US: Questions raised about much of the administration's economic program – BBH

Analysts at BBH point out that like some Fed officials, many investors have made assumptions about fiscal policy in their economic forecasts and investment strategies and the inability to agree on the alternative national health care insurance raises questions about much of the administration's economic program.  

Key Quotes

“The markets may have held up well in the face of the news before the weekend as some positions had already been pared and there is some hope that the next priority, tax reform, will be more successful.”

“We are skeptical.  First, on practical grounds, the savings from abolishing taxes associated with the Affordable Care Act was going to be an important source to fund tax reform.  That is why it was embraced first.  Second, on political grounds, the inclusion of the border adjustment tax, which is the other major source of funding for the anticipated tax cuts remains highly controversial.  In fact, the same Republican group that sank the Trump/Ryan alternative, the Freedom Caucus, is opposed to the border adjustment tax.”

“Third, there is a question of timing.  Tax reform cannot be taken up meaningfully over the next couple of months. This also the assessment of the chairman of the House Ways and Means Committee, which is its purvue.  There are some more immediate issues that must be dealt with first. They include approving a budget for the remainder of the fiscal year.  The one that President Trump first proposed which included several controversial cuts, including of substantial cut of the State Department, while funding a large increase in defense and security, including infamous Wall, will be another fight.”