Supreme Court to hear case over Trump’s revised travel ban

Doug Chin is pictured. | AP Photo

“We have always known this case would ultimately be decided by the United States Supreme Court,” Hawaii’s attorney general, Douglas Chin, said in a statement.

The Supreme Court announced on Friday that it would take up the legality of the revised travel ban policy that President Donald Trump issued in September.

The decision was expected because the justices voted, 7-2, in October to allow the president’s directive to take effect despite a partial injunction that a district court judge imposed to block the measure.

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A panel of the 9th U.S. Circuit Court of Appeals ruled last month that Trump exceeded his authority in issuing the proclamation, which limits issuance of visas to eight countries, six of which are majority Muslim.

The justices are expected to hear arguments on the issue in April and to render a ruling in the case by the end of June.

While the 9th Circuit decision steered clear of allegations that Trump’s order is an unconstitutional product of his campaign promises to enact a Muslim ban, the justices’ brief order granting review of the case told the parties to address the question of whether the president’s issuance of the order violated the Constitution’s ban on establishment of religion by denigrating Islam and its followers.

The Trump administration asked the justices to take up the case, which was brought by the State of Hawaii and the leader of a Muslim group in the state. Those parties opposed Supreme Court review, but filed their response brief early in an apparent bid to ensure that if the justices took the case, the case would be argued this term.

“We have always known this case would ultimately be decided by the United States Supreme Court,” Hawaii’s attorney general, Douglas Chin, said in a statement. “This will be an important day for justice and the rule of law. We look forward to the Court hearing the case.”

Several other suits filed in Maryland over the September travel ban are the subject of appeals to the 4th Circuit, which heard arguments last month but has yet to issue a ruling.

The September order was one in a series of travel ban directives that Trump has issued with the stated goal of preventing terrorists from entering the U.S.

The first, issued one week after Trump took office, was almost immediately blocked by several judges amid a chaotic rollout.

After vocally protesting and disparaging the court decisions, Trump elected to withdraw that order in March and issue a new one that slightly narrowed the list of affected countries. Courts also blocked much of that directive, but in June the Supreme Court issued a temporary order that allowed Trump to restrict visa issuance but exempted foreigners with “bona fide” U.S. ties.

Trump acted again in September, replacing the earlier limits with a varied set of restrictions on travelers from Chad, Iran, Libya, Somalia, Syria and Yemen, as well as North Korea and Venezuela.

A federal judge in Hawaii blocked the bulk of that directive nationwide, although the 9th Circuit eventually narrowed the injunction to cover only foreigners with U.S. ties. A federal judge in Maryland imposed a similar order.

For some immigrants, a wrenching dilemma: Stay or leave?

When the Trump administration decided to end protected status for people from El Salvador, Hector Soriano faced a wrenching decision and a big gamble.

In the 17 years since he gained protection from deportation — giving him the right to work legally in the U.S. — Soriano established a successful landscaping business and fathered four young children, all U.S. citizens. Recently, Soriano, 42, and his fiancee, Jennifer Carlsen, moved up their wedding plans, knowing that marriage to a U.S. citizen generally provides a sure path to legal status for immigrants.

But because Soriano first came to the U.S. illegally, in 1999, immigration law says he will have to return to El Salvador before he can apply for a green card.

“If it wasn’t for that, I would have done it a long time ago,” said Soriano, of Bensalem, Pa., outside Philadelphia. “The reason I didn’t do it — if I had to leave the country, I was afraid they wouldn’t let me back in. I can’t afford to leave her, and leave my kids.”

Soriano and Carlsen have thought about that option, but it would require him to give up his business and the 120 clients he’s gathered through years of work. “It’s a really hard predicament,” Carlsen said. “If it came right down to it, we’d have to do whatever was necessary to keep our family together.”

The irony of the quirky system is not lost on them. “We border Ohio,” Carlsen says. “It’s right there. It’s so frustrating.”

