Overnight Finance: Crunch time for Republicans seeking tax code rewrite | McConnell defends Corker amid Trump feud | Puerto Rico governor asks Congress for more federal aid after hurricane

by Sylvan Lane - 10/09/17 5:02 PM ET

Crunch time for Republicans seeking tax code rewrite: It’s crunch time for Republicans as they work toward releasing legislation to overhaul the tax code — a key priority to deliver after their failure to repeal ObamaCare.

The White House and congressional Republicans issued a nine-page tax framework in late September, and the House and Senate saw movement on their budget measures in recent days.

Once a budget resolution is adopted, the next big step is for tax-writing committees to produce detailed bills, something lawmakers say could come sometime this month. And their goal is ambitious — to finish up before the end of the year.

Tax writers have their work cut out for them. They’ll have to move from their blueprint of principles to legislative language to overhaul the U.S. tax code.
As they work, they’re facing pushback from lawmakers and lobbyists seeking to preserve tax provisions and breaks on the chopping block that lawmakers will need to trim to lower tax rates.

The Hill’s Naomi Jagoda tells us about five big issues Republicans face as they produce tax legislation: http://bit.ly/2xuqdM0.

McConnell defends Corker amid Trump feud: Senate Majority Leader Mitch McConnell (R-Ky.) is offering support to Sen. Bob Corker (R-Tenn.) amid a war of words between the latter and President Trump.

“Sen. Corker is a valuable member of the Senate Republican caucus and he’s also on the Budget committee and a particularly important player as we move to the floor on the budget next week and he’s an important part of our team,” McConnell said Monday in Kentucky, according to the Associated Press.

Asked about whether he agreed with Corker’s criticism of Trump, McConnell sidestepped, adding: “[Corker is] an important part of our team and he’s a particularly important part of the budget debate which will be on the floor next week.”

Corker and Trump traded rhetorical fire on Sunday after the president lashed out at the Tennessee senator during an early morning tweetstorm. The Hill’s Jordain Carney reports: http://bit.ly/2xuLzsI.

Puerto Rico governor asks Congress for more federal aid after hurricane: Puerto Rico Gov. Ricardo Rosselló is asking Congress to consider providing about $1.4 billion in funding beyond the Trump administration’s request last week to help the U.S. territory recover from Hurricane Maria.

In a letter made public on Monday to House and Senate leaders, Rosselló requested funding for federal grant and loan programs “to meet the immediate emergency needs of Puerto Rico.”

Rosselló’s request includes $3.2 million for Community Development Block Grants, $500 million for the Community Disaster Loan Program, $500 million for the Social Services Block Grant, $149 million for the Emergency Relief Program, $90 million for the Disaster Loan Program, $83 million for the Commodity Assistance Program and $78 million for the State Educational Agencies and Hurricane Education Recovery.

“Puerto Rico has experienced a natural disaster of a magnitude not seen in over a century, and we are doing everything possible to address the needs of the American citizens of Puerto Rico during this time of crisis,” Rosselló wrote.

“However, the unprecedented level of destruction, coupled with the almost complete shut-down of business in Puerto Rico, have made it impossible for us to meet the considerable human needs without the measures proposed above.” http://bit.ly/2xuJ5dL.

Trump moves to ease sanctions on Sudan: The Trump administration has decided to permanently lift some of the economic sanctions on the Sudan, handing a victory to the country and its lobbyists.

The decision, which was widely expected, followed “a focused, 16-month diplomatic effort to make progress with Sudan,” State Department spokeswoman Heather Nauert said in a statement Friday night.

“The United States will continue efforts to improve bilateral relations with Sudan,” she said. “Any further normalization of ties will require continued progress by the Government of Sudan.”

Despite the sanctions relief, Sudan will remain on the State Department’s list of state sponsors of terrorism, a three-country list that also includes Syria and Iran. The designation prohibits Sudan from being able to buy arms from the U.S. or receive American aid.

And the International Criminal Court has indicted Sudan’s president, Omar al-Bashi, for alleged war crimes. The Hill’s Megan R. Wilson reports: http://bit.ly/2xuKBMQ.

Happy Monday 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-staging.thehill.com or tweet me @SylvanLane. And if you like your newsletter, you can subscribe to it here: http://bit.ly/1NxxW2N.

Goldman Sachs: Tax cuts would only boost growth 0.2 points: The Republican tax reform plan would only increase economic growth by 0.1 to 0.2 percentage points over the next two years, according to a Goldman Sachs analysis, a far cry from the massive boost Republicans say would pay for their tax cuts.

