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4 reasons healthcare reform failure threatens tax reform

J. Scott Applewhite / AP

Stocks rebounded in late trading on Friday, after news that President Trump's healthcare bill wouldn't even get a House vote. Traders apparently believe this will accelerate tax reform, since D.C. won't be bogged down by a Senate fight over healthcare that would send it back to the House, rinse and repeat. But here are five reasons why the healthcare failure could spell trouble for tax reform:

  1. We now know that Congressional Republicans are willing to buck Trump and leadership on big-ticket legislative items.
  2. Republicans will need to keep working on healthcare reform, even though Trump says that he's done with it. They've campaigned for years on killing Obamacare, and can't head into the mid-terms without giving it another go. Particularly when they keep insisting that the current scheme is collapsing?
  3. CBO said that the Republican healthcare bill would shrink long-term budget deficits by hundreds of billions of dollars. Without it, filling the tax revenue hole becomes harder.
  4. Sean Spicer today said repeatedly that Trump had talked to "everyone" and listened to "all" ideas, which reflects zero consideration of Congressional Democrats. If such sentiment persists ― it just raises the degree of difficulty for tax reform, particularly if the White House doesn't change its position on keeping corporate tax reform tied to personal tax reform.
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