Trump's constant crises are putting his economic agenda at risk

Trump's job creation, 100 days in
Trump's job creation, 100 days in

President Trump's jobs agenda could be crippled by the crises swirling around his administration.

Economists say it's far too soon to change their forecasts. But if Congress is consumed by investigations -- and especially if there's a push to remove Trump from office -- it could wipe out any hope for tax reform and public works spending, two pillars of Trump's plan for the economy.

"It certainly bogs everything down," said Greg Valliere, chief global strategist with Horizon Investments.

Those plans were already delayed.

Treasury Secretary Steven Mnuchin originally promised a broad rewrite of the nation's tax laws by August. But many Wall Street economists say it's unlikely to pass anytime this year because the administration is having so much trouble replacing Obamacare, its first priority.

And if tax reform can't pass by early next year, it may have to wait till 2019 or beyond. It will be more difficult to win votes as the 2018 midterm elections approach.

Goldman Sachs economist Alec Phillips raised that possibility in a note on May 5 -- before the furor over Trump's firing of the FBI director and his disclosure of classified intelligence to Russia.

Mnuchin and Gary Cohn, Trump's chief economic adviser, went to Capitol Hill on Wednesday to talk about tax reform with moderate House Republicans, a group whose doubts helped kill an early version of the Obamacare replacement.

Economists have had trouble assessing what Trump's tax reform would do for the economy in the first place because the administration has released so few details.

Related: Wall Street is troubled, but not full blown panicked yet over Trump

Meanwhile, legislation to back up Trump's promise of $1 trillion in spending on public works like highways and airport upgrades hasn't even gotten started.

And most people don't realize that $1 trillion is targeted spending over 10 years, not all at once. Even if it passed, economists say there would be little chance of a quick lift for the economy.

"It takes a long time for infrastructure spending to ramp up," said Mark Vitner, an economist at Wells Fargo. "You have to do design work, get local approvals."

Valliere said he doesn't expect any real progress on infrastructure soon: "That's a 2018 story."

Related: Trump aides try to steer tax reform on Capitol Hill

Valliere said the administration made a mistake by not putting public works spending at the top of its legislative agenda, partly because there was less organized opposition to that than to Obamacare repeal or tax reform.

"There were many people who feel he should have gone for low-hanging fruit, and that was infrastructure," said Valliere. "He could have gotten some Democratic support that that. Instead he gets bogged down on Obamacare replacement."

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