House Republicans Already Shooting Down Tax Bills Promises

House conservatives are already indicating that they're prepared to block some of the key legislative promises that Senate Republicans demanded in exchange for their votes on tax reform legislation.

Those promises materialized in the frantic final hours of the tax debate last week, as Senate Majority Leader Mitch McConnell (R-KY) gave Sens. Susan Collins (R-ME) and Jeff Flake (R-AZ) assurances that some of their personal legislative priorities would be dealt with in exchange for their votes.

Collins said she received a promise that the Senate would consider two bipartisan pieces of legislation that would ostensibly mitigate the negative effects that could come from the tax bills repeal of Obamacares individual mandate. Flake said he received a firm commitment from Senate Leadership and the administration to work on a permanent protections for the soon-to-be-ended Obama-era program that shields children of undocumented immigrants.

Both senators ended up voting for the tax bill, giving it the 51 yes votes it needed to pass. Within days, however, reality began setting in that those promises might have been flimsy at best.

Moving the Collins and Flake deals through the House was always going to be an uphill climb, with a conservative bloc sharply opposed to both measures, having dubbed DACA a de facto form of amnesty and arguing that the health insurance market stabilization bills that Collins supports are tantamount to a bailout for health insurers and what they view as a broken system. On Monday, those conservatives railed against McConnell for making promises on legislation that they have long opposed.

We still have the same issues. Nothing has changed in the last two months just because were fulfilling our promise on delivering on tax reform, Rep. Mark Walker (R-N.C.), the chairman of the conservative Republican Study Committee, told The Daily Beast. I find it problematic to be promising something that the House has shunned from very early on.

Lawmakers made it clear that they felt no reason to support the proposed deals, and blamed Senate leaders for trying to wheel and deal their way to a successful result on reforming the tax code and slashing rates, an issue they believe all Republicans should have been united around from the start.

I think this is exactly what the American people are sick of: learning about trading votes to modify the healthcare system and one fifth of the economy in exchange for a tax vote, Rep. Dave Brat (R-VA), a member of the hardline House Freedom Caucus, told The Daily Beast. So it seems like it would be wiser for Republicans to actually follow what is in the Republican platform and not what is in the Democratic platform.

GOP leadership has long had difficulty corralling its conservative members on even its own agenda. And on Monday, aides scoffed at the idea that leadership would be able to sell them on swallowing what the Senates more moderate lawmakers produced in their tax billlet alone really try.

McConnell is asking for us to vote for these unpalatable things to do tax reform, a conservative House GOP aide told The Daily Beast. We have someone whos taking a hostage, we have to negotiate with them, and, oh, they happen to be from the same party.

The aide was granted anonymity to candidly discuss House conservatives longstanding frustrations with the Senate and with McConnell throughout the Trump presidency, in particular the upper chambers failure to repeal and replace Obamacare.

The likelihood that the House declines to follow through on either the Collins or Flake measures may not, in the end, complicate tax reform at all. The Senate has already passed its tax bill and the House could simply pass the Senates billmeaning that even if the senators raise objections, the bill would still be able to pass.

Collins had been extremely skeptical of the Senate version because it included a repeal of the Obamacare individual mandatesomething that the nonpartisan Congressional Budget Office (CBO) says would result in 13 million more Americans uninsured over the next 10 years. She demanded that Congress pass two bills in exchange: one crafted by Sens. Lamar Alexander (R-TN) and Patty Murray (D-WA) that aims to lower premiums in 2018; the other co-authored by Collins and Sen. Bill Nelson (D-FL) and would provide a federal reinsurance pool worth $10.5 billion.

Flake, meanwhile, is one of a few Republicans who supports a bipartisan version of the DREAM Act that was introduced by Sens. Dick Durbin (D-IL) and Lindsey Graham (R-S.C.). But while Durbin, the Senate Minority Whip, has said hes willing to block any spending bill that does not codify DREAMer protections before the end of the year, Republican leaders in both the House and Senate have said they dont plan to deal with the issue by the end of the year. The White House, meanwhile, has stressed that they only promised Flake a seat at the table, not a final legislative outcome.

On Monday, Flake downplayed the significance of the administrations commitment to work with DACA, which was given when Trump first announced he was rescinding the program in September with a six-month phase-out. Instead, the Arizona senator described it as an affirmation of Congress role in the process.

Both the vice president and the president have said they want to work with me on it. That wasnt my condition to vote for the bill. It wasnt. It was a secondary thing. But Im glad I got it, Flake told The Daily Beast in an interview. The problem is what weve seen so far for Congress, it seems, is not in the attempt to reach a deal [but] to make a statement rather than make a law. And these kids are going to be timed out here soon. And so weve got to actually get serious with it.

Flake has been one of Trumps sharpest critics. When he announced in October that he wasnt seeking re-election in 2018, he took to the Senate floor to cast Trump as a reckless threat to democracy.

On DACA, though, the senator appears to have faith in Trump.

Ive said before I think this is one area the president has said some good things about wanting to do it. I think his instincts on DACA, at least, are probably better than some of the advice that hes gotten on this, Flake added.

Read more: https://www.thedailybeast.com/house-republicans-already-shooting-down-tax-bills-promises

Should the Upper Middle Class Take the Biggest Tax Hit?

Humans learn the concept of fairness at a very young age. After all, it doesn’t take long for a child to start whining about a sibling who gets an extra serving of ice cream. As the Republican-controlled Congress tries to push through tax reform this year, one group of Americans may similarly question why it’s coming up a scoop short.

