CHECK IN:
- 9 days - until NFIP and CR to fund the government expire
- 13 days - until the Alabama Senate election
- 16 days - until Christmas recess
- 16 days - until the end of year expirations (tax extenders, Medicare extenders, FISA)
- 16 days - until their self-imposed tax timeline
- Looming: DACA, debt ceiling (December 8 expiration, extended to January with extraordinary measures), and Iran deal legislation deadline
CLOSE TO THE RED ZONE: Republicans advanced the Tax Cuts and Jobs Act after a party line (12-11) vote in the Senate Budget Committee. The already close margins had leadership on edge as two Committee Republicans, Senators Ron Johnson (R-WI) and Bob Corker (R-TN), threatened to vote against the bill. Majority Leader Mitch McConnell and Finance Chair Orrin Hatch (R-UT) were able to mollify Johnson by making significant progress on pass-through entities, all while protecting the deficit for Corker. Republican unity during yesterday’s Budget Committee test, which left the package almost entirely intact, is a strong signal about the direction in which the bill is headed. Maintaining “regular order” will continue to shield McConnell from significant changes that could ultimately sink the bill, while allowing him to modify the bill to appease wavering Senators.
MCCONNELL MOVES FORWARD: McConnell is expected to call the tax package to the floor as soon as today - with a final vote still expected Friday. So far, he is close to securing the two Republican Senators opposed to the bill - Johnson and Steve Daines (R-MT) on the pass-through issue by considering increasing the income deduction to 20% effectively making their tax rate the 20% of corporations or matching the House’s model. Senator Corker said his clan of fiscal hawks have their “backstop” legislation drafted and are confident it would pass - though opposition to the provision is mounting with outside conservative groups. Senator Susan Collins (R-ME) signaled she’s moving toward yes, saying leadership and President Trump were very receptive to her wish list - adding a $10K property SALT deduction and a willingness to support a separate legislative effort to stabilize health insurance markets. If McConnell manages to accomplish all of these things without blowing the $1.5 T math problem, then he will be on his way to 51 - with a bill increasingly moving in the direction of the House’s - making the Conference Committee’s work somewhat less challenging.
THIS IS REFORM?: We have been saying that every single tax deduction and credit is in the code for a reason or at least a special interest. That explains why credits for enhanced oil recovery, intangible drilling costs, and other oil and gas measures are being saved from elimination while solar and renewable credits were part of the simplification. Cruise line lobbyists are now geared up - as the Senate bill modifies sections 873 and 883 of the tax code that provided exemptions on income taxes for many of them. So are education lobbyists who were unprepared for the number of provisions in the bills that would make college less affordable - the lifetime learning credit, student loan interest deduction, employer-provided tuition benefits, and non-taxable tuition waivers. Meanwhile, the House plan includes a tax break for a tuna cannery that could provide about $10MM a year to StarKist. Other provisions between the Chambers are directed at microbreweries, bicycle commuters, farmers, firefighters, and a company that manufactures organic salad dressing.
RAISING THE STAKES: Democratic leadership refused to meet with the president on a year-end spending deal after an unprovoked Trump tweet accusing Democrats of wanting to flood the country with criminals and raise taxes meant he did not see a deal being made. Republicans are using the opportunity to slam Democrats for playing partisan politics (hmmmm) and refusing to take funding the government seriously. But Democrats gained serious leverage for the year-end discussion as Republicans need to prevent a shutdown and quickly if they want the focus to be on tax reform. With barely over a week left before Congress recesses, a temporary extension to late December or even January is looking more and more appealing.
VIENNA DISPATCH - WEDNESDAY UPDATE: WHEN THREE MONTHS IS NINE MONTHS: Our Senior Energy Analyst Joe McMonigle writes that the OPEC Technical Committee recommends a compromise of a nine-month extension that is reviewed after three months at the next meeting in May/June. Read the full piece here.
EVENT TODAY: OPEC PANEL DISCUSSION LIVE FROM VIENNA WEDNESDAY 10AM (ET): Our Senior Energy Analyst Joe McMonigle is hosting a panel discussion live from Vienna today at 10:00 AM ET. Topics include: OPEC’S next steps, geopolitics and oil markets. Get the event details here.
VIENNA DISPATCH: SHALE’S SHADOW LOOMS OVER OPEC MEETING: Our Senior Energy Analyst Joe McMonigle wrote OPEC hits the pause button on the rush to a full year of cuts amid concerns about U.S. shale rebound. Read the full piece here
RIDING OUT #ACATAPER IN MANAGED CARE? CMS TAKES AIM AT PART D PLANS: UNH, CVS, HUM, ESRX , AET, ATHM: Our Senior Health Policy Analyst Emily Evans wrote that CMS is edging up to a proposal to require a portion of $25B in drug manufacturer rebates to be passed on to Part D plan members. Read the full piece here.
GENERAL DAN CHRISTMAN - SAUDI SHAKE-UP: Our Senior Advisor Dan Christman wrote that the moves by Saudi Arabian Crown Prince Mohammed bin Salman (MBS) over the last three weeks have been nothing short of tectonic. Read the full piece here.
INSIDE THE SUPREME COURT: Our Senior Telecom Analyst Paul Glenchur will be inside the Supreme Court next Monday as they hear arguments in the case about State’s rights to regulate sports betting. Stay tuned for more information on a call with our gaming and lodging team.
