Larry Kudlow, the veteran financial guru and former economist in the Reagan administration, said a congressional delay on healthcare reform is a bigger drag on President Donald Trump’s economic agenda than any fallout from Tuesday’s firing of FBI Director James Comey.
“Everybody was pushing back healthcare a month or two … the Senate was going to consider healthcare more than people initially thought,” Kudlow said on CNBC. “Frankly I think that's more significant than the Comey firing.”
Kudlow said it’s important for Trump to move past the Comey dismissal and appoint a new FBI director quickly. Former New York Police Department Commissioner Ray Kelly is Kudlow’s top choice.
Comey’s abrupt dismissal was met with a collective market yawn on Wednesday, with the S&P 500 rising throughout the day into positive territory. The Dow Jones Industrial Average declined, mostly on Walt Disney Co.’s disappointing earnings report the night before.
Healthcare reform is a key part of Trump’s pro-business agenda that also includes tax cuts, less government regulation and greater spending on roads, bridges and airports. The House last month passed a healthcare bill that still requires Senate approval before it reaches the president’s desk.
Speaker of the House Paul Ryan, who shepherded the Republican bill through the lower chamber, said he wants the Senate to pass healthcare reform in a month or two. GOP senators are planning to write their own bill, a process that could take longer.
Other analysts said the Comey controversy wastes Trump’s political capital.
"I think it's still another story that's going to slow down Trump's agenda," said Greg Valliere, Horizon Investments chief global strategist.
"We're going to have a budget fight in the next few months. Nobody has any idea what the Senate is going to do on health care. You have another huge story that's going to gobble up more time. It's a distraction for sure," he told CNBC.
BMO Private Bank CIO Jack Ablin said while markets shouldn’t be swayed by the Comey news, the firing could increase doubt that already exists about when Congress and the White House will actually tackle tax reform, the policy most important to investors, CNBC.com explained.
"There's a healthy degree of skepticism among investors already that a lot of these policies that Trump has been bombastically touting around aren't going to get signed into law. This would seem to undermine that confidence," said Ablin.
Valliere said he still expects to see tax reform, but timing is uncertain.
"There's only two things I see that could really derail this market. One could be a geopolitical crisis, and I don't see it, and the second would be a sign that tax reform bill is dead, and I don't see it. It's a distraction," Valliere said.
Valliere said he does not expect Comey's termination to lead to the FBI ending its investigation into possible ties between the Trump campaign and Russia.
"It's going to embolden Trump's critics, who say he has something to hide…but I think this has become too much about Comey for the last few months. I think an FBI director should be more circumspect and he wasn't," said Valliere.
"I think there's going to be a huge focus on him [Sessions] and his role. This complicates things. I think the average Americas are sick of this whole thing but inside the beltway, it slows down progress on the Trump agenda," said Valliere.
The direction and strength of the nation's growth under Trump is of much concern and speculation.
The U.S. economy won't achieve the Trump administration's 3 percent growth goal this year and not until all of its tax, regulatory, trade and energy policies are fully in place, Commerce Secretary Wilbur Ross said on Tuesday.
The GDP target "is certainly not achievable this year," Ross told Reuters in an interview.
"The Congress has been slow-walking everything. We don't even have half the people in place."
Kudlow is host of "The Larry Kudlow Show" and author of "JFK and the Reagan Revolution: A Secret History of American Prosperity," written with Brian Domitrovic and published by Portfolio.