Border adjustment has a Senate problem - Axios
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Border adjustment has a Senate problem

J. Scott Applewhite / AP

Paul Ryan's $1.2 trillion border adjustment tax plan to hike import taxes has a Senate passage problem. Both sides of the fight have gamed it out the same way: They think Ryan and the House Ways and Means chair Kevin Brady can probably squeeze the plan through the House, but the Senate is a different ball game.

Even if Trump loudly supports border adjustability — and that's a big if — he'll have a tough time convincing Senators who fear him far less than House members do. And senators from states home to big box retailers have compelling reasons to oppose border adjustability.

(Here's our Facts Matter on border adjustment.)

GOP Senators being targeted by opponents of border adjustability:

  • Arkansas Senators Tom Cotton and John Boozman (Walmart)
  • Georgia Senator Johnny Isakson (Home Depot)
  • North Carolina Senators Richard Burr and Thom Tillis (Lowe's)

GOP Senators who have already said they don't like border adjustability:

  • Senator David Perdue of Georgia is a former CEO of Dollar General who has a deep understanding of the effects of border adjustment on retail. He said on CNBC: "In my view, it's regressive. It just hammers low-income and middle-income consumers, and it really doesn't foster growth."
  • Senator Mike Lee of Utah told Koch network donors: "This ends up becoming a VAT-like substance and I think it would end up having a lot of the negative characteristics of both a VAT and a tariff ... I really don't like it."
  • Senator John Cornyn of Texas is known to be concerned about border adjustment's effect on gasoline prices. Last week he tweeted: "Many unanswered questions about proposed "border adjustment" tax."

What's next: The biggest question troubling operators on both sides of this fight is whether Trump will weigh in forcefully on behalf of border adjustment. We know that his chief strategist Steve Bannon is on board and believes it's an American nationalist tax. And the House GOP — supported by an outside coalition — is wisely making their pitch in nationalist (read: Trumpian) terms. Our source, who favors border adjustment, adds: "It is safe to say that the retail giants and the Koch brothers have jumped out to a head-start in this debate, but the political environment is tailor-made for the manufacturers and a strong 'American jobs' message."

The bottom line: Tax reform will likely be done through reconciliation, which requires a majority vote, so Republicans can only afford to lose two senators on border adjustability. But both sides see a path for border adjustment becoming a reality; otherwise they wouldn't be engaging so heavily in this fight.

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Trump: I didn't mention Israel while sharing intel with Russia

Evan Vucci / AP

President Trump met with Israeli Prime Minister Benjamin Netanyahu for a photo opportunity this morning, where he held the press pool back to refute last week's reports that he disclosed sensitive Israeli intelligence on ISIS to Russian officials in the Oval Office.

I never mentioned the word or the name Israel during that conversation. They're all saying I did, so you have another story wrong. Never mentioned the word Israel.

Okay, but... the initial reporting from May 15 on Trump's conversation with the Russians never claimed that he mentioned Israel at all, only that he disclosed information given to the United States by a key ally — which was reported to be Israel the next day — that was not intended to be shared. And of course, National Security Advisor H.R. McMaster said last week that Trump "wasn't even aware of where that information came from."

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Big business to Trump: Don't gut the State Department

Jacquelyn Martin / AP

Ahead of the White House's budget proposal this week, which is rumored to cut 31% from the budgets of State Department and USAID, hundreds of top business leaders have sent Secretary of State Rex Tillerson a letter urging him to fight for funding for State, per the WSJ.

A key quote: "With 95 percent of the world's consumers outside the United States and many of the fastest growing economies in the developing world, now is the time to double down on America's global economic leadership."

A taste of the signatories: Top executives from Walmart, Pfizer, Coca-Cola, GE, Nike, UPS, and Marriott.

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House and Trump administration to delay insurer subsidy case

(Atef Safadi / EPA Pool via AP)

The House and the Trump administration will seek an additional 90 days to resolve a pending court case over the legality of Affordable Care Act insurer subsidies, the Washington Examiner and CNBC report.

While the subsidies may continue to flow to plans operating on exchanges, the failure to reach a decision doesn't give insurers the certainty they're looking for. Plans must decide whether to participate in federal exchanges by June 21. If they don't get a guarantee that they'll keep receiving the subsidies, plans will likely drastically raise premiums or pull out of exchanges.

The Examiner reports the House and the White House are working on a plan to ensure the subsidies continue going to insurers, who pass them on to low-income enrollees.

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Supreme Court strikes down North Carolina redistricting

Jon Elswick / AP

The Supreme Court ruled Monday that North Carolina Republicans placed too many African-Americans in two congressional voting districts it re-mapped after the 2010 Census, according to the Associated Press.

Why it matters: The 5-3 ruling upholds a federal district court decision that argued North Carolina lawmakers packed more African American residents into the districts than was necessary, which was challenged by the state. But even with the new lines, Republicans continue to hold 10 of the state's 13 districts.