The upper middle class gets relatively few benefits and a disproportionate number of tax hikes under the $1.4-trillion Tax Cuts and Jobs Act approved by the U.S. House of Representatives last week. Families earning between $150,000 and $308,000—the 80th to 95th percentile—would still get a tax cut on average. But by 2027, more than a third of those affluent Americans can expect a tax increase, according to the Tax Policy Center.

If the House bill becomes law, overall benefits for the upper middle class will start out small, and later vanish almost entirely.

Is this fair? Some argue it’s only right for the upper middle class to carry a heavier burden. This is because the top fifth of the U.S. by income has done pretty well over the past three decades while the wages and wealth of typical workers have stagnated. People in the 81st to 99th percentiles by income have boosted their inflation-adjusted pre-tax cash flow by 65 percent between 1979 and 2013, according to the Congressional Budget Office. That’s more than twice as much as the income rise seen by the middle 60 percent. (The top 1 percent, meanwhile, saw their income rise by 186 percent over the same period, but that’s another story.)

“Many upper-middle-class families will tell you they do not feel wealthy,” said Brian Riedl, a senior fellow at the Manhattan Institute, a right-leaning think tank. “Their standard of living [is] closer to the middle class than to the top 1 percent.” The income numbers don’t tell the whole story, he explained. The upper middle class is weighed down by high costs: Affluent workers live in expensive areas, pay a lot for real estate and daycare, and are taxed far more than Americans further down the ladder.

Richard Reeves, a senior fellow at the left-leaning Brookings Institution, isn’t buying that argument. He’s the author of “Dream Hoarders: How the American Upper Middle Class Is Leaving Everyone Else in the Dust, Why That Is a Problem, and What to Do About It.”

“There’s a culture of entitlement at the top of U.S. society,” Reeves said. While others focus on rising wealth of the top 1 percent, Reeves argues that the gap is widening between the top 20 percent and everyone else. The upper middle class is guilty of “hoarding” its privileges, using its power to skew the job market, educational institutions, real estate markets, and tax policy for its own benefit, he contends.

“The American upper middle class know how to take care of themselves,” Reeves said during a presentation at the City University of New York last week. “They know how to organize. They’re numerous enough to be a serious voting bloc, and they run everything.”

So by his measure, the tax legislation’s disproportionate hit to the upper middle class is indeed fair.

A family earning $240,000 a year is bringing in four times the U.S. median household income of $59,000, according to the U.S. Census Bureau. All that money, along with the upper middle class’s political power, buys some huge advantages, Reeves said. For example, affluent parents compete for access to the best schools, bidding up home values in the best school districts. Then, they use zoning rules to prevent new construction, keep property values high, and prevent lower-income Americans from moving in. In the process, children of this demographic end up at the most prestigious universities, nab the best internships and jobs, and ultimately join their parents at the top of U.S. society. 

The very existence of the House tax bill rebuts Reeves’s argument that the upper middle class is in a position to manipulate Washington. (The Senate is considering its own tax legislation, which differs from the House bill in several ways.) Compared with middle class Americans, the upper middle class is less likely to see marginal tax rates fall under the House legislation. The bill also limits or scraps entirely some of the group’s favorite tax breaks, especially deductions for state-and-local taxes, and medical expenses, and tax breaks for education.

If you’re part of the upper middle class and concede you should be paying more, don’t count on wealthier groups making the same sacrifice—at least under the House bill. 

While a repeal of the alternative-minimum tax helps some people with incomes below $300,000, it’s more likely to benefit those on the higher wealth rungs. The very rich, including President Donald Trump, who has been pressing for a legislative victory before the end of his first year in office, would benefit from a repeal of the estate tax, lower corporate tax rates and a lower “pass-through” rate on business income. The House bill explicitly tries to limit the pass-through benefit for doctors, lawyers, accountants, and other high-earning professionals—traditional denizens of the upper middle class. 

This all may seem terribly unfair to members of the upper middle class, but there are some provisions they can take solace in. The bill leaves untouched some sweet tax breaks that predominately benefit people with lower six-figure salaries, such as 529 college savings plans and 401(k)s and other retirement perks. The CBO calculates that two-thirds of the government’s costs for retirement tax breaks go to the top 20 percent.

But beyond these few exceptions, much of the upper middle class will still take it on the chin.

And maybe they should. Higher taxes on the upper middle class make sense to some liberal tax experts—but only if the proceeds are used the right way, they said, for things like better health care, more affordable college, and rebuilding infrastructure. Under the House bill, though, any new tax revenue is used to offset tax cuts—much of which will benefit the super wealthy and corporations, especially over time.

“There would be a lot of people in the country who would be willing to chip in for those goals,” said Carl Davis, research director of the left-leaning Institute on Taxation and Economic Policy. In the House plan, however, the upper middle class is “going to pay more for a bill that’s going to grow the national debt, and provide the lion’s share of the benefits to corporations and their shareholders.”

Riedl, who has advised Republican candidates, argues the upper middle class should get a more generous tax cut under GOP tax reform. “It’s hard to argue the upper middle class is not currently paying its fair share,” he said. Reeves said the U.S. should ultimately tax the upper middle class more—but “the top 5 percent more still.”

Looking at Republican tax plans, Reeves said, “it’s like they only read half my book.”

