As we sit here today, the bill now known as “The Tax Cuts And Jobs Act” is being pounded out behind closed doors. The word “pounded” is a fitting description, because that’s precisely what is happening in all phases and forms. i.e., Members of both chambers are being pounded into submission via threats or payoffs for their support, while there will undoubtedly be more “pork” pounded within – it would make a real sausage blush.
The true issue at hand is this: They (e.g., GOP) believe it’s all about passing a tax cut bill in name only, with some great sounding sound bites and headlines to campaign on into the next election cycle, so substance ranks secondary. If one has any doubt, just look to any Sunday talk show for clues, the rhetoric is pure unadulterated fantasy land type arguments. And that’s just the moderators.
We are at a moment in time both politically, as well as economically, where everything can go awry faster, and far more severely, than those currently trying to estimate their current Bitcoin™ net worth. Hint: In a heartbeat – it could all be over.
And just to be clear, neither party will walk away unscathed. i.e., An abstention strategy like that being proposed by the opposing Party (e.g., Dem’s) will not act as the shield afforded the GOP after the Obamacare debacle, in my opinion.
Why? Let me put it this way: People are sick of it – been there, done that.
Healthcare is now an unmitigated disaster needing far more than just a “clean up on aisle 9” response. It needs a full teardown and rebuild requiring both parties to work earnestly as to remove the government’s intrusive tentacles, not probe them deeper. (I know, I can hear you through my screens, and I’m with you: “pure fantasy.”)
But yet, playing fast and loose with tax policies, on top of it? Turns the healthcare headaches up to 11, and the ensuing backlash throughout everything else exponentially so. (Remember, healthcare is 1/6th of the economy – taxes and regulations touch 100%. Think about it.)
The past election cycle showed that the electorate was fed up with “dancing around the edges, fiddling and diddling pols”, while taxpayers of all stripes were bloodied and beaten with higher taxes, regulations, and a “guaranteed” insurance policy that fewer and fewer Dr’s, along with entire “Exchanges” willing to issue/take said “insurance” with a deductible that’s now equivalent to a down-payment for a home: every – calendar – year.
The current powers-that-be are absolutely clueless just how ticked off everyone is. Again, on both sides of the aisle, especially the business community.
The business community wants (and needs) meaningful (think: “Bigly”), and near instant (think: within the same calendar year) change to much of the status quo in regards to healthcare, taxes, and regulations. Anything short of what was
sold presumed as the first meaningful steps toward true government and institutional reform will be met by many a politician with immediate, knee-jerk type responses in much the same manner as the analogy conjures. The “markets” in-turn may get the full effect of a full-on drop kick.
I’m sorry for using this term so often, but it needs to be stated: Remember – this was to all supposed to be passed with the assurance, if-need-be, along purely partisan lines. If this procedure is wasted as to only do around-the-edges styled legislation. It will be seen as an outright betrayal. And the resulting backlash, fury is currently unknown. But make no mistake – a reckoning there will be. And the daily drip of what is being considered, as well as dropped, is adding fuel to that ire.
Again, if what gets passed in the end is nothing more than specious headlines, requiring a purely partisan vote to do so will be considered a complete and utter waste of political capital along with any remaining voter goodwill. Period.
This will be met along the lines fitting description, using terms like, fire-and-brimstone, as just one example. This, in my estimation, will be seen as reason to jettison them all. (“all” meaning entrenched re-elected, after re-elected purely partisan, establishment types.)
In other words, the ire of the “great unwashed” will grow in such tsunami type fashion that current party elders, from both sides of the aisle, could find themselves walking down the political plank, into oblivion. For just like a tsunami needs a catalyst – the tectonic upheaval that may arise from a watered down, pork laden, near 500 page filled tax reform joke book may indeed be that very catalyst, because the warning signs of seismic tremors are already appearing with frequency, as well as intensity.
The issue that will be almost to indignant to bear, again, on both sides, is Mr. Trump just might be – the last man standing.
I know, heresy too some, and requiring smelling salts for others. But if one thinks about it objectively, it’s not that far of a stretch, again, when contemplated (Trigger alert!) rationally and objectively, not emotionally. (Hint: He would still hold the argument of “I signed the best offered to me. Send me people who will do more, and I’ll sign more!” Don’t shrug that idea off, it’s not as crazy as some may want to argue. Truly think about it.)
This isn’t an endorsement of any politician or party over the other. This is about what both the business community expected, as well as the “markets.” You can’t disappoint one and not the other, they’re intrinsically linked, regardless of what’s currently taught in academia.
Now, suddenly, there are reports that the so-called “tax cuts” (e.g., Brackets) are suddenly being “adjusted” not lower, but higher, and that’s not all…
Taxes that were supposedly going to be eliminated seem to have more staying power than dandelions. Oh, and all that talk about the “simplification” process? (i.e., The “post card” filing process) If adding more brackets, changing “entirely eliminating” to – above this threshold, and only by this much, if this criteria is fulfilled, along with, not eliminating, but “phasing out” and maybe, by year _____(fill in the blank), can all be calculated on a “”post card?” Let’s just say, I’m highly skeptical, to be polite, shall we?
The reason for concern is this: the moment (actually within hours) the Senate passed its version of the bill one of the key architects for making sure the something that was added (e.g., AMT) as to ensure passage, now wants to eliminate it.
Eliminating any tax is great, but the way this monstrosity is going about making sure every “cut” is “paid for”, is an abomination to any common sense wielding individual. Yet, this one snafu shows just how precarious this entire process now sits. The “Keystone Cops” look like an efficient, synchronized machine in comparison. And we’re only days in, so does this now lose a vote, gain a vote, change a multitude of votes? And if it does, what will it take to regain them? Or worse, what will need to be taken away, or added?
As I warned in a previous article “nothing’s yet been passed, but hot air and gas.” Should further details of the forthcoming “tax cuts” legislation resemble what has transpired over the preceding week with further watering down (think: the corporate rate going from the proposed 20%, to 22% or more, and being phased in over years, just for one) along with the “adding in” of more brackets, or elimination of meaningful deductions in return for “pork barrel” infused additions, will cause those tectonic plates (aka “markets”) to shift from the front-running “Trump trade” of hopium into the leaking lead balloon of deflated tax cut reality.
Oh yeah, and the price tag for all of it gets voted on this week in conjunction, aka FOMC interest rate hike decision.
What could possibly go wrong?
© 2017 Mark St.Cyr