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What Ever Happened to Tax Reform?

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Remember tax reform?

It seems like a lifetime ago. But it was just last month that the Trump administration rolled out its ambitious tax reform plan. The single-page blueprint was really more of an outline and offered little in the way of specifics. Still, it sparked hope that Republicans would push forward with significant tax reform this year.

Since then, we’ve heard pretty much nothing. Talk of significant tax reform got sucked into a black hole of FBI director firings and Russia probes. In fact, many analysts are starting to doubt Republicans will be able to get tax reform done at all.

The House Ways and Means Committee held the first in a series of public hearing on tax reform Thursday amid skepticism that substantive changes will come to pass. US News said Congress may be “chasing a unicorn,” noting Republican leadership doesn’t appear to be on the same page as Trump, and neither camp has Democratic support that could lead to permanent tax overhaul.

The chances of getting tax reform through Capitol Hill in a timely manner has been thrown into question by the consistent chaos surrounding the Trump administration, largely centered on questions about ties between the president’s campaign and Russia. Markets tumbled on Wednesday and improved only marginally Thursday as investors began to question whether Trump’s promised private sector reforms would actually come to fruition.”

A Reuters report also sowed seeds of skepticism.

In late April, the administration put out a one-page blueprint of its tax reform plans but faces hurdles in getting consensus on them in Congress. Investors have begun to doubt the size and scope of tax cuts the administration may be able to pass and the likelihood of any swift action.”

Nevertheless, House Speaker Paul Ryan insists tax reforming is happening. During a recent news conference, he bristled when asked if the timeline could stretch beyond 2017.

I don’t think this is the case. Our goal, and I believe we can meet this goal, is calendared 2017 for tax reform. And I think we’re making good progress.”

But it looks like political reality may ultimately flatten Republican optimism. After all, weren’t we going to have repeal of Obamacare within the first 100 days?

Despite the House passing an bill that tinkers with the Affordable Care Act – make no mistake, it is not a repeal – the Senate is taking its own sweet time crafting healthcare legislation. It seems certain it will look nothing like what the House put forward. Even if the Senate passes a bill, Congress will have to figure out a way to reconcile the plans. In other words, we may not even get healthcare legislation signed into law, much less tax reform – a much more ambitious and contentious undertaking.

Meanwhile, the Trump administration is embroiled in turmoil. Actually, turmoil seems to be modus operandi for Trump. But its boiled to a new level since he fired Comey. There is even talk of impeachment. This is not a political environment conducive to passing “once in a generation” legislation.

Investors and economic analysts put a lot of stock in Trump’s economic reforms. Some even dubbed the post-election stock market gains the “Trump-bump.” But from the looks of things, we may end up in a Trump ditch.

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