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Pittsburgh sours on Uber's driverless car experiment

Gene J. Puskar / AP

Nine months after Uber rolled out its self-driving car trials in Pittsburgh, the relationship is deteriorating, the New York Times reports.

Why it matters: Self-driving car companies are forming partnerships with cities that will allow them to test their vehicles on their streets. It's a high-risk, high-reward proposition for city leaders.

Pittsburgh Mayor Bill Peduto told The Washington Post this fall, "Is there going to be an accident in a robot car? Yes there is. But the greater goal is to make our streets safer in the long term. We have to start at some point and we can't wait for regulation to catch up with innovation."

The city's complaints: Uber began charging for rides that were expected to be free; it withdrew support from Pittsburgh's application for a major federal grant to overhaul transportation; and it hasn't hired local workers as it promised.

Uber's response: "Uber is proud to have put Pittsburgh on the self-driving map, an effort that included creating hundreds of tech jobs and investing hundreds of millions of dollars," Uber told the Times in a statement. "We hope to continue to have a positive presence in Pittsburgh by supporting the local economy and community."

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Another U.S. chemicals giant strikes global merger

Huntsman Corp. of Texas and Switzerland's Clariant have agreed to an all-stock merger that would create a specialty chemicals giant valued at around $20 billion (including debt). Clariant shareholders would hold around a 52% stake in the combined company, which is expected to generate $13.2 billion in annual sales and $2.3 billion of EBITDA.

Why it's a big deal: This tie-up is part of a trend of cross-border consolidation in the mega-chemicals space, following the pending deal between Praxair (Connecticut) and Linde (Germany) and PPG Industries (Pittsburgh) attempting to purchase Dutch rival Akzo Nobel. It's also notable for private equity buffs (yes, such people exist), as Huntsman was at the center of what arguably was the most contentious M&A failure failure of the financial crisis era.

Fun fact: "Huntsman... is best known for inventing the clam-shell styrofoam box for McDonald's Big Mac burgers." ― Reuters

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Report: Michael Flynn will plead 5th, decline subpoena

Saul Loeb / Pool Photo via AP

The Associated Press is reporting that Michael Flynn, the former general fired from his National Security Advisor role by President Trump for lying about his contacts with Russians, will decline a subpoena from the Senate Intelligence Committee.

  • The sourcing: "[A] person with direct knowledge of the matter... spoke on condition of anonymity to discuss the private interactions between Flynn and the committee."
  • Why this was coming: "Legal experts have said Flynn was unlikely to turn over the personal documents without immunity because he would be waiving some of his constitutional protections by doing so. Flynn has previously sought immunity from "unfair prosecution" to cooperate with the committee."

Background on the subpoena, here.

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First-class travel, hotel suites: WHO spending under scrutiny

Raphael Satter / AP

The World Health Organization nearly spent more on travel for its 7,000 staffers in 2016 — $201 million — than its combined programs for AIDS, hepatitis, malaria, tuberculosis, mental health, and substance abuse, which total $213.5 million, per the AP.

  • How it happened: Lax rules surrounding first-class travel and hotel bookings allowed WHO employees to ignore official travel policy. For example, the agency's Ebola head spent nearly $400,000 in West Africa during the crisis, often opting for helicopter travel.
  • Comparisons: Doctors Without Borders spent $43 million on travel for its 37,000 aid workers; UNICEF spent $140 million for its 13,000 staffers.
  • Worth noting: The agency's polio expenditures hit $450 million last year.
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Zuckerberg: I'm not using this trip to run for office

Jeff Chiu / AP

Facebook CEO Mark Zuckerberg announced in a Facebook post Sunday:

"Some of you have asked if this challenge means I'm running for public office. I'm not. I'm doing it to get a broader perspective to make sure we're best serving our community of almost 2 billion people at Facebook and doing the best work to promote equal opportunity at the Chan Zuckerberg Initiative."

His learned insight: Zuckerberg said he sees an opportunity for Facebook to connect users beyond people they already know, and is hoping to soon introduce a system that recommends "people you should know," like mentors and people outside of your social circle who can provide "a source of support and inspiration."

Read next: Inside Zuck's real political strategy

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Ford replaces CEO Mark Fields with autonomous driving exec

Carlos Osorio / AP

Ford will announce Monday morning that it is replacing CEO Mark Fields with Jim Hackett, who ran Steelcase furniture for 20 years before joining the car company, reports The New York Times. Hackett most recently headed Ford's autonomous vehicle subsidy, known as Ford Smart Mobility.

Under Fields, who served as CEO for three years, Ford shares dropped 40 percent. He also was criticized by investors and the board for failing to make Ford a competitive player in the development of high-tech vehicles for the future.

Between the lines: The shake-up shows that Ford is shifting its focus to accelerate its self-driving technology. As the NYT points out, Ford has lagged behind other large automakers like General Motors and tech companies like Google, both of which have already begun testing their own autonomous vehicles. Ford is promising it will have a fully operating driverless car on the road by 2021.