The GOP Has A Deal On Taxes, And It’s Terrible
Plus, no more penalty for not having health insurance.
House and Senate Negotiators Settle Their Biggest Differences In A Flash, Mostly By Giving Even More Benefits To Rich People And Corporations
It’s not final final yet. But it’s pretty final. And it looks like passage next week should be doable, in spite of demands by Democrats that Doug Jones be seated before a vote occurs. Democrats did wait for Republican Scott Brown before voting on Obamacare. But that was in the olden days…no way Republicans will extend that courtesy at this time.
- The top tax individual tax rate will now be 37%, down from the current 39.6% and even the 38.5% Senate Republicans had proposed. That late reduction intended to soften the blow of ending the deductibility of state and local taxes. But obviously that will only apply to rich people in the top tax bracket.
- And the very deep cut in corporate taxes will go into effect immediately, not after a one-year wait as the Senate had proposed. Corporations will be taxed at a rate of 21%, up from the 20% originally in both bills, but way down from 35% currently.
- So called pass-through rates, for small (and some big) businesses and trusts, will also be lowered from both the Senate and House’s earlier proposals, to 20%.
Bloomberg has a pretty clear and comprehensive summary of some other remaining issues and how they’re being resolved. But really, there’s not too much else to talk about: as we’ve said, corporations and rich folk make out like bandits. The wealth gap widens. For everybody else, things get shuffled around a bit, to create the appearance of a couple of more bucks here and there, and even those benefits eventually disappear.
There are also a couple of momentous changes in the bill that may have legitimate financial impact, but really aren’t directly related to tax cuts:
- A partial repeal of Obamacare, by reducing the penalty for not buying health insurance to zero.
- Opening Alaska’s Arctic National Wildlife Refuge to drilling: a goal Republicans have yearned for and has proven illusory for decades. It’s probably as significant a political milestone as moving the U.S. Embassy in Israel to Jerusalem.
President Trump was somewhat low-keyed, and stuck mostly to script while selling the plan: focusing on the impact “giant” taxes cuts would have on creating jobs. “And when I say giant, I mean giant”.
You can watch part of the President’s pitch here:
We Need To Talk A Little About The Federal Reserve
The U.S. Central Bank raising its benchmark short term interest rate to 1.5% from 1.25%; going out of its way to assure everybody this is not an extraordinary action, rather something routine and planned.
At the same time, with “giant” tax cuts looming, it’ll be up to the Fed to make sure corporations and rich people don’t use that free money to borrow too much more money.
But if the government’s about to give them a ton of free money they didn’t have before, why would they need to go out and get even more? Because “need” is not a valid word in this equation. “Greed” is. If corporations or rich people think they can make more money than the cost of borrowing it, they will (even if they already have tons of cash lying around). It’s like a huge party that never ends…
Only the Fed can control it by nudging rates higher — making money more expensive, and borrowing less attractive — if they start to see the accumulation of an insane level of debt as an outcome of the tax bill.
Outgoing Fed Chief Janet Yellen expressed an overall positive view of the economy, with the tax cut leading to “some modest lift”. That’s considerably more conservative than the President, who claims he’s providing “rocket fuel”.
The Day Net Neutrality Died?
A vote by the Federal Communications Commission on ending net neutrality is set for late this morning, and with 3 Republicans and 2 Democrats on the panel…barring any surprises…well, you can do the math…
As we’ve said before, this is one instance where reducing government regulations will not simplify things for consumers, it will actually subject them to much more complicated rules, except those rules will be dictated by corporations, not the government. And as we’ve argued before, the reason for agencies such as the FCC, is that left on their own, corporations almost never act in the best interests of consumers.
How do we know this time won’t be the exception? Because nobody’s complaining about the way things are right now except the corporations that provide internet service. And the Chairman of the FCC, former Verizon attorney Ajit Pai.
A couple of stories to look at:
A good primer from Salon.com on what net neutrality actually is, what ending it will mean, and how we got to where we are today.
A snarky piece from Gizmodo about the undeniably fatuous Chairman Pai.
A pointed criticism from the New York Attorney General. He’s angry today’s vote is going ahead without any investigation into what could be millions of comments supporting an end to net neutrality that are turning out to be from stolen identities. Leading one to reasonably conclude public comment, at least to Chairman Pai, wasn’t going to mean anything anyway.
Rosenstein: If President Orders Someone To Fire Mueller, It Ain’t Gonna Be Me
Deputy Attorney General Rod Rosenstein, who appointed Special Counsel Robert Mueller after Attorney General Jeff Sessions recused himself from the Russia investigation (much to Trump’s chagrin), was grilled by the House Judiciary Committee.
Republican House Members did their best to appear genuinely shocked and incensed by text messages shared in recent days by the Justice Department, in which an FBI investigator who was reassigned over the summer, expressed unfavorable opinions of the President.
Rosenstein replied by stating the obvious: “We recognize we have employees with political opinions. It’s our responsibility to make sure their opinions don’t influence their actions”.
When asked directly if he would fire Mueller if ordered to, he replied only if there was “good cause”. He then answered he has seen no “good cause”.
You can watch that exchange here:
Republicans Play What’s Been The Democrats’ Favorite Game
So much writing about lessons in the wake of the dramatic Democratic victory in Alabama. Much of it valid: the power of African-American voters, the influence of Senior Senator Shelby who encouraged Republicans to write in candidates instead of voting for Roy Moore…
But lots of it reflected Republicans trying to take solace in the idea that it will be very hard for newly elected Senator Doug Jones to hold on to his seat when he’s up for re-election in 2020. To which we say the same thing we’ve said to Democrats who kept looking hopefully past crushing losses: who the hell knows? As the President said “a win is a win”. Do we really need to remind the people who are now saying it’ll be impossible for Jones to win reelection that just a couple of days ago they were saying it’d be impossible for him to win in the first place?
Al.com, which has provided tremendous coverage throughout the campaign and election, shared this very laid-back interview with Jones (we felt it gave us the chance to get to know him a little better):
Roy Moore did not wake up this morning and decide to concede. He continues to hold out for a recount even though the margin he lost by appears too big to trigger an automatic recount, and the Republican Party won’t pay for one. Steve Bannon’s money guy, billionaire hedge fund manager Robert Mercer certainly could, but wouldn’t Bannon want to move on at this point? Meanwhile, longtime Republicans suddenly felt much more comfortable bashing Bannon: New York Republican Rep Steve King, who’s known for being a bigmouth, mercilessly ripped into him on CNN.
Trump seems eager to cut Moore loose: first Tweeting congratulations to the Democratic victor Doug Jones, then calling Jones and inviting him to stop by the White House when he gets to D.C. And that attitude seemed to be reflected by many Republicans on Capitol Hill: right now, they’d rather talk about tax cuts.
We are not going to get any further into what these results might mean for midterms (Nate Silver has some well-reasoned speculation on fivethirtyeight.com). In hindsight, it’s still hard to say how much of the Alabama result had to do with Roy Moore’s creepiness, and how much was a strong repudiation of Trump, but we think it’s fair to say there was some of both. Trump won the Presidency because a lot of people stayed home. Now that people are recognizing the damage his policies are doing to the fabric of this country, we see people who are engaged, and mobilized. What will that ultimately mean? Check back with us in about a year…
