For the principal part of President Donald Trump's agenda to get passed, it may take something as dramatic as a sharp stock market pullback, according to one Wall Street analyst.
As the political drama heightens in Washington the legislative agenda suffers, leading to fears that tax reform is nowhere near getting done. Trump wants to roll back taxes for corporations and individuals and has offered a broad outline of how he'd like to see that get done.
Concerns over delays grew when the White House announced last week that it would not offer more details of its tax plans until after the August recess. Treasury Secretary Steven Mnuchin previously had said he believed the program could be pushed through before the break.
It's all leading to worries that with the stock market seemingly on autopilot, moving higher in the face of damaging political headlines and mediocre economic growth, that complacency about getting tax reform accomplished will only grow.
"We have come to think that a combination of brinkmanship and a correction of risky assets may be necessary for tax reform to get done," David Woo, currency and rates strategist at Bank of America Merrill Lynch, said in a note to clients.
Woo calls the scenario a "mini-TARP moment," referencing the market plunge after Congress rejected the initial bill for the Troubled Asset Relief Program, a measure that ultimately would provide the bedrock for the Great Recession recovery. The Dow industrials fell 7 percent in late-September 2008 after the TARP rejection.