Trump Tax Overhaul Under Intensifying Fire as Congress Readies Bill

President Donald Trump’s plan for overhauling the U.S. tax system faced growing opposition from interest groups on Sunday, as Republicans prepare to unveil sweeping legislation that could eliminate some of the most popular tax breaks to help pay for lower taxes.

Republicans who control the U.S. House of Representatives will not reveal their bill until Wednesday. But the National Association of Home Builders, a powerful housing industry trade group, is already vowing to defeat it over a change for home mortgage deductions, while Republican leaders try to head off opposition to possible changes to individual retirement savings and state and local tax payments.

Trump and Republicans have vowed to enact tax reform this year for the first time since 1986. But the plan to deliver up to $6 trillion in tax cuts for businesses and individuals faces challenges even from rank-and-file House Republicans.

House and Senate Republicans are on a fast-track to pass separate tax bills before the Nov. 23 U.S. Thanksgiving holiday, iron out differences in December, send a final version to Trump’s desk before January and ultimately hand the president his first major legislative victory. Analysts say there is a good chance the tax overhaul will be delayed until next year.

The NAHB, which boasts 130,000 member firms employing 9 million workers, says the bill would harm U.S. home prices by marginalizing the value of mortgage interest deductions as an incentive for buying homes. The trade group wants legislation to offer a $5,500 tax credit but says it was rebuffed by House Republican leaders.

“We’re opposed to the tax bill without the tax credit in there, and we’ll be working very aggressively to see it defeated,” NAHB chief executive Jerry Howard told Reuters.

Republicans warned that the Trump tax plan is entering a new and difficult phase as lobbyists ramp up pressure on lawmakers to spare their pet tax breaks.

“When groups start rallying against things and they succeed, everything starts unraveling,” Senator Bob Corker, a leading Republican fiscal hawk, told CBS’ Face the Nation.

Anxiety in high-tax states

One of the biggest challenges involves a proposal to eliminate the federal deduction for state and local taxes (SALT), which analysts say would hit upper middle-class families in high income tax states such as New York, New Jersey and California. The states are home to enough House Republicans to stymie legislation.

The top House Republican on tax policy gave ground over the weekend, saying he would allow a deduction for some local taxes to remain.

“We are restoring an itemized property tax deduction to help taxpayers with local tax burdens,” House Ways and Means Committee Chairman Kevin Brady said in a statement.

But the gesture appeared to do little to turn the tide of opposition to SALT’s elimination.

“I’m not going to sign onto anything until the full package is fully analyzed by economists,” Representative Peter King of New York told the Fox News program Sunday Morning Futures. “The fact that we’re getting it at the eleventh hour raises real issues with me,” he added.

A lobby coalition representing state and local governments, realtors and public unions rejected Brady’s statement outright, saying the move would “unfairly penalize taxpayers in states that rely significantly on income taxes.”

House Republicans have also faced opposition from Trump and others after proposing to sharply curtail tax-free contributions to 401(k) programs and move retirement savings to a style of account that allows tax-free withdrawals, rather than the tax-exempt contributions that are popular with 401(k) investors.

House Republicans now say they could permit higher 401(k) contribution limits but continue to talk about tax-free withdrawals. “We will expand the amount that you can invest. But we’ll also give you an option to actually not be taxed later in life,” House Republican leader Kevin McCarthy told Fox News.

The current cap on annual 401(k) tax-free contributions is $18,000.

Corker said congressional tax committees seem to be falling short of their goal to eliminate $4 trillion in tax breaks to prevent the Trump plan from adding to the federal deficit.

“They’re having great difficulty just getting to $3.6 trillion,” said the Tennessee Republican, who has vowed to vote against tax reform if it increases a federal debt load that stands at more than $20 trillion.

Ohio’s Republican governor, John Kasich, told Fox News Sunday that spending on entitlement programs such as Medicare, Medicaid and Social Security should also be reviewed as part of the effort to pay for tax cuts.

“It may be separate from the tax bill, but it needs to happen,” Kasich said.

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Radio Pollution Creates Space Shield for Satellites

People are big polluters, on the land, in the sea and even in outer space, that can include anything from a hammer that floats away from the space station, to radiation from a nuclear weapons test in the atmosphere.

