As Republicans inch closer to passing the first comprehensive tax overhaul in nearly 30 years, President Donald Trump touted the legislation as a win for middle-class Americans and brushed off concerns that it could contribute to the United States’ massive debt — which on Friday hit $666 billion — during an exclusive interview with FOX Business’ Maria Bartiromo. “It’ll be the biggest cuts ever, in the history of this country,” he told Bartiromo during “Sunday Morning Futures.” “And I think that there’s tremendous appetite, this tremendous spirit for it, not only by the people we’re dealing with in Congress, but the people out there who want to see something.” Despite some concerns that party infighting could cause tax reform to meet the same fate as the GOP’s failure to deliver on its seven-year promise to repeal and replace Obamacare, late Thursday evening the Senate passed its 2018 budget blueprint, paving the way for the House Ways and Means Committee to introduce tax reform legislation. Trump has said that the proposed cuts, which he’s said would lower taxes for the middle class and reduce the corporate tax rate from 35% to 20%, would provide an additional influx of savings to nearly $5,000 for the average American family. During an interview on “CBS This Morning” Speaker of the House Paul Ryan, R-Wis., discussed the possibility of the creation of a fourth tax bracket. The GOP initially had planned to collapse the existing seven income brackets into three — at 12%, 25% and 35% individual rates. A fourth bracket, experts anticipated, would likely fall somewhere 35% and 39.6%.
Democrats, led by Minority Leader Sen. Chuck Schumer, D-NY, derided this plan as cuts for the wealthy. Now, the GOP is considering adding a fourth bracket for high-income earners, possibly in order to ensure that the legislation passes. “Here’s the thing,” Trump said. “Schumer — I like Schumer — but before he even knows the plan he’ll say ‘Oh, this is for the rich,’ so he doesn’t even know what the plan is. And he’s screaming for the rich.” If adding an additional bracket would help middle-class Americans, Trump said he would consider it -although he said he’d “rather not” have to do so. In an uncanny reversal of platforms, some have criticized the GOP’s sweeping, nearly $6 trillion cuts for contributing to the national debt. Trump, and members of his cabinet, have maintained that the cuts will fund themselves by unleashing economic growth and encouraging job creation. Last week, for the first time ever, the Dow Jones Industrial Average rallied above the 23,000-mark — an historical moment largely attributed to the business-friendly tax cuts proposed by the Trump administration.
Next Fed Chair?
As President Donald Trump prepares to select the next Federal Reserve chair, experts explained his decision could show what’s most important to the administration: low rates or deregulation. A new report from Capital Economics explains current Fed Chair Janet Yellen is fairly dovish on interest rates, making her presumable favorable to Trump, who describes himself as a “low-interest rate guy.” However, Yellen’s post-crisis tightening of financial regulation seems to be a deal breaker for Trump, the report explained. On the other hand, current Fed Governor Jerome Powell, who the president seems to be leaning toward, could be a good compromise as he aligns with Yellen on the interest rate outlook, but is more open to loosening financial regulation. In the end, Capital Economics explained the final decision will depend on where Trump’s priorities lie. “But there is still uncertainty over exactly what criteria Trump will use to judge his five candidates and it is still possible that Trump will have a late change of heart,” the report stated. “If it turns out that a commitment to deregulation is more important than keeping rates low, then that could open the door to a much more hawkish Fed under the control of either Kevin Warsh or John Taylor. Under those circumstances, we would expect to see an immediate rise in Treasury yields.”
EPA abandons changes to biofuel program, dealing a blow to oil refiners and boosting corn states
The Environmental Protection Agency has backed off a series of proposed changes to the nation’s biofuels policy after a massive backlash from corn-state lawmakers worried the moves would undercut ethanol demand, according to a letter from the agency to lawmakers seen by Reuters. EPA Administrator Scott Pruitt said in the letter dated Oct. 19 that the agency will keep renewable fuel volume mandates for next year at or above proposed levels, reversing a previous move to open the door to cuts.The move marks a big win for the biofuels industry and lawmakers from corn-states like Iowa, Nebraska and Illinois, while dealing a blow to merchant refiners like PBF Energy Inc and Valero Energy Corp who hoped the administration of President Donald Trump would help provide regulatory relief. The White House issued a statement hours after the Pruitt letter was delivered to lawmakers expressing the president’s support for maintaining the renewable fuel plan. “President Donald J. Trump promised rural America that he would protect the Renewable Fuel Standard (RFS), and has never wavered from that promise,” the White House statement said.
The letter could end uncertainty about the future of the US Renewable Fuel Standard that has roiled commodity and energy markets for months. The program, which requires refineries to blend increasing amounts of ethanol and other biofuels into the nation’s fuel supply or buy credits from those who do, appeared on the verge of a massive overhaul. The most popular form of program credits hit two-month highs on Friday on the EPA news, traders said. The so-called D6 credits sunk to 68 cents last month as EPA considered cost-cutting measures, but prices have rebounded in recent weeks and approached 90 cents on Friday, traders said. Pruitt said the EPA would not pursue another idea floated by EPA leadership that would have allowed exported ethanol to be counted toward those volume quotas.Pruitt also said the EPA did not believe a proposal to shift the biofuels blending obligation away from refiners was appropriate. That plan is backed by representatives of a handful of independent refining companies who have warned the cost of the program will bankrupt plants and cost thousands of jobs. Those ideas would have eased the burden on some in the refining industry, who have argued that biofuels compete with petroleum, and that the blending responsibility costs them hundreds of millions of dollars a year.
But Midwestern lawmakers, including Republicans Charles Grassley and Joni Ernst, had vocally opposed all those ideas, calling them a betrayal of the administration’s promises to support the corn belt. They were concerned the moves would undercut domestic demand for ethanol, a key industry in the region that has supported corn growers. Its a great day for Iowa and a great day for rural America. Administrator Pruitt should be commended for following through on President Trumps commitment to biofuels,” Grassley said in a statement.
Hasbro says Toys ‘R’ Us collapse will hit holiday sales
Hasbro warned on Monday of weaker holiday-season sales due to the bankruptcy of its largest customer Toys ‘R’ Us, while reporting higher-than-expected quarterly results on demand for My Little Pony and Transformers toys. The company said its revenue for the current quarter will increase 4% to 7% over last year’s $1.63 billion. That translates to $1.7 billion to $1.74 billion, below the average analyst estimate of $1.82 billion, according to Thomson Reuters I/B/E/S. Toys’R’Us, the largest toy retail chain in the United States, filed for bankruptcy in September with $5 billion due to creditors such as Mattel and Hasbro. The bankruptcy raised fears that the toymakers would be unable to sell inventories during the key holiday season. Hasbro said its third-quarter revenue and operating profit were already affected by the bankruptcy, but still posted a 3% increase in profit and a 7% rise in revenue. The company reported a profit of $265.6 million, or $2.09 per share, for the quarter and revenue of $1.79 billion, helped by strong demand for games such as Monopoly and Magic: The Gathering and toys based on its successful My Little Pony franchise. Analysts on average had expected sales of $1.78 billion and a profit of $1.94 per share.