Trump Administration began its public push for tax reform - Nomura

Today the Trump Administration began its public push for tax reform with the President giving a tax-related speech in Springfield, Missouri. 

Key Quotes:

"With the Republican health care reform effort effectively on hold, we expect the administration to devote considerable time and effort on tax reform in the coming months.

Despite today’s speech, our outlook for tax reform has not materially changed since our last update: we still expect modest tax cuts instead of full-scale reform, and for those cuts to be passed by late 2017 or early 2018.

While the ‘Gang of Six’ – Senate Majority Leader Mitch McConnell (R-KY), House Speaker Paul Ryan (R-WI), Treasury Secretary Steven Mnuchin, National Economic Council Director Gary Cohn, Senate Finance Committee Chairman Orrin Hatch (R-UT), and House Ways and Means Committee Chairman Kevin Brady (R-TX) – has agreed on a broad agenda for reform, the House Ways and Means Committee has been given the task of writing up the details. We do not expect details of the bill to be released until after the debt ceiling, funding to repair damage inflicted by Hurricane Harvey, and a temporary spending bill are addressed. That is, we do not expect the details to be released until some time in October.

In the near term, we expect to see more public events from the White House highlighting tax reform, with an additional effort to enlist the business community in the messaging. However, after the dissolution of business advisory councils following the President’s controversial statements on the recent events in Charlottesville, corporate leaders may be more cautious to embrace the White House tax agenda.

As we have stated before, the outlook for tax reform suffers from the reality of the slim Republican majority in the Senate and a relatively small majority in the House (both were on full display during the health care debate). Mr. Trump’s selection of Missouri for his first major tax reform speech, a state which he won by over 18 percentage points and is home to Democratic senator Claire McCaskill (up for reelection in 2018), portends an upcoming effort by the White House to enlist vulnerable Democrats in final passage. However, we do not expect the tax package to garner much, if any, Democratic support."