House Passes Budget

By the very narrow margin of 216 to 212, the House passed the Senate's budget resolution, which will allow a tax-reform bill to clear the Senate with only 50 senators voting for it. The plan is to cut the corporate tax rate to 20% (down from 35%) and reduce the top marginal rate to 35% (from 39.6%). If the final tax bill passes as outlined in the budget resolution, it could cost the treasury as much as $1.5 trillion over 10 years.

Even with this resolution, the Republicans are not home free. Every House Democrat voted against it, as did 20 Republicans. Eleven of the 20 nay-saying Republicans were from New York or New Jersey, which will be hard hit by the proposed elimination of the deduction for state and local taxes. They, along with Republicans from California, Maryland, and Illinois, could doom the ultimate bill when it comes up if the deduction is killed. What is especially noteworthy is the fact that the House Freedom Caucus, nearly all of whose members are deficit hawks, was fine with increasing the deficit by over a trillion dollars. The obvious reality is that the Freedom Caucus is wildly against deficits when passed by Democratic-controlled Congresses but are fine with them when it is the GOP increasing the deficit, even by very large amounts. Despite all their rhetoric and anti-deficit posturing, the only thing the Caucus really cares about are tax cuts. The talk about deficits is just a smokescreen for use only when the Democrats are running the show.

The actual tax bill is expected to be released Nov. 6, and getting it passed will be a tough battle. When push comes to shove, Republicans from high-tax states are going to have a lot of trouble voting for the bill, knowing that Democrats will hammer them in 2018 over it. While a lot of legislation is fairly abstract and people don't really understand it, having to explain to people in California, New York, and elsewhere why it was a good idea to raise their taxes so that corporations and millionaires could get a big tax cut won't be simple. If the bill also limits contributions to 401(k) plans, that is also going to be a tough sell. Many other battles could break out over specific items in the bill after it is released. (V)

Six Things That Could Kill GOP's Tax Scheme

Congressional Republicans are certainly making progress on giving their financial supporters a very big Christmas present. But Mitch, Paul, and Santa's other little elves aren't quite there yet. The grinches at Politico point out six different things that could spoil the egg nog:

• The Budget Hole: The GOP has already accepted an additional $1.5 trillion in deficits in the next 10 years, as noted above. However, the proposed cuts will actually reduce revenue by $5.5 trillion over that time. That means they still have to find $4 trillion somewhere; a truly massive undertaking.
  
  
• The 401(k)s and the State/Local Tax Deductions: Two possibilities for making up some of the $4 trillion are to reduce the caps on 401(k) contributions, and to kill the deductions for state and local taxes. There are all sorts of downsides to these choices as a matter of policy, and as a matter of politics, they will be a very tough sell to the voters, particularly in states like New York, California, New Jersey, and Illinois (as noted above). Yes, those are blue states, but they also have many Republican representatives who would like to keep their jobs.
  
  
• Donald Trump: Under ideal circumstances, the president would help his party sell their tax plan—particularly a plan this ambitious—to the special interests and to the general public. This president, however, is no particular help on that front; no skeptics are persuaded by 140 characters of "This will be the biggest TAX CUT in the history of our country—and we need it!" If that is not bad enough, the fly-by-the-seat-of-his-pants Trump is a huge risk to say or do something that cuts his party off at the knees. Like, for example, taking the 401(k) option off the table, which he did this week. Or waiting until Congress passes something, and then blasting it as "mean," as he did with one of the Obamacare repeal bills. At this point, the Republican members of Congress would be very happy if Trump just zipped it and didn't say anything. But they know they are likely to be disappointed.
  
  
• The Senate: The culture of the Senate is different from that of the House; it's more moderate, many members are institutionalists who prefer "normal order," and their six-year terms and 90% re-election rate make them a bit more impervious to presidential pressure. And that is before you consider the fact that at least three or four GOP senators are in the midst of public feuds with The Donald. Add it up, and there's a very good chance that Speaker Paul Ryan (R-WI) herds something through the House, only to see it die in the Senate, as happened with the Obamacare repeal.
  
