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Washington is not governing. What was expected after the election by Wall Street was a rebirth of growth through pro-business policies, a giant stimulus from tax cuts and a sweeping infrastructure package within the economy. Growth expectations have been languished and slowly ground to a halt at near 1% GDP growth.
Real GDP growth is close enough to zero when you realize that they’re understating inflation. If you look at nominal GDP, which is roughly 3.5% to 3% a year at most, and you take a real measure of inflation from that – there isn’t much left.
All of the expectations that have been priced into the market and still linger will eventually come to terms with the fact that none of the anticipated growth is happening.
Government leadership hasn’t even started on a tax bill yet. They also haven’t started on the budget resolution for fiscal year 2018. There is a somewhat arcane machinery for the fiscal process to passing such a bill but without a reconciliation instruction.
Currently there is a filibuster proof majority in the Senate holding 60 votes. What that means is there’s not a snowball’s chance of anything passing. There would need to be a reconciliation instruction for the 2018 budget that would begin October 1st in order to bring a tax bill through committee and to the floor of both houses.
Congress hasn’t even started the budget resolution process and while some people may think it’s still early, the hour is late. There are very few legislative days left between now and the start of the new fiscal year and we don’t even have any semblance of a budget resolution.
Revenues, spending and tax policy must be approved and voted upon with consensus in the Republican majority. Achieving all of that in the House and the Senate is going to be virtually impossible. This is why the stimulative tax bill that was expected is dead in the water.
Now we are in early July and we’ve had weeks and months of the Trump presidency go by with almost nothing to show for it, other than controversy and continued efforts to relitigate over Russia. Because of all of this distraction, there has been virtually nothing done and even on the simple priority of repeal and replace Obamacare, we’re essentially nowhere.
I think the leading indicator is that if Congress can’t even repeal and replace Obamacare, when it was the substantial issue that Trump ran on during the campaign, that the Imperial City is frozen.
The only reason that I can see why the stock market …read more
Source:: Daily Reckoning feed
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