The 4 most important stories in politics this week

With President Trump out of town on his tour of Asia, American politics moved on two distinct tracks this week. The off-year election on Tuesday offered disastrous results for Republicans — most notably in Virginia but also extending to some state legislative elections in Georgia, New Hampshire, and Washington, plus a governor’s race in New Jersey. And explosive new allegations against the GOP’s candidate in an upcoming Alabama Senate race at least raise the prospect of a dramatic upset by Democrats in a deep-red state.

Meanwhile, on a parallel track, congressional Republicans pushed ahead with their plans to enact a large tax cut primarily focused on helping business owners and inheritors of large, multimillion-dollar estates. House and Senate GOP leadership have each unveiled different pieces of legislation that differ in crucial respects but share that primary goal. And while the overall prospects for the project remain uncertain, forward progress continues at a rapid pace even amid the growing swirl of bad electoral news.

Here’s what you need to know.

Democrats won a landslide in Virginia

A Democratic win in Tuesday’s Virginia gubernatorial race was not shocking — Hillary Clinton won the state, Democrats’ candidate was the incumbent lieutenant governor, Donald Trump’s approval rating is low, and Dems were up in the polls — but Ralph Northam ended up winning by a considerably larger margin than pollsters had forecast, and Democrats also won far more state legislative seats than nearly anyone thought possible.

Win McNamee/Getty Images

• The Trump backlash is here: For all that Northam overperformed his polls, his win was about on target for what you would expect if all you knew was the 2016 election result and Trump’s approval rating.
• Why it matters: With the state Senate still narrowly in Republican hands and the House of Delegates likely the same (there are some recounts), status quo will largely be the policy of the day. But the sheer number of delegate seats Democrats picked up makes Medicaid expansion at least possible in the state, and Northam’s win means Republicans won’t be able to pass a one-party gerrymander after the 2020 census.
• What’s next? There are still several pending recounts that could ultimately determine who holds the majority in the House of Delegates. And given how strongly the political winds in Virginia are blowing blue, if Dems get a majority there, it’s possible at least one state senator could be tempted to switch parties.

New allegations surfaced about Roy Moore

The Washington Post reported on four different Alabama women who say that GOP Senate nominee Roy Moore sought sexual relationships with them when they were teenagers and he was a 30-something prosecutor. Moore, who was very much not Washington Republicans’ first choice for the nomination, has come under considerable criticism from Senate Republicans as a result of the story, with dozens of senators saying that the stories — “if true” — mean that Moore should step down.

Tom Williams/CQ Roll Call

• The rules: It’s too late for Alabama Republicans to officially switch nominees, but there sometimes turns out to be flexibility with these things (a judge let New Jersey Democrats switch nominees at the last minute in the 2002 cycle), and Moore could also stand aside in favor of a write-in candidacy from Luther Strange, the current holder of the seat, whom Moore beat in a recent primary.
• Washington-Alabama split: While Senate Republicans are largely distancing themselves from Moore, Alabama Republicans are circling the wagons, with the state’s secretary of state and state auditor issuing supportive remarks.
• What’s next? We’ll see in the next few days if pressure on Moore to quit is effective. If not, we’ll see if this inspires national Democrats to start trying to invest money in Doug Jones’s long-shot challenge to Moore.

The House moved ahead with a tax bill

The House Ways and Means Committee voted Thursday afternoon along party lines to pass the Tax Cuts and Jobs Act of 2017, a bill that will reduce federal revenue by $1.5 trillion over 10 years while — oddly enough — raising taxes on about a quarter of American households.

Mark Wilson/Getty Images

• What the bill does: The TCJA makes a lot of changes to the tax code, but the big takeaways are lower taxes for businesses, elimination of the estate tax, a higher budget deficit, and, for individuals, lower taxes for most people but higher taxes for about a quarter of people.
• The big hurdle in the House: The provision likely to give House Republicans the most heartburn is the way TCJA curtails the deductibility of state and local taxes, a very tough vote for House Republicans from California, New York, and New Jersey whose votes are needed for a majority.
• What’s next? The TCJA will go to the floor next week if Republican leaders can scrounge up the votes. But the bill as written does not comply with Senate rules, and Senate Republicans are working on their own bill anyway.

Senate Republicans unveiled a different bill

Late Thursday, Senate Republicans began to roll out their own version of tax reform. It’s broadly similar in structure to the House plan — business tax cuts, estate tax cut, higher deficit, a mixed bag for individuals — but very different across a wide range of issues.

Melina Mara/The Washington Post via Getty Images

• Differences on deductions: The Senate plan entirely scraps the state and local tax deduction, allowing it to (unlike the House plan) save a bunch of other smaller deductions, including one that’s crucial for PhD programs and one for medical expenses.
• Differences on rates: The Senate plan also cuts the top income tax rate lower than the House plan, while preserving a seven-bracket structure that the House ditches in favor of just three brackets. On corporate taxes, both plans cut the rate to 20, but the Senate plan delays implementation by a year to reduce the cost on paper.
• What’s next? It’s totally unclear at this point how much actual support the Senate plan has in the caucus. Ultimately, the two Obamacare repeal bills that came closest to passing the Senate — “skinny” repeal and the Cassidy-Graham plan — were very different from the leadership’s initial draft.

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