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Gutting the SALT Deduction is Terrible Policy 

With SALT deductions again – at least momentarily today – at the center of a Senate legislation battle, I wanted to write out in one place why reducing the SALT deduction is terrible policy, even though many progressives don’t seem to realize it. The SALT deduction is the part of the federal tax code that allows you to deduct state and local taxes when calculating your federal tax bill. Critics argue that the benefits go mainly to wealthy and very wealthy people. And that is true as far as it goes. But that’s going to be true in almost any revision of graduated income taxes. The key is that in many blue states it hits a lot of middle and upper middle class families too.

Now, boohoo for them right? Well, if it’s them versus subsidizing people’s out of control insulin costs, sure. But it’s not. That’s not the trade off. Here we get to the myopia of progressive opposition to or lack of support for SALT deductions. The SALT deduction was originally gutted in the 2017 Trump tax cut bill. That was done in part to make up revenue lost by giving huge tax cuts to the extremely wealthy. But that wasn’t the main reason. The authors of the bill correctly believed that gutting the SALT tax was a direct attack on the (mostly) blue states with high-tax/high-service governance. We all know that some states put more into health care, unemployment insurance, education, social services than others – all the basic stuff mostly or partly paid for at the states. That high-tax/high service model is what’s behind that. States that follow the low-tax/low-service model not only have fewer benefits. They also rely more on federal subsidies to provide what services and benefits they do provide. Which is to say that, in most cases, they rely on transfers from blue states to red states to cover part of the bill for their already stingy social safety nets.

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Trump’s Grievance Feedback Loop 

Democrats are now in a reasonably strong position to hold the Senate and perhaps expand their majority. A major reason for that is that Donald Trump took it upon himself and was largely allowed to pick the candidates. Almost all of them are terrible candidates: Oz, Vance, Masters, Walker. These are simply terrible candidates. They could win. But it will be in spite of their terribleness not because of it. Kelly, Warnock, Fetterman, Ryan are all pretty good candidates. In some cases, in terms of their fit for the state in question, they are near-perfect candidates. Tim Ryan may be the best example of that even though he’s the least likely of the four to win. But all would be in much more challenging contests if they were opposed by even generic, non-crazy-sounding Trumpite Republicans.

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Roe and Reform Matters Even More for the House Than the Senate

Since we started talking about Roe and Reform, the Democrat’s prospects in the Senate have improved significantly. Dems holding the Senate now seems a more likely outcome than not and a two-seat pick-up seems increasingly plausible. (The 538 polls-only forecast now lists a two-seat pick-up as the most likely outcome of the midterm.) But what about the House? I’ve had a number of people tell me about Roe and Reform, “well, that was a great idea for the Senate but what about the House?” … No, no, no. And no. While holding the Senate has always been within closer reach for Democrats, Roe and Reform has always been a more powerful tool for the House. The senators who are avoiding questions or holding back on Roe and Reform to avoid awkward moments with more hesitant colleagues are greatly reducing the odds of Democrats holding the House. This is especially so now that a two-seat Senate pick-up looks like an increasingly plausible election outcome.

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Kyrsten Sinema—Still Completely Terrible 

You’ve probably seen the news that Kyrsten Sinema has signed on to the Schumer/Manchin climate and inflation deal. She did so in exchange for nixing the carried interest loophole fix, an almost comically mercenary demand — a payoff to working families in the venture capital and private equity businesses. She also ramped back the corporate minimum tax with some depreciation tweaks. On the plus side, they seem to have made up the revenue and added a bit more with a small surtax on stock buybacks. A modest additional amount of spending goes to drought mitigation, which is of course a big deal for the Southwest.

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Sinema Gets On Board With Reconciliation Deal

Senate Democrats appear to have a deal that all 50 members of the caucus will support — including Sens. Joe Manchin (D-WV) and Kyrsten Sinema (D-AZ).

Here’s Sinema in a statement a few minutes ago:

We have agreed to remove the carried interest tax provision, protect advanced manufacturing, and boost our clean energy economy in the Senate’s budget reconciliation legislation. Subject to the Parliamentarian’s review, I’ll move forward.

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What Do You Say?

Yesterday TPM Reader NN wrote in to ask what exactly it makes sense to say if you’re calling a Senate office about Roe and Reform. I thought others might be interested too. So here’s the gist of what I told her.

First, whenever I’m operating in this mode there’s always a balance between journalism and advocacy, one in which I’m leaning a bit out of my comfort zone. In a case like this I’m not trying to convince you to do one thing or another. It is rather one of a handful of cases over the last couple decades where I believe my experience and knowledge of American politics gives me some insight into how a lot of people’s very strongly held beliefs can be applied successfully to the mechanics and idiosyncrasies of American politics. There’s no shortage here of passion or intensity of belief. But how to work the levers of our political and electoral structure can be less clear.

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Blue Trend #2 

Another probabilistic nugget. As of today, the polls-only version of the 538 Senate forecast has 52 Democratic seats as the most likely outcome of the election. That’s enough to pass a Roe law in January 2023 if Democrats hold the House. The House is almost certainly the bigger challenge at this point. But the two equation is firmly locked together. House candidates need the Senate pledges completely nailed down to run on Roe and Reform in their races, even though the filibuster itself has nothing to do with the House.

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Good Morning, Everyone! New York Times reporter Maggie Haberman confirmed her disgusting scoop on Trump’s tendency to flush documents down the toilet–a blatant violation of the Presidential Records Act–with photos she recently shared with Axios, which published the pics just this morning.

  • The photos reportedly show two different toilets with Trump’s notes just chillin’ at the bottom of the bowl.

Senate Passes Historic Climate Bill: Senate Democrats successfully passed their sweeping reconciliation bill on climate investment, taxes and drug pricing, aka the Inflation Reduction Act of 2022, on Sunday.

  • Senate Republicans stripped a provision in the bill that would’ve put a $35 cap on insulin for private insurers. However, the $35 cap provision on insulin for people 65 and older on Medicare survived.

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The Josh marshall podcast

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Drips From The Leak

Josh and Kate discuss new data points on the Dobbs leak and the shifting prognostications of the midterm elections.

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