Overnight Finance: Congress poised to avoid shutdown | Yellen defends Fed from Trump | Why Obama needs PhRMA on trade

Senate passes funding bill to avoid shutdown: The Senate on Wednesday passed a short-term bill to fund the government, days ahead of the Oct. 1 deadline to avoid a shutdown. 

Senators voted 72-26 on the continuing resolution (CR) to fund the government through Dec. 9. With the legislation heading to the House, where it is slated to be voted on late Wednesday, lawmakers are preparing to leave Washington until after the November election.

{mosads}Wednesday’s vote came after a late-night deal to include aid for the Flint, Mich., drinking water crisis broke a stalemate that was threatening to torpedo the Senate’s bill.

Twelve Democrats and 14 Republicans voted against the spending bill. Sens. Tim Kaine (D-Va.) — who is running for vice president and returned to the Senate briefly Tuesday — and Bernie Sanders (I-Vt.) — who is out campaigning with Hillary Clinton on Wednesday — didn’t vote.

The White House formally signaled its support for the bill Wednesday, though the Office of Management and Budget said in a statement that it was “disappointed” that a provision allowing the Export-Import Bank to make transactions larger than $10 million was not included.The Hill’s Jordain Carney tells us how we got here: http://bit.ly/2dADvhL.

Following the Senate vote, the House allowed a vote on an amendment adding emergency funding for communities with lead-contaminated drinking water to a water infrastructure bill.

House passes waterways bill with Flint aid: The House easily passed a major waterways bill on Wednesday that included a bipartisan compromise to address the drinking-water crisis in Flint, Mich.

In a 399-25 vote, House lawmakers approved the Water Resources and Development Act (WRDA), which authorizes dozens of water-related infrastructure projects around the country.

Lawmakers adopted numerous amendments during floor debate, including one from Reps. Dan Kildee (D-Mich.) and John Moolenaar (R-Mich.) that would authorize up to $170 million for Flint. The Hill’s Melanie Zanona reports: http://bit.ly/2duxjeO.

Yellen defends Fed from Trump attacks: Donald Trump’s charges that the Federal Reserve is a political tool of the Obama administration are gaining some traction on Capitol Hill.

Federal Reserve Chairwoman Janet Yellen had to directly rebut the GOP nominee’s attacks Wednesday when she testified to the House Financial Services Committee.

Republicans have long been critical of the Fed’s policies since the financial crisis, but now they appear to be upping their attacks on a number of fronts.

Rep. Scott Garrett (R-N.J.), a subcommittee chair of the panel, directly charged that Yellen’s Fed had a “cozy relationship” with the Obama administration and Democrats. He echoed Trump’s claims that the Fed is deliberately keeping rates low to benefit Obama in his final months in office.

“Whether you like it or not, the public increasingly believes that the Fed’s independence is nothing more than a myth,” he said. The Hill’s Peter Schroeder takes us there: http://bit.ly/2dsvD18.

Trump adviser says plan would break potential recession: Donald Trump’s senior economic adviser claims the Republican presidential nominee’s platform would help stave off a recession he says experts are predicting in the next few years.

Stephen Moore, a fellow at the conservative Heritage Foundation and founder of the Club for Growth, said Wednesday that Trump’s plan would grow the economy by 4 percent each year. 

While he ceded a recession could be unavoidable, Moore expressed confidence in Trump’s plan.
“It’ll be like adding another Texas to the U.S. economy,” Moore said at a question-and-answer session hosted by the Committee for a Responsible Federal Budget (CRFB). 

When asked how he’d advise Trump in the White House on how to handle a recession, Moore insisted that Trump’s plan would be the best answer regardless of the circumstances.

“We have an economic growth model,” said Moore, who joined the Trump campaign this summer. “When Reagan rebuilt the American economy, he rebuilt the global economy.” I’ve got more here: http://bit.ly/2cCpqhH.

Happy Wednesday and welcome to Overnight Finance, where we’re getting ready for the pre-election recess. I’m Sylvan Lane, and here’s your nightly guide to everything affecting your bills, bank account and bottom line.

Tonight’s highlights include more on the spending deal, a big move from OPEC and a bleaker picture for the Trans-Pacific Partnership.

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

On tap tomorrow

• House Financial Services Committee: Hearing entitled “Holding Wall Street Accountable: Investigating Wells Fargo’s Opening of Unauthorized Customer Accounts,” 10 a.m. http://bit.ly/2dgITdw.

Conservative groups deliver last-minute warning to GOP on spending bill: Ahead of Wednesday evening’s House vote, conservative groups are applying last-minute pressure for Republicans to oppose a plan backed by Speaker Paul Ryan (R-Wis.) to avert a government shutdown this week.

Club for Growth, Heritage Action for America and FreedomWorks are all pressing conservative members to vote down the GOP’s bill to fund the government through Dec. 9. All three influential groups will “key vote” the legislation, holding “yes” votes against lawmakers in their annual scorecards.  

The spending bill, which pushes most budget deal-making into the lame-duck session of Congress, was blasted as a “dereliction of duty on behalf of Congress,” by the Club for Growth. Heritage said the bill, which was crafted by Senate Majority Leader Mitch McConnell (R-Ky.) last week, “falls far short of conservative expectations.” The Hill’s Sarah Ferris tells us why: http://bit.ly/2d7QWtA.

