Overnight Finance: GOP to reduce tax relief by $350B to win over deficit hawks | Republicans eye two-week spending bill | Fed official urges caution on digital currency | Security of auditing system under scrutiny

Overnight Finance: GOP to reduce tax relief by $350B to win over deficit hawks | Republicans eye two-week spending bill | Fed official urges caution on digital currency | Security of auditing system under scrutiny
© Greg Nash

Republicans to reduce tax relief by $350B to win over deficit hawks: Senate GOP leaders have agreed to roll back $350 billion in tax relief in response to a procedural ambush by deficit hawks led by Sen. Bob CorkerRobert (Bob) Phillips CorkerSenate campaign fundraising reports roll in Congress should take the lead on reworking a successful Iran deal North Korea tensions ease ahead of Winter Olympics MORE (R-Tenn.) that nearly killed the GOP tax reform bill.

Senate Republican Whip John CornynJohn CornynMcCarthy: ‘No deadline on DACA’ NSA spying program overcomes key Senate hurdle Hoyer suggests Dems won't support spending bill without DACA fix MORE (R-Texas) told reporters after a round of intense discussions on the floor, "we have an alternative, frankly, tax increase we don't want to do to try to address Sen. Corker's concerns."

Cornyn said the details of the proposal are being worked out.


Corker had insisted on a trigger proposal that would have rolled back tax relief in case economic projections fell short of expectations.

But the Senate parliamentarian ruled Tuesday afternoon that the trigger would not pass procedural muster.

"It doesn't look like the trigger's going to work according to the parliamentarian," Cornyn said.

Sen. David Perdue (R-Ga.) said the estimated reduction in tax relief would be $350 billion over a decade. 

Corker had joined with two other deficit hawks, Sen. Ron JohnsonRonald (Ron) Harold JohnsonGOP senators eager for Romney to join them The House needs to help patients from being victimized by antiquated technology Comey’s original Clinton memo released, cites possible violations MORE (R-Wis.) and Sen. Jeff FlakeJeffrey (Jeff) Lane FlakeMcCain rips Trump for attacks on press Bipartisan group to introduce DACA bill in House Flake's anti-Trump speech will make a lot of noise, but not much sense MORE (R-Ariz.), and threatened to vote for a motion to recommit the tax bill back to the Finance Committee.

That move would have put the legislation in limbo for the foreseeable future and scuttled an all-night voting session on tax relief.

Conservatives pounced on Corker Thursday night, accusing him of breaking his agreement with Sen. Pat ToomeyPatrick (Pat) Joseph ToomeyTop GOP candidate drops out of Ohio Senate race Newly declassified memos detail extent of improper Obama-era NSA spying Overnight Tech: FCC won't fine Colbert over Trump joke | Trump budget slashes science funding | Net neutrality comment period opens MORE (R-Pa.) to set the total size of the tax package at $1.5 trillion.

"If tax bill is less than $1.5 trillion, then Corker broke his deal with Toomey. He is a dishonest broker," tweeted Club for Growth, a group that advocates for lower taxes and less government.

Senators have to figure out a way to ensure that their proposal meets the complex budgetary rules that GOP leaders are using to pass the tax bill with only 51 votes instead of the 60 usually required to pass major legislation. The Hill's Alexander Bolton and Naomi Jagoda have more:  http://bit.ly/2kdLybB.


And The Hill's Jordain Carney recaps the drama in the Senate as deficit hawks held up a motion on the tax plan for an hour: http://bit.ly/2kdg7hm.


And to recap the rest of today's tax developments...


McCain a yes on tax reform, boosting Republicans: Sen. John McCainJohn Sidney McCainMcCain rips Trump for attacks on press NSA spying program overcomes key Senate hurdle Meghan McCain says her father regrets opposition to MLK Day MORE (R-Ariz.) said on Thursday that he will support the Senate Republicans' tax plan, which GOP leadership wants to pass this week.

"After careful thought and consideration, I have decided to support the Senate tax reform bill. I believe this legislation, though far from perfect, would enhance American competitiveness, boost the economy, and provide long overdue tax relief for middle class families," McCain said in a statement.

McCain's decision was a boost for Republicans and a reversal from the ObamaCare repeal effort in July when he joined with GOP Sens. Susan CollinsSusan Margaret CollinsDemocrats search for 51st net neutrality vote Overnight Tech: States sue FCC over net neutrality repeal | Senate Dems reach 50 votes on measure to override repeal | Dems press Apple on phone slowdowns, kids' health | New Android malware found Overnight Regulation: Dems claim 50 votes in Senate to block net neutrality repeal | Consumer bureau takes first step to revising payday lending rule | Trump wants to loosen rules on bank loans | Pentagon, FDA to speed up military drug approvals MORE (Maine) and Lisa MurkowskiLisa Ann MurkowskiSessions torched by lawmakers for marijuana move Calif. Republican attacks Sessions over marijuana policy Trump's executive order on minerals will boost national defense MORE (Alaska) to kill the "skinny repeal" legislation. Murkowski announced on Wednesday that she would back the tax-reform bill: http://bit.ly/2keHLuF.


