Overnight Finance: GOP eyes raising corporate rate, lowering individual rate | House to link defense spending to stopgap bill | Senate Dems play hardball on funding | House package would delay ObamaCare taxes | Dem AGs blast Mulvaney as consumer chief

GOP eyes raising corporate rate to 21 percent, lowering top individual tax rate: Republican negotiators have reached a tentative agreement to raise the corporate rate in their joint House-Senate tax bill from 20 to 21 percent as they seek revenue to pay for a variety of significant changes that could be sold as tax relief for individuals.
The higher corporate rate could pay for a reduction in the top individual rate, which Republicans are talking about lowering to 37 percent — beneath the current top rate of 39.6 percent and lower than the rates set by bills passed by the House and Senate this fall.

It could also pay for keeping more deductions for taxpayers, particularly in high-tax states that would be severely impacted by proposals to eliminate the state and local tax deduction or a cap on the property tax deduction.

Even President Trump has reportedly heard complaints from friends in New York about cuts in deductions that were approved in the initial House and Senate bills.

“The House has a lot of asks to pay for,” said a Republican source briefed on the talks, referring to House lawmakers from high-tax states, such as New York and California, who worry the bill could hit their constituents.

Two GOP sources told The Hill that negotiators have tentatively agreed to the corporate rate of 21 percent — still a 14-point reduction from the current 35 percent rate.

Conservatives have fought to keep the 20 percent rate, and the hike is likely to encounter some resistance. One conferee noted that there has been no formal vote for conferees to sign off on any provisions in a final bill.

“We have not had a vote on any of these policies,” said Sen. Tim Scott (R-S.C.).

The Hill’s Alexander Bolton and Scott Wong report: http://bit.ly/2BiCadq.

 

Cornyn optimistic tax deal coming soon: The late breaking developments came after Senate Republicans signaled they were on the verge of a deal on tax reform.

{mosads}

Sen. John Cornyn (R-Texas) told reporters that negotiators working to merge the House and Senate bills are still ironing out the details but are “getting closer” to an agreement. 

He suggested it was possible the sides could reach a verbal commitment as early as later today.

Other key members of the House and Senate were slightly less optimistic, though they said a deal could be finished by the end of the week. http://bit.ly/2C7boST.

 

House GOP commits to linking defense spending with stopgap bill: House GOP leadership will put a stopgap spending package on the floor next week that fully funds defense through September but provides short-term funding for the rest of the government, Republican lawmakers said Tuesday.

Leadership is moving ahead with the plan in an effort to appease defense hawks and conservatives, even though pairing defense spending with a short-term extension of other programs is likely dead-on-arrival in the Senate.

But showing the conference that the defense-first approach will fail in the upper chamber would give House leadership some cover to revert to a plan B: a continuing resolution (CR) that keeps the government’s lights on until the New Year.

That would also buy lawmakers some more time to write a massive, trillion-dollar omnibus package.

“We have to go through a series of false starts before we get down to reality. I suspect we will indulge those who feel this is tactically smart to do defense plus CR,” Rep. Charlie Dent (R-Pa.), an Appropriations cardinal, told reporters Tuesday. “I think everybody with a pair of eyes and ears knows that the defense piece will be stripped out and sent back.”

“Then there will be disappointment, drama, and yelling and screaming. And then we’ll avert a shutdown before Dec. 22,” he added.

The game of legislative chicken comes as Congress is facing a tight deadline to pass another bill to fund the government, after kicking the can for two weeks in an effort to buy more negotiating time.

http://bit.ly/2BWWaz2

 

Senate Dems play hardball on funding bill: Senate Democrats are warning that they will not accept a plan by House conservatives to pair a full year of defense funding with a short-term fix for other programs.

“We write to express our concern with reports that the House Republican leadership is considering sending partisan legislation to the Senate that would result in funding cuts to important homeland security, veterans, agriculture and health care programs,” 44 of the caucus’s 48 members wrote in a letter to Majority Leader Mitch McConnell (R-Ky.) and Speaker Paul Ryan (R-Wis.).

They said Republicans should “forego any plans to consider partisan legislation known as a ‘CRomnibus.'”

Here’s more from The Hill’s Jordain Carney: http://bit.ly/2AzQCOA.

 

Happy Tuesday and welcome back to Overnight Finance. I’m Sylvan Lane, and here’s your nightly guide to everything affecting your bills, bank account and bottom line.

See something I missed? Let me know at slane@digital-stage.thehill.com or tweet me @SylvanLane. And if you like your newsletter, you can subscribe to it here: http://bit.ly/1NxxW2N.

 

And check out The Hill’s live blog with the latest on the Alabama Senate race.

 

 On tap tomorrow

• Federal Reserve Federal Open Market Committee meeting announcement, 2 p.m.
• House-Senate tax conference panel open meeting, 2 p.m.

 

House GOP unveils package to delay ObamaCare taxes: House Republicans on Tuesday unveiled a package of bills to delay a range of ObamaCare taxes, which could be acted on later this month.

House Ways and Means Chairman Kevin Brady (R-Texas) led the announcement for the bills to delay ObamaCare’s tax on medical devices for five years, on health insurance for two years, and the “Cadillac tax” on high-cost health plans for one year. The package would also eliminate penalties for employers who do not offer health insurance to their workers, under the employer mandate, through 2018.

The bills are only supported by Republicans at the moment, but they come after bipartisan negotiations with Democrats on delaying the taxes, a move that has support on both sides of the aisle. The package could be attached as part of a bipartisan deal on a year-end government funding bill.

