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TRUMP A-COURTING: While President Trump is feeding his new friendship with Democrats, the switch from the White House’s pragmatic Republican-led effort on tax reform will likely not last long. Yes, President Trump has seen the benefits of reaching across the aisle - briefly taking the debt ceiling and government spending off the bargaining table - but did last night’s dinner mean something more? It’s clear that Trump is losing faith in fellow Republican leaders to pass major legislation including the FY18 budget with reconciliation language. The president is meeting with the House Bipartisan Problem Solvers Caucus today under this pretense, “We don't feel like we can assume that we can get tax reform done strictly on a partisan basis."

THE ROAD TO REFORM: Getting eight Democrats to swing seems, well, difficult at best. Aside from the political stigma, there are still major idealistic differences when it comes to tax reform. If the Republican leadership yields to Democrats, they will certainly lose some on their side - all the while keeping them obligated to pass a FY18 budget with reconciliation language for the goal of passing tax reform with a simple majority. Republicans still have a lot of details on which to agree: how to pay for the cuts, if it will be reform or cuts, if they will be permanent or temporary, and if to make the effort budget neutral. Given that their window for using 2017 reconciliation is almost gone (expires on Sept 30) and the 2018 budget with reconciliation instructions faces multiple hurdles, the Administration's deadline is looking very aggressive.

MCCAIN’S OFFENSE ON DEFENSE: The president is not going to be willing to negotiate on military spending come December according to Treasury Secretary Steve Mnuchin. Defense hawks scoffed at the deal he made with Democrats to extend government funding because it missed an opportunity to increase military spending. Senate Armed Services Chair John McCain (R-AZ) is on the offensive this week, ahead of the Senate vote on the House-passed Defense Appropriations minibus. The Bill, as the president requested, is more than budget caps allow, so Congress will have to address those too. But not all Republicans are hawks, Senator Rand Paul (R-KY) is poised to block a vote unless his amendments to end the wars in the Middle East (effectively sunsetting increased spending) are offered.

CASSIDY WON'T QUIT: Senator Bill Cassidy (R-LA) jumped out of the gate early in the year with one of the first health care replacement bills, the Cassidy- Collins Patient Freedom Act. When Congress chose to focus on the AHCA, he wrote the Cassidy- Graham Amendment later evolving into the Cassidy- Graham- Heller plan. The Senator seems to eat, sleep, and breathe health care - he was Dr. Cassidy before he was elected to the Senate. The buzz on the Hill is Cassidy will stop talking about health care when McCain stops talking about defense. Last night, he and Senator Lindsey Graham met with Senate Majority Leader Mitch McConnell to hash out the details of their plan and the potential to move it. McConnell, who is taking a hands-off approach, told them to get 50 votes before reconciliation language runs out at the end of September and he will call a vote. Our Senior Health Policy Analyst wrote about the proposal, read it here.

THE LAST LAUGH: Another power feud simmers on the Hill - Senate Majority Leader Mitch McConnell said Democrats spiked the ball too soon after their excessive celebration over their ability to work with President Trump on getting a short-term debt extension. McConnell, who wrote the text of the deal to favor Republicans, says the debt ceiling will not need to be addressed again in December. He is right, as we said yesterday, extraordinary measures allow for the Treasury Department to shift money around to keep the government afloat for a couple of extra months, pushing the deadline to March/April 2018. Senate Minority Leader Chuck Schumer was nonplussed claiming the deal is still good - and having two showdowns is going to look much worse politically for Republicans than having one.

HCA, HOLX, MD, AMN, ATHN | HEALTH CARE JOB OPENINGS +5.6% IN JULY: Our Senior Health Policy Analyst Emily Evans writes we remain short a number of names in the Hedgeye Health Care Position Monitor related to our #ACATaper thesis. Read the full piece here.

CALL INVITE | DISH NETWORK (DISH): Our Senior Telecom and Cable Analyst Paul Glenchur is hosting a call discussing the regulatory outlook and agenda for Dish Network with its Senior VP and Deputy Counsel, Jeff Blum, September 20th at 11am. Get the dial-in here.

CALL REPLAY | EXPOSING HEALTH CARE'S OUTLOOK: Our Senior Health Policy Analyst Emily Evans hosted a video conference call and live Q&A, September 8th at 11am. Watch the replay here.

EVENT: FORMER OPEC PRESIDENT & NEW FERC COMMISSIONER HEADLINE OCT 11 HEDGEYE ENERGY CONFERENCE:  Our Senior Energy Analyst Joe McMonigle is hosting a Hedgeye energy conference in New York City. Topics include regulating pipelines, grid reliability, energy infrastructure in the Trump Administration, and an OPEC meeting preview. Get the event details here.