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" 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 will begin confirmation hearings to be the next Federal Reserve Chair.

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

The day will bring key developments on the fight over the GOP tax bill and on talks over the looming government shutdown. Elsewhere on Capitol Hill, Jerome Powell's confirmation hearings to be the next chair of the Federal Reserve 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, chief strategist at Horizon Investments, wrote in a note to clients Tuesday. "It's not a stretch to assert that today is the most important day of the year in Washington (so far)."

1. The tax bill's next test

The highlight of the day may come at 2:30 p.m. ET, when the Senate Budget Committee meets to consider the Senate GOP tax bill, the Tax Cuts and Jobs Act (TCJA).

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

If either of the two defect, it would hold up the bill from being considered on the full floor. And it would slow down the breakneck pace Republicans have used to try to pass the bill by the end of the year.

Behind the scenes, there is still furious wrangling as Senate GOP leaders attempt to find the 50 votes needed to get the bill through the full Senate. As of now, as many as eight Republicans have expressed serious concerns about the bill. Republicans can only lose two members for it to pass the Senate.

On one end is a group of senators who are concerned about the bill potentially inflating the federal deficit. On the other, some Republicans wants more generous tax cuts for pass-through businesses. Somehow balancing 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."

2. Shutdown negotiations begin in earnest

Also on the agenda is the looming federal government shutdown with a December 8 deadline.

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 (DACA) immigration program and stabilization measures for the Affordable Care Act, the law better known as Obamacare. Republicans are likely to fight for funding for border security - possibly Trump's long-promised wall.

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 and hash out some differences.

While Trump quickly caved to Democrats during the last 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 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!"

Valliere said the mostly likely scenario is a short-term funding bill to punt the shutdown to the end of December and allow more time to haggle.

"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."

3. Jerome Powell heads to the Hill

Then in the Senate Banking Committee, Trump's pick to be the next Federal Reserve chair will begin confirmation hearings.

Jerome Powell, the current Fed governor, will likely face questions on two fronts, according to Business Insider's Pedro da Costa. For one, Powell will be asked 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, Powell will face questions 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 the current Fed policy and will likely 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.