May 2017

As many Americans plan their summer vacations, we decided to share the latest thinking from Strategas on what appears to be the long, and likely bumpy, road toward health care and tax reform. Strategas, our trusted research provider, has an office in Washington, D.C., dedicated to providing insight on how policy might impact the markets.

First, health care.

President Trump’s campaign promise to reform “Obamacare,” followed by a failed attempt to pass the “congressional plan,” got a boost when the house passed the American Health Care Act (AHCA) earlier this month. Quickly, it has become apparent that the Senate will likely make significant changes, which may delay any resolution until mid-summer. The markets seem to have priced this in, as shown in the graph. To date the S&P 500 has met this news with a marked upswing. Although the AHCA is considered a health care bill, the legislation is first a $900B tax cut that serves as a down payment for congressional tax reform. Completion of the legislation provides a fiscal policy stimulus cushion until tax reform details can be worked out. Passage of AHCA will also prove that Congress has the bandwidth to pass complex legislation, so the bill is a proxy for tax reform. And the legislation provides a more favorable baseline for tax reform.



Which brings us to tax reform.

The tenets of this would be to simplify the tax code, cut taxes and make U.S. businesses more competitive. This could involve adding a controversial “border adjustment tax” and providing tax relief for middle class Americans. Congress cannot begin work on the FY 2018 budget until health care is signed into law. And without an FY 2018 budget, there is no reconciliation instruction available for tax reform. Congress will likely get tax changes completed close enough to Jan. 1, 2018, that the tax changes will be retroactive. This is important for how investors are looking at EPS for 2018. Clearly, the news from Washington will continue to impact both the markets and individual portfolios.



We will continue to monitor this legislation and how it might impact clients. If you have questions about how health care or tax reform might impact your financial situation, please call us.


For more information, please contact:
Dallas: Randy Root at 214.756.6900 or
Houston: Bill Cunningham at 713.683.7070 or
Omaha: Art Burtscher at 402.393.1300 or



The information contained herein represents the views of Westwood Holdings Group, Inc. at a specific point in time and is based on information believed to be reliable. No representation or warranty is made concerning the accuracy or completeness of any data compiled herein. Any statements non-factual in nature constitute only current opinion, which is subject to change. Any statements concerning financial market trends are based on current market conditions, which will fluctuate. Past performance is not indicative of future results. All information provided herein is for informational purposes only and is not intended to be, and should not be interpreted as, an offer, solicitation, or recommendation to buy or sell or otherwise invest in any of the securities/sectors/countries that may be mentioned.