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Trumponomics Daily—Thursday, February 23

Yesterday’s note looked at the outside pressures imperiling chances for quick action on tax reform. Namely, Congressional Republicans won’t take it up until they’ve dealt with Obamacare, and that task is only getting more vexing. As we’ve seen this week in footage from raucous town-hall meetings across the country, rising popular angst over the potential repeal of the healthcare law is forcing GOP lawmakers into confrontations with angry constituents. And fraught debate over the issue will come amid an already-packed Congressional calendar, including ongoing Senate confirmations for cabinet and sub-cabinet level posts and Supreme Court nominee Neil Gorsuch; a government spending measure (current funding expires April 28); and a debt ceiling hike, among other items.

But the bandwidth issue at most is only half the challenge. A potentially tougher one comes from within the party. Despite the claim by President Trump yesterday that the GOP tax plan is “actually very well finalized,” there is nothing approaching a consensus about how to move forward among the three Republican power centers in Washington. House Republicans are pushing a proposal to fund rate reductions by raising roughly $1 trillion from a new border tax. Senate Republicans largely object to that approach but so far have no offer of their own. And though Trump two weeks ago promised to present a “phenomenal” plan within a matter of weeks, neither side of Capitol Hill expects the White House to deliver one. That could leave the administration in a position of refereeing a debate between the two chambers, but it’s not clear there’s agreement within Trump’s team about major contours of an overhaul. For starters, Steve Bannon, Trump’s chief strategist, is said to back a border tax while Gary Cohn, Trump’s top economist, doesn’t.

Newly-confirmed Treasury Secretary Steven Mnuchin told the Wall Street Journal yesterday that his department has its own reservations about such a levy (specificially, “what the impact may be on the dollar”) and added the administration is “looking seriously” at it. Appearing on CNBC this morning, Mnuchin restated the White House goal of getting a “very significant” bill passed by the time lawmakers quit Washington for their August recess. That timeline is exceedingly ambitious, which is a nice way of saying it’s plainly unrealistic. CGCN Group, a lobbying firm, offered some optimistic perspective in a note to clients yesterday: “Complex comprehensive reform proposals die a dozen or more times before they are signed into law. That rule has been true for most major pieces of legislation Congress has enacted over the last 30 years, and it will certainly be true for tax reform.” But a tax overhaul has to be born before it can start dying, and that hasn’t happened yet.

Tory Newmyer
@torynewmyer
tory_newmyer@fortune.com

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