It’s an all-hands-on-deck blitz(krieg) by the GOP to rally public support for a tax plan that will help Donald Trump and his family save an estimated $1.1 billion and help secure the fortunes of “struggling” Americans like Steve Mnuchin who wishes his entire graduating Yale class would stop writing him letters asking why he works for a Nazi sympathizer.
The irony, of course, is that you can’t count on Trump to move the plan forward because when he’s not busy talking shit about the people trying to get it done for him, he’s tweeting about “wacky Wilson” while those same people are wrapping up an hours-long, marathon effort to contort the legislative process in the service of that “moron’s” agenda. That latter bit is not an exaggeration. He was literally tweeting about that Wilson phone call at the very same moment Senate Republicans were announcing that they passed a budget last night (note the time stamp).
And so the burden is left to people like Paul Ryan who, on Friday, wants to know “how many of you hate filling out your taxes?”
How many of you hate filling out your taxes? https://t.co/DfZbSqMxyq
— Paul Ryan (@SpeakerRyan) October 20, 2017
So can also vote in our fun follow-up poll:
How many of you hate Paul Ryan?
— Heisenberg Report (@heisenbergrpt) October 20, 2017
“Movement” (or what counts as movement) on tax reform has got the reflation narrative alive and kicking which means that bank stocks are on the move:
Of course this is far from a done deal. In fact, it’s about the furthest thing from done as there is, something which was implicit in the title of our original post on this from Thursday evening: “Senate Passes Budget In Big Win That Sets Stage For Next Big Failure.”
Well, in case you were wondering what analysts think about the prospects, you can find a summary below as compiled by Bloomberg, and do note this bit from Greg Valliere:
These folks are serious — they want a victory, and they want it fast.
Right. Or, just as we put it last night:
Anything to get something done at this point. Fiscal discipline be damned — they’ve got midterms to worry about and Steve Bannon’s “got his hands on his guns.”
Via Bloomberg
COMPASS POINT (Isaac Boltansky)
- Flags the Senate’s adopting last-minute amendment that’s likely to clear the path for House consideration, and then passage as early as next week
- House clearing consensus resolution is “meaningful” as a conference cmte would have drained time/momentum; may mean both chambers may be on track to release legislative text for taxes prior to Thanksgiving recess
- Notes tax politics are far more complicated than budget; will watch Sens. Corker, McCain, Collins, Murkowski
- Keeps 60% odds for tax package in this Congress, with odds now biased modestly higher given Senate’s positive procedural movement
HEIGHT SECURITIES (Stefanie Miller)
- Leadership from both chambers coming together to create smooth path forward for FY2018 budget is positive sign for tax reform debate
- Budget moving relatively smoothly means Height positions its 75% odds as trending up on Congress passing a tax reform measure that includes:
- Cutting corporate rate to at least 25%
- Shifting to territorial tax regime for multinational income with deemed repatriation of prior earnings stockpiled overseas
- Creating new preferential rate on certain pass-through business income
- Simplifying individual tax code/modestly consolidating existing 7 tax brackets
- Providing middle class tax relief
- Congress may be able to pass this during early months of 2018, with best-case scenario seeing completion by end of 2017
HORIZON INVESTMENTS (Greg Valliere)
- Assertion by House Republicans that conference committee may not be required to finalize budget was “the real eye-opener”; would save at least two weeks, allowing debate to begin quickly on tax bill
- Strong signal there’s plan to steamroll bill through Congress ASAP
- Had been predicting enactment of tax bill by spring; now thinks late winter is possible: “These folks are serious — they want a victory, and they want it fast”
CAPITAL ALPHA (Charles Gabriel)
- Possibly-more-accelerated timetable preserves hope for completion of tax legislation before year end
- At the same time, budget adoption will mark “end of the beginning,” with next messy phase still likely to take months to work out in both chambers
- Release of first draft of comprehensive tax reform bill in House will be “a more sobering effect,” heralding “roiling and divisive base-broadening decisions,” triggering “protective juices” of interests including high-tax state constituents, stakeholders in commercial real estate, mortgage/housing, highly leveraged cos., globally diversified tech, IT, pharma
BEACON POLICY ADVISORS
- Republican leaders are hoping to capitalize on the unified sense of urgency (“do-or-die” mentality on tax reform) within the GOP, while minimizing time for special interests and Democrats to mount organized opposition
- Such a “manufactured crisis” by Republican leaders works when details on tax reform are sparse, but once legislation is introduced, Beacon expects tax reform momentum to hit “traffic jam” of institutional gridlock/individual priorities
- Adds that tax reform will be competing with busy legislative calendar of actual “must-pass” issues, like govt funding, which will run out on Dec. 8; DACA, Obamacare cost-sharing reduction payments, disaster funding also come to a head in December
BMO (Ian Lyngen, Aaron Kohli)
- Cautions that “the cloud of GOP infighting (sorry, differing priorities) still remains,” with Sen. Lindsey Graham comment about being “at the bottom of the mountain” reinforcing Senate budget plan passage was one of many steps
- Notes roughly a year ago, when Trump won, this level of partisan unity/agreement was a given — especially regarding key shared Republican value of tax cuts
- “But the same was also true about repealing Obamacare and we all know how that ended”
DEUTSCHE BANK (Torsten Slok)
- Notes voters care less in recent years about budget deficits
- Percentage of Democrats who say reducing the budget deficit as a top priority is now near all-time lows
The Fed has been after the Whitehouse and Congress to take the economic reins and pass some fiscally-beneficial legislation. Would a big-deficit budget and eased tax regime (for corporations and the wealthy) qualify? If that’s the case, would it clear the way for the Fed to keep upward movement on rates (providing Congress can get past the Dec 8 threatened govt shutdown)?
If all that goes forward, would the effect of increased Fed rate and QT overwhelm the effect of tax decreases (after the initial euphoria, of course)?