Overnight Finance

Overnight Finance: House passes budget in big step to tax reform | WH rules out forgiving Puerto Rico's debt | Consumer agency releases payday lending rule | Senate confirms Trump's first Fed nominee

House passes budget, paving way for tax reform: The House passed its 2018 budget resolution Thursday in a party-line vote that represents a step toward its goal of sending tax-reform legislation to President Trump.

In a 219-206 vote, lawmakers approved a budget resolution for 2018 that sets up a process for shielding the GOP tax bill from a filibuster in the Senate.

A total of 18 Republicans voted against the resolution, along with all the Democrats who were present.

GOP lawmakers hailed the vote as meaningful because of the tax measure.

"We haven't reformed this tax system since 1986. We need to pass this budget so we can help bring more jobs, fairer taxes and bigger paychecks for people across this country," Speaker Paul Ryan (R-Wis.) said during House floor debate.

Democrats lambasted it for the same reason.

"This budget isn't about conservative policy or reducing the size of our debt and deficits. It's not even about American families. This budget is about one thing -- using budget reconciliation to ram through giant tax giveaways to the wealthy and big corporations -- and to do it without bipartisan support," said Rep. John Yarmuth (D-Ky.), the ranking member of the House Budget Committee. The Hill's Niv Elis and Cristina Marcos report: http://bit.ly/2xlciYx.


Consumer bureau releases payday lending rule: The Consumer Financial Protection Bureau released a long-anticipated rule Thursday that's meant to protect short-term, high-interest loan customers from being trapped with debt.

The CFPB's action targets lenders that offer small loans with short payback timeframes and interest rates, often called "payday" loans. Such loans, which sometimes use car titles as collateral, are often used by low-income customers in need of extra money to cover basic expenses.

The CFPB's rule is the final step of a years-long effort to hold payday and car title lenders to stricter standards that could hamper much of the industry. CFPB Director Richard Cordray called the rule "a stop to the payday debt traps that have plagued communities across the country."

"Too often, borrowers who need quick cash end up trapped in loans they can't afford." Cordray said. "The rule's common sense ability-to-repay protections prevent lenders from succeeding by setting up borrowers to fail." I break down the 1,600-page rule here: http://bit.ly/2xldr2b.


Senate confirms Trump's first Fed nominee: The Senate on Thursday confirmed Randal Quarles to serve on the Federal Reserve's Board of Governors, where he'll oversee the central bank's financial regulation efforts.

Quarles, a top Treasury Department official under former President George W. Bush, will serve as the Fed's first vice chairman for supervision, a position created by the Dodd-Frank Act to bolster federal oversight of major banks.

Quarles is the first member of the Fed nominated by President Trump, who'll have several chances to reshape the central bank. Trump is currently mulling whether to replace Fed Board Chairwoman Janet Yellen when her term expires in February, and Vice Chairman Stanley Fischer is scheduled to leave the bank by the middle of October.

The Senate cleared Quarles 65-32, with 14 Democrats voting in favor his confirmation. No Republicans opposed Quarles, while Sens. Thad Cochran (R-Miss.), Dean Heller (R-Nev.) and Catherine Cortez Masto (D-Nev.) were not present for the vote. Cochran is currently recovering from a medical issue, while Heller and Cortez Masto are in Nevada responding to the Las Vegas concert shooting that killed more than 50 people.

Quarles served in various senior positions at the Treasury Department between 2002 and 2006, including undersecretary for domestic finance from 2005 to 2006. His oversight of the United States finance system during the lead-up to the 2007 crisis drew criticisms from Democrats who argued he should have seen the full dangers of the risky trading before it was too late: http://bit.ly/2xl8aHS.


Happy Thursday and welcome back to Overnight Finance. I'm Sylvan Lane, and here's your nightly guide to everything affecting your bills, bank account and bottom line.

See something I missed? Let me know at slane@thehill.com or tweet me @SylvanLane. And if you like your newsletter, you can subscribe to it here: http://bit.ly/1NxxW2N.


