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JT TAYLOR: CAPITAL BRIEF - JT   Potomac banner 2  1

DEFICIT HAWKS SWOOP IN: Keeping his promise to focus on the middle-class, President Trump’s team of tax scribers are expected to drop provisions that benefit the wealthiest from the proposal. The original plan to change the top tax bracket from 39.6 - 35% is on the chopping block as is the repeal of the estate tax. This may help with his appeal to Democrats and with offsetting the costs of other cuts. Meanwhile, key Senators Bob Corker (R-TN) and Pat Toomey (R-PA) have come to a tentative deal on a budget resolution that allows for tax reform. Senator Ron Johnson (R-WI) says the agreement assumes a tax reduction of $1.5 trillion, but if they plan on passing a tax package through reconciliation it has to be deficit neutral - meaning they may be looking at temporary tax cuts - a non-starter for some Republicans.

THE END OF A DEAL?: President Trump’s speech to the UN did not fall short of expectations. He stuck with his “America First” narrative, but encouraged all members of the UN to realize the importance of strong sovereign nations. Trump’s comments became much more heated while talking about North Korea, when Trump said that any country willing to trade with the regime is an “outrage.” The threat of trade war wasn’t the only signal to come out of the speech - he called the Iran deal an “embarrassment” to the U.S. and one of “the worst agreements ever.” With the Administration’s next deadline approaching all eyes are on Trump’s decision to stay in the nuclear agreement, Iran has threatened that they would respond strongly to any rash decisions. Our Senior Energy Analyst Joe McMonigle wrote about what could happen and what it means to the energy industry. Read his full piece here.

ALL IN AGAIN: This isn’t the first time we’ve seen the White House or Senate Republicans throwing all they have at a repeal and replace of Obamacare, but this time they only have a handful of days and hours left. Vice President Pence has been making calls - including a few across the aisle - while Senate Majority Leader Mitch McConnell was seen meeting with his undecided colleagues. Senator Rand Paul (R-KY) is dead-set against it, leaving the Republicans very little wiggle room. The president has his pen ready, if they can get to 50 - one key question for moderates - does it pass Senator Bill Cassidy’s (R-LA) very own “Kimmel test?” There may be some negotiations on pre-existing conditions that could push the fence riders to yes.

HARD-HITTING HURRICANES: With two major hurricanes still swirling off the coasts of the U.S. it’s hard not to try and quantify how powerful this storm season has been and it could not be a worse time for one of the worst hurricane seasons in history. Tax reform is already pulling Republicans apart on raising federal debt and when you throw in the costs of hurricane relief, the predicament grows exponentially. No one wants to vote against hurricane recovery and relief, but estimates about job vacancies, storm damage, and recovery costs are piling in from Hurricanes Harvey and Irma. While it is too soon to see the full impact of Irma, Harvey is now expected to be one of the most costly storms in history. We compared Harvey to past storms that cost the most to the federal government. The estimates assume Texas is granted an amount of money consistent with past federal relief and is based on an average of estimated damage cost.

JT TAYLOR: CAPITAL BRIEF - FSB

DEFENSE BILL PASSES: Our Senior Defense Analyst Emo Gardner wrote about the defense spending package that just passed the Senate and allocates $611 Billion in FY18. The amount is higher than the president requested and significantly higher than budget caps allow. Most significantly, the Bill increases procurement to $140 Billion that is 23% more than the president requested and raises OCO procurement by 25% compared to FY17. Read more about the bill and its impact in General Gardner’s piece here.

CONFERENCE CALL TODAY | DISH NETWORK (DISH): Please join our Senior Telecom Analyst Paul Glenchur to discuss the regulatory outlook and agenda for Dish Network with its Senior VP and Deputy Counsel, Jeff Blum. September 20th at 11am ET. Get the dial in instructions here.

EVENT TOMORROW | QUARTERLY POLICY THEMES: Thursday, September 21 @ 2pm: We will be hosting our Quarterly Policy Themes Call Thursday, September 21st at 2pm. Led by our Macro Policy Analyst JT Taylor and Health Care Analyst Emily Evans, this presentation will be a conversation with our policy team as they provide insight on major policy issues developing in Washington. It is crunch time for Congress who has a jammed packed legislative agenda ahead. Over the next three months, they must address an FY18 budget, appropriations, tax reform and maybe even health care reform. Get the event details here.

PROLONGED NET NEUTRALITY FIGHT (CMCSA, CHTR, ATUS, T, VZ, S, TMUS): Our Senior Telecom Analyst Paul Glenchur writes that the FCC should repeal current net neutrality rules by year-end, but the subsequent court battle likely delays work on legislation. Read the full piece here.

EVENT: DEPUTY ENERGY SECRETARY & FORMER OPEC PRESIDENT HEADLINE OCT 11 HEDGEYE ENERGY CONF (NYC) Our Senior Energy Analyst Joe McMonigle is hosting a Hedgeye energy conference in New York City. Topics include regulating pipelines, grid reliability and energy infrastructure in the Trump Administration - as well as an OPEC meeting preview. Get the event details here.