Trump’s spat with Bob Corker could doom tax reform

Trump administration officials have doubled down on the plan to increase the deficit, said Greg Valliere, chief global strategist at Horizon Investments, putting deficit hawks like Corker in a bind over the plan before it even really gets off the ground. He pointed to Office of Management and Budget Director Mick Mulvaney’s interview on “Meet the Press” on Sunday.

Mulvaney “said running higher deficits — at least $1.5 trillion of red ink over 10 years — is acceptable if it eventually jump-starts economic growth,” Valliere wrote in a note to clients Monday. “This Keynesian dogma, coming from a former hard-line deficit hawk, has bewildered many Republicans like Corker, while supply-side Republicans are dismayed that abolition of the estate tax looks less likely. There’s no margin for error on a tax bill, as Republicans waver and Democrats reject any compromise.”

Issac Boltansky, an analyst at the research firm Compass Point, said the added friction between himself and Trump argument could endanger the tax effort, given the already slim majority for Republicans in the Senate.

“The margin for error in the Senate is already perilously slim for tax reform and the president’s comments undoubtedly hurt that push,” Boltansky wrote in a note to clients on Monday.

The tax bill is likely to go through the budget reconciliation process, which allows Republicans to avoid a filibuster by Democrats. But the GOP only holds a 52-seat majority in the chamber, meaning leaders can only survive two defections.

Chris Krueger, an analyst at Cowen Washington Research Group, said that Trump is either Trump taking his frustrations out on Corker for endangering the agenda or unknowingly making it worse for himself. Either way, it’s not good for the tax plan, he said.

“Either Trump realizes that Corker can sink the remainder of the Trump/GOP legislative effort and is upset by that reality, or he didn’t/doesn’t know and just made it a reality,” Krueger said in a note to clients. “Either way, we see ZERO upside for the budget process/tax reform in this Twitter-tantrum with the policy downside limit-down.”

This isn’t the first time that Trump attacked a Republican via Twitter in the midst of an important legislative push. Sens. John McCain, Rand Paul, Mitch McConnell, Lisa Murkowski, and Susan Collins were all targets of Trump’s Twitter fury during the GOP’s push to repeal and replace Obamacare.

Trump’s tweets on that subject did little to change the eventual defeat of the healthcare measures.