It's the 'most important day of the year' in Washington

It's a busy Tuesday in Washington — one analyst thinks it's the "most important day of the year in Washington (so far)."
First, the Senate Budget Committee will consider whether to advance the GOP tax bill to the Senate floor.
Also, President Donald Trump will meet with congressional leaders from both parties to start negotiations to avoid a government shutdown.
Finally, Jerome Powell, the nominee for Federal Reserve chairman, will begin confirmation hearings.

Three events will dominate the conversation in Washington on Tuesday — with potentially significant ramifications for the Republican Party's policy agenda.

The day will see key developments in the fight over the GOP tax bill, as well as in talks over a looming government shutdown. Elsewhere on Capitol Hill, confirmation hearings for Jerome Powell, the nominee for Federal Reserve chairman, will begin.

"The stakes may be high today, because the financial markets will get some clarity on the tax bill, on a potential government shutdown, and on the Fed's monetary policy," Greg Valliere, the chief strategist at Horizon Investments, wrote in a note to clients on Tuesday. "It's not a stretch to assert that today is the most important day of the year in Washington (so far)."

The tax bills next test

The Senate Budget Committee meets at 2:30 p.m. ET to consider the Senate GOP tax bill, the Tax Cuts and Jobs Act.

While Republicans control the committee, the bill is not guaranteed to make it out. Two Republican members of the group, Sens. Ron Johnson and Bob Corker, said on Monday that they would not vote for the bill in the committee unless there were changes before the vote.

If either defected, it would hold up the bill from consideration by the full Senate and slow the breakneck pace at which Republicans are trying to pass the bill — they've set a deadline of the end of the year.

Behind the scenes, Senate GOP leaders are furiously wrangling the 50 votes needed to get the bill through the full Senate. As of now, as many as eight Republicans have expressed concerns about the bill. Republicans hold 52 seats in the Senate and can lose only two members to pass the bill.

On one end is a group of senators concerned about the bill inflating the federal budget deficit. On the other are Republicans who want more generous tax cuts for pass-through businesses. Trying to balance those two competing interests, Valliere said, could introduce even more problems.

"What concerns us is that the fixes required to keep dissident senators happy will cost money, and a logical place to find money is the corporate tax, which may not reach 20%, as Donald Trump demands," Valliere wrote. "A top rate of 22% or 23% or a delayed phase-in still is possible. Any major changes could provoke Trump, who's a bull in this very delicately constructed china shop."

Shutdown negotiations begin in earnest

Also on the agenda is preventing a government shutdown by December 8.

Folded into the negotiations over funding will be a slew of other policy priorities from both parties.

Democrats will fight to include codification of the Deferred Action for Childhood Arrivals program, which grants temporary protection from deportation to young immigrants and whose recipients are known as Dreamers, and stabilization measures for the Affordable Care Act, the healthcare law better known as Obamacare.

Republicans are likely to fight for funding for border security — possibly Trump's long-promised wall along the US-Mexico border.

Trump is set to meet Tuesday with congressional leaders from both sides — House Speaker Paul Ryan, House Minority Leader Nancy Pelosi, Senate Majority Leader Mitch McConnell, and Senate Minority Chuck Schumer — to try to hash out some differences.

While Trump quickly caved to Democrats during shutdown negotiations in September, this round is less likely to be resolved so smoothly.

"Meeting with 'Chuck and Nancy' today about keeping government open and working," the president tweeted on Tuesday. "Problem is they want illegal immigrants flooding into our Country unchecked, are weak on Crime and want to substantially RAISE Taxes. I don't see a deal!"

"Schumer and Pelosi would face withering criticism from their troops if there isn't an immigration deal on 'the Dreamers,' and they also want a major increase in domestic spending — close to the enormous hike that's coming for the Pentagon," Valliere wrote. "So why cut a deal now? Why not wait until there's a very real threat of a shutdown? The likely drama is too irresistible to finalize a deal today."

Jerome Powell heads to the Hill

In the Senate Banking Committee, Trump's pick to be the next Fed chairman will begin confirmation hearings.

Powell, a current Fed governor, is expected to face questions on two fronts, according to Business Insider's Pedro da Costa.

For one, committee members are likely to ask Powell about his opinion on monetary policy and how quickly the Fed should raise interest rates. That will help lawmakers determine how he would handle the economy.

Secondly, they are likely to ask Powell about his plans for banking regulation. Republicans want to see Powell ease some of the post-financial-crisis rules on banks, while Democrats want Powell to maintain strong control.

In the end, however, Powell is seen as a continuation of current Fed policy and is expected to be confirmed, said Isaac Boltansky, an analyst at the research firm Compass Point.

"There will likely be a handful of rocky moments during this hearing, but it would take an unprecedentedly cataclysmic series of verbal miscues for this appearance to derail Mr. Powell's nomination," he wrote.

It's the 'most important day of the year' in Washington

The tax bills next test

Shutdown negotiations begin in earnest

Jerome Powell heads to the Hill

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