“Our analysis suggests that the ‘dynamic’ cost of the tax cuts is about 20 percent lower than the ‘static’ cost, consistent with the implications of the academic literature,” the bank wrote in a Saturday report.

Republicans have argued that the $1.5 trillion in deficit-financed tax cuts, measured by a “static” score that does not include the effects of economic growth, would largely pay for itself once the growth factors were considered in a “dynamic” analysis.

Treasury Secretary Steven Mnuchin, a former partner at Goldman Sachs, has gone so far as to suggest that growth would increase enough to eliminate related deficits altogether. The Hill’s Niv Elis explains: http://bit.ly/2xuI1qd.

EPA chief: I’d ‘do away with’ wind, solar tax credits: Environmental Protection Agency Administrator Scott Pruitt said on Monday that the hot-button federal tax credits for the wind and solar power industries should be eliminated.

Pruitt told a crowd at a Kentucky Farm Bureau event that the credits stand in the way of utility companies making the best decisions about power generation.

“I would do away with these incentives that we give to wind and solar,” he said, referring to wind’s production tax credit and solar’s investment tax credit.

“I’d let them stand on their own and compete against coal and natural gas and other sources, and let utilities make real-time market decisions on those types of things as opposed to being propped up by tax incentives and other types of credits that occur, both in the federal level and state level.”

Pruitt conceded that any move to end the credits would be a “policy decision” for Congress, “not an EPA decision.” The Hill’s Timothy Cama reports: http://bit.ly/2xuPwO5.

US deficit spending reached $668 billion in fiscal 2017: The federal government’s deficit spending was $668 billion in fiscal 2017, an $82 billion increase over the previous year, according to the Congressional Budget Office.

The deficit rose to 3.5 percent of the nation’s gross domestic product for the fiscal year, up from 3.2 percent of GDP a year earlier.

Typically, deficits that are higher than economic growth add to a country’s overall debt burden, which can lead to higher borrowing costs and, in extreme cases, an inability to pay debts.

U.S. debt surpassed $20 trillion for the first time in September.

The deficit has become a major sticking point in the debate over a Republican tax-reform plan, with some, such as Sen. Bob Corker (R-Tenn.), raising concern that the U.S. would have to borrow vast sums to finance a tax cut: http://bit.ly/2xuSZfe.

Norquist: Corker can fight with Trump and still help with tax reform: Americans for Tax Reform President Grover Norquist on Monday expressed confidence that Sen. Bob Corker (R-Tenn.) would support a tax-reform bill despite his recent feud with President Trump.

In an interview on CNBC, Norquist, who often has the ear of GOP lawmakers, said that Corker is “a grown-up” who “can have a fight with the president” but also recognizes the benefits of lowering taxes.

“He’s a serious guy in terms of wanting economic growth,” Norquist said, noting that Corker’s home state of Tennessee largely doesn’t tax income.

Corker has said he would not vote for a tax-reform plan that was temporary or raised the deficit.

Norquist’s comments come after Trump and Corker, who is retiring at the end of next year, traded barbs on Twitter Sunday. http://bit.ly/2xuHnc4.

Banking panel Dems push chairman for bipartisan reg relief bill: Four moderate Democrats on the Senate Banking Committee on Friday asked the panel’s chairman to help strike a bipartisan deal to amend Obama-era financial regulations.

Sens. Joe Donnelly (Ind.), Heidi Heitkamp (N.D.), Jon Tester (Mont.) and Mark Warner (Va.) “strongly encouraged” Chairman Mike Crapo (R-Idaho) to “reach an agreement on a regulatory reform package that can come before the committee” within weeks.

Donnelly, Heitkamp, Tester and Warner backed a 2015 bipartisan bill that former Banking Committee Chairman Richard Shelby (R-Ala.) never brought for the panel for a vote. That bill would have rolled back and readjusted some of the key portions of the Dodd-Frank financial reform law long targeted by banks and firms that complained that the 2010 law was slowing economic growth with red tape.

Crapo and ranking Democrat Sherrod Brown (Ohio) both expressed interest in moving a bipartisan regulatory reform bill this year, and committee members have largely coalesced around key provisions of deal. Those include clarifying the Volcker rule banning banks from making risky trades with their own capital, exempting mid-size regional and community banks from stricter government oversight and reduce the frequency of regulator stress tests.

The four Democrats asked that Crapo pick up the efforts “to rationalize our financial regulatory regime.” Donnelly, Heitkamp and Tester are up for reelection next year in states President Trump won by wide margins in 2016 and have been vocal in pursuit of major bipartisan legislation: http://bit.ly/2xuQABz.