Join us Wednesday, October 11 for "Cracking the Tax Code: Prospects for Reform," featuring CEA Chairman Kevin Hassett, Rep. Richard Neal (D-Mass.) and Rep. Peter Roskam (R-Ill.). Topics of discussion include the potential for an overhaul of the U.S. tax code, current tax reform proposals, and their predicted impact on taxpayers, the economy and beyond. RSVP Here.


White House rules out forgiving Puerto Rican debt: The White House threw cold water on the prospect of forgiving Puerto Rico's debt days after President Trump floated the idea as a way to help the island deal with widespread damage from Hurricane Maria.

When asked about Puerto Rico's more than $70 billion in debt, White House press secretary Sarah Huckabee Sanders said that the best thing for the island will be for it to use the normal process set up to deal with its debt.

"There's a process for how to deal with Puerto Rico's debt, and it will have to go through that process to have a lasting recovery and growth," she said Thursday.

Trump appeared to signal an openness to wiping out Puerto Rico's debts during an interview with Fox News on Tuesday, a claim that sent markets spinning with the possibility that creditors would not be paid back. Puerto Rico's bonds reportedly plunged upon those comments.

"They owe a lot of money to your friends on Wall Street and we're going to have to wipe that out," Trump said. "You can say goodbye to that."

The administration has worked over the past few days to walk back those comments. http://bit.ly/2wzWyBb


Price wrote personal check to Treasury: Former Health and Human Services (HHS) Secretary Tom Price wrote a personal check to the U.S. Treasury for the expense of his travel on private charter planes before resigning, an HHS official confirmed to The Hill Thursday.

Price wrote a check before stepping down last week and the "necessary processing of that payment by HHS has been completed," the official said.

Price resigned following a string of Politico reports that showed his use of private and government planes cost more than $1 million since May.

It wasn't immediately clear Thursday how much Price paid the U.S. Treasury, but HHS previously said he would write a check for $51,887.

That appears to cover the cost of his seat on the planes but not those of his staffers. http://bit.ly/2yrICxM


Trump hosting manufacturers in Oval Office: President Trump will host manufacturers in the Oval Office on Friday, amid his push for a tax-code overhaul supported by the industry.

National Association of Manufacturers (NAM) President Jay Timmons and more than one dozen manufacturing industry representatives will attend a ceremony at the White House where Trump will proclaim Friday National Manufacturing Day, according to a White House official.

Among the attendees will be manufacturing leaders from companies in Maryland and West Virginia. The latter state is home to Sen. Joe Manchin, one of several moderate Democrats up for re-election next year who Trump is hoping will support his tax plan.

The event comes one week after Trump called for a "giant, beautiful, massive" tax cut at the NAM's board meeting. NAM backs the GOP's tax framework and has been pushing for a tax-code rewrite that lowers tax rates for corporations and small businesses, has strong incentives for research and development and makes the U.S. tax system more internationally competitive. http://bit.ly/2xl9Qkz.


Deficit hawks voice worry over direction of tax plan: A handful of GOP deficit hawks are worried that their party's tax plan could add trillions to the deficit, deepening a debt crisis for future generations.

"The numbers are really uglier than almost anybody around this place seems to have digested," said Rep. David Schweikert (R-Ariz.), a member of the tax-writing Ways and Means Committee.

Republicans for the most part have rallied around the tax proposal, which is backed by GOP leaders in both chambers as well as the White House.

The tax plan could cost the government $1.5 trillion in revenue over the next decade, but advocates argue that would be made up for through economic growth unleashed by the corporate and individual tax cuts included in the plan. Niv Elis explains: http://bit.ly/2xlweui.


GOP eyes limits on carried interest tax break: Republicans are targeting a controversial tax provision that critics say benefits wealthy hedge fund managers and other Wall Street types.

President Trump during his White House campaign said people using the tax rules on carried interest are "getting away with murder." The break generally benefits real estate investors, venture capitalists and some hedge fund managers.

Yet language targeting the provision was missing from the tax reform framework that the White House and congressional Republicans unveiled last week.

Republicans, mindful of the president's campaign rhetoric and the criticism that their plan skews toward the rich, say that doesn't mean there won't be changes coming: http://bit.ly/2xl8BBV.


