This was the kind of busy week where the president announced his pick to fill arguably the second most important job in the whole executive branch — chair of the Federal Reserve — and it barely attracted any attention.
Beyond the Federal Reserve, the big political story of the week was the race between the Republican Party’s top policy priority — a major tax bill — and the rising tide of scandal that is threatening to engulf the Trump administration. Fresh indictments from special counsel Robert Mueller brought criminality into the inner sanctum of the Trump campaign, while also kicking loose new reporting and new testimony that raises new questions about Attorney General Jeff Sessions’s knowledge and honesty in earlier statements to Congress.
Here’s what you need to know.
We finally saw the GOP’s tax bill
After months of discussion and rumors, House Republicans finally rolled out actual legislative text for a tax bill, the Tax Cuts and Jobs Act, which offers about $1.5 trillion in net tax cuts over 10 years. That money goes mostly, though not exclusively, to business owners and inheritors of large fortunes. But within the $1.5 trillion net change are much larger gross shifts, with some taxes going down and others going up, setting the stage for some potentially very complicated politics.
- Key House sticking point: The bill would eliminate the existing state and local tax (SALT) deduction and replace it with a less generous property tax credit worth up to $10,000. This seems to be the key political sticking point in the House, where many members from California and the Northeast aren’t excited about raising taxes on their constituents.
- Senate trouble ahead: The TCJA, as written, faces a huge problem in the Senate because a permanent, deficit-increasing tax cut — which is what the TCJA is — violates the terms of the budget reconciliation process and could be filibustered by Democrats unless it’s substantially rewritten.
- What’s next? The House Ways and Means Committee will begin the formal “markup” process next week and, in theory, will consider amendments. But realistically, changes, if they happen, will be negotiated informally with House leadership. The Senate is also expected to release its own version of the bill next week.
Mueller revealed indictments — and a guilty plea
News leaked last weekend that special counsel Robert Mueller would unseal indictments on Monday, and he did — of former Trump campaign chair Paul Manafort and his business associate Rick Gates for a range of financial crimes. But soon after came a surprise — a guilty plea, entered months ago, by former Trump campaign foreign policy aide George Papadopoulos for lying to the FBI.
- Why it matters: That the president hired a criminal with compromising, illicit ties to Ukrainian oligarchs and Russian government figures, and then continued to employ his longtime business associate even after Manafort himself was fired, is significant on its own terms. Indeed, in a normal administration these basic facts would be a huge, news-dominating scandal.
- Why it really matters: Issuing indictments while the investigation is still ongoing — especially when paired with the Papadopoulos plea — strongly suggests an effort to get Manafort or Gates (or both) to cut a deal and start cooperating with the investigators in exchange for leniency.
- What’s next? One huge undropped shoe here is former National Security Adviser Michael Flynn, who certainly appears to have violated the very same Foreign Agent Registration Act that Manafort is charged with breaking.
Jeff Sessions is back in the spotlight
Attorney General Jeff Sessions is one of the few non-family links between the senior levels of the Trump campaign and the senior levels of the Trump administration. Having already gotten himself into hot water by “forgetting” about meetings with Russian Ambassador Sergey Kislyak during his confirmation hearings, he’s coming under new pressure this week, as it turns out he was involved in discussions with lower-level campaign aides about potential collaboration with the Russian government.
- A new story from Sessions’s camp: NBC News reported Thursday that Sessions aides are saying he heard and rejected Papadopoulos’s campaign-era proposal to use his “Russian contacts” to set up a meeting between Trump and Vladimir Putin. On one level, that’s an exculpatory story for Sessions. On another level, it appears to contradict his previous testimony that he had “no knowledge” about any campaign contacts with the Russians.
- A different story from Carter Page: Page, the colorful adventurer who seems to have tried to set himself up as a Trump-Putin go-between of some kind, testified on Thursday to Congress that he apprised Sessions of his summer 2016 trip to Russia. Testimony that, again, at least on its face appears to contradict Sessions’s statements at his confirmation hearings.
- What’s next? For a special counsel to go after a sitting attorney general would be explosive, but you’re really not supposed to lie to Congress, and it’s at minimum starting to look like Sessions certainly didn't tell the whole truth about his knowledge of the Trump-Russia nexus.
Jerome Powell will be the next Federal Reserve chair
Jerome (“Jay”) Powell, a Republican Federal Reserve Board member originally appointed by Barack Obama as part of a larger compromise package, was selected this week as Donald Trump’s nominee to succeed Janet Yellen as chair of the Federal Reserve Board of Governors.
- Why it matters: The Fed is far and away the single most influential economic policy institution in the United States government. The pace with which it raises interest rates as the labor market strengthens will largely determine the short-term trajectory of the economy, and if crisis strikes, all eyes will look to the Fed for the rescue.
- A consensus pick: Democrats wanted Trump to reappoint Yellen, who, by Trump’s own admission, has done a good job in her four years at the Fed. But they don’t have any major substantive objections to Powell, who is seen as largely eye to eye with Yellen on policy matters, albeit less distinguished academically.
- What’s next? Powell ought to be confirmed easily and will take over next year. When he does, we’ll see if it’s really true that he represents policy continuity or whether he has bigger ideas beyond what the public knows as of now.