Twitter: @jtanfani

New tax law could be victim of shutdown

Mick Mulvaney is pictured. |AP Photo

Director of the Office of Management and Budget Mick Mulvaney speaks during a briefing on a possible government shutdown at the White House. | Evan Vucci/AP Photo

Government funding will lapse after Friday unless lawmakers pass another short-term spending bill.

A prolonged federal government shutdown could throw into turmoil the implementation of the new tax law by the IRS and disrupt the start of the tax filing season.

A contingency plan released by the Treasury Department on Friday doesn’t mention activities on implementing the new tax law as exempt from a shutdown, but some tax season planning would continue.

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The revenue agency already faces a slew of operational challenges every day, given steady drops in staffing and funding over the better part of the past decade. As it stands now, the agency’s budget is on track to decline to about $11.1 billion without anything extra funding from Congress, down from about $12.5 billion in 2010 when not adjusted for inflation.

So if the federal government shuts its doors at the end of Friday, the blow could be harder at the IRS than at many other agencies.

“If Congress would like the IRS to be able to implement the massive tax reform they just did, there have to be people there doing it,” said Jennifer MacMillan, an enrolled agent in Santa Barbara, Calif., who chairs the Government Relations Committee of the National Association of Enrolled Agents.

“Congress has asked for quite a bit out of the IRS, and if they shut them down it’s just going to delay things,” she said.

The massive tax law requires the IRS to draft dozens of rules and procedures for changes to the corporate and individual sides of the tax code.

Government funding will lapse after Friday unless lawmakers pass another short-term spending bill. That means lawyers figuring out how to put new tax rates and rules into effect could be sent home. Audits would stop. And while the agency would probably keep accepting checks, refunds would stop going out the door.

But prep work for 2019 tax forms could continue, as would law enforcement and work on litigation. OMB Director Mick Mulvaney suggested Wednesday that the tax form work could include implementation of the tax law, and played down the implications of a short-term shutdown.

“But again, the bottom line is if there is a shutdown and it would impact the implementation of the tax bill, it would be very temporary in nature,” he said on Fox Business Network’s “Varney & Co.” “Those folks simply wouldn’t be allowed to work on it for the day or two the government is shut down. So writ large, the impact on the overall tax bill would be negligible, if not zero.”

Only 43.5 percent of the agency’s 80,565 officials and employees, those designated as essential, would stay on the job. Everyone else would be sent home and barred from working there.

The chief counsel’s office, which MacMillan said plays a key role in interpreting the new tax law, would stay open, but its “primary responsibility during a lapse is to manage pending litigation, the time-sensitive filing of motions, briefs, answers and other pleadings related to the protection of the government’s material interests,” according to the plan.

Mark Mazur, a former Treasury Department official who now directs the Urban-Brookings Tax Policy Center, said in an interview before the contingency plan came out that disrupting planning for the new tax law would hit taxpayers, from individuals to major corporations, who want to know the new rules of the road in order to comply or decide how to organize their business.

“Everything gets pushed back in time, and that is not a good way to run things,” said Mazur, who was the Treasury Department’s assistant secretary for tax policy during the last shutdown, in 2013.

A shutdown this year would deliver “a gut punch” to the IRS considering the constraints already straining implementation and tax filing season demands, National Treasury Employees Union President Tony Reardon, said in a statement earlier this week.

“However, it’s crucial to understand that those most harmed in this scenario would be the American taxpayer, businesses, and the tax preparer community who all need to be able to be in contact with the IRS,” he said.

The 2013 shutdown lasted 16 days. During that time many automated processes continued at the IRS, which accepted returns and processed payments over the course of the shutdown, but refunds weren’t issued while the doors were closed.

Operations at the IRS didn’t return to normal for a while afterward, as it took several days for returning employees to fully resume their regular duties and reactivate systems, said Karen Hawkins, who ran the IRS’ Office of Professional Responsibility when the last shutdown happened.

