Tax reform shocker: the White House actually has a plan - Axios
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Tax reform shocker: the White House actually has a plan

Carolyn Kaster / AP

Here's a shocker that shouldn't be a shocker: The White House actually seems to have its act together on tax reform. Activists and business leaders who've been meeting with Gary Cohn, Steven Mnuchin, Marc Short & Paul Teller from legislative affairs, and Sean Spicer (who's leading the comms strategy), all tell us the same thing: They're surprised about how much planning and organizing the White House has already done, given its ham-handed approach to the health care rollout.

The administration will start pitching the tax reform effort in mid-August, according to sources involved. They're hoping to get the bill itself finalized for mark-ups after Labor Day (count us as skeptical on that.) But while that happens, expect to see CEOs, White House surrogates, and high-profile conservative activists start talking up the plan.

Sources close to the effort say the White House is looking to avoid the mistakes of the health care debacle, when they failed miserably to build nationwide support.

Here's what to expect:

  • President Trump wants to pitch tax reform aggressively. Our sources expect him to make the case for the plan by barnstorming the Midwest states he won in November. Reince Priebus is in charge of his schedule, so this will be a major test of his organizational skills.
  • The White House is engaging CEOs across the country, looking for them to hold town halls, do media appearances, and write letters to their employees explaining the benefits of tax reform. They want members to return to their districts in August and hear from business leaders and other influential constituents about why tax reform needs to get done.
  • They're talking to local mayors and county commissioners, too. And they're pressing outside groups to spend big on advertising support.
  • A wide range of groups — from movement conservatives to downtown lobbying shops — are fired up. This includes Heritage Action, Americans for Tax Reform, the Business Roundtable, and the Koch brothers' network, which is already rolling out a multi-million dollar ad and grassroots organizing campaign to support comprehensive tax reform.
  • We expect the White House to float a few tax policy trial balloons in August.
  • The aim is to get as many administration officials involved as possible, regardless of their day jobs. UN Ambassador Nikki Haley, for example, has nothing to do with tax reform. But White House officials think she could be an asset because she's a great communicator and a former small business leader.

On the substance:

  • The "Big Six" leading the tax code rewrite — Speaker Paul Ryan and Rep. Kevin Brady, Sens. Mitch McConnell and Orrin Hatch, Treasury Secretary Steven Mnuchin, and National Economic Council Director Gary Cohn — are currently working through their disagreements.
  • One of the toughest remaining disputes is whether to start letting businesses immediately write off the cost of equipment (known as "full expensing"). This would be hugely expensive, so some conservatives oppose it. But House Leadership argues it would juice short-term economic growth.
  • Another major unsolved problem is how (or if) to pay for all these tax cuts. Some in the White House would happily just blow out the deficit, but Leadership suspects most Republicans wouldn't be on board with that.

Be smart: There's a reason it's been more than 30 years since Congress passed real tax reform: It's damn hard.

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First GOP health care bill fails, with many more votes to come

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The Senate GOP's Affordable Care Act replacement plan did a face plant on Tuesday night, with nine Republicans and all Democrats voting against it. But it was only the first vote of what's sure to be a long process, and its failure wasn't a surprise.

Why this matters: This was the Senate's best attempt at an ACA replacement, after about two and a half months of closed-door meetings attempting to find something that could bridge the caucus' deep divides. Its failure suggests Senate Republicans won't be able to come together on a replacement plan without Democrats in the future, no matter what happens next.

What's next: A vote on a bill that repeals the Affordable Care Act's subsidies, taxes and Medicaid expansion but leaves in place its regulations. It's expected to be tomorrow at noon.

The version of the bill, the Better Care Reconciliation Act, that the Senate voted down tonight included an agreement by Sens. Ted Cruz and Rob Portman that added $100 billion to help low-income people transitioning off of Medicaid, as well as Cruz's proposal to let insurers sell health plans that don't meet ACA requirements as long as they also sell plans that do.

Since neither of these were scored by the Congressional Budget Office, the BCRA amendment needed 60 votes to pass, meaning it was doomed from the start as Democrats were never going to support it.

Republicans who voted against the bill: Mike Lee, Susan Collins, Bob Corker, Lindsey Graham, Rand Paul, Dean Heller, Jerry Moran, Lisa Murkowski, Tom Cotton.

