Good morning,
Senate Republican leaders are in a last-minute scramble to ensure that no more than two of their members break ranks when they take up tax reform Wednesday. The focus yesterday was on Montana Sen. Steve Daines and Wisconsin Sen. Ron Johnson, who are pushing for lower taxes for smaller “pass-through” businesses. But the danger leaders face in buying off Daines and Johnson is that they lose another group of Senators—Tennessee’s Corker, Arizona’s Flake, Oklahoma’s Lankford—who are worried about the bill’s effect on the deficit. This one is headed to the wire.
The big winners from the bill are still big corporations, who get a much needed—and permanent—fix to the corporate tax system. But increasingly, Republicans politicians are beginning to worry the bill may become a political albatross for them. New estimates suggest it will actually raise taxes for households making less than $75,000 a year by 2027, after the temporary cuts in individual taxes expire. And the change in Obamacare could raise health insurance premiums.
All this ensures the tax bill, even if it passes, will become a political football in next year’s election, making it subject to alteration thereafter. And it’s another reminder, if one was needed, of what’s broken about our political system. Big legislative changes work best when passed on a bipartisan basis. But bipartisan legislation—or even bipartisan discussion—isn’t possible in today’s Washington.
News below.
| Alan Murray | |
| @alansmurray | |
| alan.murray@fortune.com |
Top News
• Softbank Puts a Heavy Price on Uber Scandals
The Softbank-led consortium that intends to invest up to $10 billion in Uber is making clear what it thinks of the scandals that keep coming to light (Waymo alleged yesterday Uber had withheld evidence in their looming court case, while a pilot service in Israel was hit with an injunction). Its first offer to exiting shareholders reportedly values the company at only $48 billion, nearly one-third below the valuation at its last funding round. The two-stage deal Softbank is conditional on shareholders tendering 14% of the company’s stock, which may encourage them to band together and hold out for more. But if this year has proved anything, it’s that the world doesn’t see Uber and its shareholders the way they see themselves. Fortune
• Home Sales Roar Ahead
Sales of new single-family homes unexpectedly rose to a 10-year high in October, underlining the robust health of a key part of the economy. The Commerce Department said new home sales increased 6.2% to a seasonally adjusted annual rate of 685,000 units, the highest level since October 2007. Year-on-year, they were up a thumping 18.7%. The data suggest that the housing market could be regaining momentum after treading water for much of the year, constrained by shortages of homes for sale, skilled labor, and suitable building land. They also go some way to explaining NY Fed President William Dudley saying that the Fed wouldn’t be put off raising rates by a small undershoot in the headline inflation rate. Fortune
• ‘Pocahontas’, the CFPB and Lawyer Humor
The confusion over who is leading the Consumer Financial Protection Bureau continued, with acting director Mick Mulvaney (backed by President Trump) and Leandra English (who is suing to defend her own appointment as acting director) both still claiming to be in charge. English was sending all-staff e-mails to thank them for their work and support yesterday, while Mulvaney brought doughnuts, according to the New York Times. Elsewhere, Sen. Elizabeth Warren’s outspoken support for English prompted the President to renew his “Pocahontas” quip about her at an event commemorating Native American veterans, raising hackles at the NCAI. Twitter wags noted that, irrespective of the case’s merits, the docket English vs. Trump was one of the best and most overdue legal gags of the year. Fortune
• Dominating Actual Reality Isn’t Enough for Amazon
Amazon wants a part of the nascent markets for virtual and augmented reality. It debuted software tools called Amazon Sumerian Monday, aiming to help coders more easily build virtual reality and augmented reality apps using 3D computer graphics. Amazon pitches Sumerian as a way to build 3D-powered apps and games that can run on some VR headsets like Facebook Oculus Rift and HTC’s Vive, as well as on Apple products like the iPhone or iPad. It also plans to make its tools compatible with Google's AR software tools for Android-powered devices soon, but it didn't say when. Fortune
Around the Water Cooler
• Wells Fargo’s Amazing Special FX Rates
Wells Fargo overcharged hundreds of clients for routine foreign exchange transactions, according to The Wall Street Journal. It said an internal review had found out that only 35 out of 300 fee agreements stuck to the pricing initially agreed. Wells had fired four of its senior forex bankers earlier this year in connection with the investigation, an episode that showed poor governance standards went well beyond its retail bank. Fortune
• Between a U.K. Rock and a Dutch Hard Place
Unilever is to delay its choice between the U.K. and the Netherlands for a single, unified corporate headquarters, pushing back the day when it will be able to buy and sell businesses more freely to meet the demands of impatient shareholders. CEO Paul Polman told the Financial Times that the toxic atmosphere created by the Brexit negotiations meant that the decision risked being politicized either way. It emerged over the holiday weekend that Unilever has engaged headhunters to look for a successor to Polman, who fought off a bid from Kraft Heinz earlier this year. FT, metered access
• Monsanto’s Roundup Win Highlights German Risks
The EU approved a five-year extension for Monsanto’s Roundup—the world’s best-selling weedkiller—dismissing claims from the World Health Organization that it can cause cancer in humans. The approval owed much to the fact that Germany, represented by its outgoing Christian Democrat farm minister, had dropped its opposition—against the wishes of the Social Democratic ministers who continue to serve in the interim government, pending the formation of a new coalition. Monsanto, for its part, is still angry that it got only a five-year extension, rather than the usual 15 years. Reuters
• U.S. Charges 3 Chinese Hackers
The U.S. accused three Chinese hackers in absentia with stealing trade secrets from Moody’s Analytics, Siemens, and Trimble Inc. (a maker of drones, satnav systems and laser rangefinders) between 2011 and 2014. The three are accused of working together with the People’s Liberation Army, similar to the charges against five serving Chinese military officers in 2014. Commercial espionage has, however, apparently tailed off since a 2015 commitment by Presidents Barack Obama and Xi Jinping to forego it. Reuters
Summaries by Geoffrey Smith; geoffrey.smith@fortune.com
@geoffreytsmith