A shutdown lasting only a couple of days would prove less problematic for rulemaking and tax filing, said Ed Karl, vice president of taxation for the American Institute of CPAs. But the specter of shutdown threats resurfacing deeper into tax filing season if Congress can’t agree on a long-range funding plan would cause disorder, he said. Taxpayers have until April 17 to finish their taxes this year.

Even normal conditions at the IRS are anything but smooth these days, Hawkins said.

“Under the best of circumstances, that agency is pulled in 12-plus directions a day in accommodating Congress’s demands for information, the public’s need for guidance, their mission requirements to collect the right amounts of tax and to get into disputes when people disagree with what the right amount of tax is,” she said. “They’ve got an enormous amount of activity in the normal course.”

IRS personnel will do their best to be prepared ahead of the Jan. 29 start of tax filing, said Hawkins, a tax lawyer who said she was offering her personal opinion and not speaking in her role as chair of the American Bar Association’s tax section. Agency employees’ public commitment means they’ll bend over backwards to make that starting date happen, she said.

GOP lawmakers on Capitol Hill are hoping to strike a deal that would avert all of this, at least for now, but their solution appears temporary yet again and isn’t assured of passage. The proposed short-term fix would only patch funding needs for another four weeks.

The current funding extension to Jan. 19 is the result of the last short-term remedy from a month ago. Lurching along a month at a time presents its own problems, Mazur said.

“Even if there is no shutdown, it’s incredibly disruptive because you’ve taken people from the finance office and the management office and operations to figure out who has to come in next Monday if we don’t have funding,” Mazur said. “That’s time you never get back.”

Feds intend to re-try Menendez

Robert Menendez is pictured. | Getty Images

Federal authorities allege Robert Menendez did political favors for Salomon Melgen in exchange for hotel stays, private jet flights and hundreds of thousands of dollars in political contributions. | Nicholas Kamm/Getty Images

Two months after a jury failed to come to a verdict in the corruption case against Democratic Sen. Robert Menendez and co-defendant Salomon Melgen, the Justice Department on Friday said they want to retry him.

The department filed a one paragraph notice of intent in federal to retry the case.

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“The United States files this notice of intent to retry the defendants and requests that the Court set the case for retrial at the earliest possible date,” reads the notice, signed by Annalou Tirol, acting chief of the public integrity section. “Defendants Robert Menendez and Salomon Melgen have been indicted for bribery and corruption by two separate grand juries properly empaneled in the District of New Jersey. The first trial ended in a mistrial with a deadlocked jury. An early retrial date is in the best interests of the public, and the United States is available to schedule a retrial at the Court’s earliest convenience.”

A jury deadlocked on Nov. 16 after a two-and-a-half month trial. One juror told reporters that the jury was 10-2 in favor of acquittal.

Menendez is up for reelection this year.

Federal authorities allege Menendez did political favors for Melgen, a Florida eye doctor, in exchange for hotel stays, private jet flights and hundreds of thousands of dollars in political contributions.

Shutdown threatens Trump’s economic winning streak

New York Stock Exchange is pictured. | Getty

Wall Street is largely shrugging off the shutdown threat. After closing over 26,000 for the first time this week, the Dow was off just slightly on Friday as the clock ticked down toward the midnight Friday deadline to keep the government open. | Bryan R. Smith/AFP/Getty Images

‘This would be like getting a couple dents in our nice, shiny fender.’

If Republicans and Democrats can’t cut a last-minute deal, a federal government shutdown would probably exact at least a small toll on the U.S. economy.

Furloughed federal workers and frozen government contracts, among other damage, would likely draw billions of dollars out the economy for every day the government remains shuttered. The stock market — once described by President Donald Trump as a “big fat ugly bubble” — could also find a reason to stage a sell-off that many on Wall Street believe is long overdue.

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Generally, brief government shutdowns are much less damaging to the economy, and overall business and consumer confidence, than fights over raising the nation’s debt limit that could end in catastrophic default. But they still exact pain, analysts say.

