Impatience over Trump tax cuts is growing

Another day, another disappointment for Wall Street and much of corporate America when it comes to those promised big Trump tax cuts. House Speaker Paul Ryan said today that the Republicans in Congress will tackle replacing Obamacare and infrastructure spending first and won't take up a tax bill until the spring. That pushes the most realistic projections for a signed tax cut bill to August at the earliest.

To be fair, President Donald Trump has been in office for less than two weeks. But he quickly leapt into action on the protectionist side of his agenda and campaign promises. The immigration and travel ban on people from seven countries announced last Friday is the strongest example. But there's also been President Trump's continued pressure on major CEOs to invest and hire more in the U.S. That pressure and public comments have been so consistent that if a Democrat applied that kind of pressure, conservatives would be going crazy talking about a statist takeover of American industry.

But the brass ring the Trump team has been dangling in front of corporate America and even middle class taxpayers for months is the promise of those big tax cuts. And while President Trump continues to mention them, we aren't seeing or hearing anywhere near the kind of action and clarity from the White House on taxes that we've seen and heard on immigration and trade protectionism.

That didn't change Thursday when the president met with top Congressional leaders from the Senate Finance Committee and the House Ways and Means committee. Even though the committee leaders from the parties were there, it appears the discussion focused more on trade and not so much on taxes.

Congress and the White House may still be on an historically reasonable timeline considering the thin GOP Congressional majorities. Even the laser-focused-on-tax-cuts Reagan administration didn't get its tax cut plan passed and signed until August of its first year in office. And with Treasury Secretary-Designate Steven Mnuchin not yet confirmed, it's not surprising that the tax cut movement would be a little stalled when the administration's chief quarterback for the effort is still on the sidelines.

"Perhaps the biggest roadblock isn't the result of Republicans fighting with Democrats, but Republicans fighting among themselves."

But it's not just about action. Big corporations and Wall Street know there's a need for some clarifying messages and statements on the tax cuts from the White House and the GOP Congressional leadership leading up to legislation. And that's been lacking. For example, it would be nice to know the actual corporate tax rate the Republicans will be pushing for. And it would be nice if the administration talked not just about the tax cuts, but also about why it really is ethically and economically wise to enact them. In the age of quasi-socialist Senators like Bernie Sanders and Elizabeth Warren, investors and CEOs might appreciate someone in the White House making the case for capitalism again.

The White House, including the president and spokespeople like Kellyanne Conway and Sean Spicer, have done something different. Starting in the middle of last week, Conway started referring to the Trump tax policy as "tax relief." as opposed to "tax reform." That's a blow to those who want a simplified tax code and perhaps more permanent changes to the system. "Tax relief" sounds a lot more like the 1981 Reagan tax cuts and the tax cuts under George W. Bush that boosted the economy but were easy for subsequent administrations to discontinue. Substantive tax reform is tougher to unwind, but now the White House isn't even using the term anymore.

So far, we're not getting a clear message on what to expect from Capitol Hill either. House Ways and Means Chairman Kevin Brady is the man who will be shepherding whatever tax bill the White House and the GOP Congressional leaders put together. But Wednesday morning, Brady was still only talking about getting some Democrats to vote for the tax cuts and whether "nuclear options" should be used in the Senate to get it passed. Rep. Brady did say Congress will deliver the "lowest tax rates in modern times." But there was nothing else on the details of the bill or even headline numbers to consider. Right now, all we have to hang our hats on is that Speaker Ryan promise to get this passed by August.

What's holding things up? Paying the piper. Several Republicans in Congress are standing on ceremony when it comes to making sure the tax cuts are paid for with corresponding budget cuts. This is what we call the "revenue neutral" movement. Speaker Ryan, Chairman Brady, and Senate Majority Leader Mitch McConnell are the leaders of that movement. On the other side are Senator Rand Paul and conservative groups like the Club for Growth and the Heritage Foundation who all say the tax cuts should come first and the budget cuts later. So perhaps the biggest roadblock isn't the result of Republicans fighting with Democrats, but Republicans fighting among themselves.

That's why Wall Street's starting to look a little antsy. The selloffs we saw in the Dow Jones Industrial Average as the week began were attributed to investor uneasiness with the Trump immigration executive order. But it's beginning to look like the Street is shaken not just by the immigration policy but the lack of action on tax cuts to balance that out. Several investors, including Jack Ablin at BMO Private Bank in Chicago, have been talking about how impatience and disappointment is growing in response to the tax cut inaction so far. And you thought the Democrats weren't giving President Trump a Honeymoon period!

Maybe these intramural differences among Republicans will work themselves out soon and maybe the White House will start preaching the gospel of tax cuts for everyone in the coming weeks. But be ready for more disappointment and fear from Wall Street and assorted top American CEOs for every day that passes without some visible progress in this area. Patience is not one of the market's virtues.

Commentary by Jake Novak, senior columnist. Follow him on Twitter @jakejakeny.

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