The assumption in Washington and Wall Street was that the AHCA’s failure is a defeat for the GOP. The opposition suggests this represents an ignominious retreat for Trump, who had campaigned on the promise to repeal and replace Obamacare virtually on day one of his term.
But there is an alternative narrative from Chicago, whence hails John Brady, managing director at R.J. O’Brien & Associates. While Obamacare isn’t currently collapsing, why would the Republicans want to remove that albatross from the neck of Senate Minority Leader Chuck Schumer (D-N.Y.) and the rest of the Democratic opposition? The Dems would then own the program in next year’s midterm election, by which time the financial strains on it would probably worsen.
The stock market’s spurt of 10% since Election Day has been the product of roughly equal parts optimism over the Trump agenda and momentum from the moderately expanding global economy. Perhaps a bit more could be ascribed to the former than the latter. Whatever the case, the underlying pro-growth optimism that Trump brings remains.
The defeat of the AHCA represents the rejection of legislation disliked by both the left and the right. By contrast, who doesn’t like tax cuts? Reform would probably attract sufficient support among members of the Freedom Caucus to pass the House and then get through the Senate. Bulls would suggest that this is really what the stock market wants, and that shelving the health-care bill lets the Republicans go on to the issue they ought to have tackled in the first place: taxes.
The decision to set aside the AHCA means that tax reform will be taken up immediately, according to Anthony Karydakis, the chief economic strategist at Miller Tabak & Co. That might lead to a speedier outcome, since Trump’s ability to push it through would be only moderately compromised by having cut his losses early and shifting the blame for the defeat to Congress.
Whether that line of thinking holds up after Trump’s first and loudest election vow has gone down to defeat at the hands of his own party remains to be seen. Other legislative initiatives also remain, including the nomination of Neil Gorsuch to the Supreme Court. And the AHCA fight offered another benefit: It overshadowed the other controversies swirling around the White House, which don’t need recounting here.