As 2017 wraps, the Washington Report would like to thank you for being a loyal reader. When I started writing this report, the goal was to share a quick review of some of the week’s political happenings. The idea was to make the read quick and enjoyable and sometimes, even make you laugh (after all, life is short!). Here we are, over 5 YEARS LATER, and still going strong.
If you thought 2017 was a wild ride, hold on to your seats for 2018!
Congress is “Getting the hell out of Dodge” (h/t Gunsmoke, look it up!). And so, the Washington Report returns on January 12th, 2018.
Wishing you and yours a Happy Holiday and Healthy New Year from me and the entire Capstone Team!
It’s hard to ignore the toxic atmosphere in Washington as Congress winterized the Capitol. Optimists are hopeful that the holiday season, supported by a booming economy, will change the tone and tenor of Congress. The pessimists, and the realists, acknowledge that “bipartisanship” has been hard to come by in the past 10 years and we should not hold our breath for too much changing in 2018.
Weeks ago this update gave an overview of the MANY (presumably) must-pass issues that Congress would attempt to tackle in the closing weeks. We expected drama as consensus around controversial programs that needed urgent attention was distant. In the end, however, drama was contained as a sweeping tax bill passed, the threat of a government shutdown never materialized, and many of the programs that needed to be addressed were either extended or decisions delayed until 2018.
INFRASTRUCTURE The White House said it plans to submit “detailed legislative principles” to Congress in early January outlining Trump’s infrastructure vision. Officials are still putting the finishing touches on the roughly 70-page document, which is expected to serve as the building block for lawmakers to write actual legislation next year.
The administration has said it wants to use about $200 billion in federal seed money, along with significant permit reform and other incentives, to leverage $1 trillion worth of overall infrastructure investment in the country. The President’s tweet on Friday morning solidifies suspicions that this will be the next focus of the Administration and Congress
Tax Legislation
On Wednesday the House of Representatives approved the final Republican plan to overhaul the tax code effectively sending the legislation to President Trump to be signed into law.
The measure passed 224 to 201 with only Republican support. 12 Republicans joined Democrats who voted unanimously against the legislation. The House vote came after the Senate approved an identical measure earlier in the morning, with all Democrats opposed and all Republicans present in support (Senator John McCain left early this week to return home for cancer treatment).
A provision to tax corporate interest expense – which paid for a large portion of the tax cuts – included an exemption for regulated utilities, including water utilities. Other issues of concern were either not part of the debate or excluded in the final version; specifically stock dividends remain tax-free and the private activity bond vehicle remains tax exempt.
As it has been widely reported, other provisions include individual tax cuts for the vast majority of households, with some of the largest benefits going to the wealthy. Many of the tax breaks are set to expire at the end of 2025, however Republicans promise a future Congress will intervene to prevent such a tax hike from happening.
SIGNED INTO LAW President Trump on Friday signed … the $1.5 trillion measure in the Oval Office shortly before he was scheduled to head to his Mar-a-Lago resort in Florida for the holidays.
KEY PRINCIPLES WITHIN THE BILL:
The final negotiated package increased the corporate tax rate by 1%, to 21%; this is up from the House and Senate proposals but down from the current rate of 35%.
The corporate alternative minimum tax was stripped from the final package. Lawmakers yielded to concerns raised by business groups about the Senate’s last-minute inclusion of the corporate alternative minimum tax.
The top individual income tax rate will drop to 37%, down from the current rate of 39.6% in the Senate bill and the 38.5% in the House bill. This lower rate will also apply to more people.
On SALT deductions specifically, the bill will allow individuals to choose how to use their state and local tax deduction, giving them the ability to write off up to $10,000 in property taxes, income or sales taxes paid or a combination of property and sales or property and income taxes.
The deal would cap the deduction for interest on mortgage debt at $750,000 for newly purchased homes. This is a higher cap than the $500,000 limit in the House bill but lower than the $1 million limit that currently exists and remains in the Senate bill.
The final bill preserves the individual alternative minimum tax, which the House bill had eliminated and the Senate bill retained.
The final bill will keep the Senate provision to provide a tax deduction for so-called pass-through companies, whose owners pay taxes on profits through the individual code.
The final bill will retain the Senate approach to taxing multinational companies.
The final bill will allow taxpayers to continue to deduct high out-of-pocket medical expenses.
The final bill will retain a provision allowing graduate students who receive tuition stipends to avoid paying taxes on that benefit.
