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Goldman Sachs: Republican fighting over health-care reform could wreck Trump's tax reform plans

Health-care reform looks complicated, after all.

Hurdles in repealing and replacing the Affordable Care Act could have ripple effects on President Donald Trump's ability to follow through on his ambitious campaign promises in the coming months, according to a Goldman Sachs research note on Wednesday. Issues with repealing and replacing the law, also known as Obamacare, threaten the White House's goal to sign tax reform into law by August, in particular.

"While it is certainly possible that Congress will finalize ACA legislation in April, as Republican leaders have projected, it seems more likely to take until mid-to-late May, in our view," Goldman economists wrote in a note.

"Assuming that Republican lawmakers are ultimately able to resolve differences and send ACA legislation to the White House by May, the tax reform process will be delayed but will remain generally on track, with potential consideration by the House Ways and Means Committee by June and passage in the House in July. Even in this scenario, we would expect a final bill would take until Q4 to enact into law."

Speaker of the House Paul Ryan (R-WI) (C) holds up a copy of the American Health Care Act during a news conference with House Majority Leader Kevin McCarthy (R-CA) (L) and House Energy and Commerce Committee Chairman Greg Walden (R-OR) outside Ryan's office in the U.S. Capitol March 7, 2017 in Washington, DC.
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Speaker of the House Paul Ryan (R-WI) (C) holds up a copy of the American Health Care Act during a news conference with House Majority Leader Kevin McCarthy (R-CA) (L) and House Energy and Commerce Committee Chairman Greg Walden (R-OR) outside Ryan's office in the U.S. Capitol March 7, 2017 in Washington, DC.

Since House Republicans introduced their Obamacare repeal law on Monday, lawmakers across the ideological spectrum have flagged concerns. Not only Democrats but also conservative and moderate Republican lawmakers have criticized specific provisions of the plan, which Trump has endorsed.

Disagreements threaten to trip up Trump's broader agenda, because the GOP has said it will wait to pass tax reform until ACA repeal is done for procedural reasons. Trump's promise of a business-friendly agenda — including regulatory rollback and tax reform — has helped to fuel optimism on Wall Street and among business executives.

The Republican timeline may prove too optimistic.

In January, House Speaker Paul Ryan laid out a plan to repeal and replace Obamacare by April.

The firm's economists believe that, if the GOP cannot agree on a consensus by "late May or June," lawmakers may focus on tax reform, instead.

"This would be no easy task, for two reasons. First, Republican lawmakers and President Trump made a commitment during last year's campaign to repeal the ACA, and will be under pressure to follow through," the Goldman note reads.

Additionally, Republicans plan to use a process called budget reconciliation for both health-care and tax reform. It requires only a majority vote in the 100-member Senate, and the GOP holds 52 seats.

They are using the fiscal 2017 budget resolution for ACA repeal because it contains tax and spending provisions. It may prove difficult to pivot from that plan, Goldman said.

Still, Goldman said tax legislation "has a high likelihood of being enacted." It noted, though, that early debate over the health-care bill "is a reminder that structural reform is difficult, and even harder when being passed along party lines."

The House Ways and Means and Energy and Commerce committees will both begin to mark up, or debate and potentially amend, the bill on Wednesday. Ryan said Wednesday he expects a Congressional Budget Office score, which would show the estimated cost of the plan and the number of people who could lose coverage under it, by early next week.