“This can range from little chips of paint all the way up to spent rocket bodies and things like that,” said Dan Baker, director of the Laboratory of Atmosphere and Space Physics at the University of Colorado, Boulder. “We’ve been trying to figure out how can we most effectively eliminate this debris without causing more of a problem.”

Space debris travels so fast, even an orbiting chip of paint can poke a hole in a satellite. But Baker says something tinier, and natural, is a bigger hazard: It’s the highly charged “killer electrons” of the magnetized zone above the earth called The Van Allen Belts.

“We’ve observed them to cause very significant problems for spacecraft,” Baker said.

Electro-magnetic planetary blanket

The doughnut-shaped Van Allen Belts around our planet protect life on earth from solar winds and cosmic rays. But their highly energetic charged particles can damage the circuitry in space stations, weather satellites and other machines that travel through that region of space.

Baker notes that “killer electrons” can also come from some human activities, like the atmospheric testing of nuclear weapons.

“Back in the 1950s and especially in the 1960s, there were nuclear explosions that put huge amounts of radiation into space that caused many satellites to ‘die’ because of radiation damage,” he said. “And if that were to happen today, we know that there are over 1,400 satellites operating in space around the earth and all of those could be subject to very severe consequences.”

Most nations adhere to treaties that prohibit atmospheric weapon testing. But Baker says that’s no guarantee.

“What is worrisome to us from a political standpoint today is that there are nations, for example, North Korea and others, that may be thinking once again, and who may not be adherent to such treaties, that this might be an interesting way to mess with modern technology,” Baker said.

Mysterious space shield

Radiation particles in the Van Allen Belts already “mess” with modern technology. So when satellites must spend time in that region, they are built with thicker materials. That armor makes them heavier, and more expensive. Fortunately, spacecraft and satellites that orbit just under the Van Allen Belts don’t need this heavy shielding. Baker says that’s because, at the lower edge of the Van Allen Belts, the killer electrons abruptly stop.

He compares it to the shields that protected Captain Kirk’s ship, the Enterprise, from phasers and asteroids on Star Trek.

Scientists have known for years that something here on the earth creates an invisible bubble that clears killer electrons from the lower edge of the Van Allen Belts. Just what makes that shield has been a mystery.

But recently, Baker’s teams figured out its source. The “bubble maker” is very low frequency radio transmissions, also known as VLF. Militaries use VLF to communicate with submarines underwater. It turns out those radio waves also travel up, through the atmosphere, to the Van Allen Belts.

“So the VLF bubble is made up of these intense waves. These waves act to sort of scatter and scrub the inner part of the Van Allen Belts,” Baker said, admitting, “I would prefer that we not be messing with nature. However, in this particular case I would say that there is some evidence that this is beneficial.”

John Bonnell, a researcher at the University of California Berkeley’s Space Sciences Lab, agrees that VLF “pollution” is probably benign, and he points to the high-energy radiation emitted by lightning bolts as evidence.

“We’ve had natural clearing of the radiation Belts with lightning, for as long as we’ve had lightning. So in essence, you’ve had a long-running experiment that you can look at and say, ‘Well, if we’re going to do things on sort of a sporadic basis, whereas lightning’s been doing it daily for hundreds of millions of years, the likelihood of there being a bad side effect is pretty minimal,'” he said.

Bonnell says that discovering a man-made way to clear killer electrons from the Van Allen Belt does not mean we will soon create “shields up” devices that use magnetics or radio transmissions. At least, he says, we’re not making them yet.

“It’s a fascinating possibility and it’s a fascinating technology that could enable us in the future, to explore more of the solar system with people, with robots. And so it’s definitely something that people pick away at slowly over time,” he said.

Bonnell says scientists, engineers and astronomers have teamed up to make amazing discoveries about how to study, and travel through, outer space. And while the future shape of space exploration is a mystery, our new understanding about the man-made “pollution” that shields satellites may be an important part of it.

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For Spanish, Catalan Economies, No Winners in Standoff

Xavier Gabriel can take some credit if the tiny Catalan mountain town of Sort is one of the most famous in Spain.