    Read more: http://www.bloomberg.com/news/articles/2017-11-20/should-the-upper-middle-class-take-the-biggest-tax-hit

    Senate Passes Tax-Cut Bill in Milestone Move Toward Overhaul

    Senate Republicans narrowly approved the most sweeping rewrite of the U.S. tax code in three decades, slashing the corporate tax rate and providing temporary tax-rate cuts for most Americans.

    The 51-49 vote — achieved just before 2 a.m. Saturday in Washington and only after closed-door deal-making with dissident senators — brings the GOP close to delivering a much-needed policy win for their party and President Donald Trump. 

    After the vote, Trump said on Twitter that he looks forward to signing a final bill before Christmas. Vice President Mike Pence tweeted that a pre-Christmas tax cut would be a “Middle-Class Miracle!”

    Before it goes to Trump, lawmakers will have to resolve differences between the Senate bill and one the House passed last month, a process that could begin Monday. Although both versions share common top-line elements, negotiations on individual provisions inserted to win votes, particularly in the Senate, may be protracted and difficult. The final product will end up being a central issue in the 2018 elections that will determine control of Congress.

    “We’re going to take this message to the American people a year from now,” Senate Majority Leader Mitch McConnell said after the vote.

    Speaking in New York on Saturday, Trump also predicted the tax package would be a winner for Republicans in the 2018 midterm elections. “We got no Democrat help and I think that’s going to hurt them in the election,” Trump said at a fundraising event.

    Read about the sticking points between Senate, House bills.

    Both the House and Senate measures would cut the corporate tax rate to 20 percent from 35 percent — though the Senate version would set that lower rate in 2019, a year later than the House bill would. Also, the Senate bill, unlike the House version, would provide only temporary tax relief to individuals, ending tax cuts for them in 2026. Both bills are expected to add more than $1.4 trillion to the federal deficit over 10 years, before accounting for any economic growth.

    Senator Bob Corker of Tennessee, who had cited concerns over the bill’s effects on federal deficits, was the only Republican dissenter. McConnell rejected revenue scores that suggested the bill’s tax cuts would add to the deficit. He predicted it would be a “revenue producer” by stimulating economic growth. Congress’s official tax scorekeeper this week said otherwise.

    The House and Senate bills also align on the contentious issue of individual deductions for state and local taxes: They’d eliminate all but a deduction for property taxes, which would be capped at $10,000.

    Mortgage Interest

    But they differ on the home mortgage-interest deduction; the House bill would restrict that break to loans of $500,000 or less with regard to new purchases of homes. The Senate legislation would leave the current $1 million cap in place.

    They also differ — narrowly — on the tax rates they’d apply to multinational companies’ accumulated offshore earnings. The House bill would tax those profits at 14 percent for earnings held as cash and 7 percent for less-liquid assets. The revised Senate bill contains a lengthy section that has no direct mention of the rates, but a person familiar with the Senate plan said they’d be 14.5 percent for cash and 7.5 percent for less-liquid assets.

    Senate Republican leaders muscled the sweeping legislation through the chamber less than two weeks after releasing the bill draft. Many GOP lawmakers, including Corker and Lindsey Graham of South Carolina, have expressed concerns that the party has little to show so far before next year’s congressional elections, after the collapse of an Obamacare repeal earlier this year and no action on issues ranging from immigration to infrastructure.

    ‘Working Families’

    Trump expressed gratitude to McConnell and Finance Committee Chairman Orrin Hatch for steering the measure through the Senate.

    “We are one step closer to delivering MASSIVE tax cuts for working families across America,” Trump wrote on Twitter.

    Republicans were able to bring the legislation to a vote using Senate rules that allowed them to approve it with a simple majority, therefore without any Democratic support. The GOP controls just 52 votes in the chamber, eight shy of what’s typically needed to move controversial measures that draw delaying tactics by opponents.

    Narrow Majority

    That narrow majority made it important for Senate leaders to try to hold every member’s vote; moderate Senator Susan Collins of Maine used that leverage to secure various concessions, including an agreement to enhance an individual deduction for large unreimbursed medical expenses through the end of next year. The House bill would eliminate that tax break.

    Democrats decried the bill’s deficit impact and complained they were shut out of the process to help draft the measure. They cited research showing that the legislation primarily benefits the nation’s highest earners and business owners, and will bleed federal revenues in a way that hurts domestic programs.

    “At a time of immense inequality, the Republican tax bill makes life easier on the well-off and eventually makes life more difficult on working Americans, exacerbating one of the most pressing problems we face as a nation — the yawning gap between the rich and everyone else,” said Minority Leader Chuck Schumer of New York during debate on the bill.

    ‘Back of a Napkin’

    Schumer noted that a set of last-minute revisions to the bill changed it in ways that had yet to be analyzed by the Joint Committee on Taxation, Congress’s official scorekeeper for the effects of tax legislation. “Is this really how Republicans are going to rewrite the tax code? Scrawled like something on the back of a napkin?”

    McConnell said the bill, the first text of which was introduced on Nov. 20, went “through the regular order.” He dismissed complaints like Schumer’s. “You complain about process when you’re losing,” McConnell said.

    Attention now shifts to a House-Senate conference committee — a specially appointed, temporary panel that will be charged with hashing out the differences in the bills and preparing a final version for both chambers to consider. Party leaders will select a small group of lawmakers, likely from the House and Senate tax-writing panels in each chamber, who would then be approved by each chamber.

