It took the market about 6 months to realize that contrary to initial expectations, Trump’s fiscal reform would be substantially delayed and implemented in 2018 at the earliest, if at all.

Next, it’s time to take the machete to the total size of the program, which is what Goldman’s chief political economist Alec Phillips did today when he reported that Goldman is lowering the firm’s expectations for fiscal policy changes over the next year: “Rather than the $1.75 trillion/10 years tax cut we had previously assumed, we now assume a cut of $1 trillion” or a cut of over 40%.

This reflects an expectation of a tax cut that could be considered close to revenue-neutral under the loose definition that congressional Republicans have been using.

What prompted the revision? The recent chaos in DC of course:

Recent developments regarding the investigation into the Trump campaign have further weighed on a fiscal policy process that was already bogged down by House passage of the AHCA, which will consume valuable time in the Senate, an uncertain outcome on the FY18 budget resolution, without which tax legislation would become much less likely, and a lack of clear forward movement on tax reform.

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