The House tax bill is in trouble, according to industry experts.
President Donald Trump's "big beautiful tax bill" faces hurdles, especially in the House, "where backers of the measure are short by at least a dozen votes," Greg Valliere, chief U.S. policy strategist for AGF Investments, said Friday in his morning newsletter.
"This iteration of the bill is in trouble," agreed Jeff Bush of The Washington Update. "But that was to be expected."
Both Valliere and Bush agree that passing the House bill by Memorial Day won't happen.
"The artificial deadline of Memorial Day was always going to be problematic as a forcing event for Congress," Bush told ThinkAdvisor Friday in an email. "It’s simply not a legitimate deadline. The three factions within the GOP House don’t share the same sense of urgency without a dire deadline (debt default) or at least a long vacation (think August recess) to sufficiently motivate them."
Beleaguered House Speaker Mike Johnson "has vowed to pass the bill by the Memorial Day recess, but that’s highly unlikely; some members are hoping to finish consideration by the July 4 break," Valliere said. "The latest uproar, keeping this controversial, focuses on spending cut provisions that, incredibly, wouldn’t take effect until 2029 — a non-starter for the fiscal hawks."
That being said, Valliere sees the bill passing this year, "perhaps by the August break, in conjunction with raising the debt ceiling, which probably has to occur by late summer."
But even that could be delayed until the end of December, Valliere continued, "because there’s agreement that the 2017 Trump tax cuts have to win enactment before they expire at the end of the year — so why not wait until the very last minute, a rich Washington tradition?"
Significant Senate Changes
Regardless of the House vote in committee or on the floor, "the Senate will make significant changes to the bill," Bush said.
The bottom line: "all the talk and headlines amount to tabloid fodder until 72 hours before the final passage, and the end of July is likely the real deadline for approval," Bush said. "I’m giving audiences permission not to get caught up in all the drama. These bills always transition from a clean bill of health to the ER, then to the ICU, only to be revived again, starting the process all over."
The House bill provides "the parameters" of a final bill, Bush said.
"You can look at the basic components of the GOP House bill and surmise that the final bill will include some variations on what we’re examining now," Bush continued. "The final bill will likely maintain the marginal rates as they are and possibly introduce a higher rate for the highest earners, SALT cap deduction relief, Medicaid cuts, and some form of tax relief for tips and overtime."
Added Bush: "Several more ups and downs will happen before an actual bill reaches the President’s desk." Expect "additional surprises" over the next couple of months, with "unexpected additions and unexpected deletions."
Valliere concluded that "as we saw in the last few months, the financial markets want clarity, but uncertainty may return in the next few weeks. A tax bill that looked like a no-brainer two months ago may stall in the House."
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