President Trump's ability to quickly push through business deregulation and tax cuts will determine the fate of the U.S. economy, according to a member of the president's economic advisory panel.
"What's really going to make or break the US economy is whether these things get done or not in the coming couple of months or so," Mark Weinberger, global chairman and chief executive officer (CEO) of EY told CNBC's Squawk Box on Wednesday.
Weinberger sits in on the President's business round table discussion which brings together more than 200 of the largest businesses in the U.S. along with some of the biggest international companies and the U.S. Secretary of Labor, Alex Acosta to discuss policy proposals with the U.S. administration.
Recent political dramas, such as last week's interrogation of former FBI chief James Comey with regards to his dismissal and Tuesday's Congressional hearing into the U.S. Attorney General Jeff Sessions' dealings with Russian officials, have indeed been unhelpful diversions.
"Obviously there are a lot of distractions that people would rather see go away in terms of derailing the economic agenda. It is sucking a lot of oxygen out of the air, no doubt, and taking the attention away from some of the folks and the president in particular at times," admitted Weinberger, adding that there are only 80 legislative days left this calendar year and citing the conventional wisdom that it is harder to get measures passed after a president's first year in power.
"They're going to do everything they can to try and get it done this year," he said, but confirmed that it would be 2018 or 2019 at the earliest before the effect of any measures would filter through to the broader economy.
During Weinberger's career, the EY chairman has interacted with former Presidents George Bush, Bill Clinton and Barack Obama and commented that his impression of President Trump was that the incumbent U.S. leader was "very quick out of the gate, very outcome-oriented, wanted to get things moving."
Weinberger stressed the importance of quickly moving ahead with business deregulation and tax planning, pointing to the results of a survey of the business round table CEOs which showed that 77 percent said that they would hire more people and 87 percent would invest more in capital equipment if these measures are swiftly implemented. Conversely, if they are not, 90 percent of the respondents said that they would cut back.
Addressing the tax regime is most critical, according to the EY chairman.
"Lowering the corporate tax rate, moving to a more competitive international system, having to make it fiscally responsible – that's where things like the border adjustment tax, getting rid of the interest deduction, getting rid of credits and incentives comes into play," said Weinberger, noting that the key question is how much change could the business and political communities bear, given that reductions to corporate tax will have to be offset by increases elsewhere as a safeguard against a worsening deficit in future years.
In addition to making U.S. corporate taxes internationally competitive, the government's other top priority must be to incentivize companies to bring back overseas earnings, says Weinberger.
"They have to find a way to take away that penalty. That is in the heart of what most of what the tax reform plans are looking at."