Wall Street's worst fears about a potentially failed effort to repeal Obamacare aren't likely to be realized, according to separate analyses that come amid an increasingly tense battle over the measure.
Financial markets have been volatile this week on worries that President Donald Trump and the Republican leadership won't be able to gather enough votes to enact the American Health Care Act, which would replace the Affordable Care Act.
Markets took a jolt Thursday afternoon on news that the vote scheduled for Thursday evening in the House of Representatives was postponed. Major averages had been higher earlier but closed around unchanged.
Failure to pass the act would cause several difficulties — parliamentary and fiscal issues could make it difficult to enact the tax reforms Trump campaigned on, while a loss also may make the new president look weak politically.
However, at least two Wall Street experts believe those concerns are overblown.
"Passage of the American Health Care Act vote is relevant for tax reform, but likely not in the way that markets and many observers may believe," Citigroup economist Dana Peterson said in a report for clients. "A failure of President Trump and House Republicans to deliver on this one of two stated objectives this year would not signal the death knell for fiscal stimulus, in our view."
Linkage between the health-care bill and tax reform comes on two levels: One is a parliamentary question about the reconciliation process, the other a related issue that the expected $337 billion in savings from the Obamacare repeal would pay for tax breaks.
Peterson, though, said it's not so important that the ACHA passes than that it gets voted on one way or the other so Congress can move on to the pressing tax issues.