  
• Time: In contrast to the Rolling Stones, time is not on the GOP's side. They want to get this done by the end of the year, despite the fact that they have plenty of other things on their plates, and the Congress is in session for fewer than 30 days for the rest of the year (23 days for the House, 29 for the Senate).

Add it up, and there is no question that the obstacles here are even tougher to overcome than with the Obamacare repeal. The only thing the GOP has going for it here is that they, and the President, so badly need a win. That could provide a little "extra" motivation that wasn't there previously. But the odds are still pretty good that, come Christmas Day, businesses and wealthy individuals who are hoping for a big present are just going to be left with a lump of coal in their stockings. (Z)

Trump Declares Opioids a Public Health Emergency

For many months, Donald Trump has promised that a declaration of an opioid "national emergency" was imminent. The announcement finally came on Thursday, but in the end, it was for a "public health emergency."

The two terms may sound similar, but they are actually fairly different. Most obviously, a national emergency immediately makes funding available from the same pot of money that goes to hurricane and earthquake victims. Declaring a public health emergency, by contrast, essentially just tells federal agencies to devote more grant money to this particular issue, and to try to remove bureaucratic obstacles to progress. There is some debate as to which option was more appropriate here, but there is also little question that declaring a public health emergency is a more restrained option, and that many people who are invested in this issue are disappointed as a result. The administration had few answers on Thursday as to why they kept promising "national emergency" when they meant "public health emergency," nor why it took so long to make a fairly low-level declaration.

Whatever the thought process is, Trump has now taken ownership of a very thorny issue. About 175 Americans die every day from overdoses. That's three Las Vegas shootings daily, or two 9/11 attacks a month. "We can be the generation that ends the opioid epidemic," Trump has declared, but that's nonsense. Drug addiction has been a major public health issue since the Civil War created millions of morphine addicts, and before that it was severe, pervasive alcohol abuse. This is not a problem that can be "ended," only one that can be "more contained" or "less contained." So the President has made a commitment here that he is never going to fulfill, one that makes getting Mexico to pay for the wall look like a cakewalk.

Reining in opioid use will be especially difficult since the drugs have many legitimate uses when prescribed by physicians for patients with unbearable chronic pain. An op-ed by Melisaa Sanders-Self makes that clear. She is a teacher at the University of California at Santa Cruz and has neuroendocrine cancer. Both the cancer and her radiation treatment have left her with chronic pain. When she takes the opioids her doctors have prescribed, she can function normally and teach her classes. Without them, she is a hopeless wreck. No doubt that if Trump really cracks down on opioid use, patients with chronic pain and their doctors are going to be writing more pieces like this and appearing on television, making Trump look like a cruel monster for denying them the medicine they need to live a normal life. (Z & V)

Trump's Short List for Fed Chair Has Two People on It

The Washington Post is reporting that Donald Trump's short list for the new chairman of the Federal Reserve consists of two people, Jay Powell and John Taylor. Of course, Trump is famous for following the advice of the last person he talks to, so tomorrow there might be a new short list with different people.

Taylor is a current Stanford University professor and former investment banker who is beloved by conservative Republicans. He is an inflation hawk and would probably move to raise interest rates quickly. Like most of his predecessors, he is an academic economist, and a particularly well-respected one, someone who is widely expected to win a Nobel sooner or later. He held roles in the administrations of both Bushes as well as during the Carter and Ford administrations.

Powell is a current Fed governor who has supported Chairwoman Janet Yellen's cautious pace for raising interest rates. He has been a Fed governor for 5 years. Before that, he worked for a think tank and was also employed by the Caryle Group. During the George H.W. Bush administration, he worked in the Treasury Dept. Powell has a law degree rather than a Ph.D. in economics, which would be a break from the past.

