losing coverage. Trump and Ryan can afford to lose a few moderates as long as they win most of the Freedom Caucus in their quest for 216 - but at what cost to votes in the Senate…Going to be an busy morning with the Rules Committee meeting first thing, a full Republican Conference meeting at 9:00am - and last minute Freedom Caucus holdouts headed to spend quality time with Trump at 11:30am.
A BREATH OF FRESH AIR: Energy companies and consumers can breathe a sigh of relief as the latest coming out of the White House is that they aren’t considering a carbon tax. National Economic Council Director Gary Cohn met with a group of former Republican officials who pitched a carbon tax with proceeds being returned to the U.S. taxpayer. It was an odd move for the former Republican officials to bring up the topic with the Administration as it is generally considered a Democratic principle and nearly all elected Republicans are opposed to it - and adds fuel to the burgeoning rivalry between Cohn and Stephen Bannon who is skeptical of Cohn for taking the meeting (among other reasons).
PLAYING DEFENSE:The ice is growing thinner for Secretary of Defense Jim Mattis as Republicans on the Hill believe he is burning up precious political capital. Republicans are unhappy with his choices to fill top jobs and his reluctance to push for dramatic increases in the defense budget. Mattis, who received bipartisan support in his confirmation, is rankling defense hawks who wanted him to choose people who suited their ideology, and are fighting him at every turn. Following Mattis’ request for Anne Patterson to become undersecretary for policy, Senators Ted Cruz and Tom Cotton worked the president to tank her nomination. If Mattis wants to put more points on the board, he may have to start playing the inside game.
OVERTIME RULE BREAK: In his confirmation hearing, Labor Department-designate Alexander Acosta bucked Republican orthodoxy and suggested that more employees should be paid for overtime because “life gets more expensive.” His suggestion was based on an inflation adjusted number as the threshold hasn’t been updated since 2004. The $33,000 number he called for is still a far cry from the $47,476 number the Obama-era rule sought. To ease Republican heartburn, he followed the limited government line by questioning whether the Labor Department actually had the authority to raise the overtime salary threshold.
BUYING OPPORTUNITY: All three major U.S. stock market indices fell over 1% on Tuesday ... the Dow and Nasdaq posted their single worst day of losses in five months. In other words, U.S. stocks are on sale. We say buy it. As Hedgeye CEO Keith McCullough wrote recently this is “the biggest buying opportunities in 4-5 months.” The reasoning is pretty simple. U.S. economic growth, profits and employment will all continue to accelerate, at least through Q3 of 2017. Evidence of accelerating growth abounds. Case in point, year-over-year growth in the Consumer Price Index (CPI) and Retail Sales are at or near five year highs. In light of the recent “correction” but improving economic fundamentals, we like Financials (XLF), Nasdaq and/or Tech (QQQ and XLK) and S&P 500
TMT POLICY TIDBITS (CHTR, CMCSA, T, VZ, CTL, S, TMUS, TWX, CBS, FOXA, DIS, SBGI, NXST): Our Senior Telecom and Media Policy Analyst Paul Glenchur writes about FCC Privacy rules on Senate chopping block; new Antitrust Chief; broadcast retrans fees get a judicial boost. You can read his full analysis here.
With the focus in Washington on healthcare today, we revisit three links to health policy by Emily Evans below:
AMENDMENTS TO ACA REPEAL & REPLACE RELEASED - MOSTLY AS EXPECTED: A little tougher stance on Medicaid expansion but with increased long term flexibility and better reimbursement for high cost populations. You can read the full piece here.
A QUICK PRIMER ON FEDERAL MEDICAID PER CAPITA CALCULATIONS IN AHCA: Our Senior Health Policy Analyst Emily Evans writes the starting point for funding will be status quo but growth curve will flatten under CPI-U Medical Care inflator. Big change for some states. You can read the full piece here.
AND, ANOTHER QUICK AHCA PRIMER - MEDICAID BLOCK GRANTS TO STATES: Emily Evans also writes details are sketchy but would apply to non-expansion adults and children; inflates on CPI w/no adjustment for enrollment growth. You can read the full piece here.
