On The Money: Why the tax law failed to save the GOP majority | Grassley opts for Finance gavel, setting Graham up for Judiciary | Trump says China eager for trade deal | Facebook reeling after damning NYT report

Happy Friday and welcome back to On The Money. I’m Sylvan Lane, and here’s your nightly guide to everything affecting your bills, bank account and bottom line.

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THE BIG DEAL–Why the tax law failed to save the GOP majority: The biggest accomplishment for congressional Republicans — passing a sweeping new tax law at the end of 2017 — didn’t end up saving the GOP majority in the House.

The economy wasn’t the biggest issue of the midterms, according to exit polls, which found that a plurality of voters think the new tax law has not had any impact on their personal finances.

{mosads}Democrats claimed victory on the issue, but Republicans are divided.

Some say the law helped prevent the GOP from losing even more seats because it boosted the economy, blaming other factors for the Democratic wave. Other GOP lawmakers, however, expressed concerns that a provision in the law hurt Republicans in high-tax states such as New York and New Jersey — where the GOP ended up losing a total of six seats, with two races still uncalled.

The Hill’s Naomi Jagoda unpacks the legacy of the tax law and its impact on the midterm elections here.

 

The campaign:

• Republicans did spend time on the campaign trail touting the tax cuts and arguing that Democrats would raise taxes if elected. But other issues, such as immigration, often featured more prominently in their campaigns.
• Health care was a bigger part of Democratic campaigns, though the two issues were linked to some extent, with Democrats often arguing that the tax law’s increase in the debt would lead Republicans to pursue cuts in Medicare.

 

The election:

• Democrats ended up gaining more than 30 House seats. These gains involved defeating four Republicans on the Ways and Means Committee and flipping a number of seats in high-tax states such as New York, New Jersey, California and Illinois.
• “Certainly, I think it would have been better if we had complete deductibility of SALT,” said Rep. Leonard Lance (R-N.J.), who voted against the tax law because of its limits on deductions for state and local taxes. Lance lost his race for reelection.
• The affluent districts that contain many voters who claim the state and local tax deduction also are areas where Trump was unpopular, and some strategists see the overall displeasure at the president as a bigger reason why these districts went for Democrats.

 

LEADING THE DAY

Harris tax credit would help low, middle-income families at cost of $3T: A new tax credit proposed by Sen. Kamala Harris (D-Calif.) would primarily help low- and middle-income households but would reduce federal revenue by almost $3 trillion over the next decade, according to an analysis from the Urban-Brookings Tax Policy Center (TPC) released this week.

“Harris’ bill is extremely ambitious and, in many ways, an improvement over the today’s [earned income tax credit],” Howard Gleckman, a senior fellow at TPC, wrote. “But it also would be very expensive at a time when next year’s budget deficit is expected to top $1 trillion.”

Harris, a possible 2020 Democratic presidential candidate, rolled out legislation last month that would create a new refundable tax credit of up for low- and middle-income families. Naomi Jagoda breaks it down here.

 

Facebook reeling after damning NYT report: Facebook is being hit with fresh criticism from Capitol Hill as lawmakers reacted harshly Thursday to a New York Times investigation that detailed the company’s efforts to wield influence in Washington after becoming aware of Russia-linked activity on its platform during the 2016 presidential campaign.

The explosive article laid out how Facebook’s leadership was reluctant to confront the Russian efforts on its platform and was unprepared for the subsequent firestorm and fallout, which involved the Cambridge Analytica scandal.

“It’s alarming, it’s appalling,” Sen. Brian Schatz (D-Hawaii) told The Hill. “It shows that they were not behaving like a neutral platform. It shows that they were engaged in information operations. That they have engaged in a strategy to avoid any oversight or regulations. This is what you get when an American corporation gets so big and is exempted from any meaningful oversight.”

The Hill’s Harper Neidig and Ali Breland tell us more about Facebook’s latest controversy.

