Bad News For Wall Street: No Tax Reform Until Fiscal 2018, McConnell Warns

Tyler Durden's picture

As explained, most recently two days ago, the key reason Wall Street is concerned about the complications involving Obamacare's "repeal and replace", which now appears will be stuck in Congress for a long time following vocal opposition from various conservative groups and outside lobby interests, is that it will delay tax reform. As Goldman laid it out over the weekend, "if Republican leaders cannot send the President an ACA bill by April or May, they will face two politically unpalatable options. First, they could continue to press for a solution, delaying consideration of tax reform for an indefinite period. This delay would occur because both proposals are expected to be considered under the “budget reconciliation” process. However, since only one tax bill and one spending bill can be considered under that process in each budget cycle—and ACA repeal legislation is expected to have tax and spending provisions—Republican leaders plan to consider the ACA bill in the FY2017 budget cycle, and to begin the FY2018 budget cycle, including instructions to pass tax reform, once the ACA bill has passed."

The other option Goldman put forward would be to postpone ACA legislation and move to tax reform, essentially reneging on a campaign commitment.

That however is not going to happen. Instead, in some very bad news for Wall Street, earlier today Senate Majority Leader Mitch McConnell confirmed the worst case outcome, when he poured cold water on the Trump administration's goal of completing tax reform by the August recess.  "I think finishing on tax reform will take longer," McConnell said during a Playbook Live interview.

This automatically means that tax reform will be part of the 2018 Fiscal Year, and will not be implemented in the current budget year ag all.

Previously, Treasury Secretary Steven Mnuchin had raised Wall Street's hopes when he said in February that the administration wants to wrap up a long-held GOP goal of overhauling the tax code before lawmakers leave for a month-long break.  “So we are committed to pass tax reform,” he told CNBC. “We want to get this done by the August recess.”

Alas, according to the Senator, this will not happen, and may instead drag on well into the end of 2017 or even 2018. The Senate is tentatively scheduled to leave town by July 31st and return during the first week of September. 

Pressed about when he thought lawmakers would be able to complete tax reform, the Senate's top Republican demurred.  "It is complicated. All of those discussions are already under way," McConnell said. "How do you craft it?" As was already known - and eliminating Goldman's second option above - McConnell added that the Senate has to wrap up work on an ObamaCare repeal bill, also being passed through reconciliation, before it can bring tax reform to the floor.

In other words, tax reform - the main catalyst behind the market's relentless surge since the election - may not be coming this year at all. It also means that readers can now add 3-6 months for every "tax-related" catalyst date in the chart below.

Incindetally, Wall Street appears to be gradually coming to terms with this: below we show that investors have clearly downgraded their view of tax reform, judging by the relative performance of a basket of high-tax stocks, which should benefit disproportionately from tax reform. They no longer are.


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Soul Glow's picture

Obvious.  Whoever thought Trump would get anything done with Congress was kidding themselves or doesn't know how DC works.

WernerHeisenberg's picture

This just in, central state refuses to downsize!

BullyBearish's picture

Sound of warm wind destroyed by foul smell...

OpTwoMistic's picture

Ah, the photo has rat and rat bastard for all to see. Great place to start the house cleaning.

FrozenGoodz's picture

All systems are go for the least productive 4 years in Precedential history. SAD

City_Of_Champyinz's picture


JRobby's picture

Burn McConnell and Ryan at the stake and tax reform will move right along.

Ryan because he is the single biggest legislative obstructionist working against Trump's policy initiatives.

McConnell because I just don't fucking like him.

Zorba's idea's picture


hedgeless_horseman's picture


Flat tax.

Everyone pays 8% on gross income and all capital gains.

No exemptions, no deductions, and no withholding!!!!

All tax payments must be made in cash at any Federal Reserve Member Bank or US Military Recruiting office.

Make the people count out those bills to a teller, and feel the pain.

Should take our "representatives" about an hour to draft the bill.

Must I do all of the thinking around here?

BigFatUglyBubble's picture

Herman Cain was out talking about a flat tax.  Got elbowed out shortly after.

AllTimeWhys's picture

Trump needs to walk in there, shove McTurtle's head all the way into his suit, and pound every senetors desk individually until they stop dragging their damn feet.

ejmoosa's picture

Simply amazing that doing the right thing is not immediate, but instead drags on for years.

I still blame Rand Paul for helping ol Mitch get re-elected.

Thanks for nothing on this one, Rand.

Consuelo's picture



 A complete and thorough roll-up/disbanding of the IRS first HH, and it has my support.   In fact, I'll go a step further and suggest that the amount should be up to the individual States to decide and any Federal funding to the States, tied to that rate. 

ejmoosa's picture

Why should there be any tax on capital gains?  I took the risks.  Not Uncle Sam.

Consuelo's picture



Stupid fucker Ramos...   I guess it never dawned on them that they're speaking the language (Spanish) of their (White European) Conquerers...   

scv's picture

the dems & cons delay it as long as they can,
cause they hate america.




they hate the people.
and the people hate them.



t should drop every fucking thing,
and get this shit done asap.



this is crushing his support base.
they are running away in large groups.
listening to the left saying,
he lied, everyday.




if he does not get the
tax cut in time. they know this. they data never fuckiong lies.




the single most important proposal to mankind and they fuck it up.


trump will LOOSE if he does not get this done

this is the ONLY policy the people care about.



they realize the tax thing is the greatest proposal any pres has done.
the people will create monuments after t,
formally means the end of the old world government.

the ONLY proposal the people would remember him by.

tax cut- the single greatest initiative by a president

if its delayed a few more months,
they will say during re-election,
'see... he lies...'


dems&cons will delay FOREVER




this is complete bullshit and someone needs a fucking 2x4"



vealparm's picture

Yeah, I was watching Paul Ryan on Tucker last night and he said that congress will only be in session for 8 days in April........what the hell do these phuckers do all month besides go to 3 hour lunches and do TV shows?

halcyon's picture

How is this news to anyone with a brain?

