Money Matters: This Week in Washington
This Week in Washington for November 6, 2017
By Dina Ellis and Casey Miller
THE BIG PICTURE
House Republicans released their much-anticipated tax bill on November 2. Among other things, the bill cuts the corporate tax rate to 20% and creates three new individual tax brackets of 12%, 25%, and 35%. It also:
Expands the Child Tax Credit from US$1K to US$1.6K to help parents with the cost of raising children, and providing a credit of US$300 for each parent and non-child dependent to help all families with their everyday expense
Reduces the tax rate on small business income to no more than 25%
Preserves the Child and Dependent Care Tax Credit
Increases standard deduction from US$6.35K to US$12K for individuals and from US$12.7K to US$24K for married couples
The bill also includes a controversial provision that will only allow homeowners to deduct interest on the first US$500K of their loans for newly purchased homes, down from the current US$1M.
On the economic front, the Treasury Department reported on November 1 that it will hit the debt ceiling in January. The department said that it will take "extraordinary measures" to meet government obligations for two more months. January is significantly earlier than lawmakers had projected. Senate Minority Leader Mitch McConnell (R-KY) said in September that the debt ceiling would not need to be raised until "well into 2018."
The Labor Department reported 261,000 new jobs in October. This is a sharp increase from September, when hurricanes prompted a monthly gain of just 18,000 jobs. Economists are warning that the sharp increase represents a return to normal, and that it does not represent a significant growth in the economy.
According to the Report to the Secretary of the Treasury from the Treasury Borrowing Advisory Committee of the Securities Industry and Financial Markets Association, economic growth was solid in the third quarter, despite the destructive damage of the major hurricanes that struck the nation in August and September. Real GDP expanded 3.0% (annual rate) last quarter, led by ongoing gains in personal consumption expenditures, rising spending on equipment, and inventory investment. Over the past four quarters, real GDP rose 2.3%, close to its average pace over the past five years.
Much of the focus last week was on Russian meddling in the election through social media. It was reported that Russian agents disseminated inflammatory posts that reached 126 million users on Facebook and published more than 131,000 messages on Twitter.
Senator Rand Paul was the victim of an alleged assault at his Bowling Green home on November 3. According to his spokesperson, the Senator is fine and the assailant has been arrested.
House Financial Services Committee Chairman Jeb Hensarling (R-TX) announced last week that he won't seek reelection. Representative Lamar Smith (R-TX) also announced that he won't seek reelection in 2018.
Lastly, in case you missed it, for 11 minutes, President Trump's Twitter account was shut down on November 2. The stunt was pulled off by a Twitter employee who was at his last day on the job. The company tweeted that it is conducting a "full internal review."
LAST WEEK ON THE HILL
President Trump Signs Bill Overturning Mandatory Arbitration Ban: President Trump signed legislation on November 1 overturning the Consumer Financial Protection Bureau's rule that banned mandatory arbitration in financial product contracts. Republicans applauded the repeal effort, with House Financial Services Chairman Jeb Hensarling calling the repeal a "decisive victory." CFPB Director Richard Cordray made an appeal to the President earlier in the week, urging him to veto the legislation. This is a significant win for the financial services industry, though Democrats have objected strongly to the repeal. House Financial Services Ranking Member Maxine Waters (D-CA) said that "there is no sound public policy rationale for repealing" the CFPB rule.
House Majority Whip Steve Scalise (R-LA) and House Financial Services Chairman Jeb Hensarling (R-TX) Reach a Deal on Flood Insurance: Majority Whip Steve Scalise and Chairman Jeb Hensarling reached a deal on flood insurance last week. The deal is expected to impose new penalties on homeowners with repeat flooding, but the penalties will be less harsh than initially proposed. This was a key sticking point for Scalise, who represents a district in Louisiana where flood insurance affordability is an important issue.
House Passes Bipartisan Bills to Help Companies Attract Investors and Create Jobs: On November 1, the House passed the
The House also passed the
HOUSE FINANCIAL SERVICES COMMITTEE
- The Honorable Kenneth Bentsen, Jr.,President and Chief Executive Officer, Securities Industry and Financial Markets Association
- Mr. Daniel Mennenoh ITP NTP, President, H.B. Wilkinson Title Company, on behalf of the American Land Title Association
- Mr. Edmund Mierzwinski, Consumer Program Director, U.S. Public Interest Research Group
- Ms. Debra Schwartz, President and Chief Executive Officer, Mission Federal Credit Union, on behalf of the National Association of Federally-Insured Credit Unions
- The Honorable David H. Stevens, President and Chief Executive Officer, Mortgage Bankers Association
- Mr. Jerry Howard, Chief Executive Officer, National Association of Home Builders
- Mr. Dan Goodwin, Director of Mortgage Policy, Structured Finance Industry Group
- Ms. Sarah Edelman, Director of Housing Policy, Center for American Progress
- Mr. Kevin Brown, Chair, Conventional Financing & Policy Committee, National Association of Realtors
- Mr. Robert DeWitt, Chairman, the National Multifamily Housing Council on behalf of the National Multifamily Housing Council and the National Apartment Association
- Mr. Patrick J. McCoy, Director of Finance of the Metropolitan Transportation Authority of New York, on behalf of the Government Finance Officers Association
- Mr. Mercer Bullard, Butler Snow Lecturer and Professor of Law, University of Mississippi School of Law
- Mr. Michael F. Gerber, Executive Vice President, Corporate Affairs, FS Investments
- Mr. Paul Schott Stevens, President and Chief Executive Officer, Investment Company Institute
- Mr. Thomas Quaadman, Executive Vice President, Center for Capital Market Competitiveness, U.S. Chamber of Commerce
Legislation considered included:
- H.R. 2319, the "Consumer Financial Choice and Capital Markets Protection Act of 2017" (Rothfus)
- H.R.____, the "Expanding Investment Opportunities Act" (Hollingsworth)
- H.R.____, the "Small Business Credit Availability Act (Stivers)
SENATE BANKING COMMITTEE
Banking Committee Chairman Mike Crapo (R-ID) Still Working on Bipartisan Regulatory Reform: Senate Banking Chairman Crapo told reporters last week that he is starting to talk to Democrats other than Ranking Member Sherrod Brown (D-OH) about banking regulation reform. The statement comes after talks with Ranking Member Brown hit a wall. Crapo said that he has the "same objective"—to "build a bipartisan bill to achieve significant regulatory reform."
