Nikolas

Chief marketing officer, easyMarkets. Previously leading the Risk Management team responsible for offsetting market risk. Extensive background within the financial markets, specializing in derivatives

The past week has not been the best one yet for Trump! A last-ditch effort to save the GOP healthcare bill, fell flat on its face this week, putting U.S. President Donald Trump in the unenviable position of having to carve a new path for his administration.

Trump healthcare bill rejected

After Senate Republicans failed to agree on a health bill earlier in July, Trump said he would “let Obamacare fail” before reconsidering a replacement.[1] However, that didn’t prevent fellow Republicans from trying again the following week. On 26 July, the Senate rejected a bill that would have repealed large swathes of Barack Obama’s 2010 Affordable Care Act.

The bill was rejected in a 45 to 55 vote even as small-government conservatives favoured it.[2]

Now, the Senate is aiming for a so-called “skinny” repeal of the Affordable Care Act. GOP Senator Bob Corker – the No. 2 Senate Republican – recently said that the slimmed down version of the bill was gaining traction.

Republicans at odds over Trump healthcare

Four Republican Senators have demanded guarantees the House will enter negotiations or they’ll kill the proposed legislation all together. In response, House Speaker Paul Ryan has assured that the House bill will proceed to a conference committee.[3]

Republicans have been at odds on healthcare despite possessing a 52% Senate majority. The failure to reach a consensus has undermined President Trump’s agenda, which has struggled to get off the ground since the 20 January inauguration. Repealing Obamacare was one of Trump’s biggest campaign promises.

The International Monetary Fund (IMF) has removed expectations of fiscal stimulus from its evaluation of U.S. economic growth. The Washington-based lending institution recently downgraded its 2017 and 2018 outlooks on the U.S. economy. The world’s largest economy is forecast to expand just 2.1% this year, down from a previous estimate of 2.5%. The 2018 estimate was also cut to 2.1% from 2.5%.

At the same time, the IMF boosted its growth outlook for China, Japan and the Eurozone.

Failing healthcare reform, the Trump administration is likely to shift focus to tax and deregulation. Those policies are likely to materialize sometime this year. Analysts expect Trump to succeed on tax reform, although the extent of the revisions are subject to a great deal of speculation. The proposed cuts could lower federal revenue by $7.8 trillion over the next decade, according to the nonpartisan Tax Policy Center.[4]

[1] Stephen Collinson (18 July 2017). “Trump” ‘We’ll Let Obamacare Fail’.” CNN Politics.

[2] Lauren Gambino and Ben Jacobs (26 July 2017). “Senate rejects bill to repeal large parts of Obamacare without replacement.” The Guardian.

[3] CNN. “Health care debate: Turmoil in Senate as Republicans revolt against ‘skinny bill’.”

[4] Sahil Kapur (12 July 2017). “Trump Tax Cuts Cost $7.8 Trillion, Aid Top Earners, Study Finds.” Bloomberg.

 

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