Trump signs legislation that gives Congress more time for tax reform

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WASHINGTON -- President Trump on Friday signed legislation providing $15.25 billion in hurricane aid for victims of Hurricanes Harvey and Irma as well as a continuing resolution and debt limit suspension that will last 90 days through Dec. 8.

The House sent the legislation to the White House after voting 316 to 90 to more than double the amount of hurricane aid it approved earlier in the week.

The Senate increased the amount of hurricane aid in a 80-17 vote on Thursday. It includes $7.4 billion for Community Block Development Grants for infrastructure and housing, $7.4 billion for the Federal Emergency Management Agency, and $450 million for the Small Business Authority disaster loan program.

The Senate also added the debt ceiling and the temporary appropriations measure that will keep the government operating past the Sept. 30 end of fiscal year 2017.

Trump and congressional leaders agreed to the package earlier this week at a White House meeting. The president surprised Republican congressional leaders at that session by agreeing to a 90-day suspension of the debt limit favored by Democratic leaders instead of longer-term proposal made by Republican lawmakers and Treasury Secretary Steven Mnuchin.

However unexpected it might have been, the bipartisan deal moved quickly through Congress.

The deal will allow Congress to consider tax reform instead of spending September debating short-term appropriations and the debt ceiling.

The Senate Finance Committee has scheduled a hearing on individual tax reform for Thursday. Representatives will include two fellows from the American Enterprise Institute as well as a representative of Pioneer Realty and Lily Batchelder, a professor at New York University and former majority chief tax counsel on the committee when it was chaired by then-Sen. Max Baucus, D-Mont.

House Speaker Paul Ryan, R-Wis., said Thursday that the template for tax reform that House Republicans plan to release this month will propose effectively doubling the standard deduction, which would offset the possible elimination of the state and local tax deduction for “middle income people.’’

The possible elimination of that deduction, known as SALT, is expected to be one of the major political battles in the debate over tax reform, with state and local governments fighting to keep it.

Groups such as the U.S. Conference of Mayors have been lobbying for the preservation of the SALT deduction with Republican House members representing states with high taxes, including New York and New Jersey.

Another battleground could be the tax-exemption for municipal bonds. Republican lawmakers may consider capping the value on the tax exempt bonds, reviving a proposal made by the Obama administration to impose a 28% cap.

The debt ceiling deal approved by Congress will allow Treasury to quickly resume the sale of state and local government series securities. Sales were suspended in March as one of the extraordinary measures the department took to avoid hitting the debt ceiling. SLGS are specially tailored Treasury securities that state and local officials can buy for refunding escrows to avoid generating arbitrage.

“In the past, when the debt limit is raised, we reopen SLGS,’’ Treasury spokesman Bradley Benson told The Bond Buyer on Thursday.

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