Wall Street Sees Zero Chance Trump's Budget Passes

Tyler Durden's picture

After claims by both democrats and republicans that Trump's "skinny" budget proposal is dead on arrival, Trump's nemesis, John McCain chimed in and said that in its current form the Trump budget simply won't pass the Senate.  “It is clear that this budget proposed today cannot pass the Senate," the Armed Services Committee chairman said in a statement. The Arizona senator added that as lawmakers work on funding the government, they must come up with a deal "that provides sufficient funds to rebuild the military." Trump's budget included $603 billion for total defense spending, which includes money outside of the Pentagon, plus an extra $65 billion in overseas contingency funding that is not subject to budget caps.

However, while for most other members of Congress the funds being allocated to the military are grotesquely too much, for McCain they are not enough, and the senator argued that the baseline budget for repealing the 2018 fiscal year needs to be at least $640 billion and that lawmakers should start working on defense funding for the rest of the current fiscal year, which expires at the end of September.
"Failure to do so will only lead to more political dysfunction that has inflicted such harm on our men and women in uniform over the past six years," he said. 

The House passed a defense appropriations bill last week to fund the department through the end of the 2017 fiscal year. Any push by Republican defense hawks to increase military spending would likely hit roadblocks in the Senate, where Democrats are demanding equal increases in defense and non-defense spending. Lawmakers have until April 28 to pass legislation funding the government and avoiding a shutdown.

Yet while McCain had his own reasons to declare the Trump Budget DOA, most on Wall Street also agrees, which is why it made virtually no impact on markets - and especially defense stocks - when it was unveiled overnight. Instead, as analysts noted, the priorities outlined weren’t a surprise to anyone who paid attention during the campaign, and those proposals will likely have trouble making it through Congress unscathed, analysts said. Here are some sellside opinions:

CAPITAL ALPHA (Byron Callan)

  • "Fat chance" for the "skinny budget" as the fiscal year (Oct. 1) will likely open under a continuing resolution, with Congress wrestling over defense, non-defense discretionary spending, borrowing and taxes
  • Sees 10% odds of budget passing Congress
  • Proposal sets up "yet another" period of uncertainty for defense spending, while cuts to infrastructure spending appear at odds with administration rhetoric

COWEN (Chris Krueger)

  • Document offers even less detail than expected, with no mention of tax reform or health care repeal/replace; that means it’s back to watching the healthcare "saga" and potential April 28 government shutdown
  • Budget process will begin once those are resolved

EVERCORE (Terry Haines)

  • Trump’s budget is "a nonstarter," as Congress is likely over the next six months to approve budget/appropriations that continue pattern of spending for the past 4 years (stable, with small increases for both defense, domestic spending)
  • Investors should understand any president’s budget submission is "inherently a political document"; Congress isn’t bound to follow it

COMPASS POINT (Isaac Boltansky)

  • At this point, the document is more messaging than actual policy, but the message is important nonetheless, Boltansky says in email to Bloomberg
  • Budget signals Trump’s campaign promises - especially the America First framework - will continue governing his policy positions

HEIGHT SECURITIES (Peter Cohn)

  • Trump’s ~50-page, $1.15t budget is less than half the size of initial documents submitted by prior incoming administrations
  • Budget adds ~$54b to defense-related accounts within regular spending caps, plus another $77b for Overseas Contingency Operations (OCO)
  • Domestic program cuts exacerbated by need to pay for increases for Dept. of Homeland Security, including $2.6b for Mexico border wall, $1.5b for detention/transportation/removal of undocumented immigrants (may help private prison cos. CXW, GEO)
  • Proposal accompanied by supplemental request for $33b of defense funds
    • $13.5b for procurement, including Apache (BA), Blackhawk (LMT) helicopters, F-35 (LMT), F/A-18 (BA) fighter jets, DDG-51 destroyer (GD, HII)
    • $2.1b for R&D efforts, including missile, air defense (RTN)
  • Supplemental funds likely "a tough sell" with Democrats given non-emergency designation

Source: Bloomberg

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knukles's picture

This budget was never intended to be passed, FFS.

Looney's picture

 

Audit the Pentagon and find the lost trillions!

Looney

NidStyles's picture

Everyone knows that money went to Israel.

NoDebt's picture

What's McCain so fucking worked up about?  There's more money in there for the military (McCain's wet dream) and still that fucking murderous fossil is bitching about it?

 

Winston Churchill's picture

Dead men tell no tales, just ask SEAL team six.

ejmoosa's picture

Exactly.

