HATCHING A PLAN: So far over 350 amendments have been offered to the Senate bill, but Finance Chair Orrin Hatch’s (R-UT) “modified mark” with 44 new proposals and 16 modifications is the most significant change. Hatch’s is specifically designed to revise the bill to satisfy Senate budgeting rules - to do so he has included a sunset date of 2025 on individual tax provisions, AMT and some pass-through changes, as well as included a repeal of the Obamacare individual mandate. He says with that extra revenue, they are able to lower taxes further for the middle class and increase the child tax credit to $2,000. With three days left of Committee debate and many factions of the Republican Party to satisfy - expect the bill to endure several major changes by the time they vote on Friday.
RINGING IN THE NEW YEAR: What is usually the largest showdown of the year, the government spending bill is getting little attention from Members of Congress - all but assuring the fact that a short-term extension will be needed to get them through the perilous first half of December now riddled with policy and political hurdles. With Republicans focused on tax reform, it would make sense for them to pass another continuing resolution to keep the government funded until they have time to work on a long-term deal - avoiding battles such as DACA legislation the Democrats planned to put in the package and a health care stabilization bill that a bipartisan group wants to roll into it. Speaker Ryan says they are not looking at a stopgap measure like the one passed at the end of September, but instead are looking at an extension lasting no longer than the end of the year.
WHAT THAT MEANS FOR NDAA: Our senior defense analyst Emo Gardner has been writing about the impacts of the continuing resolution passed at the end of September in place of a true appropriations bill. He said, “While a few days don’t matter at this point, the CR is bad for defense since it restricts any new starts or alterations to the programs that were in place in FY17. Given that the NDAA postulates a 10.7% y/y increase in defense spending, continued delays effectively make the fiscal year shorter in which to accomplish that larger program, e.g., increase the size of the Army by 7,500.”
IT’S ALL IN THE DETAILS: The macro provisions are overshadowing smaller language that can have major impacts on specific people. Congressional leaders won’t really know how the bill affects individuals until research is done for unique scenarios. This has lobbyists in a frenzy. Last week they were hell-bent on getting the adoption credit back in and it worked. This week the focus is on other smaller provisions such as the changes to private activity bonds, cruise line income, and employee stock options. These credits and deductions often have bipartisan support, but are part of the broader picture of simplification so don’t expect every line to go down without a fight. The lobbyists in Gucci Gulch are even working on retaining the business entertainment deduction. Hmmmm.
SOS: Puerto Rico’s Governor Ricardo Rossello testified on the Hill after requesting $94 billion in additional relief funding from the president this week. The island has made little progress since Hurricane Maria hit two months ago. Another wave of electrical failures created a massive outage leaving 80% of the island once again without power. Their financial woes won't end with their utility - still in hot water with the Whitefish contract charging 17 times the average lineman rate. The indebtedness of the territory is only magnified by the destruction of hurricane season, which has created an exodus of people from the island to the mainland - an already large contributor to economic shortcomings.
CALL INVITE TOMORROW 10 AM: UPDATE FROM THE FORMER U.S./UN COMMANDER IN KOREA: On the heels of President’s Trump trip to Asia, our Senior Defense Analyst Emo Gardner invites you to join us on Thursday, November 16th at 10 AM ET to hear the four-star former commander of U.S./UN forces in Korea provide an up to date assessment. Get the details here.
CALL INVITE TOMORROW 12 PM: MACRO TAX REFORM UPDATE: Join Darius Dale of the Macro team, JT Taylor and Emily Evans for our latest update on Tax Reform tomorrow, Thursday, November 16th at 12 PM ET. Get the details here.
EVENT: HEDGEYE AT OPEC – JOIN US FOR A PANEL & RECEPTION IN VIENNA ON OPEC’S NEXT STEPS: Our Senior Energy Analyst Joe McMonigle is hosting a panel in Vienna on November 29th on OPEC’s next steps, geopolitical risks and oil markets. Get the details here.
GENERAL DAN CHRISTMAN: TRUMP AND CHINA'S NEW LEADERSHIP: TO THE FUTURE AND BEYOND!: Our Senior Advisor General Dan Christman writes that President Trump’s two-day visit to Beijing last week was, as expected, high on pomp, but low on substantive deliveries. Read the full piece here.
ELECOM-MEDIA POLICY CATALYSTS THROUGH YEAR END (T, TWX, VZ, CMCSA, CHTR, TMUS, S, CCI, SBGI, TRCO): Our Senior Telecom Analyst Paul Glenchur writes that the T/TWX deal, net neutrality, wireless infrastructure rules and media ownership deregulation highlight a busy end of the year. Read the full piece here.
CALL REPLAY | TAX UPDATE WITH DAVID HOPPE ON HOUSE + SENATE BILLS: Macro Policy Analyst JT Taylor and Health Policy Analyst Emily Evans held a conference call with Speaker Ryan’s former Chief of Staff on the tax bills. If you missed it, get the replay details here and stay tuned for more of our tax call series as the legislation advances in both chambers this week.