He runs a lottery shop called La Bruja de Oro, or The Golden Witch, in a town whose name, aptly, means “Luck” in Catalan. Its fortune in having sold many prize-winning tickets has made it a household name and a successful online business.

But the crisis surrounding Catalonia’s push for independence has changed life for 60-year-old Gabriel. He joined more than 1,500 companies in moving their official headquarters out of the wealthy region in recent weeks. Their main fear: that they would no longer be covered by Spanish and European Union laws if Catalonia manages to break away, dragging their businesses into unknown territory.

“The time had come to make a decision,” said Gabriel, who employs 16 people and describes himself as a proud Catalan.

​Hedging their bets

Like Gabriel’s, the vast majority of companies that moved their headquarters didn’t transfer workers or assets, such as bank holdings or production equipment. So far, it’s mainly a form of legal insurance. But as the political crisis escalates, the risk is that companies are deferring investments and hiring. There is evidence that tourists are holding off booking, perhaps frightened by images in the media of police crackdowns, street demonstrations and strikes.

And the situation risks getting worse before it improves: the central government’s decision Friday to take control of the region could spiral out of control if there is popular resistance, whether by citizens or local authorities like the Catalan police force.

“There is absolutely no doubt that the crisis is having a very damaging effect on the economy,” said Javier Diaz Gimenez, an economics professor at Spain’s prestigious IESE Business School.

Financial markets in Spain have so far fallen only modestly, reflecting investors’ apparent belief that the tensions will eventually be resolved. The Spanish government has called a regional election in Catalonia for Dec. 21 and could later consider revisions to the constitution that might placate some of the independence supporters.

But that could take some time, Diaz Gimenez says, given how confrontational both sides have been.

Banks leave

The list of businesses moving headquarters includes Catalonia’s top two banks, Caixabank and Sabadell, which are among Spain’s top five lenders. Then there is the Codorniu cava sparkling wine maker for which Catalonia is famous. Another well-known cava maker, Freixenet, is also planning to follow if the independence drive continues. Publishing giant Planeta, the world’s leading Spanish-language publisher and second biggest publisher in France, has also moved its official address out of Catalonia.

Caixabank says it suffered a moderate but temporary run on deposits because of the crisis, but said it has since recovered and was adamant the move was permanent.

Shares for Caixabank, Sabadell and some other companies have been volatile, falling after the Oct. 1 vote for independence and jumping sharply when they announced their decision to move headquarters.

Tip of the iceberg

Lottery shop owner Gabriel says ticket sales this month are up nearly 300 percent over last year, a rise he attributed to popular support for his decision to move his business.

Diaz Gimenez said the decisions to move headquarters, while not immediately affecting jobs, were “just the tip of the iceberg.”

“Plans to relocate firms or invest elsewhere are going to accelerate and some of it is going to go to, say, Poland, and it’s never going to come back,” he said.

“People that were thinking about investing in Spain and Barcelona are starting to think again,” he said. “It’s not just Catalonia. It’s the mismanagement by Spain, which is proving that it’s not a serious country because it cannot solve this thing.”

Spanish economy humming

The turmoil, ironically, comes just as Spain has been enjoying some of the fastest economic growth in Europe.

Its economy, the fourth-largest in the 19-country eurozone, grew by a hefty quarterly rate of 0.9 percent in the second quarter. The government has maintained its forecast for growth in 2017 at 3.1 percent, but revised its estimate for 2018 from 2.6 percent to 2.3 percent because of the political crisis. Moody’s credit rating agency has warned that a continued political impasse and, ultimately, independence for Catalonia would severely hurt the country’s credit rating.

Billions at stake

Tourism seems to be taking the biggest hit so far.

Experts say spending in the sector in Catalonia in the first two weeks of October — that is, following the independence referendum — was down 15 percent from a year earlier.

Tourism represents about 11 percent of Spain’s 1.1-trillion euro ($1.3 trillion) gross domestic product, with Catalonia and its capital, Barcelona, providing a fifth of that, being the most popular destinations for visitors.

Exceltur, a nonprofit group formed by the 25 leading Spanish tourist groups, expects growth in tourism this year to ease from an estimated 4.1 percent to 3.1 percent.