JCT says Senate tax bill will add $1T to deficits, even with growth: The Senate GOP tax bill won't produce enough economic growth to fully pay for its tax cuts, the Joint Committee on Taxation (JCT) said in an analysis released Thursday.

The bill's macroeconomic effects would reduce the deficit by $408 billion over 10 years, but the bill overall would still cost about $1 trillion, the JCT said.

The JCT had earlier estimated that the bill would lose $1.4 trillion in federal revenue before accounting for economic growth. The Hill's Naomi Jagoda explains: http://bit.ly/2kdUfCs.


And check out The Hill's Whip List for the latest on where lawmakers stand. http://bit.ly/2BwTuZF


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.


Republicans pursue two-week spending bill: Congressional Republicans are pursuing a short-term bill that would avert a looming shutdown and fund the government through Dec. 22, GOP leadership aides said.

The plan would mean lawmakers will likely need to pass a second stopgap spending measure right before the holidays that would keep the government's lights on into January.

GOP leadership has been wrestling with how to avoid a government shutdown when current funding runs out Dec. 8. The latest strategy to emerge on Thursday would involve passing a two-week continuing resolution (CR) next week, GOP aides said.

If a deal on a massive, trillion-dollar omnibus package for fiscal 2018 can't be reached by then -- a scenario that lawmakers acknowledge is likely -- then they would have to pass an additional CR that punts spending talks and debate on other contentious issues into January.

"I think [a two-week CR] is going to happen," Rep. Tom ColeThomas (Tom) Jeffrey ColeLawmakers see shutdown’s odds rising Week ahead: Lawmakers eye another short-term spending bill GOP leaders face most difficult shutdown deadline yet MORE (R-Okla.), an Appropriations cardinal, told reporters Thursday. "We would hope we could finish an overall deal by then, but until there's an agreement on top-line numbers, there's just no way to get a final deal.

"Every day that we delay, it makes it much more complex," he said.

But it's a potentially risky gambit that relies on Democrats agreeing to back two separate CRs. The GOP needs the support of some Senate Democrats to keep the government's lights on.

Many Democrats and at least one Republican have demanded that any spending legislation include a fix for former President Obama's Deferred Action for Childhood Arrivals (DACA) program.

However, Democrats have so far been reluctant to say that they would oppose a January CR -- and risk being blamed for a shutdown.

The Hill's Melanie Zanona and Scott Wong explain: http://bit.ly/2keHgRj.


More spending drama... Conservatives won't back spending bill with ObamaCare payments: House conservatives said they won't support a short-term spending bill to fund the government if it contains provisions to "bail out" insurance companies.

A deal between moderate GOP Sen. Susan Collins (R-Maine), President Trump and Senate Majority Leader Mitch McConnellAddison (Mitch) Mitchell McConnellSessions: 'We should be like Canada' in how we take in immigrants NSA spying program overcomes key Senate hurdle Overnight Finance: Lawmakers see shutdown odds rising | Trump calls for looser rules for bank loans | Consumer bureau moves to revise payday lending rule | Trump warns China on trade deficit MORE (R-Ky.) would likely attach two bipartisan measures to stabilize ObamaCare's insurance markets to the spending bill in exchange for her vote on tax reform.

But conservatives say that wouldn't pass the House.

"We haven't repealed ObamaCare, we haven't cut taxes yet, and we haven't started construction on the border security wall like we told the voters. But before we get any of that stuff done we're going to bail out insurance companies in the spending bill?" said Rep. Jim JordanJames (Jim) Daniel JordanGOP leaders face most difficult shutdown deadline yet Trump FISA tweet puts Capitol Hill in a tizzy Sessions telling allies he hopes recent moves get him back in Trump’s good graces: report MORE (R-Ohio), the former chairman of the conservative House Freedom Caucus.

"For me, I think probably largely for many of our members, that doesn't make sense. I wouldn't be supportive of that." http://bit.ly/2BAgAys


Fed vice chair: Central banks should 'tread cautiously' with digital currency: Randy Quarles, the Federal Reserve vice chairman of supervision, said Thursday that the widespread use of digital currencies could threaten financial stability, adding that central banks should "tread cautiously" when considering creating their own.

"While these digital currencies may not pose major concerns at their current levels of use, more serious financial stability issues may result if they achieve wide-scale usage," Quarles said.