OPEC agrees to cut oil output: Leaders in the Organization of Petroleum Exporting Countries (OPEC) agreed on a preliminary deal Wednesday to cut oil output for the first time in eight years.

After two days of talks in Algeria, the cartel agreed to set production as low as 32.5 million barrels a day, a decrease of about 750,000 barrels from current levels, Bloomberg News reported, citing delegates to the talks.
OPEC would still need to formally vote on the limits and fine-tune them for individual countries, likely by November.

It would be the first cut mandated by OPEC since the oil price crash that started two years ago. The crash was due mostly to a glut in supply and weak demand. Despite repeated calls from major oil producers to cut production and try to increase prices, the cartel struggled to reach a deal.

Oil prices rose more than 6 percent Wednesday after the unexpected production limit deal, and stock prices for major oil companies rose as well: http://bit.ly/2cWHFPD.

Why Obama needs PhRMA: Business groups are facing a major problem in their final push for passage of President Obama’s signature trade agreement — a lack of unity.

While groups like the National Association of Manufacturers (NAM) and the U.S. Chamber of Commerce are committed to passing the Trans-Pacific Partnership (TPP), the advocacy push is missing a heavy hitter: the pharmaceutical industry.

Labor unions and environmental groups opposed to the deal, meanwhile, are marching in lockstep against it.

The disparity comes at a time when the politics of trade have taken a turn for the toxic. The Hill’s Vicki Needham tells us why: http://bit.ly/2cLXSJQ.

Ryan: Pacific deal can’t be fixed in time for lame-duck vote: Speaker Paul Ryan said Wednesday he doesn’t think the White House can fix problems with a sweeping Pacific Rim trade deal before the end of President Obama’s tenure.

The Wisconsin Republican and one of the authors of the trade promotion authority law said he doesn’t anticipate that significant changes to the Trans-Pacific Partnership (TPP) can be made in time to attract enough support to ratify the contentious pact.

“This agreement has to be improved and fixed and that’s not going to happen in the next couple of months,” Ryan told the Economic Club of Washington, D.C.

Ryan said he won’t risk putting the pact up for a vote during a lame-duck session after the November elections if support falls short: http://bit.ly/2dsw1wv.

Levin: Trade angst spans well beyond testy election-year politics: A top House Democrat said Wednesday that the broiling public debate over trade spans well beyond the toxic election-year rhetoric.

Rep. Sander Levin (Mich.), ranking member on the House Ways and Means Committee, said U.S. trade policy relies too heavily on outdated doctrine to sell global agreements like the Trans-Pacific Partnership (TPP) at the peril of economic growth and the livelihoods of workers.

“This present predicament we have with trade isn’t just an election-year phenomena,” Levin said during a discussion at the Council on Foreign Relations.

“There is a history to this, a history of over reliance on outdated doctrines and also the notion more trade is just better and problems with trade agreements will work themselves out over time,” he said.: http://bit.ly/2dsugj4.

Businesses urge Treasury to withdraw proposed estate tax rules: Thousands of companies and organizations representing family-owned business are urging the Treasury Department to withdraw proposed rules relating to the estate tax.

“The proposed guidance is one of the most sweeping changes to estate tax policies in the last 25 years and would be detrimental to active enterprises and family-owned businesses that employ millions of workers throughout the nation,” the businesses said in a letter sent to Treasury Secretary Jack Lew and House and Senate leaders and tax-writers.

“In particular, these rules would impose significant new tax costs on family-owned businesses, diverting capital from business investment, costing jobs and threatening the ability of families to pass businesses on to the next generation of owners.”

Treasury issued proposed rules in August that would limit the use of discounts when the IRS values minority shares in family-owned businesses for purposes of the estate tax. Here’s more from Naomi Jagoda: http://bit.ly/2cLXpay.

SEC approves rule to shorten settlement periods: The SEC commissioners unanimously approved a recommendation on Wednesday to reduce the time investors have to settle securities transactions with broker-dealers from three days to two.  

Under the proposed rule, broker-dealers would be prohibited from entering into a contract that allows for an exchange of funds for securities to occur later than two business days after the trade date, colloquially known as “T+2”.

Mark Flannery, director of the SEC’s Division of Economic and Risk Analysis, said the move to two-day settlements would reduce risks and costs while increasing efficiency in the clearance and settlement system thanks to a variety of factors. The Hill Extra’s Timothy Weatherhead has more: http://bit.ly/2dACxSE.

Democratic tax bill targets foreign reinsurance transactions: Two Democratic taxwriters introduced legislation Wednesday targeting insurance companies that move certain earnings to affiliates based in countries with low tax rates.

The bill would defer the insurance companies’ premiums paid to the foreign reinsurance affiliate until the insured transaction occurs.

“By deferring this deduction, any tax benefit from shifting reserves and associated investment income overseas is effectively recaptured,” the release said. “This is another way of addressing inversions and base erosion, as several U.S. companies have ‘inverted’ into tax havens and numerous other companies have been formed — or been acquired and taken — offshore to take advantage of this tax-avoidance strategy.” The Hill Extra’s Kat Lucero reports: http://bit.ly/2dlnhuT.

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Write us with tips, suggestions and news: slane@digital-staging.thehill.com, vneedham@digital-staging.thehill.com; pschroeder@digital-staging.thehill.com, and njagoda@digital-staging.thehill.com. Follow us on Twitter: @SylvanLane,  @VickofTheHill; @PeteSchroeder; and @NJagoda.