Reservations in Barcelona alone are down 20 percent compared with last year, it said. If the trend continues in the final three months of the year, it could lead to losses of up to 1.2 billion euros ($1.41 billion) in the sector, which in turn could affect jobs.

Analysts fear that the independence movement’s stated aim of continuing to create as much social and economic chaos for Spain as possible could exacerbate the situation. The Catalan National Assembly group has been openly talking about a boycott against Spain’s top companies and major strike activity.

“Spain, its tourism, everything is very dependent on image,” Diaz Gimenez said. “And this is just killing it.”

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Report: DeVos Considers Only Partial Debt Relief for Defrauded Students

The Education Department is considering only partially forgiving federal loans for students defrauded by for-profit colleges, The Associated Press has learned, abandoning the Obama administration’s policy of fully erasing that debt.

Under President Barack Obama, tens of thousands of students deceived by now-defunct for-profit schools had more than $550 million in such loans canceled completely.

But President Donald Trump’s education secretary, Betsy DeVos, is working on a plan that could grant such students only partial relief, according to department officials who were not authorized to publicly comment on the issue and spoke on condition of anonymity. The department may look at the average earnings of students in similar programs and schools to determine how much debt to wipe away.

Hints of new approach

If DeVos goes ahead, the change could leave many students scrambling after expecting full loan forgiveness, based on the previous administration’s track record. It was not immediately clear how many students might be affected.

A department spokeswoman did not immediately respond to a request for comment Saturday.

But the Trump team has given hints of a new approach.

In August, the department extended its contract with a staffing agency to speed up the processing of a backlog of loan forgiveness claims. In the procurement notice, the department said that “policy changes may necessitate certain claims already processed be revisited to assess other attributes.” The department would not further clarify the meaning of that notice.

Advocates: unjustified, unfair

DeVos’ review prompted an outcry from student loan advocates, who said the idea of giving defrauded students only partial loan relief was unjustified and unfair because many of their classmates had already gotten full loan cancellation. Critics say the Trump administration, which has ties to the for-profit sector, is looking out for industry interests.

Earlier this year, Trump paid $25 million to settle charges his Trump University misled students.

“Anything other than full cancellation is not a valid outcome,” said Eileen Connor, a litigator at Harvard University’s Project on Predatory Student Lending, which has represented hundreds of defrauded students of the now-shuttered Corinthian Colleges. “The nature of the wrong that was done to them, the harm is even bigger than the loans that they have.”

“Even more importantly, it is completely unfair that a happenstance of timing is going to mean that one student who’s been defrauded is going to have full cancellation and the next is not,” Connor said.

1990s regulation

A federal regulation known as borrower defense allows students at for-profit colleges and other vocational programs to have their loans forgiven if it is determined that the students were defrauded by the schools. That rule dates to the early 1990s. But it was little used until the demise of Corinthian and ITT for-profit chains in recent years caused tens of thousands of students to request that the government cancel their loans.

In the last few months of the Obama administration, the Education Department updated the rule to add protections for students, shift more financial responsibility onto the schools and prevent schools from having students sign away their right to sue a school.

That change was set to take effect in July, but DeVos has frozen it and is working on a new version. She argued that the Obama regulation was too broad and could cancel the loans of some students without a sound basis.

65,000 claims waiting

DeVos has come under criticism for delaying consideration of more than 65,000 applications for loan forgiveness under the borrower defense rule. The agency hasn’t approved a single claim since DeVos took office in February.

Jennifer Wang, an expert with the Institute of College Access and Success, said the Obama administration was providing full loan cancellations to students.

“It would be totally different from what was happening under the last administration,” Wang said. “It’s not equitable; it’s not fair for students. If she provides partial relief, it’s that she only cares what’s fair for schools and not students.”

Abby Shafroth, an attorney at the National Consumer Law Center, said the agency could be faced with lawsuits, especially from Corinthian students, whose classmates had received full forgiveness.

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On Climate Change, It’s Trump vs. Markets

At the 2015 Paris summit, world leaders pledged to take steps to avoid catastrophic climate change. This November in Bonn, Germany, U.N. negotiators will be back, working out the details of how to cut emissions of planet-warming gases. It is the first conference since President Donald Trump said the United States would withdraw from the agreement. That leaves questions about the direction of U.S. greenhouse gas emissions. As VOA’s Steve Baragona reports, the answer is not straightforward.