    That work could start as early as Monday, with many high-stakes issues to be worked through. The deadline of Dec. 31 is an artificial one, though — aimed partly at securing a victory well in advance of the 2018 congressional elections. Republicans would have until the end of 2018 before they lose their ability to clear final passage in the Senate without a filibuster.

    Expensing Provision

    Both bills share some key central elements: They both almost double the standard deduction for individual taxpayers while eliminating personal exemptions. They both allow companies to fully and immediately deduct the cost of their spending on equipment for five years. But the Senate version would slowly step down the expensing provision after the five-year period — a feature that the House bill doesn’t provide for.

    Yet there are many differences — ranging from the taxation of business income to the amount set for the child tax credit — and Senate negotiators may have the upper hand during talks. That’s because the wafer-thin two-vote majority in the Senate will make it harder to usher a final bill back through that chamber.

    The House bill would consolidate the current seven individual tax brackets to four, leaving the top tax rate at 39.6 percent. The Senate bill would have seven brackets — with lower rates, and a top rate of 38.5 percent. Studies have shown that many of the tax bill’s benefits would go to the highest earners — and some middle-class taxpayers might actually pay more — a finding that could impact the House-Senate talks.

    The Senate bill includes a repeal of Obamacare’s mandate that most Americans have health insurance or pay a penalty. The House bill does not.

    Pass-Through Businesses

    Senators approved a 23 percent tax deduction — subject to certain limitations — on business income earned from partnerships, limited liabilities and other so-called pass-through businesses. The House version would create a 25 percent tax rate for such business income — with restrictions on which businesses could qualify. Small businesses would get extra relief under the House legislation as well.

    The House bill would also eliminate the estate tax, while the Senate version would limit the tax to fewer multimillion-dollar estates, but leave it in place. And after 2025, the limits would lift.

    Under current law, the estate tax applies a 40 percent levy to estates worth more than $5.49 million for individuals and $10.98 million for married couples. The Senate bill would temporarily double the exemption thresholds. The House bill would double the exemption thresholds, and then repeal the tax entirely in 2025.

      Read more: http://www.bloomberg.com/news/articles/2017-12-02/senate-passes-tax-cut-bill-in-milestone-move-toward-overhaul

      Democrats Pull Out of Trump Meeting After His Shutdown Tweet

      The top two Democratic leaders in Congress pulled out of a meeting with President Donald Trump on Tuesday after he tweeted that a budget deal with them was unlikely, raising the odds that the U.S. government will partially shut down next week.

      Trump proceeded with the meeting anyway, calling reporters into the White House Roosevelt Room to see name cards for House Minority Leader Nancy Pelosi and Senate Minority Leader Chuck Schumer at empty seats. The president was joined by House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell.

      Trump blasted the Democratic leaders as “all talk and no action” and said he wasn’t surprised they didn’t come to the session. He said he expected Pelosi and Schumer would soon meet with him, but if there’s a shutdown, “I would absolutely blame the Democrats.”

      The Democratic leaders said after Trump’s tweet that they’d skip a “show meeting” at the White House and instead ask for a meeting with Ryan and McConnell.

      “Given that the President doesn’t see a deal between Democrats and the White House, we believe the best path forward is to continue negotiating with our Republican counterparts in Congress instead,” they said in a joint statement.

      Pelosi later criticized the president on Twitter, saying he was engaging in political stunts.

      “@realDonaldTrump now knows that his verbal abuse will no longer be tolerated. His empty chair photo opp showed he’s more interested in stunts than in addressing the needs of the American people. Poor Ryan and McConnell relegated to props. Sad!,” Pelosi tweeted.

      Trump sparked the dispute Tuesday morning.

      “Meeting with ‘Chuck and Nancy’ today about keeping government open and working,” Trump said on Twitter. “Problem is they want illegal immigrants flooding into our Country unchecked, are weak on Crime and want to substantially RAISE Taxes. I don’t see a deal!”

      ‘Urgent Issues’

      “It’s disappointing that Senator Schumer and Leader Pelosi are refusing to come to the table and discuss urgent issues,” White House Press Secretary Sarah Huckabee Sanders said in a statement. “The President’s invitation to the Democrat leaders still stands and he encourages them to put aside their pettiness, stop the political grandstanding, show up and get to work. These issues are too important.”

      McConnell and Ryan echoed the White House in a joint statement.

      “We have important work to do,” they said. “There is a meeting at the White House this afternoon, and if Democrats want to reach an agreement on these issues, they will be there.”

      If Democrats and Republicans do not reach a deal on spending by Dec. 8, the federal government could face a partial shutdown.

      Investors’ response to the dispute was muted. The dollar dipped after the Democrats’ statement and Treasuries extended gains, with the 10-year yield reaching the 2.31 percent level, signaling some movement to safety. But the U.S. stock market’s benchmark Standard & Poor’s 500 index continued to rise as investors placed greater emphasis on remarks made by Federal Reserve Chairman nominee Jerome Powell which analysts interpreted as favorable to bank stocks.

      ‘Dreamers’ Deal

      Some Democrats have called for any year-end spending deal to include legislation to codify an Obama administration policy protecting from deportation young undocumented immigrants brought to the country as children. Trump, who announced in September he was ending the Obama program, has said any deal protecting the so-called “Dreamers” should be paired with funding for a border wall and legislation that would reduce legal immigration.

