IT’S BEGINNING TO LOOK A LOT LIKE TAX CUTS: The Byrd Rule has not been kind to Senate Republicans, causing a minor procedural snag in their tax reform effort. The Senate Parliamentarian has ruled against two provisions in the bill as well as the short name, “Tax Cuts and Jobs Act” raised by Senator Bernie Sanders (I-VT) because it does not impact fiscal spending. One provision in question would have affected homeschooling expenses, the other - college endowments. Because the Conference Committee has dissolved, Senators had to accept the changes and send the bill back to the House for a final vote (around 12:00 pm today). Republicans still have the votes and will pass tax reform today. The bill will be on the president’s desk ahead of schedule and Republicans will all head down to the Rose Garden for a congratulatory celebration… at least until they remember they have a government to keep open.
HOUSE PAVES WAY: The House has paved the way to vote on a spending package today - their plan is to include an $81 Billion disaster bill to garner bipartisan support and send the measure over to the Senate. Unless the Senate Parliamentarian rules against the measures, the Senate will then add two health care provisions to appease Senator Collins (R-ME) and stabilize insurance markets much to the chagrin of House conservatives. The House may end up considering whatever the Senate passes, with a package done by Friday and the shutdown averted, but that’s a risky gambit leaders may not want to confront. Of course, there are always loose ends with government spending battles, but little can stand in the way of Members of Congress and his/her holiday flight home. At the very least, we expect a short-term extension with a carrot or two and don’t envision a DACA deal until they return.
LIFE AFTER TAXES: While Congressional Republicans are sticking to their roots and promising to reform mandatory spending President Trump has moved onto a long time goal of his - infrastructure. The U.S. infrastructure is rated low in the developed world with some of our air traffic control technology form the second World War. The president will use this week's tragic event in Washington State and the power outage in Atlanta’s airport to point to the critical need to update the country’s infrastructure instead of spending money abroad. Republicans rarely will vote to increase government spending, especially right after adding to the deficit with lost revenue from tax cuts, but a wave of nationalism and tragic accidents have shifted the definition of American prosperity to mean stronger infrastructure at home.
A LONG RECOVERY: Economic recovery from natural disasters can take years and years. The government continued supplemental funding for Katrina for over a decade reaching about $114 Billion. The president has promised to rebuild Florida, Texas, and California and not to forget Puerto Rico, but requested just $44 Billion in additional dollars of supplemental funding. If the House passes this bill it will bring the total emergency funding for natural disasters to the highest in one year at $130 Billion. Senators from Texas and Florida have implied that the Senate could add even more funding to a spending package to ensure votes from those Republicans as well as the at least eight Democratic Senators they need to pass a year-end measure.
CALL TODAY: TECH & TAXES | WINNERS & (SORT OF) LOSERS: Please join us today, December 20, 2017 at 12:30 PM ET as we team up with Hedgeye’s Ami Joseph for the latest implications of the tax reform proposal on the tech sector. Get the event details here.
CALL REPLAY: BRINGING HOME THE BACON: REPATRIATION DEEP-DIVE: We teamed up with Hedgeye's Macro team to discuss repatriation and international taxation. Get the replay here.
CALL REPLAY | TAX REFORM AND RETAIL: We joined Hedgeye’s Retail team featuring Jeremy McLean and Daniel Biolsi on tax reform and its impact on the retail ecosystem. Get the replay here.
GOVERNMENT REVIEW OF DISNEY-FOX DEAL (DIS, FOXA, NFLX, AMZN, GOOGL, T, TWX): Our Senior Telecom Analyst Paul Glenchur writes we expect ultimate approval by either the DOJ or FTC despite asset divestiture pressures. Read the full piece here.
ENERGY WINS BIG IN TAX REFORM BUT CHALLENGES REMAIN FOR CLEAN ENERGY: Our Senior Energy Analyst Joe McMonigle writes winners include oil and gas, utilities and MLPs. Potential losers are wind and solar on BEAT provision. Read the full piece here.
