The reform agenda of Donald Trump is in serious difficulty

A spokesman of the House, Paul Ryan, described the decision last week to pull the bill for replacing the health care reform as a short-term problem. The bill had strong support from the new president Donald Trump.

The fall of the new health reform may be the first sign of a paradox. The nature of his program can make more difficult the management of the Republican Party in Congress.

True, this particular legislation failed because it could not bridge the divide between members of the “Freedom Caucus” and so-called “moderates”. The former thought it left too much of Obamacare’s framework in place. The latter were worried about the electoral consequences of people losing insurance. Trump united with the Republican establishment to push through this supposed middle-way because he wanted to get this off the agenda and move onto the real economic issues he has championed: tax cuts, infrastructure spending, discretionary spending cuts and trade policy reform.

But many Republicans in Congress want to go further, introducing a border adjustment tax, which would shift the whole US corporate income tax code to one taxing activity where it takes place. This is not economically without merit, but many Republicans doubt that there will not be significant real impacts on certain industries. Worse, they worry this is the first step towards a European-style VAT, enabling a significant new source of revenue for future administrations.

Besides tax reform Trump should start with infrastructure costs, which pledged to raise up to $ 1 trillion to restore infrastructure in the next decade.

Far from being the end of divisions, last week’s healthcare debacle might be just the start. Indeed, some are asking: if Republicans cannot agree a deal to repeal and replace Obamacare when they control the White House, Senate and the House, can they get anything meaningful done? Governments tend to be at their most ambitious early in their terms. The Trump government has fallen at the first hurdle.

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