      The Dec. 8 deadline was set in a deal Schumer and Pelosi struck with Trump — against the wishes of Ryan and McConnell — to avoid a government shutdown and debt default in September. They agreed to fund the government at current levels and suspend the debt limit for three months.

      Since that deal was struck, Congress has focused mostly on a tax overhaul and has made little progress reaching a spending deal to keep the government open. Other issues have also piled up, including the fate of cost-sharing subsidies that help defray deductibles and co-payments for low-income people with Obamacare insurance policies. Trump has stopped reimbursing insurers for the subsidies.

      The negotiations also include efforts to lift legislative caps on military spending, raise the debt limit, provide more funding for disaster assistance, and extend a children’s health insurance program and an intelligence surveillance program.

      Several of those issues face year-end deadlines and may end up in a huge spending plan requiring votes from both Republicans and Democrats.

      Congressional Talks

      The Trump administration does not want to include immigration as part of the year-end spending deal to keep the government open, White House spokeswoman Sarah Huckabee Sanders said on Monday.

      “We hope that the Democrats aren’t going to put our service members abroad at risk by trying to hold the government hostage over partisan politics, and attaching that,” Sanders told reporters on Monday.

      A Senate Democratic leadership aide said that Democratic leaders were able to reach a deal on a spending plan in April with Republicans in Congress and not the White House. They are looking to do that again.

      In recent talks on a year-end budget deal, Democrats and Republicans in Congress have discussed a possible agreement to lift budget caps established under an Obama-era debt deal. The agreement would add $200 billion in spending above the caps over two years. However, the two sides haven’t agreed to divide the money equally between defense and non-defense programs, which Democrats want. Republicans are pushing for more defense spending than domestic spending.

        Read more: http://www.bloomberg.com/news/articles/2017-11-28/trump-tweets-i-don-t-see-a-deal-to-keep-government-open

        Chinas Central Bank Chief Warns of Sudden, Contagious and Hazardous Financial Risks

        China’s financial system is becoming significantly more vulnerable due to high leverage, according to central bank governor Zhou Xiaochuan, who has made a series of blunt warnings in recent weeks about debt levels in the world’s second-largest economy.

        Latent risks are accumulating, including some that are “hidden, complex, sudden, contagious and hazardous,” even as the overall health of the financial system remains good, Zhou wrote in a lengthy article published on the People’s Bank of China’s website late Saturday.

        The nation should toughen regulation and let markets serve the real economy better, according to Zhou. The government should also open up markets by relaxing capital controls and reducing restrictions on non-Chinese financial institutions that want to operate on the mainland, he wrote.

        “High leverage is the ultimate origin of macro financial vulnerability,” wrote Zhou, 69, who is widely expected to retire soon after a record 15-year tenure. “In sectors of the real economy, this is reflected as excessive debt, and in the financial system, this is reflected as credit that has been expanding too quickly.”

        The latest in a string of pro-deleveraging rhetoric from the PBOC, Zhou’s comments were speculated to have contributed to a rout in Hong Kong shares. They signal policy makers remain committed to the campaign to reduce borrowing levels across China’s economy. Concern that regulators may intensify this drive after last month’s twice-a-decade Communist Party congress helped push yields on 10-year sovereign bonds to a three-year high.

        Chinese bonds seemed to shrug off the essay early Monday, with 10-year yields down one basis point to 3.88 percent as of 11:14 a.m. in Shanghai, while the cost on five-year notes rose one basis point to 3.95 percent. Hong Kong’s Hang Seng Index slumped the most in two weeks and the Shanghai Composite Index fell for a third day in a row.

        “Investors are very sensitive to any negative news since the market is at a high level,” said Ben Kwong, executive director at KGI Asia Ltd. in Hong Kong, referring to the equity move. “Zhou’s comment about financial risks are hurting sentiment.”

        The PBOC chief’s essay reads more like an explanation of existing priorities than a sign they’re changing direction or pace, said Bloomberg Intelligence economists Tom Orlik and Fielding Chen. China may shift slightly toward a tighter stance, but macro-prudential rather than monetary policy will do the leg work to limit financial risks, they wrote in a note.

        Zhou may be set to retire after more than a decade at the helm, read more here.

        Despite the tough rhetoric around deleveraging in China, measures of credit continue to show expansion, with aggregate financing surging to a six-month high of 1.82 trillion yuan ($274 billion) in September. Corporate debt surged to 159 percent of the economy in 2016, compared with 104 percent 10 years ago, while overall borrowing climbed to 260 percent.

        Read a QuickTake Q&A about China’s efforts to tackle financial risks

        Zhou’s article was included in a book that was published recently to help the public and party members better comprehend the spirit of the 19th party congress, according to the official Xinhua news agency and information on the PBOC’s website.