Congress and politics has it's schedule and calendar.

It doesn't move at twitter speeds.



BigFatUglyBubble's picture

Art of the Deal?

More like Art of the Schlemiel


junction's picture

Next year, the Republican Party will be bracing for the backlash from Hispanic voters, who are incredibly steamed over the actions of Trump.  If the corrupt Democrats can toss out geriatric Pelosi and her gang of Clinton thieves, they will have a chance to take over the Senate in 2019 and then gridlock is certain.  

MasterControl's picture

Always a dickhead with a cat.

Got The Wrong No's picture

Trump needs to put a spotlight on Congress and embarrass the ass holes causing the problem. The voters will listen. Hopefully  

AGuy's picture

No Tax cuts 4-ever! Only Tax increases.

Elco the Constitutionalist's picture
Elco the Constitutionalist (not verified) Mar 9, 2017 12:15 PM

How is that bad news for Wall Street? That is the Wall Street agenda. Who do you think writes the tax laws?

dude1394's picture

This frustrates me no end.  It is almost as if senators are serial beings who cannnot walk and chew gum at the same time.  GET TO FREAKING WORK DUDES!!!!

AustrianJim's picture

Of course, it's so difficult to simplify a tax code, you know? Their brains hurt, and it will be much easier after the August taxpayer-funded vacations to think about all the complex issues involved, like, how do you write a one sentence flat tax law? Oh my god, now my brain hurts.

A. Boaty's picture

If you like the tax code, you can keep the tax code.

BigCumulusClouds's picture

And if you don't like it, you can keep that too.

AGuy's picture

"And if you don't like it, you can keep that too.'

And pay for it!

FWIW: My guess is that the RNC\Trump will end up proposing a Consumption tax (ie national sales tax/VAT). They will promise that once it gets up to speed they will cut the income tax, but the income tax cuts never cut. We just get stuck with a new tax to pay.

IridiumRebel's picture

We get Trump in only to be stymied by this shithole congress.
Dems will have control again in 2-6 years yet Ryan, McConnell, McCain, Graham et al will still be in there.

CJgipper's picture

That's the RINO's plan anyway.

William Dorritt's picture

The DC uni-party

To paraphrase palpatine.....they are stunted slime

AGuy's picture

"Dems will have control again in 2-6 years yet Ryan, McConnell, McCain, Graham et al will still be in there."

I my opinion Ryan, McConnell, McCain, Graham and many others are DEMs in RNC clothing.

BigCumulusClouds's picture

From the Rand result, We know the people in KY are capable of electing good politicians. But why the hell do keep electing this old RINO fart?

I woke up's picture



Robert Trip's picture

The Fuhrer knew how to deal with malcontents such as Ryan and that prick McConnell.

This has been the end game all along. Trump wins and they fuck him over at every turn.

We are being held hostage by 535 assholes with a combined approval rating of 18%

Times they are a-changing and different measures to eradicate these vermin, other than the ballot box must be deployed.

This Congress and Senate aren't going anywhere.

FreeShitter's picture

When you realize voting is a scam to keep you impoverished through taxation and in perpetual debt while the two parties that are really one get richer and richer, then you will begin to have a mass awakening.....until then of course, the beatings will continue...carry on.

cossack55's picture

When did the CONgress approval rating double?

AGuy's picture

"The Fuhrer knew how to deal with malcontents such as Ryan and that prick McConnell."

The Fuhrer was a socialist. Ryan, Mcconnell and McInsane would have fit in nicely in the Fuhrer's inner Circle.

ZippyBananaPants's picture

All part of the plan, when he gets it done this year he will be a hero.  'They said I could not get it done, and I did'

NoWayJose's picture

We have to wait until 2018 to do anything... McConnell in March 2017

We have to wait until after the November 2018 elections to do anything ... McConnell in March 2018

We can't do anything because we lost control of the Senate.... McConnell in March 2019.... but I'm still in charge of the Republican minority!

Serfs Up's picture

WTF is this fascination with newz?  It has no effect on the stock ""market.""

Only central bank liquidity matters.  


Dr. Engali's picture

Fuckers can have a 2,000 page bill restricting freedoms at the drop of any false flag, but tax reform is too "complicated" to get anything done. Fuck you.

ArmchairQB's picture

Bullish!  Now we have to run up the market for another year before we can sell at a lower tax rate.

PoasterToaster's picture
PoasterToaster (not verified) Mar 9, 2017 12:31 PM

McConnel might not live that long.  He's old and due for replacement.  In fact, isn't everyone from that generation due for retirement?  McCain, Pelosi, the rest of the useless crew.

AGuy's picture

" In fact, isn't everyone from that generation due for retirement? McCain, Pelosi, the rest of the useless crew."

They are all like Mr Burns from the Simpsons, They'll go on screwing with us for decades. All this BS is what keeps them alive. They live to screw over the people.