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Asia Looks for Signals on Policy Ahead of Trump Visit to Region

It was one of Donald Trump’s very first actions as president: pulling the United States out of the Trans-Pacific Partnership, or TPP, a free-trade deal he said was hurting the American worker.

The TPP was one of the centerpieces of former President Barack Obama’s so-called Asia “pivot,” an economic, political and military realignment toward a region seen as key to America’s future.

Nine months into his presidency, Trump’s decision to abandon the TPP remains perhaps the clearest evidence yet he intends to ditch the Asia pivot, or perhaps pivot there in his own way.

U.S. officials have not said whether they will unveil a similar, definitive policy to replace the pivot. But signs of a broader strategy could emerge next week when Trump leaves on his first trip to Asia as president.

 

WATCH: Asia Awaits Trump’s Regional Policy

Trump skipping regional summit

The trip will include stops in Japan, South Korea, China, Vietnam and the Philippines. But it’s where Trump has chosen not to go that has attracted the headlines.

Though Trump is attending the ASEAN multilateral summit in the Philippines, reports have suggested he will head home a day before the annual East Asia Summit, a regional meeting that focuses on Southeast Asia.

The move risks sending the message that Southeast Asia is not a priority for Trump, said Abraham Denmark, a former top East Asia official at the Pentagon.

“The region will see that China is there, and the United States isn’t. And that will send a very stark message,” said Denmark, who is now at the Woodrow Wilson Center for International Scholars in Washington.

It isn’t the first time that a U.S. president has skipped the summit. Obama also stayed home in 2013 to deal with domestic budget negotiations that resulted in a government shutdown.

Then, too, the move sparked controversy.

Asian diplomats and heads of state talked about Obama’s absence in private circles for years, said Harry Kazianis, who focuses on Asia at the Center for the National Interest.

“Missing one conference doesn’t mean that America is leaving the Asia-Pacific or that China is outpacing us or anything like that. But it’s an extremely big deal, and they’re not going to forget it,” Kazianis said.

​Regional influence

The move could add to concerns the U.S. is ceding regional influence to China, which intensified after Trump’s decision to pull the U.S. out of the Paris climate accord as well as the TPP.

The TPP decision in particular sent shockwaves throughout Asia and threatened to fundamentally reshape the U.S. economic relationship with the region.

“You can make positive and negative arguments for the TPP — it was not a net-jobs creator for the U.S. — but it had great strategic value for the U.S.,” Kazianis said. “It was a marker. America was going to be there no matter what. That’s lost, and the Trump administration hasn’t found a formula to replace that.”

Adding to the uncertainty, Trump has also threatened to pull out of the free-trade agreement with South Korea, a longstanding economic and diplomatic partner of Washington.

​North Korea

But much of Trump’s Asia tour is expected to focus on North Korea, which has dominated the bulk of U.S. foreign policy bandwidth during his first year in office.

Trump hopes to put more pressure on China, in particular, to persuade North Korean leader Kim Jong Un to make concessions on his nuclear and missile programs.

Trump has threatened to “totally destroy” North Korea if necessary to defend the U.S. and its allies, at times matching the inflammatory rhetoric typically only seen from the North.

During Trump’s trip, Asian diplomats are likely to try to convince the U.S. leader of the need to pursue diplomacy and reduce the level of rhetoric, said Michael Fuchs, a former deputy assistant secretary of state for East Asian and Pacific Affairs.

“War with North Korea is their worst nightmare,” Fuchs said.

But Trump will have plenty of time during the 12-day trip to lay out other priorities, and that can’t come a moment too soon for many.

“What our partners in Asia are looking for is not whether the Obama policy will continue,” Denmark said. “They’re looking for what is the Trump policy, what is America’s policy now.”

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Asia Awaits Trump’s Regional Policy

For much of President Barack Obama’s presidency, U.S. officials touted the so-called “Asia Pivot,” an economic, political and military realignment toward a region seen as key to America’s future. Nine months into the Trump administration, U.S. officials are taking a different approach to Asia. And, as VOA’s Bill Gallo reports, some are concerned the White House is signaling a lack of commitment to the region.

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