        Here are some of the other points Zhou made:

        On risks and regulation

        • China’s financial system faces domestic and overseas pressures; structural imbalance is a serious problem and regulations are frequently violated
        • Some state-owned enterprises face severe debt risks, the problem of "zombie companies" is being solved slowly, and some local governments are adding leverage
        • Financial institutions are not competitive and pricing of risk is weak; the financial system cannot soothe herd behaviors, asset bubbles and risks by itself
        • Some high-risk activities are creating market bubbles under the cover of "financial innovation"
        • More companies have been defaulting on bonds, and issuance has been slowing; credit risks are impacting the public’s and even foreigners’ confidence in China’s financial health
        • Some Internet companies that claim to help people access finance are actually Ponzi schemes; and some regulators are too close to the firms and people they are supposed to oversee
        • China’s financial regulation lags behind international standards and focuses too much on fostering certain industries; there’s a lack of clarity in what central and regional government should be responsible for, so some activities are not well regulated
        • China should increase direct financing as well as expand the bond market; reduce intervention in the equity market and reform the initial public offering system; pursue yuan internationalization and capital account convertibility
        • China should let the market play a decisive role in the allocation of financial resources, and reduce the distortion effect of any intervention
        • China should improve coordination among financial regulators

          Read more: http://www.bloomberg.com/news/articles/2017-11-04/china-s-zhou-warns-on-mounting-financial-risk-in-rare-commentary

          Trump’s Health Secretary Resigns Amid Private-Jet Scandal

          Embattled Health and Human Services Secretary Tom Price resigned amid an uproar over his use of private and military jets at taxpayer expense while heading one of the U.S.’s largest government agencies.

          Price, 62, quit after it was revealed by Politico that he took more than two dozen private flights at taxpayer expense as well as trips to Europe, Africa and Asia on military aircraft, at a total cost of more than $1 million. The HHS department’s Office of Inspector General launched an investigation, as did Congress. 

          Price is the first cabinet secretary to leave the administration, though President Donald Trump’s volatile White House has already seen the departure of several top staffers.

          Trump had hinted earlier in the day that Price’s time with the administration could be close to coming to an end. Asked whether he had sought Price’s resignation, the president said, “no, but we’ll see what happens later on.”

          On Thursday, Trump made it clear that he was upset with the health secretary. “I am not happy with him,” he said.

          Mulvaney Memo

          After Price’s resignation on Friday, White House Budget Director Mick Mulvaney issued a memo ordering government agencies to seek approval from Chief of Staff John Kelly before most travel on government-owned or chartered planes.

          “Just because something is legal doesn’t make it right,” Mulvaney said. “Accordingly, with few exceptions, the commercial air system used by millions of Americans every day is appropriate, even for very senior officials.”

          Mulvaney said his agency is reviewing “longstanding guidance” regarding the use of government-owned and private aircraft with an eye toward strengthening “existing controls.”

          Price Distraction

          Price’s exit could distract from other administration priorities like tax reform. It may also raise more questions about other agency heads who have taken taxpayer-funded trips on private aircraft, including Treasury Secretary Steven Mnuchin; Environmental Protection Agency Administrator Scott Pruitt, as reported by CBS; and Interior Secretary Ryan Zinke, according to the Washington Post.

          Trump intends to designate Don J. Wright of Virginia to serve as acting secretary, effective at 11:59 p.m. New York time on Friday. He currently serves as deputy assistant secretary for health.

          Price’s seven-month tenure as head of the health agency was bracketed by questions about his conduct, starting with trading of stock in health-care companies and ending with the plane trips. Price said he would write a check for the chartered jet trips to the U.S. government for $51,887.31 to cover his seat. 

          HHS didn’t immediately respond when asked for a comment from Price and if he would still pay back the funds.

          Resignation Letter

          Price told Trump in his resignation it was a “privilege to serve you.”

          “I have spent forty years both as a doctor and public servant putting people first,” Price wrote. “I regret that the recent events have created a distraction from these important objectives.”

          Price’s acting replacement Wright also serves as acting assistant secretary for health, overseeing the department’s health policy recommendations, a position he has served in since February. He has a medical degree from the University of Texas and a master’s degree in public health from the Medical College of Wisconsin.

          Obamacare ‘Sabotage’

          During the administration’s months-long attempt to get Congress to repeal the Affordable Care Act, Price wasn’t an obvious force in the Senate where the effort is indefinitely stalled. He did, however, let the law wither under his administrative tenure. His agency slashed advertising funding meant to get people to sign up for insurance plans sold under the law, and cut budgets for local groups of “navigators” who helped people find the right plan for them. HHS also shortened the time when people could sign up for coverage, and took other steps that critics decried as “sabotage.”

          Price’s successor will have to decide whether to try and make Obamacare succeed, attempt to modify it by rewriting its rules and regulations, or allow it to slide into neglect.

          “The mission of the Health and Human Services secretary should be to support Americans’ health care, not take it away,” Senate Minority Leader Chuck Schumer said in a statement. The next HHS secretary must follow the law when it comes to the Affordable Care Act instead of trying to sabotage it.”

          One obvious candidate to succeed Price is Seema Verma, who leads the Centers for Medicare and Medicaid Services and is directly responsible for managing much of the Affordable Care Act. Another is Scott Gottlieb, the Food and Drug Administration commissioner who has implemented several programs on drug prices and modernizing the agency.

          Verma is seen as close to the White House. She worked with Vice President Mike Pence to implement the then-governor’s Healthy Indiana Plan, and has regularly visited Capitol Hill to help push Obamacare repeal efforts.

          Tea Party

          Price, a doctor, joined Congress in 2005 as a representative from Georgia and was one of the original members of the Tea Party, which promotes small government. In the House, he introduced several bills to replace Obamacare. While his nomination to head HHS was backed by the American Medical Association, the U.S.’s largest doctors lobby, that group and almost every other health-care trade organization issued strong statements opposing the administration’s Obamacare-repeal attempts.

          Price was sworn in in February as he was being asked about whether, as a congressman, he improperly traded stocks of medical companies while at the same time dealing with health-care legislation that could have affected them.

