National Economic Council Director Gary Cohn Could Be the Next Fed Chair
Gary Cohn is near the top of President Trump’s list of choices for the next chairman of the Federal Reserve, says Politico. Under current chair Janet Yellen, the Fed has begun to unwind the massive balance sheet that ballooned during the 2008 financial crisis. This will be quite the balancing act. Reducing its bond holdings too quickly risks sparking a recession; if the Fed acts too slowly, it could get behind on inflation, prompting a series of rapid rate hikes that would damage the economy. If selected, Cohn would be the first chair in 40 years who is not an economist. Sources say he is also in the running to be a future White House chief of staff.
Interest Deduction Talks, Pass-Through Rates Enter Tax Reform Debate
The first House Ways and Means subcommittee on tax policy hearing of the 115th Congress took place on Thursday, per Morning Consult. Lawmakers examined the possibility of a lower pass-through tax rate for small businesses; they are currently taxed at the individual income rate of their owners. Several Democrats stated that this simpler, lower tax rate is a necessary improvement but must be implemented in a way that reserves the structure for small businesses.
Rep. Peter Roskam, chair of the subcommittee, says he is looking for a carve-out for small businesses with respect to the interest deduction as well. Much of the discussion of interest deductibility centered on agriculture’s use of the tax break.
New Health Care Law Poses Trouble for Senate Republicans
One Republican senator changing his or her vote to a “no” would doom the current GOP health care bill, according to Politico. Republican Senators Susan Collins of Maine and Rand Paul of Kentucky are both opposing a procedural vote that would bring the bill to the Senate floor—Senate Republicans still don’t have enough votes if the bill passes the procedural vote. Health care, an issue that consumed the first Congress under President Obama, needs to be resolved before lawmakers can move on to the budget, followed by tax reform. Republican leadership wants to tackle tax reform before the end of 2017.
Ben Marsico works on public policy issues for ACG.