Congress grapples with preventing next Equifax-level hack: Congress is grappling with how to respond to the massive Equifax data breach after hackers gained access to the sensitive data of more than 145 million Americans.

As lawmakers grilled former Equifax CEO Richard Smith over four separate hearings this week, they proposed a number of possible ways to prevent such massive breaches in the future.

Their ideas included like fining companies that fail to adequately protect consumer data, restructuring the credit reporting industry to allow for more competition and requiring data holders to notify consumers whose information has been compromised.

A slew of legislation aimed at instituting tougher regulation on credit reporting agencies has already been introduced since the breach was announced last month, including a bill that would give consumers greater control over the mass amounts of data about them that such organizations collect. Harper Neidig has more: http://bit.ly/2wAj7pu


The Hill Interview: Budget Chair Black sticks around for now: Rep. Diane Black (R-Tenn.) is not ready to give up her gavel just yet.

The chairwoman of the House Budget Committee, who is running for the Tennessee governor's mansion, had been expected to step down from the committee after the budget's passage on the House floor, planned for Thursday.

"I'm focused on getting this budget as far as we can get it, and obviously off the floor is the next step in the process, and then it will have to go to the conference committee," Black told The Hill in an interview at her Capitol Hill office. 

That process could take weeks, as the Senate marked up its budget in committee Thursday and expected to bring it to the floor two weeks later. If budget chairs are included in negotiations over a final spending deal for the year, which has a Dec. 8 deadline, Black could choose to stick around longer: http://bit.ly/2xl9XN4.


And across the Capitol... Senate panel advances budget, a key step for tax reform: The Senate Budget Committee on Thursday advanced a budget resolution that would help pave the way for Republicans to pass a tax reform bill without Democratic support.

The resolution passed 12-11 along strict party lines and is expected to be taken up on the Senate floor in two weeks. The Senate is not in session next week.

Though the budget ostensibly lays out spending plans for the fiscal year, the budget document's central purpose, as reflected by the committee's debate, was to open the reconciliation process for tax reform, which will allow Republicans to avoid a Democratic filibuster. 

The resolution will allow the tax plan to add up to $1.5 trillion to the deficit over the course of a decade.

"Our nation needs a simpler, fairer, and more transparent tax system that will leave more dollars in the pockets of working families," said committee Chairman Mike Enzi (R-Wyo.). "This budget will put in motion a process for pro-growth reform that will cut taxes on American families and job creators by a net $1.5 trillion over 10 years." http://bit.ly/2xlnuEn.


US, South Korea agree to amend trade agreement: The United States and South Korea have agreed to amend their five-year-old trade agreement although the deal is short on specifics.

South Korean Trade Minister Kim Hyun-chong and U.S. Trade Representative Robert Lighthizer said the two trading partners would get more aggressive in working out what they characterized would be a better agreement for both nations after a second set of talks in Washington on Wednesday.

"I now look forward to intensified engagement with Korea in an expeditious manner to resolve outstanding implementation issues as well as to engage soon on amendments that will lead to fair, reciprocal trade," Lighthizer said in a statement.

Seoul had initially expressed resistance to making changes to the U.S.-Korean Free Trade Agreement, while President Trump threatened to pull the U.S. out of the agreement, which went into effect in 2012.

U.S. officials have said the agreement has become too lopsided in Korea's favor and that changes were necessary to provide a better balance, especially with a large autos deficit. The Hill's Vicki Needham explains: http://bit.ly/2xlnzYH.


Dems: Watchdog report confirms IRS scrutiny wasn't politically motivated: Top Democratic lawmakers on Thursday praised a watchdog's report on the IRS's scrutiny of applications for tax-exempt status, saying the report confirms that the agency did not target groups for political reasons.

The Treasury Inspector General for Tax Administration's report, made public Thursday, found that the IRS had subjected progressive groups' applications for tax-exempt status to heightened scrutiny in addition to conservative groups. 

"Republicans claimed from the beginning that the Obama White House directed the IRS to target conservative groups for political reasons, but there was never any evidence to support their claims," Rep. Elijah Cummings (Md.), the top Democrat on the House Oversight Committee, said in a statement.