          In one instance, he received a discount on shares of Innate Immunotherapeutics Ltd., an Australian biotechhnology company. He also invested in a medical-supply distributor before introducing legislation that could have benefited the company.

          Price defended the trades at the time, saying a broker directed the trades independently, except for his purchase of Innate shares. He said he learned Innate and the special stock offering through Innate board member and fellow Representative Chris Collins of New York.

          Private Flights

          Then, this month, Politico reported that he had taken more than two dozen private flights at a cost to taxpayers of hundreds of thousands of dollars, including trips to Nashville, Tennessee, where his son lives and where Price owns a condominium. His office defended the travel decisions, calling the trips more convenient than cheaper commercial travel. Cabinet members typically fly on commercial airlines unless there is a specific reason to take a private plane.

          In 2009, Price told CNBC that Congress should cut spending on government planes that supporters said were needed to carry military officials leading soldiers into combat. Price criticized an original effort to spend $550 million on eight passenger jets, and also objected to a reduced $220 million request for four jets.

          “Now we need to cut it from four jets to zero jets,” he said at the time. “This is just another example of fiscal irresponsibility run amok in Congress right now.”

          Price was confirmed in February by a party-line vote in the Senate. Democrats opposed his free-market views on health care and his promises to help repeal the Affordable Care Act.

            Read more: http://www.bloomberg.com/news/articles/2017-09-29/trump-s-health-secretary-price-resigns-amid-private-jet-scandal

            The White House and Equifax Agree: Social Security Numbers Should Go

            The Trump administration is exploring ways to replace the use of Social Security numbers as the main method of assuring people’s identities in the wake of consumer credit agency Equifax Inc.’s massive data breach.

            The administration has called on federal departments and agencies to look into the vulnerabilities of employing the identifier tied to retirement benefits, as well as how to replace the existing system, according to Rob Joyce, special assistant to the president and White House cybersecurity coordinator.

            “I feel very strongly that the Social Security number has outlived its usefulness,” Joyce said Tuesday at a cyber conference in Washington organized by the Washington Post. “Every time we use the Social Security number, you put it at risk.”

            Joyce’s comments came as former Equifax CEO Richard Smith testified before the House Energy and Commerce Committee, the first of four hearings this week on Capitol Hill. Lawmakers from both parties expressed outrage over the size of the breach as well as the company’s response and grilled Smith on the timeline of the incident, including when top executives learned about it.

            Smith said the rising number of hacks involving Social Security numbers have eroded its security value.

            “The concept of a Social Security number in this environment being private and secure — I think it’s time as a country to think beyond that,” Smith said. “What is a better way to identify consumers in our country in a very secure way? I think that way is something different than an SSN, a date of birth and a name.”

            Joyce said officials are looking into “what would be a better system” that utilizes the latest technologies, including a “modern cryptographic identifier,” such as public and private keys.

            Read more: Five Data-Security Ideas Brought Up During the Equifax Hearing

            ‘Flawed System’

            “It’s a flawed system that we can’t roll back that risk after we know we’ve had a compromise,” he said. “I personally know my Social Security number has been compromised at least four times in my lifetime. That’s just untenable.”

            Joseph Lorenzo Hall, chief technologist at the Center for Democracy and Technology in Washington, said one possibility could be giving individuals a private key, essentially a long cryptographic number that’s embedded in a “physical token” that then requires users to verify that the number belongs to them. It could work like the chip in a credit card that requires the owner to enter a pin allowing use. He pointed to Estonia where they have deployed such cards that people use to validate their identity.

            “Your pin unlocks your ability to use that big number,” he said. The challenge is how to create the identifiers and how to distribute the keys. “It’s very promising” and “it’s possible to technically design something like this” but it could be expensive to design and disseminate such material to each American, he said. “This is a pretty big endeavor.”

            The administration is also participating in discussions Congress is having about the requirements of protecting personal data and breach notifications for companies.

            Avoiding Balkanization

            “It’s really clear, there needs to be a change, but we’ll have to look at the details of what’s being proposed,” Joyce said. In the response to the Equifax hack, though, he said, “we need to be careful of Balkanizing the regulations. It’s really hard on companies today” facing local, state and federal regulators as well as international rules, he added.

            The U.S. government began issuing Social Security numbers in 1936. Nearly 454 million different numbers have been issued, according to the Social Security Administration. Supplanting such an ingrained apparatus would not happen over night. The original intent was to track U.S. workers’ earning to determine their Social Security benefits. But the rise of computers, government agencies and companies found new uses for the number, which gradually grew into a national identifier.

            Over the decades, the Social Security number became valuable for what could be gained by stealing it, said Bruce Schneier, a fellow at Harvard’s Kennedy School of Government. It was the only number available to identify a person and became the standard used for everything from confirming someone at the doctor’s office to school.

            Akin to Infrastructure

            “They appeared at an age when we didn’t have other numbers,” Schneier said in an interview. “Think of this as part of our aging infrastructure” from roads and bridges to communications. “Sooner or later we as a society need to fix our aging infrastructure.” 

            He pointed to India’s wide-scale rollout of the Aadhaar card, a unique number provided to citizens after collecting their biometric information — fingerprints and an iris scan — along with demographic details, to almost 1.2 billion people. In the U.S., a more secure system could be designed, “but magic math costs money,” he said.

            Making any changes to the current system, including replacing numbers entirely or restricting who can use them, would likely require an act of Congress, according to Marc Rotenberg, executive director of the Electronic Privacy Information Center in Washington, which advocates for limiting the use of Social Security numbers. 

