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Trump Talks Up Border Wall as Congress Eyes Sept. 30 Budget Deadline

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U.S. President Donald Trump is pushing Congress to make appropriations for his proposed border wall with Mexico, placing more pressure on lawmakers ahead of the Sept. 30 budget deadline.

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Trump Takes Aim at Congress Debt Ceiling Plans

President Trump has threatened to shut down the U.S. government in October unless Congress approves the initial funding needed to begin constructing a border wall with Mexico. The threat complicates an already contentious debate about passing a new spending measure and raising the debt ceiling – both of which are required by Sept. 30.

GOP leaders are still devising a plan to keep the government open after Sept. 30. The president is said to be requesting $1.6 billion for wall construction. Democrats are widely expected to reject such appropriations. In fact, it is unlikely to get the votes it needs to pass the Senate.

NAFTA Pull-Out?

Trump also spoke of the possible termination of the North American Free Trade Agreement (NAFTA) mere days after policymakers concluded the first round of negotiations. The initial talks are said to have been positive, with all sides committing to an ambitious schedule for solidifying a new trade deal.

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However, the president doesn’t think “we can make a deal” on NAFTA, signaling that its termination could be nigh. For all the debate it generates, NAFTA has quadrupled trade between the U.S., Canada and Mexico over its 23-year history.

Wall Street Shutters

Trump’s rhetoric is pouring cold water on Wall Street’s latest rally effort. After posting its best single-day advance in four months, the Dow Jones Industrial Average fell 0.4% on Wednesday to close at 21,812.09. Twenty-three of 30 blue-chip companies finished lower, with Johnson & Johnson (JNJ) and 3M Co (MMM) leading the decline.

The large-cap S&P 500 Index fell 0.4% to settle at 2,444.04. The CBOE VIX volatility gauge rose nearly 8% as a result.

European equities also declined Wednesday, with Germany’s DAX closing 0.5% lower. France’s CAC 40 Index closed down 0.3% and Spain’s IBEX 35 finished 0.7% lower.

Haven assets, such as gold and silver, saw steady demand. Gold bullion continues to trade below $1,300.00 a troy ounce on the Comex division of the New York Mercantile Exchange.

U.S. and European stock futures traded mostly lower after-hours, pointing to a soft start to the Thursday session.

Jackson Hole Symposium Set to Begin

The Kansas City Fed’s annual policy gala is set to begin on Thursday, attracting central bankers and thought leaders from around the world. This year’s attendee list includes Fed Chair Janet Yellen and European Central Bank (ECB) President Mario Draghi. Attendees representing central banks from more than 40 countries will be present for the three-day event.

Fed Chair Janet Yellen is scheduled to deliver a speech Friday morning at 10:00 a.m. ET.

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House Pushes Forward With Trump Tax Plan Amid Dissent

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The U.S. House of Representatives is pushing hard to move President Trump’s tax proposal through the legislative process, even as growing dissent rattles confidence in the landmark bill.

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Congressional Analysis

An analysis by the Joint Committee on Taxation concluded Tuesday that tax cuts for lower- and middle-income Americans would fade over the next decade at a faster rate than those for high earners. The analysis found that four out of every five tax filers earning between $50,000 and $75,000 would receive tax relief from the bill in 2019. However, by 2027, that figure would drop to 60%.

Meanwhile, those earning more than $1 million would also see their tax savings fade, albeit at a slower rate than the smaller income brackets. In 2019, about three-quarters of those earning $1 million-plus will get tax relief, a figure that drops to two-thirds in 2027.

The conclusion could spark another round of debate as the Trump administration seeks to push forward on tax reform this year. The tax plan has faced attack from both sides of the political divide, with high-tax state Republicans criticizing individual deductions for state and local taxes.

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The reform bill, which promises to reduce the number of tax brackets, cut the corporate tax rate and implement a one-time repatriation fee, has been described as the most ambitious since the Reagan administration. Through Reagan’s tax reform, the U.S. economy managed to grow by an average of 3.4% annually until the beginning of the Obama administration. And that includes three recessions between the two presidents.

To his credit, President Jimmy Carer before him implemented the biggest regulatory overhaul in postwar history.

Mid-Terms Loom

Republicans have good reason to raise questions about Trump’s tax reform, especially those in high-tax states such as California. Already faced with a difficult re-election next year, California’s GOP Representative Darrell Issa said he wouldn’t endorse changes that “may make it the tremendous burden felt by California taxpayers even worse.”

