May 26, 2017

May 26, 2017

A vodka martini, please — We did not realize until reading this week’s obituaries that Sir Roger Moore was actually three years older than Sean Connery, whom he replaced as James Bond. No matter. Sir Roger Moore was the man who made it look like fun to be James Bond, and he was still working when he died this week, at the age of 89. We lift a glass, and still aspire to be that cool.

Fiduciary rule will take effect June 9 — The Department of Labor has found “no principled legal basis to change the June 9 date” upon which the fiduciary rule takes effect, Secretary of Labor Alexander Acosta wrote this week in the Wall Street Journal. “Respect for the rule of law leads us to the conclusion that this date cannot be postponed.” Instead, Secretary Acosta said, the department will continue to seek public comment on how to revise the rule. He called on the SEC to “be a full participant” in this process, noting that the SEC had declined to make its own rules in this area under the Obama Administration. House Financial Services Committee Chairman Jeb Hensarling (R-TX) said that he was “disappointed. It regrettably appears Obama era bureaucrats in the Department of Labor may have been allowed to overrule President Trump’s wishes.”

Full panel hears arguments on CFPB constitutionality — The full ten-member bench of the U.S. Court of Appeals in Washington heard arguments Wednesday in PHH Corp. v. CFPB, a case that challenges the structure of the Consumer Protection Bureau as an independent agency with a single director appointed to a five-year term. A three-judge panel ruled last October that the structure is constitutional, and that the President has unlimited power to dismiss the CFPB’s director. The CFPB appealed, but the Department of Justice appeared on Wednesday in support of the plaintiff, mortgage lender PHH Corporation.

Mnuchin emphasizes tax reform, trade, regulatory burden relief — In testimony before the House Ways and Means Committee and the Senate Finance Committee this week, Secretary of the Treasury Steven Mnuchin said that the President’s proposed budget makes “hard choices” in response to excessive government commitments, but that lasting growth will require tax reform, changes to U.S. trade relationships, and getting rid of “imprudent” regulations on business. House Ways and Means Committee Chairman Kevin Brady (R-TX) asked about plans to raise the debt limit, and about how the Administration plans to address the sustainability of Social Security and Medicare. Mnuchin said that the Administration would be reporting on Social Security and Medicare in the future, and urged Congress to act on a debt limit increase before leaving for the August recess.

Ways and Means debates border adjustment tax proposal — The proposed border tax adjustment would likely mean higher short-term costs for American consumers, executives of Target and Wal-Mart told the House Ways and Means Committee on Tuesday. This does not mean the proposal isn’t worthwhile, they said, but that gradual implementation will be necessary to protect the retail sector. Economist Larry Lindsey argued for the plan, saying that effects on consumer prices would be a one-time hit of about one percent, and that accelerated economic growth would boost wages. Economist Kimberly Clausing of Reed College warned that the border adjustment proposal might trigger retaliation with tariffs from U.S. trading partners.

IRS staffing shortages, budget reductions impair service  — J. Russell George, Treasury Inspector General for Tax Administration, and National Taxpayer Advocate Nina E. Olson appeared before the House Appropriations Subcommittee on Financial Services and General Government on Tuesday to talk about IRS customer service and the agency’s efforts to prevent identity theft. The IRS had to disable its online tool for student financial aid applications earlier this year, because of suspicious activity, and concerns remain about IRS verification processes. The Inspector General’s office has been successful in shutting down some of the telephone collection scams, but these remain a problem. Olson said that agency funding was a major concern, as the IRS’s budget has decreased by 20% since FY10 on an inflation-adjusted basis, and current budget proposals would reduce that even further. The IRS’s information systems databases are currently the oldest in the federal government.

Bair, Volcker warn against full-scale Dodd-Frank repeal — Former FDIC Chairman Sheila Bair and former Federal Reserve Chairman Paul Volcker said this week that eliminating resolution planning and orderly liquidation authority (OLA), as proposed by the Financial CHOICE Act pending in the House of Representatives, would be “a serious misstep.” Writing for the Washington Post, they argued that the OLA “would not, by any definition, be a ‘bailout.’”

