“U.S.-China Talks Near Close With Positive Signs From Both Sides.” This morning’s Bloomberg article led with:
Chinese authorities planned to give a statement following the latest round of U.S. trade talks on Tuesday in Beijing, after both sides signaled progress toward resolving a conflict that has roiled markets.
“The talks are still underway and I believe we will release a detailed readout after they are concluded,” Chinese foreign ministry spokesman Lu Kang told reporters at a regular briefing Tuesday in Beijing. No timing was given and it wasn’t immediately clear if the U.S. would release a statement.
U.S. Commerce Secretary Wilbur Ross expressed optimism on Monday, telling CNBC that “there’s a very good chance that we’ll get a reasonable settlement.” Vice Premier Liu He made an appearance at the talks on Monday in a sign the Chinese were also pushing for a positive outcome.
President Trump will address the nation on The Wall and the Shutdown at 9 PM EST tonight. This in advance of his visit Thursday to the U.S.-Mexico border. Last night, House Speaker Pelosi (D-CA) and Senate Minority Leader Schumer (D-NY) demanded equal air time in this statement. More in last night’s New York Times article.
“White House rules IRS can issue tax refunds during shutdown…” Last night’s Washington Post article led with:
The White House on Monday directed the Internal Revenue Service to pay tax refunds to millions of Americans during the federal shutdown, marking its most dramatic reversal yet of past legal precedent as officials scramble to contain public backlash from the funding lapse.
Last year, and during previous administrations, the IRS said it would not pay tax refunds during a government shutdown. But Trump administration lawyers ruled Monday that the refunds could be processed after all, a move that some Democrats called legally dubious.
The decision could prove extremely consequential for U.S. households and the U.S. economy. Last year, between Jan. 29 and March 2, the IRS paid more than $147 billion in tax refunds to 48.5 million households.
But it is also the latest in a string of sudden shifts and legal reversals that have seen the White House reverse precedent in the face of public pressure. Senior administration officials changed rules to pay Coast Guard salaries in December, restart an IRS program to clear mortgage applications and reopen some national parks. They are now searching for ways to prevent the nation’s food assistance program from running out of money. Unless the shutdown ends, the program lacks funds to cover expected demand in February. By March, it would be out of money entirely. A new legal ruling on the issue could come this week.
“We have tried to make this as painless as possible consistent with the law,” White House Office of Management and Budget acting director Russell Vought said at a White House briefing, describing the White House’s approach to managing the shutdown.
President Trump has threatened to continue the partial federal shutdown for months, much longer than past lapses have endured.
I’ve estimated that we’ll see approximately $74.5 more individual income tax refunds than last year’s $284.9 b. (through mid-May) because about 60% of taxpayers have yet to adjust their withholding and estimated tax payments for the Tax Cuts and Jobs Act.
IRS Tax Filing Season To Start January 28th per yesterday’s press release. Last year the tax filing season opened on January 29, 2018 as the IRS struggled to implement the Tax Cuts and Jobs Act, enacted on December 22, 2017. This year, despite the optimistic tone of this press release, the IRS will struggle to process over 140 m. individual returns because of the shutdown and thousands of pages of last-minute regulations detailing the Tax Cuts and Jobs Act.
Legislation To Lower Rx Prices May Be Enacted This Year. Yesterday’s Washington Post article stated:
Members are eyeing at least two bills with bipartisan support: The Creates Act [S.974], which would prevent branded drugmakers from guarding their medications so other companies can’t develop alternatives; and legislation [H.R.4117] to prohibit “pay-for-delay” deals in which drugmakers pay producers of generic medicines to delay introduction of cheaper versions of them.
This spring, I expect Congress to move these bills with Administration support.
“Securities Regulator Shutdown Hits Earnings Season.” Yesterday afternoon’s CQ Roll Call article led with:
The shutdown at the Securities and Exchange Commission is likely to put a crimp in fourth-quarter reporting as earnings season starts next week.
The SEC, where 94 percent of employees have been furloughed due to the partial government shutdown, isn’t available to provide guidance to newly public companies or to companies unsure of the earnings impacts of new laws, said Brian Gardner, managing director for Washington research at investment banking firm Keefe, Bruyette & Woods.
While most experienced companies will file on time, those with less experience will be filing notices that their filings will be delayed, Gardner predicted.
“I think companies will view this as, it’s better to delay” than to have to file an amendment to correct a mistake, he said. Complying with the 2017 tax code overhaul (PL 115-97) and the banking deregulation bill (PL 115-174), which relaxed filing requirements particularly for smaller firms, are sources of uncertainty.
For companies whose fiscal years follow the calendar, the fourth-quarter report coincides with filing results for all of 2018. The filing season starts in earnest next week.
The SEC furloughs are also hampering a market that Congress has taken great pains to reinvigorate in recent years. Any initial public offerings that the SEC hadn’t approved by Dec. 21 won’t be approved until the shutdown is over.
CBO’s Monthly Budget Review will be released at 2 PM EST today. December’s report (look for it here) will close out the first quarter of FY19. I expect his fiscal year’s deficit to top $1 tr. for the first time since FY12.
