Given that we live in Trump world, far too much happened this week, so here’s a list of what we won’t be discussing in depth:
- The two-employee, $300 million Whitefish Energy contract for Puerto Rico got fried, though that should not be confused with pan-fried whitefish. Not all attempts at unburying a treasure chest on a tropical island succeed.
- Trump bitterly complained that he can’t order the Department of Justice to prosecute whomever he wishes, especially Hillary Clinton. Perhaps you have heard of the Rule of Law, Mr. Trump? As in John Adams’ seeking to establish “a government of laws and not of men”? I think it has something to do with democracy.
- White House chief of staff and retired four-star Marine general John Kelly said the Civil War was caused by “lack of an ability to compromise”. Of course, as a number of historians pointed out, the North had compromised on slavery since the founding of the country. It was the South that seceded after Lincoln’s election because the South insisted that when new states were added there had to be equal numbers of slave and free states. One can only charitably assume that General Kelly was sleeping in class on the days Civil War history was discussed.
- After the horrendous terrorist attack by truck in New York, Trump, a New Yorker himself, did not offer condolences to New Yorkers. Instead, he attacked U.S. Senator Chuck Schumer of New York over a visa policy passed with bipartisan support and signed into law by George Bush senior. Perhaps he thought New Yorkers are so contentious that this would be comforting. Or perhaps it’s way too easy to mistake U.S. Senators for ISIS terrorists. It must be the suits and ties the ISIS members wear.
- Former Trump campaign CEO Steve Bannon urged Trump to defund Chief Counsel Bob Mueller’s investigation and refuse to provide documents. It’s just like a boss saying he’s not going to fire an employee, just stop paying his salary. Trump has for the moment decided not to fire Chief Counsel Mueller from the Russia investigation– probably on advice from his attorneys.
Now, on to the large stuff, indictments and tax reform.
On Monday, Chief Counsel Robert Mueller, as part of his investigation into Russian interference in the 2016 presidential election, indicted former Trump campaign advisor Paul Manafort and his business associate Rick Gates. The indictments were for money laundering conspiracy and multiple violations of the Foreign Agents Registration Act (FARA) in connection with their work advising a Russia-friendly political party in Ukraine. Although the indictments do not mention the Trump campaign, they cover the period at least through 2016 and they can be expanded later.
The bigger news was that a sealed indictment from July of 2017 was unsealed. The documents showed that Trump foreign-policy adviser George Papadopoulos pled guilty last month to lying to the FBI over Trump–Russia contacts from March 2016 through at least August 2016 during the Trump campaign. Here’s the timeline. One question is whether Papadopoulos wore a wire after he was indicted in July. One imagines the Trump administration may be mildly concerned about this.
There was immediate fallout. Among other things, it turns outs that Papadopoulos told other Trump campaign committee members, including Trump’s Attorney General Jeff Sessions and Trump himself, about his contacts with Russia during a March 31, 2016, meeting. We have a photo of the meeting! Don’t you just love sharing photos with your friends? Apparently Sessions shut down further conversation during the meeting about talks with the Russians – but did not forbid the contacts.
But there was more about Mr. Sessions. On Thursday, a foreign policy adviser to the Trump presidential campaign, Carter Page, testified to the House Intelligence Committee that he met Russian government officials during a July 2016 trip he took to Moscow. He specifically testified that he told Jeff Sessions about that trip.
Sessions had testified under oath during his confirmation hearing that he knew nothing about communications between the Trump campaign and Russia. For some reason, Senator Al Franken and other Senators who had questioned Sessions at the time seemed upset about the latest revelations. Yes, this is perjury, although it is not yet clear what will happen; the Senators have called Sessions back to testify further.
The Papadopoulos indictment also stated that he had told a “campaign supervisor” about his Russia communications. It soon became clear that “campaign supervisor” was Sam Clovis.
We then learned that Clovis testified last week before Robert Mueller’s grand jury – and no one in the Trump administration had been aware of that. Trump had nominated Clovis, who has no scientific background, to serve as the U.S. Agriculture Department’s chief scientist. Because biology is never used in agriculture. After it came out that Clovis had testified to the Mueller grand jury, he withdrew nomination. It’s too bad: THAT would have been a fun Senate nomination hearing.
But then there was “tax reform”. A day late (because they were having trouble getting their members in line), the Republicans unveiled their “tax reform” bill. Originally this was supposed to be revenue-neutral, meaning whatever changes were made in tax rates and deductions would not increase the federal debt. That horse escaped, however.
The bill would add at least $1.5 trillion (yes, that’s 1.5 times a thousand billion) to the U.S. debt over 10 years as it provides massive tax cuts to the wealthy and corporations. (As Republican Senator Everett Dirksen said many years ago, "A billion here, a billion there, pretty soon, you're talking real money.") To stay within the $1.5 trillion debt (and avoid having to have some Democratic Senators approve the bill), the Republicans had to cut back on a number of popular tax deductions.
Among other things, the bill would:
- For new purchases of homes, limit the mortgage deduction to $500,000 worth of the loan used to buy the house. For those living in California or New York, where house prices are quite high, that’s a huge problem. This proposal already caused a huge drop in the stock price for homebuilders on the S&P 500 stock exchange. Needless to say, this part is rabidly opposed both by the homebuilders and real-estate brokers.
- Repeal the deduction for student-loan interest. Because people with student loans have just too damn much money.
- Repeal itemized deductions for medical expenses. Because people with huge medical bills also have too damn much money.
- Repeal the deduction for state and local income and sales taxes. Because states that actually try to provide their citizens with more should be punished. There would still be a deduction for property taxes up to $10,000.
It did not seem to be accidental that residents of Blue (Democratic) states would be hit the hardest.
The National Federation of Businesses, the BUILD Coalition -- which represents financial services companies, real-estate developers and farm interests -- and more moderate Republicans from high-cost states like New York and New Jersey were all opposed. Expect even more opposition.
It’s difficult to imagine the Republicans will be able to gather the votes in the Senate to pass the tax bill, even with major changes, although the battle over this will take months. We will see.