What to Know in Washington: Shrinking Refunds Haunt GOP Tax Law

Getting a tax refund is a springtime tradition that Americans love as much as Easter candy.

But fewer people are getting refunds this year and that’s causing angst for Republicans who want to convince voters that the 2017 tax overhaul really did give them a tax cut. If middle America can’t be persuaded, it could have big implications for the long-term viability of the overhaul, and how consumers spend their extra income.

Republicans are on the defensive. The once little-noticed ritual of releasing weekly refund data during the tax filing season has become politically fraught, with unfavorable data being released late on a Friday night, and better figures a week later causing Treasury Secretary Steven Mnuchin to take to cable news to tout success.

“Taxes are down so refunds should be down,” Mnuchin told the House Ways and Means Committee yesterday. Mnuchin added that many people did not change their withholding and so refunds are consistent with last year.

Democrats see an opportunity to use the drop in refunds to hammer Republicans in the 2020 campaign for seeming to favor the wealthy and denying middle- and lower-income people the refunds they count on. And polling shows the GOP has work to do. The tax law is the Republican Party’s signature legislative achievement, but still only about 39 percent of people approve of it, according to a series of polls conducted this year. Read more from Laura Davison.

Meanwhile, Democrats on the House and Senate tax-writing panels have found some places where they agree with Mnuchin. Mnuchin appeared before both committees yesterday, in planned hearings on the latest White House budget proposal. Democrats will need bipartisan support and administration buy-in to make progress on their top priorities in a divided government. Lawmaker questions seemed to acknowledge the need for some consensus. Read more from Allyson Versprille and Kaustuv Basu.

Photographer: Daniel Acker/Bloomberg

More Politics & Policy

Can Beto Break Through: Beto O’Rourke’s highly public journey to the 2020 presidential race landed him in Iowa with a big splash yesterday. Now, Democrats are waiting on him once again — this time to see if he can deliver on the hype. His campaign kick-off fit the image cultivated during O’Rourke’s unsuccessful Senate bid. Presaged by a glossy Vanity Fair cover, Day One opened with a video announcement, continued with a televised appearance before cheering supporters at a coffee shop and ended with a marathon sprint a cross the state.

Also true to the former Texas congressman’s style, the roll-out had a loose, impromptu feel that raised questions about whether he’s fully ready for a national campaign. The announcement’s timing shifted abruptly in the middle of the night, and the candidate himself spoiled any surprise by texting the news to a hometown TV station. His entire schedule wasn’t made public and there was scant evidence of staff support at events. His answers to questions were heavier on biography than policy. Read more from Jennifer Epstein and John McCormick.

Senate Rejects Trump Border Emergency: The Senate yesterday voted to block Trump’s declaration of a national emergency to pay for a wall at the border with Mexico, setting up his first veto and highlighting a growing willingness by Republicans in the chamber to split with their president. “I look forward to VETOING the just passed Democrat inspired Resolution,” Trump wrote on Twitter after the vote, while also thanking the “Strong Republicans” who voted against it. Earlier, he predicted at the White House that Congress will be unable to overturn his veto. Read more from Laura Litvan.

Boeing’s Advocacy Operation: Boeing’s investment in Washington lobbyists will be tested as the company confronts questions about the safety of its 737 MAX airliner and about the way it has fulfilled its contracts with the U.S. government. The aerospace company is the No. 2 supplier of goods and services to the federal government, to the tune of about $30 billion per year. Only Lockheed Martin sells more. The company spent more than $15 million to advocate before federal policymakers on Capitol Hill and regulatory agencies in 2018 — on issues including defense, trade, and environmental policy, according to disclosure reports. That figure was the lowest amount the company had spent on lobbying by the company over the last decade, down from its all-time-high of $21.9 million in 2015. Read more from Megan R. Wilson.

What Else to Know Today

Terrorist Attacks on Two New Zealand Mosques: New Zealand has suffered its worst mass shooting in modern history, with 49 people dead and more than 20 seriously injured after a terrorist attack at two mosques in the South Island city of Christchurch. A man in his late 20s has been charged with murder and should appear in a local court tomorrow morning, Police Commissioner Mike Bush told a news conference late on Friday. Three other armed people were apprehended but police are unsure of their possible involvement and are still working through events, he said. Read more from Matthew Brockett and Tracy Withers.

