|
CHECK IN:
|
BANDAID: Speaker Paul Ryan plans to call a vote on the CR today before the government runs out of money at 12:01 AM Saturday morning. The plan is to vote on a two-week extension through December 22 to give both Chambers time to finish tax reform before Christmas without any distractions (good luck with that). Ryan is then expected to work with the Freedom Caucus on a more permanent spending solution. He wants to pass a longer extension - likely until late January and wrap FY18 spending into the debt ceiling showdown. However, if they want to pass such a long temporary solution, they will need to include funding for the Pentagon to win over fiscal hawks. CRs are draining for defense programs and no defense-driven Republican will vote for another without at least a year of secured spending.
A DASH OF SALT: The Senate is now officially meeting with the House in Conference Committee after selecting Finance Chair Orrin Hatch (R-UT), Budget Chair Mike Enzi (R-WY) and Energy and Natural Resources Chair Lisa Murkowski (R-AK) along with John Cornyn (R-TX), John Thune (R-SD), Rob Portman (R-OH), Tim Scott (R-SC), and Pat Toomey (R-PA) as conferees. The Chambers are planning to have their work done before the planned recess on December 15 and have been deliberating behind the scenes on major differences in their bills. While the House is focused on repealing the corporate AMT, they will have bigger issues with permanency and costs in the final report. President Trump opened the floodgates by saying a 22% corporate rate is possible and even if Congressional leadership insists it will stay at 20% - Majority Leader Mitch McConnell needs some pay-fors after saying he is open to changes in repealing the state and local tax (SALT) deductions, including allowing the 10K to be spread amongst any deduction, not just property.
TAX TAKE TWO: On the horizon for this year’s expirations are a number of Medicare and tax extenders and Congress is in Groundhog Day mode just extending them unless they are stuck in the crosshairs of a fiscal cliff. This process is always irksome to the Republican leadership including House Ways and Means Chair Kevin Brady who has been looking for a way to get rid of the expiring provisions by making them law in the new tax bill. Other Republican members are worried that any such changes to the tax package would complicate it and the government spending fight. They are hoping to keep these as separate as possible.
GET OUT THE GUCCI’S: We have said many times in the past that every single credit and deduction is in the tax code for a reason or really, a special interest. And the longer it takes to pass tax reform, the stronger opposition will grow to individual provisions as industries discover nuances that could have a major impact on them. Lobbyists are wearing down their leather soles and camping out their days on the Hill. While last week it was last-ditch efforts to protect pass-through entities in vote-a-rama, this week - real estate groups, leaders from high tax states, and professional organizations such as the Institute of Architects and National Home Builders are doing whatever they can to protect their deductions (mortgage interest and SALT).
CHECK OUT OUR LATEST UPDATE WITH DAVID HOPPE ON TAX REFORM AND GOVERNMENT SPENDING HERE.
CALL INVITE: SIZZLE, OR FIZZLE? FINANCIALS TAKEAWAYS FROM THE HOUSE AND SENATE TAX PLANS: Please join Hedgeye’s Financial Services team featuring Josh Steiner and Jonathan Casteleyn today, December 7, 2017 @ 10:00 AM EST for the latest on implications of the tax reform proposals on the Financials sector. Get the details here.
#ACA2.0 | NOVEMBER ADP HEALTH CARE EMPLOYMENT +2.3%: Our Senior Health Policy Analyst Emily Evans writes that we remain broadly SHORT Health Care in the Hedgeye Health Care Position Monitor. Read the full piece here.
TWOFER! TAX REFORM BECOMES HEALTH CARE REFORM | HCA, THC, SBRA, HCP, SYK, MRK, PFE, HOLX, CRL, CERN: Our Senior Health Policy Analyst Emily Evans and JT Taylor write merging tax reform with ACA reform has extensive implications for all corners of the health care sector. Read the full piece here.
ODDS OF LEGALIZED SPORTS BETTING JUST IMPROVED (MGM, WYNN, LVS, CZR, DIS, FOXA, CMCSA, CBS, TWX): Our Senior Telecom Analyst Paul Glenchur wrote from inside the Supreme Court that SOCTUS will probably rule that existing federal law does not prevent states from lifting bans on sports betting. Read the full piece here.
10 THINGS HEARD AT REAGAN NATIONAL DEFENSE FORUM: Our Senior Defense Analyst Emo Gardner writes that the invitation-only National Security forum at Reagan Library is a premier event for government, industry, and analysts. Read what he heard at the event here.
