FAST TRACK TO TAX: With little to show for the bulk of 2017, the Senate passed their FY18 budget last night with all Republicans except Senator Rand Paul (R-KY) voting for it. The resolution simply sets top-line numbers for Congress and does not dictate government spending. Senator Bob Corker (R-TN) voted ‘yes’ for those reasons. However, it does do one really important thing - sets rules for the reconciliation process in the Finance Committee - and allows for a tax package to pass with a simple majority. The House-passed budget was significantly more detailed and conservative including billions in set spending cuts, but the lower chamber will turn up their noses and take any means to tax reform. To underscore the pressure Republicans are feeling to put some big points on the board, the Chairmen of the House and Senate Budget Committees are working on legislation language with the aim of avoiding a prolonged conference committee necessary to reconcile the divergent House and Senate budget bills. Nonetheless, this was a critical step forward and the significance to their tax reform timeline cannot be overstated.
PAT YOURSELF ON THE BACK: Puerto Rico’s conditions only become more severe as families go weeks without proper shelter, nutrition, and medications. According to the island’s Governor Ricardo Rossello, the problem is not a lack of resources, but a lack of mobility and infrastructure. He was in Washington fighting for additional means to get their GRID back - and better - and get long-term aid to rebuild. Despite their immediate humanitarian crisis, President Trump said he would rate his response to Puerto Rico a 10 and compared the catastrophe to Hurricane Katrina for the amount of damage caused. One thing is certain; the casualties are far different from Katrina when thousands lost their lives due to the lack of relief efforts that followed the storm. Now that the budget monkey is off their back, the Senate is expected to take up the House-passed disaster relief package that gave $36.5 billion for recovery from Hurricanes Harvey, Irma, and Maria and the wildfires in California.
SALT OVER THE SHOULDER: House Republicans are grappling with what to do with one of the main pay-fors in the tax framework - eliminating state and local tax (SALT) deductions. Many conservatives feel it is unfair for the Federal government to subsidize such dramatic state tax increases, while some two dozen Republican Representatives from blue states find the deduction critical to their constituents not being double taxed for where they live. We knew they were weighing compromises such as an income cap for whom the deduction is eliminated, but now they are rumored to be considering keeping the deduction for state and local property taxes, but eliminating all other SALTs.
HELP LAMAR: Senate HELP Committee Chair Lamar Alexander (R-TN) is fed up with the back and forth support from other Republicans and the politicization of his health care efforts. If the Senate had the votes to repeal and replace Obamacare, we are confident it would be gone - but they don’t. Alexander reminded his colleagues of this yesterday when asking them to step up and join the conversation on how to stabilize the insurance markets in the meantime. He has also said he is willing to modify the bill to make it more conservative. As it stands, it has 11 Republican and 12 Democratic co-sponsors - impressive support in such a divisive Congress.
GOVERNING GOVERNORS: Governors took an active role in repeal and replace efforts and are showing up again to support a bipartisan stabilization measure from the Senate HELP Committee. This bipartisan group of Governors is advocating to continue the insurance payments President Trump is proud to cut, saying the exchanges would implode. Many are also showing up for the NAFTA fight. They are meeting with Canadian and Mexican leaders directly and securing agreements for their states. Governors have a unique perspective on trade - as they deal the most directly with the impacts. States tend to have a handful of major industries that run their economy so minor changes in regulations could have catastrophic effects.
SENATE BUDGET RESOLUTION DOES NOT RESOLVE DEFENSE BUDGET: Our Senior Defense Analyst Emo Gardner writes that the Senate Budget Resolution does not remove defense spending caps. Read the full piece here.
CYNICS BEWARE | SENATE STEPS ON THE GAS FOR TAX REFORM: Our Senior Health Analyst Emily Evans writes that last night’s vote avoids two key potential speed bumps - conference and House Budget; expect health care to feature in the upcoming debate. Read the full piece here.
CALL REPLAY | CANARY IN A COAL MINE | 4Q17 HEALTH CARE THEMES PRESENTATION: Our Senior Health Analyst Emily Evans invites you to watch the replay here.
AT&T/TIME WARNER ON TRACK (T, TWX): Our Senior Telecom Analyst Paul Glenchur writes that the deal seems on track despite new criticism from lawmakers. Attacks on the new antitrust chief appear more desperate than constructive. Read the full piece here.
