Below are the public policy issues affecting the middle market that MMG is watching this week.
Preliminary budget agreement points to deficit finance tax cuts
Senators Bob Corker (R-TN) and Pat Toomey (R-PA), of the Senate Budget Committee, disclosed that an agreement has been reached on a government budget, Bloomberg reports. The deal, though still needing approval by the chairman of the committee, Mike Enzi (R-WY), points towards a deficit-financed package, with an estimated $1.5 trillion in tax cuts – though neither would confirm the exact number. This helps provide a realistic picture of current tax reform efforts, as “it would roughly cover the cost of either slashing the corporate tax rate to 20 percent from 35 percent or doubling the standard deduction to help working-class taxpayers. But not both.” In short, any other tax cuts would need to be achieved at the expense of current tax breaks.
Final health care vote
Senators Lindsey Graham (R-SC) and Bill Cassidy (R-La) have written a health care bill that may be sent to a floor vote in the Senate before the end of the month, when the window of opportunity for health care ‘repeal and replace’ efforts closes, per Politico. The bill would turn towards block granting state health care funding, eliminate the federal mandate to buy health insurance, and remove the Medicaid expansion brought about under Obamacare. Rand Paul (R-KY) has adamantly opposed the measure, indicating continuing dissent by the far right in the chamber. Senators John McCain (R-AZ) and Lisa Murkowski (R-AK) are currently the focus of much of the whipping efforts on the bill. No Congressional Budget Office score of the impact of the bill has been released.
Fed to begin unwind of holdings, starting October
Janet Yellen, chairwoman of the Federal Reserve, has stated that the central bank will begin to reduce bond holdings it purchased after the financial crisis, the Wall Street Journal reports. The massive bond buying program helped to keep housing prices (among other things) low, with the Fed holding over $1.7 trillion in mortgage-backed securities. Mortgage rates are currently close to their lowest levels of the year. The lack of any significant stock market activity following the announcement signals investors trust in the very slow unwind Yellen has planned.
Ben Marsico works on public policy issues for ACG.