            Rewriting Laws

            “You’d need to change a lot of existing public law," Rotenberg said. “There would need to be extensive hearings and study about the consequences. It’s a complicated issue." 

            The government’s own record of protecting Social Security numbers has its blemishes. Medicare, the federal health-care program for senior citizens, has long used the numbers on identification cards recipients must carry. After years of criticism by the agency’s inspector general for the risks that creates, new cards with different numbers are currently being rolled out.

            The failure of the Social Security number is that there’s only one for each person, “once it’s compromised one time, you’re done,” Bob Stasio, a fellow at the Truman National Security Project and former chief of operations at the National Security Agency’s Cyber Operations Center.

            Public and private keys — long strings of code — could help validate identities. For instance, the government could issue each person a public key and private key. If people were to open a bank account, for instance, they could provide their public key — instead of a Social Security number — and the bank would send a message that could only be decrypted using their private key. If the private key gets compromised, the government could easily issue another one.

            Saved by Math

            Stasio also cited emerging blockchain technology as another potential tool. It could create a kind of digital DNA fingerprint that’s “mathematically impossible” to duplicate. In place of a Social Security number, each person could receive a blockchain hash — a kind of algorithm unique to an individual — that is stamped on every digital transaction or action.

            That type of technology “could be used as a much more efficient and mathematically sound method of transaction, identification and validation,” Stasio said.

            While lawmakers were unanimous in criticizing Equifax’s response to a breach that compromised information on 145.5 million U.S. consumers, they were divided on how to fix the underlying issue. Democrats on the panel have reintroduced legislation imposing requirements for when companies have to report data breaches, while Oregon Republican Greg Walden noted the company’s human errors, saying “you can’t fix stupid.”

            Smith said the Equifax employee responsible for communicating that the vulnerable software needed to be patched didn’t do so. That failure was compounded when a scan of the company’s systems didn’t find that the vulnerability still existed, the former CEO said.

            Joyce’s comments helped take some of the focus off Equifax’s blunders, analysts at Cowen Inc. said in a note Tuesday.

            The “White House may be indirectly coming to Equifax’s rescue,” they wrote. “This reduces the risk of business-model-busting legislation such as a requirement that consumers opt-in to a credit bureau collecting their data.”

              Read more: http://www.bloomberg.com/news/articles/2017-10-03/white-house-and-equifax-agree-social-security-numbers-should-go

              Stephen Colbert slams Senate Republicans for dodging debate on healthcare

              Despite a looming July 4 deadline, the Senate has not spent any time debating Republicans’ health care bill in the open and want to limit debate to just 20 hours. To make us feel even worse about this, Stephen Colbert pointed out what The Senate has debated this year: outer space settlements and pool and hot tub safety, for example.

              To be fair, if millions of people lose access to healthcare, it’s probably best to keep all hot tubs as slip-proof as possible.

              Read more: http://mashable.com/2017/06/22/stephen-colbert-senate-health-care-bill/

              House representatives ducked and dodged questions about whether they’d read the healthcare bill

              Don't talk to me.
              Image: Evan Vucci/AP/REX/Shutterstock

              The people have many questions about the contents of the American Health Care Act (AHCA) but, firstly and perhaps most importantly, they want to know: How many representatives read it before they cast their votes for it on Thursday?

              Several members of Congress ducked questions about whether they’d read the 126-page bill. One said he was busy swinging a bat at a ball, and some just came out and said they didn’t get through the piece of legislation that if it gets through the Senate and onto President Donald Trump’s desk will likely kick millions off their health insurance.

              We’ve gone through some of Congress’s most outrageous ducks, dives, dodges and embarrassing admissions about the bill.

              Here’s how some of them faced the media in the aftermath of the vote, when an MSNBC reporter asked if they’d read the healthcare bill. To their credit, a couple said yes. The others either didn’t answer or said, “We’re still working on it.”

              The variety of excuses in the hours following were astonishing. A few of the best:

              Baseball > reading the bill

              OK. What to add, really.

              I mean, I tried

              South Carolina Rep. Mark Sanford went on CNN Thursday morning, where he said he “attempted to read the entire bill,” and, though he didn’t quite get there, he “turned through every page.”

              I can’t prove this, but these words bring me back to something I said in a high school English class as I was preparing to write a book report.

              My staff read it though

              Sanford concluded that, while he didn’t read the bill he voted on, his staff did, and several of his Republican colleagues used the same defense on CNN.

              Rep. Tom Garrett said, “Let’s put it this way: People in my office have read all the parts of the bill.” He added that he doesn’t think “any individual” has read the whole thing.

              Rep. Chris Collins, too, did not read the thing. But while that may be the case, he told CNN’s Wolf Blitzer, “I can also assure you my staff did.”

              However, back in 2010…

              Not reading healthcare bills prior to passing them is starting to become something of a tradition.

              In 2010, before the passage of the Affordable Care Act, House Republicans were enraged that they felt Democrats had drafted a bill that was impossible to read in the time given before the vote.

              Then-House Minority Leader John Boehner, speaking before his colleagues, shouted “Have you read the bill?” Soon, he again shouted, “Hell no you haven’t!”

              One of the Democratic authors of the legislation suggested that there wasn’t any point to his reading the bill before it became law.

              Seven years later, politicians are back at it.

              Read more: http://mashable.com/2017/05/05/congress-questions-healthcare-bill/