The Senate voted to take up the fiscal year 2018 budget resolution (BR) for debate, which includes reconciliation instructions for tax reform, by a party-line vote of 50 to 47). The Senate must pass a budget resolution for GOP lawmakers to have a legislative vehicle for tax reform. A Senate vote on the BR is expected on Friday, October 20, after allowing for 50 hours of debate.
Using a BR unlocks the reconciliation process for tax reform, which enables GOP lawmakers in the Senate to pass legislation by a simple majority, rather than 60 votes, if no Democratic support can be garnered. Senate Democrats criticize the BR for implementing budget cuts for the sake of providing tax cuts to the wealthy.
Sen. Rand Paul, R-Ky., a controversial figure in the BR’s prospect for success, voted yes to take up debate on the BR, but has expressed criticism of the measure for not including budget caps, stating it is not currently fiscally conservative. If approved, the Senate and House will likely go to conference to reconcile the differences between the two BRs.
“Specifically, this budget resolution contains a $1.5-trillion reconciliation instruction for tax reform. That is a good number, putting meaningful tax reform within reach,” Senate Finance Committee (SFC) Chairman Orrin G. Hatch, R-Utah, said on the Senate floor on October 17. Hatch stated that the taxwriting SFC is currently crafting tax reform legislation pursuant to the guideposts of the Trump administration and top GOP lawmakers’ unified framework.
“Our bill, based on the unified tax reform framework, will give much-needed relief to millions of low-to-middle income families. But, without this budget resolution…we’re unlikely to get there,” Hatch said.
According to CCH, the highly respected tax reporting service, the House approved the Fiscal Year (FY) 2018 Budget Resolution (BR) by a 219–to-206 vote on October 5. The measure is intended to serve as the legislative vehicle for tax reform. All present Democrats and 18 Republicans voted against the measure.
Meanwhile, the Senate Budget Committee approved its own budget resolution (BR) on October 5. A full Senate vote is expected the week of October 16. The two BRs are expected to go to conference to reconcile differences to reach full congressional passage, which would unlock the reconciliation process, enabling tax reform legislation to pass with only a simple GOP majority.
The BR includes a policy statement on tax reform and specifically recommends five policy items:
(1) simplifying the tax code to make it fairer for American families and businesses and reducing time needed for tax compliance;
(2) substantially lowering tax rates for individuals and consolidating the current seven income tax brackets;
(3) repealing the Alternative Minimum Tax (AMT);
(4) reducing the corporate tax rate; and
(5) transitioning the tax code to a more competitive system of international taxation.
We believe Congress is only 20% through the process of passing meaningful tax reform. There are many hurdles to clear before legislation is passed into law. We will keep you informed on the progress of this important legislation.
You may have heard you may be one of at least 143,000,000 victims whose personal information may be at risk because of a data breach at Equifax. This is a big deal which will result in FBI scrutiny, law enforcement investigations, Congressional inquiry, and numerous efforts on Equifax’s part to appease those who have become a victim. We intend to follow this mess. At this time, we recommend you click here and read this consumer information from the Federal Trade Commission.
Imagine you were and I were employed as part of an executive team at a major corporation – and we reported the current state of affairs of our corporation to the Board of Directors the day before the entire executive team left for vacation for a month. Can you imagine the consequence if we said: Sorry, but we were not able to complete the budget for your review. Sorry, we did not have time to reach out to our bankers to renew our line of credit, and we will run out of money next month. Sorry, we were not able to fix the company’s healthcare plan, which will soon spiral out of control. And, sorry, we did not get to figure out or tax situation either. But, we are all going on vacation for the entire month of August. Yes! We would all be fired.
Many investors use the Dow Jones Industrial Average (“DJIA”) as a barometer of the U.S. Stock market. The DJIA stood at 18,000 the day before the Presidential election on November 8th. Today, it has jumped to within a few points of 22,000. This increase equals 4,000 Dow points, or more than 22%. WOW!
If it wasn’t clear that the world’s central banks had begun to shift away from easy-money policy, last week should leave little doubt. This discussion came a week after Fed Chief Janet Yellen openly questioned whether asset valuations have gotten too high for their own good. The S&P 500 now trades at 17.6 times 12-month forward earnings, and while we can debate how much easy money has helped inflate those prices, there’s little doubt that it’s played a role.
It’s clear the Democrats and the Republicans will not work together during the current Administration. Thus, the passage of any meaningful fiscal legislation depends upon the Republicans unifying into one effective voting-block. This has not yet occurred as evidenced by the growing log-jam in Washington.
We are watching closely for actions which will unleash the log-jam. We will report them to you if noted. Meanwhile, there has been no progress toward the legislative goals listed below.
American Airlines is the largest airline in the world, serving nearly 200 million passengers a year. Soon, as those passengers settle into their seats and pick up their in-flight magazines, they’ll be reading all about the Lehigh Valley.
The region will be the subject of a 24-page supplement in next month’s issue of American Way, the most-read in-flight magazine in the world, highlighting the Lehigh Valley for millions of readers on an international platform bestowed on only a select few regions each year.
“The Lehigh Valley is in the midst of an economic renaissance,” said Carsten Morgan, Vice President of Special Projects for the London-based Ink Global, which publishes the magazine.
“The commercial landscape of today’s and tomorrow’s economy is vastly different than the stigmas and misnomers associated with the community,” Morgan said. “This is a story that hasn’t been presented to a global audience on this scale.”
The supplement feature, called Spotlight Lehigh Valley, is an economic development series that takes a detailed look at what makes a certain region a great place to invest, visit, or relocate, with a particular focus on global economic impact, business diversity, and innovation.
Source: Lehigh Valley Economic Development (READ MORE at LehighValley.org)
On one hand, stock prices are being supported by strong business profits and consumer spending. On the other hand, stock prices are being hindered by Congress’s lack of progress on legislation which the U.S. stock market has speculated on being enacted. It is difficult to forecast future stock prices over short periods of time. However, many experts suspect stock prices may have a tough summer because the earnings reporting season is almost over; and, on the other hand Congress appears to be unable to enact fiscal legislation anytime soon.
NOTE: This article is repeated from 2-13-2017 to emphasize the important shift of stock market sentiment.
Why are we so closely monitoring political moves in Washington? Because staff serving on Congressional Committees, by making leaks about legislation in process, can move markets more than the FED.
The markets right now are incredibly dependent upon fiscal policy (fiscal policy is the means by which a government adjusts its spending levels and tax rates to influence the U.S. economy).
Fiscal policy is the brother strategy to monetary policy through which the Federal Reserve Bank (the FED) adjusts the U.S. money supply to influence the U.S. economy. For many years, the FED was the only game in town. Now, many believe the FED’s ability to influence the economy has withered. Maybe, just in time, the government is able to rev up fiscal policy.