Uhlmann stays on as managing executive at SEC — Securities and Exchange Commission veteran Peter Uhlmann will serve as the managing executive for Chairman Jay Clayton, the SEC announced yesterday. He had held that position with then-acting Chairman Michael S. Piwowar, and had previously served as managing executive of the agency’s Division of Corporate Finance. He served as chief of staff and senior advisor to former Chairman Christopher Cox.


Next Week in Washington:

The House and Senate are in recess until June 6. The Golden Apple may take next week off, barring unforeseen eruptions of news.

The Ellis Insight. Jim Ellis reports on political news:


Indiana:  While it is clear that Reps. Todd Rokita (R-Brownsburg/Lafayette) and Luke Messer (R-Greensburg/Muncie) are gearing up for Senate runs next year, another GOP candidate may be emerging. Attorney General Curtis Hill, who was just elected to the statewide position in November with 62% of the vote, is also apparently testing the waters for a Senate bid. Mr. Hill served as the Elkhart County Prosecutor for four terms that began in 2003. The eventual Republican nominee will face Sen. Joe Donnelly (D) in what could be the GOP’s top 2018 conversion opportunity.

Ohio:  On Thursday, Sen. Rob Portman (R) publicly declared his endorsement of state Treasurer Josh Mandel (R) in the latter’s re-match with US Senate challenge of Sen. Sherrod Brown (D), and urged all Republicans to coalesce around the statewide official. Rep. Pat Tiberi (R-Franklin County) last week announced that he is not entering the US Senate race; hence, Sen. Portman swinging into action. In 2012, Sen. Brown was re-elected to a second term with a 51-45% vote margin over Mr. Mandel, and this succeeding battle will likely be even more competitive.

Utah:  More scenarios associated with Sen. Orrin Hatch (R) and whether he will seek re-election are surfacing. The last time this story came to the forefront a couple of months back the spin centered around the Senator running for an eighth term. Now political rumors emanating from Utah are suggesting that the retirement option may be on the front burner. And, with the Hatch retirement scenario again being discussed, the related option of Mitt Romney running for the seat also gains strength. In an interview about the subject, the Senator indicated he has still not reached a decision, that he is planning on running, and that he spoke to Mr. Romney who says he is not looking to run for the Senate. It is clear we have not heard the last of the 2018 Utah political saga.


FL-27:  Miami-Dade County former school board member and radio talk show host Raquel Regalado (R), the daughter of Miami Mayor Tomas Regalado, announced she will run to succeed veteran Rep. Ileana Ros-Lehtinen (R-Miami) who is retiring after what will be 15 terms in office. Miami-Dade County Commissioner and former state Rep. Bruno Barreiro is also an announced Republican candidate. For the Democrats, state Sen. Jose Javier Rodriguez (D), Miami Beach City Commissioner Kristen Rosen Gonzalez, and 2016 nominee and business owner Scott Fuhrman are all declared candidates. Since this is the most Democratic district to elect a Republican Representative in the nation, we can count on being in toss-up campaign mode here in South Florida throughout this election cycle.

GA-6:  Survey USA released a new north Georgia special election poll (5/16-20; 700 GA-6 adults; 549 likely special election voters) that gives Democrat Jon Ossoff his largest lead of the campaign, at 51-44% over former Secretary of State Karen Handel (R). But, looking at the party segmentation numbers, it appears the 2016 presidential contest was over-emphasized in the sampling universe, meaning an over-sampling of Democrats. That taken into consideration, a small Ossoff lead is still a reasonable conclusion in relation to this race’s status.

MT-AL:  Bozeman businessman and former Greg Gianforte defeated Democrat Rob Quist last evening, overcoming the negative national publicity from his altercation with a reporter, by a six-point margin, 50-44%, with still one county outstanding. Mr. Gianforte will serve the balance of former Rep. Ryan Zinke’s (R-Whitefish) term. Mr. Zinke, of course, became US Interior Secretary. Despite media claims that this race would be close, and that Quist was potentially in position to score an upset win, there was no such tangible pre-election evidence to support such a premise. Comparing Gianforte’s performance with that of the last two members who won the at-large seat in an open configuration, the point spread is within the same range. Steve Daines (R), now US Senator, won his first victory at the congressional level in 2012, 53-43%. Mr. Zinke scored a 55-40% first-term victory two years later in the national GOP wave election.

