Here’s What To Make Of Thursday’s Failed Attempt To “Repeal And Replace” Obamacare

While Donald Trump was busy playing “big boy trucks” on the White House lawn, Congress was busy not voting on his bungled attempt to “repeal and replace” Obamacare.

And so: epic fail.

That’s what he gets for trying to be a smart ass, according to Rep. Ileana Ros-Lehtinen (R-Fla.) who told CBS4 in Miami the following:

Oops.

Now the reflation narrative/”Trump trade” is in serious jeopardy as markets question what this presages for tax reform and other growth-friendly initiatives. Spoiler alert: nothing good.

And so, as we prepare ourselves for (much) more log rolling/political jockeying/posturing and all the market-moving headline hockey that comes with it, here’s Goldman’s take on today’s disappointing outcome.

Via Goldman

BOTTOM LINE: The House vote on the health bill has been delayed until at least tomorrow (March 24) and looks likely to slip to next week (March 27-31). House passage looks likely in the next two weeks (60% probability) but enactment into law is unlikely before May, in our view. This would delay tax legislation but we do not believe it threatens eventual passage of a tax bill.

MAIN POINTS:

1. The House vote on the American Health Care Act (AHCA) has been delayed due to a lack of support. A vote could occur tomorrow (March 24) but looks more likely to occur next week. Our subjective odds of passage in the House before the upcoming two-week congressional recess, which begins April 7, are 60%. This is slightly lower than our last estimate, in part because there appears to be somewhat greater-than-expected opposition among centrist Republicans, in addition to the well-known opposition among members of the conservative “Freedom Caucus”.

2. Enactment of a health care bill before May looks even more doubtful than before, for two reasons. First, assuming the House does not vote until next week, the Senate is less likely to pass its own version of the health legislation prior to the upcoming recess and, if it did, reconciling differences between the two chambers would take additional time. Second, the probability is rising that Republican leaders will need to take an entirely different approach to reforming the Affordable Care Act (ACA), since the odds that the current approach can become law—even if it manages to pass the House—appear to be dwindling.

3. The Congressional Budget Office (CBO) has released an estimate of the revised legislation. The coverage estimates are unchanged—it would reverse essentially all of the coverage expansion under ACA—but is now estimated to reduce the deficit by only $150 billion over ten years, rather than $337 billion under the earlier version.

4. Our view continues to be that while the delay in addressing the health care legislation is likely to delay consideration of tax legislation, it does not signal a lower probability that Congress will eventually enact a tax bill. We continue to expect legislation that lowers the corporate tax rate and makes incremental tax reforms to be enacted by late 2017 or early 2018.

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