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Trump rallies in Ohio

Carolyn Kaster / AP

President Trump slipped into campaign mode Tuesday evening before an enthusiastic crowd in Youngstown, Ohio. He repeated his claim that he's accomplished more than almost any other president during his first six months in office, getting some of his biggest cheers of the night by comparing himself to the greats:

  • "With the exception of the late great Abraham Lincoln, I can be more presidential than any president that's ever held this office."
  • "I'd ask whether or not you think someday I should be on Mount Rushmore, but here's the problem — if I did it jokingly, having fun, the fake news media would say he believes he should be on Mount Rushmore, so I won't say it, I won't say it."
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Sessions issues new guidelines on sanctuary cities

Andrew Harnik / AP

Attorney General Jeff Sessions rolled out a new strategy to push back against sanctuary cities today, adding two new conditions for cities to obtain popular grants for local law enforcement from the Department of Justice:

  • Federal immigration authorities must be granted access to local detention facilities.
  • The federal government must receive 48 hours notice before a local authority can release an illegal immigrant in custody who is wanted by federal authorities.

Why it matters: Even as Trump hints at firing his attorney general both publicly and privately, Sessions is continuing to implement DOJ policy that's perfect red meat for Trump's base — and, indeed, Trump himself.

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House votes 419-3 for new Russia sanctions

Evan Vucci / AP

The House passed a bill Tuesday that would place new sanctions on Russia, Iran and North Korea by a 419-3 vote. The Senate passed a similar bill in June, by a 98-2 margin.

Speaker Paul Ryan released a statement saying: "The bill we just passed with overwhelming bipartisan support is one of the most expansive sanctions packages in history. It tightens the screws on our most dangerous adversaries in order to keep Americans safe."

The House bill requires congressional review of any actions President Trump wishes to take to relieve the sanctions, and the administration has argued that would limit Trump's ability to deal with Russia. But the wide margins mean Trump will have to either sign the bill, or risk an override of his veto.

What's next: This version of the bill heads to the Senate for approval.

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SEC concludes that "initial coin offerings" may be securities

BTC Keychain / Flickr CC

After an investigation, the Securities and Exchange Commission has concluded that organizations offering or selling digital assets using blockchains or distributed ledgers may be subject to securities laws, depending on the circumstances. This includes "initial coin offerings" (ICOs), a recently popularized crowdfunding method by which an organization issues virtual currencies or tokens.

Why it matters: ICOs are becoming increasingly popular among some circles of technologists. So far, hundreds of millions of dollars have been raised through ICOs, including the most recent record-breaker, Tezos, which brought in $232 million earlier this month.

Top concern: The SEC says that its main concern is ensuring that investors partake in these offerings and sales with full knowledge of the risks. By making these sales subject to securities laws, organizations will have to comply with disclosure requirements.

"Investors need the essential facts behind any investment opportunity so they can make fully informed decisions, and today's report confirms that sponsors of offerings conducted through the use of distributed ledger or blockchain technology must comply with the securities laws," said William Hinman, director of the division of corporation finance, in a statement.

Origin: The SEC's investigation stems from an inquiry into The DAO, a decentralized organization that intended to operate as an investment fund managed by shareholders and raised its funds through an ICO. However, in June 2016, it was hacked and some of its funds were syphoned. The SEC has concluded that it doesn't qualify as a broker-dealer or crowdfunding portal, though the commission won't pursue charges in this case — instead choosing to simply issue guidance to the industry.

More investor info: The SEC also issued an investors' guide in handling ICOs and similar digital asset sales.

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Trump promises three new "big, big, big" Apple plants in U.S.

Trump is seated between Apple CEO Tim Cook and Microsoft CEO Satya Nadella, in the State Dinning Room during yesterday's tech summit (AP's Alex Brandon)

Apple is declining to comment on any plans to expand domestic manufacturing after President Trump told the Wall Street Journal that the iPhone maker was planning three "big, beautiful plants" in the U.S.

Trump didn't say where the plants would be, but did add that they would be "big, big, big."

