Donald Trump speaking in an interview with FOX Business that aired today: "You know, if you look at the kind of numbers that we're talking about, that's all going back into the taxes.  And we have to do health care first to pick up additional money so that we get great tax reform.

So we're going to have a phenomenal tax reform.  But I have to do health care first.  I want to do it first to really do it right."

With these words the president has officially taken one foot out of the water in pursuit of tax cuts. The support for a repeal of Obamacare has faded in light of the intra-party upheaval that caused the first attempt to fall through. Now Republicans have to deal with the fact that their voter base, made of the working class who benefit most from Obamacare, will be left deserted by new legislation, leaving many millions uninsured, alienating a voter base that is quickly pulling back support of a president with some of the lowest approval ratings in the first few months of taking office in history.

Trump has to know this. So coming out, basically saying that tax reform is dependent on Obamacare being replaced is setting the stage for an exit on tax reform during the second half of the year. That exit will either consist of a much lower tax cut than most expect, somewhere in the vicinity of 28% for the corporate rate. It is also entirely possible, if not probable, that nothing happens at all, especially if his popularity continues to wane and tax reform gets pushed back to 2018, when mid-term elections take place.

And then there is the possibility that the president may have recently realized that geopolitics is much easier than dealing with Congress, making it difficult to focus on the domestic front when there are so many challenges internationally that can be pursued without Congressional approval.

Bottom line: Tax reform is hard. Neither Congress or the White House is equipped to deal with hard at the present moment or in fact, for the foreseeable future. Throw in easily distracted leadership and one can see how this goes further and further off track.


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