"After Republicans spent years investigating this issue and squandering millions of taxpayer dollars, today's report confirms what we knew years ago--that progressive groups were also selected for heightened scrutiny and that the tax-exempt status of some progressive groups was severely delayed as a result," the statement continued. http://bit.ly/2xlaheK.


Lawmakers demand answers on IRS contract with Equifax: Lawmakers want to know why the IRS is awarding a multimillion dollar contract to Equifax after the credit rating company suffered a massive hack that compromised the information of more than 145 million Americans.

"Right now, no businesses or consumers in Massachusetts or Nebraska would blindly trust Equifax to protect against fraud or handle sensitive personal information," wrote Sens. Elizabeth Warren (D-Mass.) and Ben Sasse (R-Neb.) on Wednesday.

"It is surprising that the IRS would choose to do so given its legal obligations to protect Americans' privacy," Warren and Sasse continued. "The catastrophic breach at Equifax puts a significant burden on the company to earn any government contract, and on the IRS to explain fully why such a contract was awarded. If the IRS cannot sufficiently do so, this contract should be rescinded."

Despite the hack, IRS gave Equifax a $7 million contract to help the agency with fraud prevention services. The Hill's Ali Breland reports: http://bit.ly/2xl8q9G.


House to consider disaster relief next week: The House will vote on legislation next week that would provide billions of dollars in disaster relief to help states and territories recovering from recent hurricanes.

The White House submitted a formal request to Congress on Wednesday for $29 billion, which includes $12.8 billion for the Federal Emergency Management Agency and $16 billion for debt relief for the federal flood insurance program. Another $576.5 million would be allotted for wildfire recovery.

House Majority Leader Kevin McCarthy (R-Calif.) on Thursday announced that lawmakers would consider the funding while laying out next week's floor schedule. He warned that Congress may have to approve more supplemental appropriations packages in the coming weeks.

"I do not believe this will be the last of the supplementals, based on the damage that has been done from the numerous hurricanes," McCarthy said on the House floor. Here's more from Cristina Marcos: http://bit.ly/2xlhkEj.


Fight over tax center: A top economic adviser to President Trump slammed a research group's analysis of the GOP's tax plan during a visit to its headquarters Thursday.

"It's inaccurate, it's fiction," Kevin Hassett, chairman of the White House Council of Economic Advisers, said during an event at the Tax Policy Center (TPC).

The TPC produced a report last week estimating the Republican tax framework would cut revenues by $2.4 trillion over 10 years and produce a windfall for the rich.

"It is scientifically indefensible to say -- as the TPC report of last Friday does -- that the framework would have little macroeconomic feedback impact," Hassett said. http://bit.ly/2xleOy4.


Koch-backed group targets red-state Dems on tax reform: The fiscally conservative advocacy group Americans for Prosperity is putting millions of dollars behind an ad-buy pressuring red-state Democrats up for reelection in 2018 to support the GOP's tax reform proposals.

Americans for Prosperity, which is backed by billionaire Republican donors Charles and David Koch, has purchased $4.5 million of air time in three states, calling on Democratic Sens. Claire McCaskill (Mo.), Tammy Baldwin (Wis.) and Joe Donnelly (Ind.) to support a tax code overhaul.

All three senators face reelection next year in states won by President Trump.

"People are sick of politics. I am too," the narrator says in the video. "But fixing our broken tax system isn't about politics -- it's about helping people. It means the powerful, the well-connected, politicians -- they'll stop benefiting from a rigged system. It means average Americans will have more to spend on what's important to them. That's what tax reform will do. So, what's stopping us?" http://bit.ly/2xkOVhN.


From The Hill's Contributors section:

Opinion: "Steven Mnuchin will deliver a Republican win on tax reform," by Barner Keller, a former Mnuchin aide during the transitio

Opinion: "Congress eliminating state and local tax deduction the right move for big growth," by ALEC's Joel Griffith and Jonathan Williams


Write us with tips, suggestions and news: slane@thehill.comvneedham@thehill.comnjagoda@thehill.com and nelis@thehill.com. Follow us on Twitter: @SylvanLane,  @VickofTheHill@NJagoda and @NivElis

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