Healthcare Plan Collapse Rekindles Doubts About Trump Economic Agenda
The dollar plunged after Republicans in Congress abandoned their plan to overhaul Obamacare this week.
The plan to “repeal and replace” the Affordable Care Act collapsed after Senators Mike Lee and Jerry Moran joined fellow Republicans Susan Collins and Rand Paul opposing it. In fact, “repeal and replace” was a misnomer. The Republican plan kept many key elements of Obamcare in place. It was more of a Republican revamp than any kind of repeal.
Nevertheless, pundits and analysts widely viewed the failure to get healthcare reform done a major stumble for Republicans, and it seems to cast doubt on the Pres. Trump’s ability to advance his ambitious economic agenda. Reuters put it this way:
Republican’s healthcare failure spelled uncertainty for Trump’s other top agenda items of tax reform and an infrastructure overhaul, leaving the president without any major legislative accomplishments six months into his tenure.”
Trump tried to put a positive spin on things, as Republicans in Congress talked of simply repealing the massive federal healthcare scheme.
“As I have always said, let Obamacare fail and then come together and do a great healthcare plan. Stay tuned!” he tweeted, blaming Democrats and a few members of his own party.
But it seems unlikely Republicans in Congress can muster the political will to scrap the ACA completely. In fact, one has to wonder if it can really get anything significant done at all.
Some analysts have said all along counting on Trump to bring about significant change was foolhardy. As the House wrestled with Obamacare repeal last April, Jim Rickards said implementation of the Trump economic agenda was “sheer fantasy.”
The idea that Congress and the White House can somehow revive Obamacare repeal, reform the Internal Revenue Code, pass a major spending bill, raise the debt ceiling cap, and extend the continuing resolution to keep the government going until the budget is complete is sheer fantasy. It’s more likely that the Congress will descend into partisan fights between Democrats and Republicans, and internal fights among various Republican factions.”
Nothing has changed over the last few months to cast any doubt on Rickards’ assessment.
If Trump doesn’t show signs of progress on the economic front soon, it could create major problems in the markets. The plunge in the dollar was just a little foreshadowing of what could happen if Americans really lose faith in the Republicans.
In fact, it could pop the stock market bubble. On the campaign trail, Trump called the stock market a “big, fat, ugly bubble.” He was right. Last spring, Yahoo Finance reported on analysis showing that 93% of the entire stock market move since 2008 was caused by Federal Reserve policy. Nothing has fundamentally changed. But once Trump took office, he immediately started taking credit for the stock market rally.
In the wake of Trump’s election, stock markets continued their meteoric rise. Some have dubbed it the Trump Trade. It rests on the idea that the president’s proposed policies of lower taxes, infrastructure spending, Obamacare repeal, and decreasing government regulations will juice the economy. But if the politics start to unravel, the Trump trade might unwind right along with it.
During a recent interview at International Metal Writers Conference, Peter Schiff said Trump supporters have allowed themselves to get caught up in unreasonable optimism. We see this reflected gold sales here in the US.
The people who typically buy gold in America voted for Trump, and they’re no longer worried about the economy. So they’re not buying gold. They’re buying stocks instead, and I think they’re making a big mistake. They should be selling their stocks and buying even more gold.”
The current political climate seems to support Peter’s contention. If Republicans can’t even pass modest reforms to Obamacare, how will they ever push through substantive tax reform? It just doesn’t seem likely. Peter said those who really believe there will be significant change suffer from “false optimism.” Trump inherited a mess. Republicans in Congress aren’t going to fix it.
I think a lot of people actually believe this is a game-changer, that he’s going to drain the swamp, that he’s going to solve all the problems, and people are now optimistic. Unfortunately, none of this is true. Nothing that Trump is likely to do is going to make any difference as far as the course we are on … Government is going to continue to grow. The Fed is going to keep printing money. We are continuing to head off the edge of an economic cliff.”
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