This is how serious negotiators start.

knukles's picture

Exactly exactly!  The Art of Negociation

Rainman's picture

Wall Street also said there was zero chance Trump would be prezident.

E.F. Mutton's picture

There's absolutely nothing wrong with this bill that Ryan and McConnell can't fuck up completely.

They may even commission a 100' Bronze Statue of Harry Reid in the process.

markar's picture

Trump can't even get executive orders to stick. How the hell will he get anything Congress needs to pass done?

Herdee's picture

Trump and The Goldman Boys will take control of spending very soon. You're going to see large portions of the federal government disappear. The President has  a lot of power in this regard.

crossroaddemon's picture

You just keep telling yourself that shit will happen.

The_Dude's picture

Ahhh...the GOP...party of fiscal restraint,  small government and individual liberties

roadhazard's picture

And Congress bats a 1000.

Ace Ventura's picture

Well, one thing is for sure....this proposed budget is sure to send the already comically-hysteric libtards into some sort of galactic turbo-hyperventilation verklempt nookoolar fit.

The equivalent of Darth Helmet's ship GOING PLAID!!!

kuz's picture

It's like Trump isn't even a president. Nobody fears him. Nobody respects him. He can't even get freaking executive orders to pass. He's everyone's daily laughing stock. I bet I could spit in his face and get away without facing consequences.

 

I guess that's what he gets for acting like a 14yo child.

cheech_wizard's picture

and you're acting like a sock puppet on the Internet...

Standard Disclaimer: The real question is, "Crusty Kuz", is which Democrat is one sock short of a pair?

 

SMC's picture

Setting them up for the mid-terms....

In.Sip.ient's picture

Zero Chance ANY Presidential Budget passes as is...

 

...fixed it for you.

I mean really, name the budget that got rubber stamped...

EVER...

 

cheech_wizard's picture

Why, it's almost as if the House of Representatives has forgotten who controls the power of the purse...

Brief reading as I make a point, stick with me...

At the time of a presidential transition, one question commonly asked is whether the outgoing or incoming President submits the budget for the upcoming fiscal year. Under past practices, outgoing Presidents in transition years submitted a budget to Congress just prior to leaving office, and incoming Presidents usually revised them. Six incoming Presidents— Dwight Eisenhower, John Kennedy, Richard Nixon, Gerald Ford, Jimmy Carter, and Ronald Reagan—revised their predecessor’s budget shortly after taking office, while only two Presidents during this period, Lyndon Johnson and George H. W. Bush, chose not to do so. The deadline for submission of the President’s budget, which has been changed several times over the years, was set in 1990 as “on or after the first Monday in January but not later than the first Monday in February of each year.” The change made it possible for an outgoing President, whose term ends on January 20, to leave the annual budget submission to his successor. The three outgoing Presidents since the 1990 change—George H. W. Bush, Bill Clinton, and George W. Bush—exercised this option. Accordingly, the budget was submitted in 1993, 2001, and 2009 by the three incoming Presidents (Bill Clinton for FY1994, George W. Bush for FY2002, and Barack Obama for FY2010). Before President Barack Obama, the last three incoming Presidents that submitted a budget or revised their predecessor’s budget (Ronald Reagan, Bill Clinton, and George W. Bush) did not submit detailed budget proposals during their transitions until early April; however, each of them advised Congress regarding the general contours of their economic and budgetary policies in a special message submitted to Congress in February concurrently with a presentation made to a joint session of Congress. President Barack Obama followed a comparable approach. He delivered an address on his economic and budget plan to a joint session of Congress on February 24, 2009, and submitted an overview document two days later. He submitted his detailed budget proposal on May 7, 2009, and submitted additional supplemental volumes four days later, on May 11, 2009. 

Pay particular attention to the last sentence. May 7th, followed by May 11th. Now here comes Trump, delivering a budget before even two months into his "tenure" as President.

Standard Disclaimer: Attention to Detail Bitchez... which is why liberals always, and I do mean always, fail.

 

 

MikeOz's picture

Wall Street knows.....it owns the politicians.

cheech_wizard's picture

>$2.1b for R&D efforts

The company I work for thanks you, we obviously need even more R&D.

Standard Disclaimer: We actually got to sit through this today... https://vimeo.com/29387570 (Yes, it's the DHS's hit propaganda piece... "See something, Say something"...) 


JailBanksters's picture

Obvious

He only won the Battle, he didn't win the War

 

The War for WHO controls Washington, that is.

whatisthat's picture

Wall Street no longer matters