The final bill repeals the Affordable Care Act requirement that most Americans have health insurance or pay a penalty.
Republicans Exact Their Revenge Through A Tax Bill
The Atlantic “Instead of eliminating favoritism, the GOP’s reforms load the costs of the state upon disfavored persons, groups, and regions. Interesting Read.
Politico “Conservative groups are planning a multimillion-dollar effort to sell the GOP’s tax cut law, hoping the American electorate can learn to love the party’s signature – but massively unpopular – legislative achievement. … The Koch Network will launch a multimillion-dollar push next year to sell the bill. … A major GOP super PAC is planning to spend $10 million to protect House members. “And another group, the Committee to Unleash Prosperity , plans to spend the majority of its $1 million annual budget selling the tax plan next year.”
While there was a very benign threat that the government might shutdown, it never materialized in full. It did, however, force appropriators to back off from an ambitious plan to pass an Omnibus that would have increased Defense funding. Both the House and Senate backed a stopgap spending package, also known as a continuing resolution. It cleared the House 231-188, while the Senate backed it 66-32.
THERE WILL BE NO GOVERNMENT SHUTDOWN Roll Call “With just more than 12 hours to spare, President Donald Trump on Friday signed a four-week government funding bill into law. It sets up a potentially bruising battle between Republicans and Democrats over a slew of hot-button issues next month. Lawmakers were able to send him the spending measure with relatively little drama after House Republicans abandoned plans to attach a full-year Pentagon appropriations bill. The CR also includes temporary extensions to the Children’s Health Insurance Program, community health centers, care for veterans, and Section 702 of the Foreign Intelligence Surveillance Act.
theSkimm “The government isn’t getting a shutdown in its stocking. For the third time in recent months, lawmakers were up against a deadline to pass a spending bill to keep [the federal government’s] lights on. They had until midnight. But yesterday, the House and Senate managed to pass a short-term fix. Again, it punts a lot of issues into January. LIKE … ?
DACA, the program that protects hundreds of thousands of undocumented immigrants brought to the US as kids from being deported. Earlier this year, President Trump said he’s getting rid of it, but gave Congress six months to replace it. The Children’s Health Insurance Program (CHIP)– which covers more than 1.9 million children in 23 states could lose health coverage in January, according to a new analysis by the Georgetown University Health Policy Institute. The temporary bill includes some CHIP funding but not enough for the year. Also, minor things like defense spending. All these problems will be waiting for lawmakers next year. Cheers.”
ALSO An $81-billion disaster spending bill easily cleared the House, but the Senate ignored it. THE BOTTOM LINE: Congress punted everything to January.
theSkimm “Yesterday, the UN voted to reject President Trump’s Jerusalem decision. Earlier this month, Trump reversed decades of US policy by recognizing Jerusalem as Israel’s capital and promising to move the US embassy there. It made a lot of people unhappy, because of the Israeli-Palestinian conflict. Reminder: Palestinians claim parts of Jerusalem as the capital of their future state. Leading up to this vote, Trump threatened to cut off foreign aid to any country that went against him. But nearly 130 countries – including US allies like France and the UK – ignored him. The vote is largely symbolic and nonbinding. But it’s the latest sign that Trump’s decision is not going over well with Western and Arab allies…and pretty much everyone else.”
Axios “Hours after President Trump’s tax-cut celebration on Wednesday, “aides and outside advisers had a spirited, and at times tense, discussion with him about the political outlook ahead of next year’s midterm elections,” the WaPo reports.
– Those closest to Trump are bracing for a possible bloodbath in the 2018 midterms, which could obliterate the Republican congressional majorities and paralyze the president’s legislative agenda,” (Politico)
– NYTs “‘A lot of people’ have been telling the president that his White House team needs improvement.
– Steve Bannon has “remarked on the toll the office has taken on Trump, telling advisers his former boss has ‘lost a step.’ ‘He’s like an 11-year-old child,’ Bannon joked to a friend in November.” (Vanity Fair)
BE SMART: Recent generic polls show Republicans down double digits to Dems, a tough way to start a midterm year that’s traditionally harsh on new presidents.
Bloomberg Politics “Amid all the noise surrounding the Trump-Russia investigation, Special Counsel Robert Mueller has stuck to a fairly unconventional strategy: total silence.