The delay of these taxes would be a victory for industries, like medical device companies and health insurers, that have pushed against the taxes. Those groups are still pushing for full repeal eventually. The Hill’s Peter Sullivan explains: http://bit.ly/2C3stNz.

 

Paul says he won’t vote for spending bill that adds to deficit: Sen. Rand Paul (R-Ky.) said Tuesday that he will not vote for an end-of-year spending bill that adds to the deficit.

“I cannot in good conscience vote to add more to the already massive $20 trillion debt. I promised Kentucky to vote against reckless, deficit spending and I will do just that,” Paul said in a tweet accompanied by a video of him speaking about the subject.

His announcement comes as lawmakers have until Dec. 22 to pass a bill to keep the government’s lights on into the new year.

“The end-of-the-year spending bill will continue spending money like there’s no tomorrow,” Paul says in the video. 

Paul, who voted for the Senate’s tax overhaul earlier this month, said he will vote against “any budget busting spending bill.”

The Kentucky senator in an op-ed last month admitted the Senate’s tax legislation is “not perfect,” but said he will support a bill “as long as it is a real cut.” http://bit.ly/2C9M5zS.

 

Wharton study: GOP tax bill does not pay for itself: The University of Pennsylvania’s Wharton School released an analysis of the Republican tax plan that concludes that even under favorable economic conditions the plan will add more than $1 trillion to the national debt.

The analysis released Tuesday by the Penn Wharton Budget Model finds that “even with assumptions favorable to economic growth,” the Senate’s version of that tax bill would add more than $1.5 trillion to the nation’s debt over the next 10 years.

The Wharton model estimates that the plan would add $1.8 trillion to $1.9 trillion in debt even with economic growth. 

“By 2027, under our standard economics assumptions, [gross domestic product] is projected to be between 0.5 percent and 1.0 percent larger, relative to no tax changes. Debt increases between $1.8 trillion and $1.9 trillion, inclusive of economic growth,” Wharton’s analysis reads: http://bit.ly/2Bh2ULi.

 

Majority in new poll: GOP tax plan would hurt us: A majority of Americans said in new poll that the Republicans’ tax overhaul is likely to hurt them and their families, and that it will mostly help the wealthy. 

Fifty-two percent of respondents said that they expect the GOP’s tax plan to hurt them and their families, according to the Marist poll, while 30 percent said they believe the proposal would ultimately help them.

Asked whom the overhaul would help the most, 60 percent of respondents said they believe it would provide the most relief to the wealthy, while only 21 percent said they expect it to help the middle class the most.

Only 4 percent believe the bill would provide the most help to the poor. 

Voters’ views of the GOP’s efforts to reform the tax code varied widely by party identification.

Ninety percent of respondents who identified as strong Democrats said they expect the plan to help the wealthy the most, compared to just 15 percent of those who identified as strong Republicans. And 54 percent of independents said they believe the proposal would help the wealthy. http://bit.ly/2C7HT3A.

 

GOP under pressure on bond issue in tax bill: Groups representing affordable housing, hospitals, airports and colleges are intensely lobbying House Republicans to defer to the Senate and retain a critical financing tool scrapped in their own tax plan.

The groups say eliminating tax-exempt private activity bonds (PAB) would dramatically limit the ability of nonprofit hospitals to perform much-needed renovations, of certain colleges to finance new dorms and heating plants, of developers to build desperately needed affordable housing and much more.

Overall, they argue the changes will be harmful to vulnerable communities, making critical capital projects more expensive and likely resulting in the need to scale them back: http://bit.ly/2C5TvDX.

 

Mattis gets unique role in budget talks: When President Trump and lawmakers met last week at the White House to start talks aimed at averting a government shutdown, the table of negotiators included the usual suspects and one new addition: Defense Secretary James Mattis.

The former Marine Corps general’s presence was meant to “be an adult in the room” and impart the importance of lifting long-in-place defense spending caps as President Trump seeks a deal with congressional Democrats to fund the government next year. 

Mattis is perhaps the most respected figure in Trump’s Cabinet and was confirmed in an overwhelming 98-1 Senate vote. Trump seemed to be aiming at harnessing that political clout in the bargaining session.

After Trump and the four leaders offered words to reporters, the president invited Mattis to speak, highlighting his presence.

“The No. 1 priority for our country is to make certain we protect this Constitution and our way of life,” Mattis said. “We’ve got great bipartisan support. I’m confident we’ll walk out of this with it.” http://bit.ly/2C9VYgL.

 

Dem attorneys general blast Trump for Mulvaney appointment to consumer bureau: Attorneys general from 17 states criticized President Trump’s temporary pick to lead the consumer bureau in a Tuesday letter, saying White House budget director Mick Mulvaney should be disqualified from leading the agency.

Led by New York Attorney General Eric Schneiderman (D), the state law enforcement chiefs said they’d fight any attempt from Trump to weaken the Consumer Financial Protection Bureau (CFPB).

“The CFPB has been a critical partner in protecting American consumers and holding fraudsters accountable. It deserves a leader who actually believes in its mission,” Schneiderman said.

“However, Attorneys General won’t hesitate to protect those we serve – with or without a partner in Washington.” http://bit.ly/2C78Kgd.

 

From The Hill’s opinion pages:

Class warfare must not derail sorely needed tax reform

Avoid budgetary wrecking ball by making key changes to tax bill

Black women entrepreneurs, the GOP tax reform is for you

Immoral tax plan favors greed over compassion

 

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