Quarles, who oversees financial regulatory issues for the Fed, said in the Thursday speech that while digital currencies such as Bitcoin could yield useful innovation in finance, they also pose several risks to the global financial system.

Quarles expressed concerns about the often-volatile value of digital currencies and whether they could be easily exchanged for government currencies at a fixed rate during times of crisis. He also said that the U.S. banking system lacks the technology necessary to make real-time digital currency changes happen with the regularity needed to run an economy. I've got more here: http://bit.ly/2kgocCh.


Trump moves to fill Fed, financial regulatory vacancies with two nominations: President Trump on Wednesday made nominations for two key economic policy positions, seeking to fill piling vacancies at the Federal Reserve and reshape the Financial Stability Oversight Council (FSOC).

Trump nominated Carnegie Mellon University economics professor Marvin Goodfriend to the Federal Reserve Board and insurance attorney Thomas Workman to FSOC. The two would play critical roles in shaping economic and financial regulatory policy through independent agencies.

Goodfriend worked for the Federal Reserve Bank of Richmond between 1978 and 2005, serving as the director of research and a policy adviser. He also served as an economist for the Fed and was on President Reagan's Council of Economic Advisors.

Goodfriend was nominated to fill the seat vacated by former Fed Governor Sarah Bloom Raskin in 2014. The Fed is facing a slew of upcoming vacancies that could leave the bank without a quorum of governors.

Without a full quorum of four governors, the Fed board would be unable to legally make key monetary and regulatory moves: http://bit.ly/2kc1prd.


Economy surges but voters focus elsewhere: Eight years after the depths of the worst recession in modern history, voters are finally becoming more optimistic about the national economy -- and, in many cases, turning their attention to other issues.

But those who conduct polls and focus groups for both parties say that while voters are now more bullish on the national economy, they're still bearish -- or at least nervous -- about their own economic position. The conversation, some say, has moved from the macro level to the micro level.

Voters "think things have gotten a little bit better. They're not like way better, but they're better," said J.B. Poersch, who runs the Senate Majority PAC, which backs Democratic candidates. "They are mindful that wages haven't gotten better."

Republicans have been frustrated that they are not getting credit for a booming market and plunging unemployment rates. Democrats see an opportunity to make President Trump's unpopular policies a focal point, though they acknowledge that the stronger economy could eventually benefit the GOP. The Hill's Reid Wilson breaks it down: http://bit.ly/2kc69gp.


Legislators ponder cybersecurity of market auditing system: Members of the House Financial Services Committee mulled concerns over cybersecurity and the pace of development for a consistently delayed project to bolster Wall Street records collection during a hearing Thursday. 

"We can't make a mistake in building [the Consolidated Audit Trail (CAT) system]," said Chris Concannon, president and chief operating officer for the Chicago Board of Options Exchange at a hearing of the Capital Markets, Securities and Investment Subcommittee.

The panel met to discuss CAT, which will pool financial logs from stock and bond trades into one database easily searchable by regulators. Until now, regulators had to go through a variety of sources to pool together information to discover complex market manipulation schemes.

Subcommittee Chairman Bill Huizenga (R-Mich.) worried that such a system would carry a "troubling" amount of personal information on traders, including names, addresses and social security numbers. It could also contain enough trade information for a hacker to reverse engineer proprietary trading strategies. The Hill's Joe Uchill explains: http://bit.ly/2kb19IW.


Number of jobs lost to foreign competition up since Trump's election: The number of U.S. jobs eliminated due to foreign competition since President Trump's election last year has largely kept pace with previous years, according to a new report.

An analysis of Labor Department data by the labor coalition Good Jobs Nation found that more than 93,000 U.S. jobs have been eliminated since Trump's election due to foreign trade.

That's roughly on par with the previous five years, which saw an average of 87,500 jobs per year eliminated. 

The coalition's analysis also found that the number of jobs outsourced by federal contractors has actually risen since Trump was elected. Since November 2016, some of the biggest federal contractors have offshored some 10,269 jobs, making up 11 percent of trade-related layoffs, compared to 4 percent in the previous five years: http://bit.ly/2kcGggy.


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In today's PM View, your daily evening update on what went down in Washington: Secretary of State Rex TillersonRex Wayne TillersonDecline in US travel spurs business push for visitors Overnight Defense: GOP chair blames Dems for defense budget holdup | FDA, Pentagon to speed approval of battlefield drugs | Mattis calls North Korea situation 'sobering' Mattis: North Korea situation 'sobering' MORE's future is once again in doubt, but President Trump doesn't like having to say "you're fired"; the GOP tax plan steams ahead; and Congress seeks more time to avert a government shutdown.

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From The Hill's opinion pages

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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