Trump likes low interest rates, since they are good for his real estate business, which may give Powell the edge. If he picks Powell, markets may be happy because he is not much of a change from Yellen. On the other hand, many conservative Republicans hate the Fed and have a congenital fear of inflation, so they are surely going to push for Taylor. Trump is expected to make his choice before he leaves for Asia on Nov. 3 to give the Senate time to confirm the nominee before Janet Yellen's term ends in February. (V)

Enthusiasm Gap May Help Democrats in 2018

In 2016, many Republicans didn't care much for Donald Trump, but they hated Hillary Clinton, so they voted for Trump anyway. Many supporters of Sen. Bernie Sanders (I-VT) did not want to vote for the "lesser of two evils," so they voted for a third-party candidate or didn't vote at all. This constellation of factors led to Trump's victory in the Electoral College, despite losing the popular vote.

In 2018, the enthusiasm gap may work the other way and may hurt the Republicans. A new poll from SurveyMonkey shows Trump with a 92% disapproval rating among Democrats, with 83% strongly disapproving. In contrast, only half of Republicans strongly approve of Trump. Among independents, 49% strongly disapprove of Trump but only 16% strongly approve of him.

This matters because turnout is key in the midterms and angry people vote. Democrats seem much more motivated to vote than Republicans. Of course that could change if Congress passes a tax cut and Republicans like it. Another factor that could affect turnout is the report of special counsel Robert Mueller. If it is released before the midterms and is critical of Trump, this could motivate Republicans to vote to keep the GOP in charge of the House to prevent Trump's impeachment. On the other hand, it could motivate Democrats to turnout precisely for the purpose of having Democrats take over the House to impeach Trump. A lot depends on what is in the report and how many people believe it. (V)

Democrats Introduce Preemptive Strike Bill

Congressional Democrats seem to be enjoying their time as nuisance-makers, aka the minority party. On that front, Sen. Chris Murphy (D-CT) will introduce a bill barring Donald Trump from launching a pre-emptive military strike against North Korea. In theory, this bill should not be necessary, since the Constitution gives Congress sole authority for starting wars. In practice, however, presidents since Truman have been doing end runs around Congress on this front, often with shaky legal justification.

The proposed bill, then, is certainly on firm legal ground, and is rather prudent, given the President's verbiage on the subject. However, it's also a big headache for Congressional Republicans. Likely, most of them agree that the presidency has assumed too many war-making powers, and that Trump is cause for special concern. On the other hand, they don't want to appear sympathetic to Kim Jong-un in any way, and they don't want to slap the President in the face while they are working on the tax code. It's possible that the bill gets actual consideration next year, but no way that happens this year. (Z)

Schweikert Not Likely to Run for the Senate

With the retirement of Sen. Jeff Flake (R-AZ), Arizona Republicans are casting around for a candidate who could take down the nearly unelectable Kelli Ward, a favorite of Breitbart executive chairman Steve Bannon. One name that has been mentioned is Rep. Dave Schweikert (R-AZ). Sources close to Schweikert say that Schweikert is not interested in a run. He is more interested in running for governor in 2022, and wants to stay in the House until then. Other Republican representatives from Arizona who might make the plunge include Martha McSally, Paul Gosar, and Andy Biggs. (V)

Many JFK Files Released

For a week, everyone has wondered "will he or won't he?" when it comes to Donald Trump's releasing thousands of documents related to the JFK assassination. The answer, we learned on Thursday, is "yes." That is, several thousands of the promised documents were indeed released, but several hundred remain classified, at least for now.

The new documents contain a few juicy revelations, like that the CIA thought about contracting with the Mafia to kill Fidel Castro, and that the FBI had good reason to be nervous about Lee Harvey Oswald before he turned assassin. If Oliver Stone ever wants to make a sequel to JFK, he will have plenty to work with, without even having to make stuff up this time. However, the truth of who actually killed JFK is obviously in the unreleased documents. Trump says he really wants to release the rest, so we may finally learn the truth then.

Just kidding, of course. If there are un-revealed secrets about the JFK assassination, they likely went to the grave with whoever knew them. Or they are in the hundreds or thousands of documents that went missing, or were destroyed, and so are (presumably) lost forever. Of course, given that the conspiracy theorists are already declaring that the Las Vegas shootings never happened, there is no amount of evidence that will actually silence the JFK conspiracy theories. (Z)

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---The Votemaster and Zenger