Worth noting: Apple uses contract manufacturers, mostly in Asia, to assemble nearly all its products, while a number of its suppliers have operations in the U.S. Thus, any domestic expansion is likely to come in conjunction with a supplier or contract manufacturer. Apple has also committed to investing another $1 billion in US manufacturers through an advanced manufacturing fund and is taking a $1 billion stake in SoftBank's $100 billion Vision Fund, which plans to make investments in US-based manufacturing.

Trump's hand: In the interview, Trump said he told Apple CEO Tim Cook that he wouldn't consider his administration's economic efforts a success if Apple didn't shift some work to the U.S.

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Timeline shortens on North Korea's nuclear strike capabilities

Wong Maye-E / AP

North Korea is on the course to be able to field a reliable, nuclear-capable intercontinental ballistic missile (ICBM) as early as next year, according to a confidential report from the Defense Intelligence Agency, per The Washington Post. This prediction now matches more closely the revised estimations coming from South Korea.

Why it matters: That jumps the timeline forward by two full years and ramps up the pressure on the U.S. and regional allies to halt North Korean progress. Kent Boydston, a research analyst at the Petersen Institute for International Economics, told Axios this will likely make the U.S. calls for isolating North Korea financially stronger. Boydston added that this will "make any kind of South Korea to North Korea engagement increasingly unlikely."

Why the change: As Tom Karako, senior fellow on the Missile Defense Project at CSIS, told Axios, "the activity of the last few years has been especially intense. It's not really a surprise that they're getting a closer to no-kidding ICBM deployment." Pyongyang has advanced its fuel and missile capabilities beyond what experts anticipated was possible, and its July 4 test of a missile capable of hitting parts of Alaska showed U.S. officials just how close the North Korean threat is according to Scott Bray, ODNI manager for East Asia.

What to watch:

  • North Korea does not yet have the capability to use reentry vehicles, which would allow warheads to survive reentry into the atmosphere despite high pressures and speeds. The Washington Post reports North Korea might be testing a new reentry vehicle around this Thursday, a North Korean national holiday. U.S. spy agencies have detected activity indicating a test is in the works.
  • There is also a submarine making erratic maneuvers, which could foreshadow a test launch from a sub, which would also indicate an important technological development, given how complex it is to launch a missile through layers of water.
  • "This is why we have long had operational plans to strike, defeat, and defend against missile threats like this, of both longer and shorter range varieties," Karako said. Read more on Axios about whether the U.S. is ready for an attack, here.

The DIA and ODNI declined to comment on classified assessments.

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More Senate health bill provisions violate budget rules

J. Scott Applewhite / AP

The Senate parliamentarian has ruled that more provisions of the Better Care Reconciliation Act — the Senate's Affordable Care Act replacement bill — don't comply with budget rules, meaning they'd need 60 votes to pass. These include a provision allowing insurers to charge older people more in premiums than under current law — the provision AARP has called an "age tax" — and the provision allowing small businesses to sell "association health plans," an important GOP priority.

However, the provision allowing states to choose to receive a Medicaid block grant, rather than a per-person funding cap, does comply with budget rules, meaning it only needs 50 votes like the rest of the bill. A provision broadening the ACA's state innovation waivers to include more of the law's regulations is still pending review.

Why it matters: The Senate bill was already struggling to win support among enough Republicans, and shedding more big pieces isn't going to help.

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AT&T's Internet TV service nears 500K users as traditional video business weakens

Mike Mozart / Flickr Creative Commons

AT&T said Tuesday that it now has nearly 500,000 subscribers in its Internet-based DirecTV Now video service. That comes amid continued losses in its traditional DirecTV video service.

DirecTV Now also faces a host of Internet-based competition, including Hulu, Dish Networks' Sling, Sony's PlayStation Vue and Google's YouTube TV. Sling leads the back, according to Ad Age, with an estimated 1.7 million subscribers, while Sony has around 450,000. Nielsen said earlier today it plans to start counting Hulu and YouTube TV along with the other leading TV services.

Earnings up, Revenue down: Overall, AT&T posted per-share earnings 79 cents, a nickel ahead of expectation and up nearly 10 percent from the prior year. Revenues, though were down a bit from a year-ago, to $39.8 billion amid weakness in both wireline and consumer wireless.

Phone business tough: AT&T said it added 2.3 million wireless customers in the U.S., but as has been the case for a couple years now, nearly all the gains came from connected cars and other non-phone devices.