Mr. David J. Ryder, to be Director of the United States Mint;
Ms. Hester M. Peirce, to be a Member of the Securities and Exchange Commission; and Mr. Robert J. Jackson, Jr., to be a Member of the Securities and Exchange Commission.
All three nominees were advanced unanimously. Following the Executive Session, the committee met in Open Session to conduct a hearing on the following nominations:
The Honorable Scott Garrett, to be President of the Export-Import Bank;
Ms. Kimberly A. Reed, to be First Vice President of the Export-Import Bank;
The Honorable Spencer Bachus III, to be a Member of the Board of Directors of the Export-Import Bank;
Ms. Judith DelZoppo Pryor, to be a Member of the Board of Directors of the Export-Import Bank;
Ms. Claudia Slacik, to be a Member of the Board of Directors of the Export-Import Bank; and
Mr. Mark L. Greenblatt, to be Inspector General of the Export-Import Bank.
THIS WEEK ON THE HILL
Tuesday, November 7
Senate Banking Committee, "
House Financial Services Subcommittee on Housing and Insurance, Hearing entitled “
House Financial Services Subcommittee on Monetary Policy and Trade, Hearing entitled “
Wednesday, November 8
House Financial Services Subcommittee on Monetary Policy and Trade, Hearing entitled “
House Financial Services Subcommittee on Terrorism and Illicit Finance, Hearing entitled “
Thursday, November 9
House Financial Services Housing and Insurance Subcommittee, Hearing entitled “
President Trump Nominates Jerome Powell to Serve as Chair of Federal Reserve: President Trump appointed current Fed Governor Jerome Powell to serve as the next Chair of the Federal Reserve. Speaking at the Rose Garden on November 2, President Trump said that Jerome Powell is "strong, he's committed, he's smart and if he is confirmed by the Senate, Jay will put his considerable talents and experience to work leading our nation's independent central bank." Some Republicans would have preferred Kevin Warsh or John Taylor.
The nomination breaks with the precedent of presidents re-appointing currently serving Fed Chairs eligible for another term. Senate Banking Committee Ranking Member Sherrod Brown expressed disappointment in the decision and lauded the work of current Fed Chairwoman Janet Yellen. House Financial Services Chairwoman Maxine Waters said that Yellen has done a "masterful job as a steward of the U.S. economy" and criticized the President's decision not to reappoint her.
Securities and Exchange Commission Warns Celebrities about Endorsing Cryptocurrencies: The SEC warned that celebrities could be breaking laws by endorsing new virtual currencies. Celebrities such as socialite Paris Hilton have promoted particular initial coin offerings. This method of fundraising is currently "hot" but largely unregulated.
Administration Not Expecting Housing Reform Until Next Year: Speaking at a symposium held by the Urban Institute and CoreLogic, Mark Calabria, chief economist to Vice President Mike Pence, said that they've "only really now begun the process of figuring out what is the exit path" from conservatorship for Fannie Mae and Freddie Mac. He said that they are "committed to making sure that Fannie and Freddie are not handed over in conservatorship to the next administration," but that it is not "going to happen anytime soon."
COMINGS AND GOINGS AT THE AGENCIES
Nominee for Department of Agriculture Withdraws Name: Sam Clovis, who was tapped by President Trump to serve as the Department of Agriculture's chief scientist, withdrew his name from consideration on November 2. Reports have said that Clovis is intertwined in the investigation into Russia's interference in the 2016 election.
OTHER NOTEWORTHY ITEMS
Former New Jersey Attorney General Heading to American Insurance Association: Former New Jersey Attorney General John Degnan will serve as the next President and CEO of the American Insurance Association. He will fill the role of Leigh Ann Pusey, who left earlier this year for a job at Eli Lilly.
CME Group to Launch Bitcoin-Based Futures Contract: CME Group, the world's biggest exchange group, said that it aims to launch a bitcoin-based futures contract this year, depending on regulatory approval. This would be a major step forward for digital currency.
Equifax Clears Executives: Equifax cleared three of the executives who sold off stock the day before its data breach discovery, finding that no insider trading occurred. The committee investigating the sales found that the officials didn't learn of the data breach until days or weeks after the breach was discovered