We have met the enemy and he is us.
A couple of weeks ago, the passage of a Republican-sponsored tax reform bill appeared to be a slam-dunk. But the chances of its actually being enacted seem to be diminishing by the day.
A committee of Republican Senators and Representatives has been struggling to write a bill that will secure a majority vote in both Houses. To achieve that end, it has been engaging in the time- honored Congressional practice of horse-trading.
A decade ago, no one talked about tail risk hedge funds, which were a minuscule niche of the market. However, today many large investors, including pension funds and other institutions, have mandates that require the inclusion of tail risk protection. In a recent interview with ValueWalk, Kris Sidial of tail risk fund Ambrus Group, a Read More
Each day brings a report of still another adjustment or concession. Most recently, we heard that an increase in the corporate income tax rate from 20 to 21 percent was under consideration, and that the top individual income tax rate would be lowered from 39.6 to 37 percent. Still up in the air was whether the alternative minimum income tax would be lowered or abolished completely.
Apparently, several other major issues – each of which may affect the vote count – still need to be resolved. If somehow, the committee manages to wrap things up by the end of the week, it will still need to hand each Senator and Representative a printed copy to study over the weekend.
Further complicating the process, the federal government will run out of money on Friday, December 22nd. Passing still another continuing resolution to secure funding through early January will require the votes of at least eight Democratic Senators. What will these folks ask for in return?
If the tax reform bill has not yet passed, there is no predicting what might then happen. No tax reform and a government shutdown would certainly not be winning issues for Republicans to carry into the 2018 Congressional elections.
Should they manage to kick the can of tax reform into the early days of January, the odds of passage will grow still longer when newly elected Doug Jones of Alabama reduces the Republican Senate majority from 52 to 51.
It is becoming increasingly apparent that if Congressional Republican cannot pass tax reform by December 22nd, they may not be able to pass it at all.
About the Author
Steve Slavin has a PhD in economics from NYU, and taught for over thirty years at Brooklyn College, New York Institute of Technology, and New Jersey’s Union County College. He has written sixteen math and economics books including a widely used introductory economics textbook now in its eleventh edition (McGraw-Hill) and The Great American Economy (Prometheus Books) which was published in August.