Ahead of Trump’s much anticipated tax announcement on Wednesday, the WSJ reports that the president has ordered his (mostly ex-Goldman) White House aides to accelerate efforts to create a tax plan “slashing the corporate rate to 15% and prioritizing cuts in tax rates over an attempt to not increase the deficit” which means that without an offsetting source of revenue, Trump is about to unleash the debt spigots, a proposal which will face fierce pushback from conservatives as it is nothing more than a continuation of the status quo under the Obama administration, and may well be DOA.
The WSJ adds that during an Oval Office meeting last week, “Trump told staff he wants a massive tax cut to sell to the American people” and that it was “less important to him if the plan loses revenue.”
Hoping to add a sense of dramatic urgency – after all his 100 day deadline hits on Saturday – Trump told his team to “get it done,” in time to release a plan by Wednesday.
Translation: Trump’s massive tax cut will be funded by debt, and as a result, will be at best temporary as it will be in breach of the revenue constraints in the reconciliation process; at worst it will never happen as it will now require Democrat votes.
As pressure mounts on Trump to post some victories within the totally arbitrary window of the “First 100 Days” of his administration, the President is expected to join Treasury Secretary Steven Mnuchin later this afternoon to sign a combination of executive orders and memos targeting the reduction of tax regulations and certain components of Dodd-Frank.
Per a statement from the White House, one of Trump’s new executive orders will seek to undo tax rules put in place in the last year of Obama’s presidency that were designed to limit so-called ‘corporate inversions’ which allows U.S. traded companies to recognize income in lower cost countries like Ireland. Per Bloomberg:
Under President Barack Obama, Treasury sought to rein in U.S. companies’ attempts to shift their profit offshore by proposing rules that would curb so-called “earnings stripping” and inversions — mergers in which U.S. companies transfer their tax address overseas to low-tax countries like Ireland to cut their tax bills.
Some of those rules, first proposed in April 2016, sought to restrict lending among subsidiaries of the same corporate parent, a technique that can create income in low-tax countries and tax-deductible interest payments in the U.S. The proposed rules met a barrage of criticism from corporations and tax lawyers, who complained that they went too far by banning common, everyday cash-management practices that have nothing to do with tax avoidance.
Amid the criticism, Treasury last October softened the proposed rules to allow cash pooling, a common corporate money-management technique in which excess cash in subsidiaries is swept daily into a single pool. It also delayed a related proposal, which would require companies to extensively document their related-party lending, until Jan. 1, 2018.
As we noted first thing this morning, and as we, and others, have been warning since December, the passage of Trump’s tax plan is conditional on the effective repeal (and/or replace) of Obamacare, which is set for a vote on Thursday. And yet, it was only today that the market, and the press, appeared to notice that the biggest threat for the market – a market which has long ago priced in the successful passage of Trump’s tax cuts – is that Trumpcare may not pass not only the Senate, but also the House, which in turn would stall Trump’s tax plan schedule well into fiscal 2018 (if not later) as the following Reuters headlines confirms: “Worries about Trump tax plan sink stocks.”
And, unfortunately for Trump and bulls, despite the president’s trip to the Capitol this morning, he failed to whip holdout Republicans. In fact, according to the latest NBC News roll call, there are at least 26 Republicans who as of this moment, 48 hours before the House vote to repeal Obamacare, are either opposed, or lean “strongly against” the health bill despite its recent revisions.
So, for all those who are looking for someone – or someones – to blame for today’s selloff, which is shaping up as the worst of 2017, here is the list of 26 Republican house members who are jeopardizing Trump’s entire domestic agenda. As a reminder, the GOP can only afford to lose 21. If the list below holds, Trump’s biggest legislative push will be a failure on Thursday.
From Russian ties to business conflicts of interests, both Democrats and Republicans are actively working to find chinks in the President’s armor.
But for those with hope of change in their hearts, Democrat Senator Diane Feinstein says there is a possibility that Trump will eventually remove himself from office by filing his own resignation.
Speaking to a crowd during a town hall-style Questions and Answers session, Feinstein was asked how Congress is going to deal with Trump’s alleged illegal activities:
Journalist: We don’t know what’s happening but we know that he is breaking laws every day, he’s making money at Mar-a-lago, he’s getting copyrights in China, he has obvious dealings with Russia, the Dakota pipeline… there’s some many things that he’s doing that are unconstitutional… how are we going to get him out?
Feinstein:We have a lot of people looking at this… Technical people… I think he’s going to get himself out… I think sending sons to another country to make a financial deal for his company and then have that covered with government expenses… I think those government expenses should not be allowed.. we are working on a bill that will deal with conflict of interest… it’s difficult…
Videos of Feinstein speaking to what appears to be a local press pool of reporters and protesters appear below. You can jump to 1:30 in the first video to listen to Feinstein discuss Trump’s conflicts of interests, or watch from the beginning to hear Feinstein’s response to how her husband’s firm directly benefited from bills she voted into law, proving once again that the hypocrisy of socialist Congressional representatives from California has no bounds…
Despite U.S. President Donald Trump’s bluster on “historic tax reform” and $1 trillion in infrastructure investment, his visions still remain short on specifics, while the Congress appears headed to an epic clash over a contentious corporate tax plan.