The former FBI director hasn’t uttered a single word in public since he was appointed in May to lead the probe into Russian meddling in the U.S. election despite increasingly combative attacks by Republicans and their allies on the FBI, the Justice Department and the integrity of his probe. It’s an intentional strategy meant to convey the investigation’s credibility and seriousness in an age of 24-hour noise, amplified by cable news shows and Twitter, according to current and former U.S. officials who know Mueller personally or who have followed his work.
Trump’s lawyers have been trying to build public expectations that Mueller will wrap up soon, but officials say the investigation is ramping up in some ways and is likely to last for most, if not all, of 2018. Areas where the inquiry is accelerating include a close examination of the activities of Trump’s son Donald Jr. and son-in-law Jared Kushner, said two U.S. officials who asked to remain anonymous.
So far, the strategy appears to be working. Republicans have sullied his probe a bit with their attacks, but Mueller has won over key allies who would play instrumental roles should Trump try to force him out. Deputy Attorney General Rod Rosenstein told House lawmakers during a Dec. 13 hearing that he is fully aware of what Mueller is doing and stands behind him. Rosenstein appointed Mueller and is the only official with the authority to fire him or stop parts of his investigation.
Senator Chuck Grassley of Iowa, the Republican chairman of the Senate Judiciary Committee, and Senate Majority Whip John Cornyn said in interviews this week that they support Mueller and would oppose efforts to remove him. Republican Senator Bob Corker of Tennessee said he thinks there would be an “uprising” in the Senate if Mueller were fired. That would be “beyond the pale,” Corker said.
WaPo “The Trump administration is waging a linguistic battle across official Washington, seeking to shift public perception of key policies by changing the way the federal government talks about climate change, scientific evidence and disadvantaged communities. The push drew fresh attention after employees at the Department of Health and Human Services were told to avoid certain words — including “vulnerable,” “entitlement” and “diversity” — when preparing requests for next year’s budget. But the effort to disappear certain language and replace it with other terms is much broader, sparking resistance from career officials in federal agencies, outside experts and congressional Democrats.
Climate change, for example, has for months presented a linguistic minefield; multiple references to it have been purged repeatedly at the [EPA] and the Interior Department. In late summer, the Office of Juvenile Justice and Delinquency Prevention (above) issued a document to employees and contractors bearing a column of words and phrases to be avoided, alongside a column of acceptable alternatives.
“The one-page ‘language guidance’ document (Justice Dept.’s Office of Juvenile Justice and Delinquency, dated August 2017) recommends using ‘all youth’ instead of ‘underserved youth,’ referring to crime as a ‘public issue/public concern’ rather than a ‘public health issue/public health concern’ and describing young people who commit crimes as ‘offenders’ rather than ‘system-involved or justice-involved youths,’ according to a copy of the document obtained by The Washington Post.”
The document also says to avoid the term “substance abuse disorder” in favor of “substance abuse issue” — a change that runs counter to efforts by experts to cast substance abuse as a disease.
Politico “Speculation about additions to the cast of characters in Season 2 of Trump’s West Wing has ramped up as the administration braces itself for a wave of staff departures expected in the coming weeks, according to a dozen White House aides and outside advisers who have spoken with the president. In recent weeks, these people say, Trump has been particularly high on Larry Kudlow, an outside economic adviser to the president and a former adviser to President Ronald Reagan…. [Kellyanne] Conway – who purposefully lowered her public profile earlier this year, running the White House opioid crisis efforts and working closely with the first lady on the issue – is seen internally as a person on the rise, with some suggesting her as a potential successor to Kelly as chief of staff.”
WaPo “Forget what they say — House Democrats are readying for impeachment,” To fill their top spot on the House Judiciary Committee, Democrats had a choice between experts in two critical policy arenas – a constitutional-law ace with firsthand experience battling Donald Trump, and an architect of sweeping immigration legislation. By a wide margin, they chose the constitutional-law expert. Why? To ready themselves for a battle with President Trump that could end with impeachment proceedings. The selection of Rep. Jerrold Nadler (D-N.Y.) as the ranking Democrat on the Judiciary Committee was the clearest sign yet of how seriously House Democrats consider the possibility of a full-blown constitutional showdown with Trump.”
The wave of sexual misconduct allegations that toppled Hollywood power brokers, politicians, media icons and many others was the top news story of 2017, according to AP’s annual poll of U.S. editors and news directors,” first conducted in 1936 (abdication of Britain’s King Edward VIII was #1):