Brazil Seeks Nuclear Pact: Brazil’s energy minister said the country plans to sign an accord next week with Trump that could pave the way for U.S. companies to explore the Latin American country for uranium and invest in new nuclear-power plants. Bento Albuquerque, a former admiral who once ran the Brazilian Navy’s atomic program, met with U.S. Energy Secretary Rick Perry in Houston this week and discussed creating a bilateral forum on energy cooperation that would include nuclear projects. That’s expected to be part of a memorandum signed by Brazilian President Jair Bolsonaro on his first trip to the White House next week, Albuquerque said yesterday in an interview. Read more from Sabrina Valle.

Kim Jong Un Rethinks U.S. Nuclear Talks: Kim Jong Un will soon decide whether to halt nuclear disarmament talks with the U.S., a top North Korean diplomat said, in the latest sign of fallout from his failed summit with Trump last month. Vice Foreign Minister Choe Son Hui told reporters and diplomats today in Pyongyang that North Korea blamed the U.S.’s “gangster-like” demands for the breakdown in talks, according to the Associated Press. Choe said Kim would clarify his position on whether to continue his 15-month freeze on bomb and missile tests “in a short period of time,” the AP reported. Read more from Jihye Lee.

Meanwhile, Trump’s envoy for North Korea called on United Nations Security Council members to stay united in pressuring Kim’s government to give up its nuclear weapons following the failed talks between Trump and Kim in Hanoi last month. Special Representative Stephen Biegun briefed council members at the U.S. mission in New York yesterday, and stressed the importance of ensuring that U.N. sanctions are maintained and fully implemented amid ongoing North Korea denuclearization talks, according to a diplomat who was present at the meeting and requested anonymity to discuss it. Read more from David Wainer.

Trump-Xi Meeting Delayed: A meeting between Trump and President Xi Jinping to sign an agreement to end their trade war won’t occur this month and is more likely to happen in April at the earliest, three people familiar with the matter said. Despite claims of progress in talks by both sides, a hoped-for summit at Trump’s Mar-a-Lago resort will now take place at the end of April if it happens at all, according to one of the people. China is pressing for a formal state visit, which traditionally takes place in Washington, rather than a lower-key appearance just to sign a trade deal, the person said. Read more from Jenny Leonard, Jennifer Jacobs and Jeffrey Black.

Liberals Keep Narrow Wins on High Court: Republican-nominated justices on the U.S. Supreme Court have outnumbered their Democratic-appointed colleagues throughout John G. Roberts’ tenure as chief justice. Yet more than half the court’s 5-4 decisions over those 14 years have involved majorities other than five Republican appointees prevailing over four Democrats. Up until last term, liberal justices relied primarily on Reagan-appointed Anthony Kennedy to notch victories in these cases. Kennedy crossed the ideological line six times more than the next closest justice in these five-justice majorities, according to a Bloomberg Law analysis of all 5-4 rulings in the Roberts era. But even with Kennedy’s retirement, there’s still potential for the court’s outnumbered liberals to cobble together majorities in certain types of cases, based on past votes and the newest justices’ histories. Read more from Kimberly Strawbridge Robinson.

Organized Labor Opposes NAFTA Replacement: The AFL-CIO, the nation’s largest federation of labor unions, won’t support the United States-Mexico-Canada Agreement trade deal if an early vote is pursued, the organization announced yesterday. The federation’s executive council voted to oppose the deal after a two-day meeting, saying that it lacks sufficient enforcement mechanisms that would strengthen labor conditions in Mexico. More work needs to be done to strengthen the USMCA’s labor rules, including adding mandatory monitoring and reporting of labor conditions, the AFL-CIO Executive Council said in a statement. Read more from Andrew Wallender.

To contact the reporter on this story: Zachary Sherwood in Washington at zsherwood@bgov.com

To contact the editors responsible for this story: Loren Duggan at lduggan@bgov.com; Giuseppe Macri at gmacri@bgov.com

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