NC-9:  Dan McCready (D), a finance business owner and Iraq War Marine Corps veteran, announced that he will challenge three-term Rep. Robert Pittenger (R-Charlotte). The mid-decade North Carolina redistricting plan radically changed this seat from the one in which Mr. Pittenger first won in 2012. Originally, the 9th District began in Charlotte and stretched north around Interstate 77 past the Lake Norman region. Now, the district juts due east and south from Charlotte, along the South Carolina border and almost stretching to Fayetteville. Pittenger, who was plagued by a FBI investigation into his business dealings and a razor-thin primary victory, still sailed to a 58% re-election victory against a weak Democratic opponent but in a district that was 60% new to the incumbent. With the FBI case now closed, Mr. Pittenger certainly begins his 2018 re-election effort in much better position. Still, this could become a race to watch.

PA-16:  Small town school superintendent John George (D) says he will challenge freshman Rep. Lloyd Smucker (R-Lancaster) in what has been a traditionally Republican district since before the end of World War II. Mr. Smucker, a veteran Pennsylvania state Senator at the time of the last election, defeated Democratic consultant Christina Hartman, 54-43%, in a district that President Trump simultaneously carried, 51-44%.

SC-5:  South Carolina election officials completed the Republican run-off recount in record time, delivering a final total just as the week began. The recount produced absolutely no change in the original total, and former state Representative and 2006 congressional nominee Ralph Norman officially defeated state House Speaker Pro Tempore Tommy Pope by a margin of 221 votes. Mr. Norman now advances to the special general election against Democrat Archie Parnell on June 20th. Mr. Norman begins as a heavy favorite. The first poll, fielded just after the run-off concluded from Victory Enterprises (5/17-18; 629 SC-5 likely special election voters) finds Norman leading Parnell, 53-36%.

UT-3:  Gov. Gary Herbert (R) acted quickly in calling a special election to replace resigning Rep. Jason Chaffetz (R-Alpine/Sandy). Scheduling the filing deadline for today, more than a month before Rep. Chaffetz leaves office on June 30th, at least ten individuals, seven of whom are Republicans, have announced candidacies. With an onerous 7,000 valid petition signature requirement required to qualify for the ballot, all by the June 12th deadline, the field’s size could retract. The partisan primaries are scheduled for August 15th, with the special general calendared for November 7th. The winner serves the balance of the current term, and then must turn around and file for re-election to the coming term beginning with the Utah nominating convention process.


Georgia:  Former US Rep. Lynn Westmoreland (R-GA-3), who had recently completed a “listening tour” of the state to reconnect with voters, has decided not to enter the open Governor’s contest next year. Gov. Nathan Deal (R) cannot seek a third term and already two GOP statewide officials, Lt. Gov. Casey Cagle and Secretary of State Brian Kemp, are in the race. State Sen. Hunter Hill is another announced candidate, and former Congressman and US Senate candidate Jack Kingston (R-Savannah) is expected to soon enter. The eventual Republican nominee will be the favorite to succeed Gov. Deal, but Georgia can be competitive on the statewide level from time to time. State House Minority Leader Stacey Abrams is presently the lone announced Democratic candidate.

Iowa:  Gov. Terry Branstad (R) resigned his position after being confirmed as the new US Ambassador to China. Lt. Gov. Kim Reynolds (R) immediately ascended to the Governor’s post. Mr. Branstad leaves office as the longest-serving Governor in American history, 22-plus years over six non-consecutive terms. Gov. Reynolds can expect heavy general election competition next year, and possibly a Republican primary challenge.

Kansas:  Political activist Greg Orman, who as an Independent candidate held Sen. Pat Roberts (R) to a 53-43% victory in 2014, is considering entering the open 2018 Governor’s race. Mr. Orman became the de facto Democratic Senate nominee because the major party failed to qualify a candidate. This time, however, the gubernatorial field features several potentially strong Democratic candidates meaning an Orman Independent candidacy would likely give the eventual Republican nominee even stronger victory odds since a strong liberal non-affiliated candidate would drain support from the Democratic nominee. Gov. Sam Brownback (R) is ineligible to seek a third term.