 

Graham set to take over Judiciary as Grassley takes Finance. Crapo staying at Banking: Sen. Lindsey Graham (R-S.C.) is poised to become the chairman of the Senate Judiciary Committee after Sen. Chuck Grassley (R-Iowa) announced Friday that he would step down to take over the chairmanship of the Finance Committee.

Grassley, who was fiercely criticized by Democrats for his handling of Kavanaugh’s nomination, said he’s looking forward to working on economic issues. He said he will focus on passing additional tax relief, expanding market access for farmers, manufacturers and service providers, and reforming health care.

Grassley’s move also all but ensures that Sen. Mike Crapo (R-Idaho) will remain chairman of the Senate Banking Committee.

More on the changes here.

 

Trump says China eager for trade deal: President Trump on Friday said “China wants to make a deal” with the U.S., but noted that any deal would have to be reciprocal.

“China wants to make a deal,” the president told reporters Friday in the Oval Office. “They sent a list of things that they’re willing to do, which was a large list,” he added, referencing a list of items on which China said it was willing to compromise.

“I think we’ll have a deal. We’ll find out very soon,” he continued. “We have to have reciprocal trade. We can’t have trade that’s meant for stupid people, and that’s the way they took advantage of our country.”

Context: Trump’s comments on Friday come one day after China’s Commerce Ministry said the country had resumed trade talks with Washington.

The Hill’s Chris Mills Rodrigo has more.

 

NEXT WEEK’S NEWS, NOW

• Congress will be out next week for Thanksgiving, but the Senate is expected to confirm Kathy Kraninger to be director of the Consumer Financial Protection Bureau soon after lawmakers return. Senate Majority Leader Mitch McConnell set up a procedural vote on her nomination Thursday, but it’s unclear when the Senate will formally confirm her.

 

GOOD TO KNOW

• Two senators are pushing a new bipartisan bill to crack down on illegal robocall scams, raising the maximum civil fine for violators to $10,000 per call.
• Rep. Larry Bucshon (R-Ind.) on Friday criticized a drug pricing proposal President Trump made last month, marking some of the first public resistance to the move from congressional Republicans.
• Congress is looking to provide emergency disaster funding to California as wildfires have left 60 people dead and rising, but members say it will take some time.
• White House budget director and acting CFPB Director Mick Mulvaney is openly angling to replace Wilbur Ross as Commerce secretary, according to Politico.
• Britain’s top manufacturers are working on backup plans as they brace themselves for a hard Brexit, despite Theresa May’s draft withdrawal agreement from the EU, reports the Financial Times.
• The Federal Reserve is close to the point of being “neutral” on interest rates and should predicate further increases on economic data, the central bank’s vice chairman Richard Clarida told CNBC Friday.

 

ODDS AND ENDS

• T-Mobile predicted that its $26 billion merger with Sprint could close as early as the first quarter of next year, despite significant opposition to the deal from consumer and labor groups.
• Kansas Gov.-elect Laura Kelly (D) said she believes the state will expand Medicaid next year and will put together a proposal to do so.

 

RECAP THE WEEK WITH ON THE MONEY 

• Monday: Funding fight to dominate dramatic lame duck | Trump blames Dems for stock slide | Trump hits Comcast after antitrust complaint | Officials reportedly moving closer to imposing auto tariffs
• Tuesday: Amazon taps New York, Northern Virginia for new offices | What it means for the DC area | Dems target vulnerable commerce chief | Earmarks look to be making a comeback
• Wednesday: Trump, Senate leaders to huddle on border wall funding | Fed bank regulator walks tightrope on Dodd-Frank | Koch-backed groups blast incentives for corporations after Amazon deal
• Thursday: Senior GOP senator warns Trump against shutdown | Treasury sanctions 17 Saudis over Khashoggi killing | HQ2 deal brings new scrutiny on Amazon | Senate confirms Bowman to Fed board