Republican Ed Gillespie of Virginia was defeated in state elections on Tuesday, a clear sign that the GOP-controlled Congress is under attack. South Carolina is seen as an important barometer of the Democrats’ chances of winning in crucial swing states ahead of next year’s midterms.

Democrat Ralph Northam will be the next governor of Virgina, various news outlets reported late Tuesday.

Featured image courtesy of Shutterstock.

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Libertarian Speaks: Ron Paul Says U.S. Government Should Not Intervene in Cryptocurrency

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The U.S. government has no place intervening in cryptocurrency, according to former U.S. presidential candidate Ron Paul.

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In an interview with Kitco on Oct. 27, Paul said the government should “stay out” of bitcoin if people want to use it. The former Congressman acknowledged that he didn’t know much about cryptocurrency, but that he was “amazed” by the market’s growth.

“I take some very strong political positions on competing currencies,” Paul said, when asked if he was a believer of cryptocurrency. “And if you can come up with a competing currency, and there is no fraud, I think it should be.”

Although a lot has been said about bitcoin’s black market roots, Paul says government involvement shouldn’t be a given. That message has been lost on several nations, which have grown uneasy about the growth and widespread adoption of cryptocurrency. Major economies like  China, South Korea and Russia have already stepped in to halt the expansion of crypto-assets.  However, most policymakers appear to be open to regulating cryptocurrency insofar as its criminal elements can be controlled.

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Libertarians like Ron Paul are very weary of government involvement in all aspects of life. It should therefore come as no surprise that bitcoin and its altcoin competitors have received strong buy-in from the libertarian, free market community. While the United States has a strong libertarian presence across key segments of its society, this has largely failed to translate into meaningful political reform.

Bitcoin’s market capitalization climbed back above $100 billion over the weekend, with the sum of all coins valued at around $179 billion. Cryptocurrency is by far the fastest growing asset class of 2017, dwarfing stocks, crude oil and other traditional financial assets.

“I am amazed,” Paul said, ” at all the capitalization on these cryptocurrencies. It’s a huge amount of money.”

Featured image courtesy of Shutterstock. 

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Draft of U.S. Tax Bill Coming Within Days, According to GOP Lawmaker

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It won’t be long now before congressional Republicans table their first draft bill to reform the U.S. tax code, according to House conservative Mark Meadows. GOP lawmakers are under the gun to meet President Trump’s ambitious goal of delivering a major tax overhaul by the end of 2017.

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Draft Bill Coming in Less Than Ten Days

House Freedom Caucus Chairman Mark Meadows says the House Ways and Means Committee has promised to release a preliminary tax bill about seven days after this Thursday’s vote on a budget resolution. Based on that timeline, the tax bill should be published on or before Nov. 3, according to Bloomberg.

Last week, Republicans stuck together to pass a 2018 budget plan that many say is the preamble to tax reform. The budget resolution was approved by a 51-49 vote. Rand Paul of Kentucky was the lone GOP member to vote against the measure.

Before giving the final approval, lawmakers must go through another voting process that will begin Thursday and run into Friday morning.

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The new plan, which was first unveiled by the White House this past spring, is pursuing drastic changes to the tax regime. This includes reducing the number of tax brackets, slashing the corporate tax rate and instilling a one-time repatriation tax to encourage multinationals to bring offshore profits back home.

Challenges Remain

President Trump and fellow Republicans face numerous challenges implementing the most ambitious tax reform of a generation. This includes balancing promises of major overhaul against a self-imposed $1.5 trillion limit on the size of those cuts over the decade.

Analysts say that President Trump has considerable leeway to influence the proposal, but that the ultimate penning of the bill is a legislative process. This means it will be Congress, not the president, that will put the final details together.

Tax overhaul was a cornerstone of Trump’s election campaign. Combined with deregulation of key industries and massive infrastructure spending, tax breaks are expected to boost economic growth and make the U.S. more resilient to cyclical downturns.

That’s exactly what happened under the Reagan tax cut more than three decades ago. Although often maligned today, the Reagan tax plan laid the foundation for 25 years of strong, noninflationary growth. The U.S. economy grew an average of 3.4% annually between Reagan and Obama despite three recessions. To be sure, President Carter also helped lay the foundation by leading the biggest deregulatory effort in the postwar era.

Featured image courtesy of Shutterstock. 

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