And depending on how long a shutdown lasts, it could slice away some potential economic growth in the first quarter of the year, possibly limiting the power of one of Trump’s favorite talking points. It also could slow some of the current economic tailwind provided by the GOP’s big corporate and individual tax cut bill.

“A shutdown, particularly if it’s short, wouldn’t be a catastrophic event,” said Beth Ann Bovino, chief U.S. economist at Standard & Poor’s. “The economy is chugging along at a pretty nice pace. This would be like getting a couple dents in our nice, shiny fender.”

S&P issued a report in December, when another shutdown loomed, estimating that each week the government remained shut would cost the economy $6.5 billion, or a reduction of 0.2 percent in potential GDP growth.

Most of this would come from the hundreds of thousands of federal workers who would be furloughed and miss paychecks. Federal workers would likely receive that back pay, but productivity lost during the shutdown would never come back.

Shutdowns also freeze work by federal contractors, hitting both small and large businesses that depend on government revenue. Unless the Trump administration succeeds in plans to keep federal parks open, a shutdown also could impact tourism dollars that would likely never get spent, taking a bite out of both federal government revenues and those of small businesses around the nation’s parks.

Estimates of the last government shutdown in October of 2013 found that the 16-day standoff cost the economy anywhere from 0.2 percent to 0.6 percent in economic growth. S&P estimated it took $24 billion out of the economy. Still, the U.S. economy wound up growing 4 percent in the fourth quarter of that year, suggesting any impact was largely temporary. Business and consumer confidence, however, did take a hit from the 2013 shutdown, something that could happen again if the current impasse drags on for more than a couple of weekend days.

“The question really is whether it affects confidence and markets and is there any spillover from that into the economy,” said Jim O’Sullivan, chief U.S. economist at High Frequency Economics. “In recent years the really more extreme impact was from the debt limit sagas more than just shutdown threats. But even in the 2013 shutdown you had a drop in confidence and an increase in uncertainty over the ability of policy makers.”

So far, Wall Street is largely shrugging off the shutdown threat.

After closing over 26,000 for the first time this week — just eight days after breaking 25,000 — the Dow was off just slightly on Friday as the clock ticked down toward the midnight Friday deadline to keep the government open.

Both the Nasdaq and S&P were up slightly at midday on Friday even as a shutdown seemed more likely by the moment. Investors say this nonchalance is based on the notion that any shutdown would be short and have minimal effect.

Very little has been able to stand in the way of a relentless stock market rally based on synchronized global growth, tax and regulatory cuts in the U.S., continued easy money policies from central banks and the anxiety of investors who don’t want to miss out on the good times. A short shutdown does not seem immediately likely to make much difference.

“In the U.S., we are inured to this screwed up, over-tweeted, asymmetrical, political process. The rest of world fails to understand our process, so they may sell off,” said David Kotok, chief investment officer at Cumberland Advisors. “Any deep-dive sell off is a buying opportunity.”

There was some impact of the impending shutdown to be found in markets, however. Gold prices rose and the dollar fell on Friday, suggesting investors were seeking safe-haven assets amidst political uncertainty in the United States.

The dollar has been falling in recent weeks, surprising some analysts who would expect it to rise along with interest rates as the Federal Reserve continues its path of tightening monetary policy. Tax cuts and faster economic growth should also be pressing the dollar higher. Part of the reason that’s not happening could be political uncertainty.

While a shutdown may not be the kind of trigger that could cause mayhem in global markets, a big fight over the debt limit, which could emerge as soon as next month, would be much more worrisome.

So far, analysts do not believe that kind of crisis will emerge. “Despite the positively noxious conversation on Capitol Hill currently, we firmly believe that Congress will not play chicken with the debt ceiling once again,” Compass Point Research and Trading’s Isaac Boltansky wrote in a note to clients on Friday.