4 political stories that actually mattered this week

The week closed with a cacophonous battle over President Trump’s phone call to the grieving widow of a dead Special Forces soldier, featuring emotional pushback from Chief of Staff John Kelly, outrage from many former military officers, and the now-customary mix of shifting stories and ferocious accusations of “fake news” from the White House.

But while Trump once again threw Washington into a tizzy with tweets and offhand remarks, the policymaking train continued to chug forward with significant developments on taxes, health care, and trade.

Here’s what you need to know.

We got a bipartisan insurance stabilization deal

Sens. Patty Murray (D-WA) and Lamar Alexander (R-TN) announced agreement on legislation that would help stabilize individual health insurance markets that have been reeling under the weight of several executive branch action designed to dismantle a framework created by the Obama administration.

  • CSR payments: The centerpiece of the deal is restoring funding for cost-sharing reduction payments to insurance companies. These CSR payments allow insurers to charge lower premiums, which ultimately results in more enrollment and lower federal spending on premium subsidies.
  • Enrollment money: The deal would also more clearly direct the executive branch to run a real insurance enrollment campaign, something the Obama administration routinely did but Trump has tried to kill.
  • Flexibility: In exchange, the deal would also allow insurance companies to sell more low-cost, catastrophic-style insurance plans on the exchanges and make it easier for states to apply for waivers.

Republican leaders don’t seem to want a deal

After an initially supportive statement calling the Alexander-Murray legislation “a very good solution,” Trump seemed to turn tail and characterize the bill as a “bailout” for insurance companies.

  • Paul Ryan is opposed: House Speaker Paul Ryan also voiced opposition to the bill, and said “the Senate should keep its focus on repeal and replace of Obamacare” rather than on bipartisan deals.
  • Having the votes versus getting a vote: With 12 Republican co-sponsors in the Senate so far, there’s a good chance Murray-Alexander would have the votes to pass Congress — but it would need to get a vote on the floor to pass, which can’t happen with leadership opposed.
  • The real deal may come later: The continuing resolution that funds the government expires in December, and it will take a bipartisan vote to extend or modify it. That, in theory, could be a time for bipartisan health legislation to end up folded into what’s going to be a big bipartisan package anyway.

The administration tested some new tax arguments

Republican tax reform legislation still lacks crucial details such as how many tax brackets there will be, what income thresholds the brackets will be pegged to, which deductions will be closed, and what will happen to the child tax credit, but while leaving such matters unresolved, the Trump administration did try out some new arguments.

  • Corporate tax cuts boost wages: On Monday, Kevin Hassett, head of the president’s Council of Economic Advisers, rolled out a paper purporting to show that middle-class wages would rise by $4,000 to $9,000 per year if the corporate tax rate is cut from 35 percent to 20 percent.
  • Math forces tax cuts for the rich: Meanwhile on Wednesday, Treasury Secretary Steve Mnuchin backed off earlier pledges to avoid cutting taxes for the rich by saying that “when you’re cutting taxes across the board, it’s very hard not to give tax cuts to the wealthy with tax cuts to the middle class.”
  • What’s next? The critical question around taxes at this point is really congressional procedure and not the sales pitch. Will Senate Republicans do a temporary deficit-financed tax cut, or aim for a permanent one that’s paid for? Or will they change the Senate’s rules to allow for a permanent deficit-financed tax cut? Until a decision is made on that, everything else is essentially theoretical.

Nobody knows what’s happening with NAFTA

The ongoing process of renegotiating the North American Free Trade Agreement — a key campaign pledge that Trump hasn’t talked about much since Inauguration Day — has been an under-the-radar story in the United States but a much bigger deal in Mexico and Canada. And, frankly, everyone is confused.

  • What’s happening: Trump triggered a formal process to demand revisions to the treaty or else the United States will pull out and North American trade will default to the pre-NAFTA rules. The US is represented in the ongoing talks by Trade Representative Robert Lighthizer, while Mexico sends its economy minister and Canada sends its foreign minister.
  • But what’s happening? Nobody’s really sure. The most recent round of talks ended with a lot of ill will precipitated by the United States making a bunch of demands everyone knows are unacceptable to Canada and Mexico. Is that a negotiating tactic? An effort to look tough before striking a compromise? Or is Trump trying to lay the groundwork for a NAFTA withdrawal?
  • What’s next? Actually leaving NAFTA would scramble partisan allegiances, hurting farm-state exports but pleasing manufacturing unions and likely earning praise from many congressional Democrats and condemnation from congressional Republicans. In practice, Trump has governed as a conventional pro-business Republican, suggesting he won’t actually scuttle NAFTA. But who knows how long that will hold up.

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