American stocks surged in euphoria after Trump said Feb. 9 that he would announce something “over the next two or three weeks that will be phenomenal in terms of tax.” Yet his address to a joint session of Congress Tuesday night, his first, contained nothing but generalities — a far cry from the promised “phenomenal” plan.
During the campaign, Trump called for cutting the federal corporate tax rate from 35% to 15%. Republican lawmakers in the House of Representatives have drawn up a proposal of their own that would introduce a 20% border adjustment tax to fund a corporate tax rate cut to 20%. This plan would impose no taxes on exports but would bar companies from deducting import-related costs from taxable income.
Trump has not taken a clear stand on the border adjustment tax, and Tuesday’s address only alluded to the issue. “When we ship products out of America, many other countries make us pay very high tariffs and taxes,” he said. “But when foreign companies ship their products into America, we charge them nothing, or almost nothing.” Read More
The announcement comes amid reports that CNN, MSNBC and other organizations were thinking of boycotting the evening to protest their treatment at the hands of the new administration. This includes being called “a danger to our country” by the president and having their access to officials limited. Buzzfeed, the New York Times, the Los Angeles Times, the New York Daily News, the Hill and Politico were not invited to an off-camera but on-the-record press gaggle with White House Press Secretary Sean Spicer yesterday, a move CNN called “unacceptable.”
The annual dinner at the Washington Hilton, which raises money for journalism scholarships and awards, has turned into a celebrity event that some journalists have criticized as a sign the Washington press is becoming too cozy with the nation’s power structures.
Trump himself was brutally roasted when he attended as a guest in 2011 for pushing the Obama “birther” controversy.
In a striking announcement by John Bercow, the speaker of the British House of Commons, Donald Trump is to be barred from giving a historic address in Westminster Hall, the British Parliament’s grandest and most prestigious hall.
Bercow announced he would not give the US President permission to speak in the 11th Century Westminster Hall when he makes a state visit. John Bercow slammed Trump for “racism and sexism”, his undermining of judges and his migrant ban. Bercow’s intervention is unusual because Speakers are expected to remain above Parliament’s partisan fray.
Back in January, when it still wasn’t certain that Donald Trump would be the Republican presidential candidate, let alone be neck and neck with Hillary Clinton in the polls days ahead of the election, we explained why Trump should be praying for a market crash, or rather not so much a market crash as a swoon in the market in the three months prior to the election. We were referring to a market-based indicator which had a near flawless 86.4% accuracy track record.
As we noted at the time, the old saying that “people vote their pocketbooks” is more accurate than the average political analyst thinks. While Wall Street typically worries about how politics might affect the market, presidential candidates are far more concerned about how the stock market might affect their political outcomes.
Here is why this is important: historically, the market performance in the three months leading up to a Presidential Election has displayed an uncanny ability to forecast who will win the White House… the incumbent party or the challenger. Since 1928, there have been 22 Presidential Elections. In 14 of them, the S&P 500 climbed during the three months preceding election day. The incumbent President or party won in 12 of those 14 instances. However, in 7 of the 8 elections where the S&P 500 fell over that three month period, the incumbent party lost.
There are only three exceptions to this correlation: 1956, 1968, and 1980. Statistically, the market has an 86.4% success rate in forecasting the election!
Multiple reports that the investigation is back open
The FBI earlier this year said it found nothing criminal in Hilary Clinton’s use of a private email server during her time as the Secretary of State.
They have been attacked from the right on the inability to recover 33,000 missing emails or hold anyone to account.
Now, NBC News and a several Congressmen report that the FBI has re-opened the investigation. One of the reasons might be disclosures about who know what in the Podesta emails that continue to drip out from Wikileaks.
USD/JPY is slumping on the report and USD/MXN is rallying.
Update: The US House Oversight Committee Chairman says on twitter that the FBI told him they have learned about emails that appear pertinent to the Clinton investigation.
The latest batch of emails released by WikiLeaks from Clinton campaign chairman John Podesta gives an insight into the planning done by the Obama administration to ensure a successfull visit by Prime Minister Narendra Modi to the Silicon Valley in 2015.
More than a month and half before Narendra Modi was to visit Silicon Valley in the last week of September, US Assistant Secretary of State for South and Central Asia Nisha Desai Biswal wrote an email to John Podesta, who had by then joined the Clinton Campaign, seeking his advice and input on making the trip successful and also checking if the former US president Bill Clinton can co-host a clean energy event with the Modi at Stanford.
In an email to Podesta dated August 12, Biswal said there is a lot of interest in the Indian government to focus on two themes for the Silicon Valley visit.
First is the digital economy, she wrote and added that here the focus will be a visit to google and some announcements on Google’s massive investments in India, she said.
“The other focus is on clean energy. Here the Indians want to visit Tesla and hopefully announce a Tesla partnership/venture with India focusing on their battery storage system for solar,” Biswal said.
“The other major effort is around a clean energy roundtable with Stanford that Commerce had been working on. It now it seems (Commerce Secretary Penny) Pritzker cannot make it to California and the Indians are looking for some other USG (US government) principal to participate with industry, academia and government,” she wrote.