The first big battle of Donald Trump's young presidency ended in a spectacular dumpster fire on Friday as House Speaker Paul Ryan pulled an effort to repeal Obamacare off the floor because it lacked enough support to pass.
In a press conference, Ryan suggested the House was ready to move on from the Obamacare repeal disaster and take on other items of Trump's agenda. "Obamacare is the law of the land," he said after acknowledging the bitter disappointment of the loss. "We are going to be living with Obamacare for the foreseeable future."
Ryan added that the party's failure to reach consensus on repealing Obamacare, something Republicans have been promising to do for seven years, clouds the picture for other big-ticket items on Trump's agenda eyed by Wall Street including sweeping corporate tax reform.
"Yes this does make tax reform more difficult," he said. "But it does not in any way make it impossible. We will proceed with tax reform."
The American Health Care Act's failure came just as markets closed for the day with the Dow ending down just slightly as it became clear the measure did not have enough support to pass. Significant U.S. market reaction will have to wait for Monday, something for which Republicans should be thankful.
Ryan's forthright admission that Republicans are not yet ready to be a governing party is likely to spook investors counting on relatively swift passage of a major corporate tax cut, significant new infrastructure spending and a dramatic reduction in federal regulation.
The health-care debacle will not necessarily be repeated on tax reform. But there are ominous signs. Ryan continues to support a border-adjustable tax (BAT) that would produce $1 trillion in revenue over ten years to help cover the cost of a rate cut to somewhere close to 20 percent. But Senate Republicans and many in the House – along with much of the retail industry – hate the proposal.
Some inside the White House don't like it much either. But conservative House Republicans, including the Freedom Caucus members who helped torpedo Obamacare repeal, are unlikely to support a giant tax cut that adds to the deficit. So if the BAT gets tossed aside, as many in Washington think it will, Ryan and the White House will have to come up with other methods to cover the cost.
If they don't, they could wind up in the same ditch they fell into on Friday.
There is also the question of Trump's ability to muscle Congress to pass his agenda. In a testy press conference on Friday, White House spokesman Sean Spicer repeatedly said that Trump had done absolutely everything he could to get the health-care bill passed. Ryan repeated those statements and praised the president.
But those are not the facts. Trump got involved in the health-care bill late, never made any kind of robust public case for it and got fed up after a few days haggling with the Freedom Caucus and other members.
By contrast, former president Barack Obama spent months pushing the Affordable Care Act including speeches and town hall meetings. Trump never really took the AHCA to the public in any sustained or detailed way. He seemed relatively uninterested in the details of the bill, only caring whether he could notch a win. In the end, he took a major loss.
The presumption in Washington is that he will be much more enthusiastic about pushing big economic legislation intended to speed up economic growth and boost wages and hiring. Both National Economic Council Director Gary Cohn and Treasury Secretary Steven Mnuchin are eager to begin a full-on blitz for tax reform.
Ryan himself, who dreamed of being House Ways and Means chairman much more than Speaker, will also find himself in territory in which he is much more comfortable. So the pieces are in place for the tax effort to find more success than the health-care disaster.
But major obstacles still remain. The GOP spent a decade as an opposition party, as Ryan acknowledged on Friday, and faces significant "growing pains," as the speaker termed them, to become a functioning governing party.
Tax reform should give them a big opportunity to make that transition. But as with health care, tax reform will pit powerful constituencies against one another within the party. And getting a bill through both the House and Senate, especially by August as the administration has promised, will be incredibly challenging.
—Ben White is Politico's chief economic correspondent and a CNBC contributor. He also authors the daily tip sheet Politico Morning Money [politico.com/morningmoney]. Follow him on Twitter @morningmoneyben.