US: Fiscal policy amongst priorities under Trump presidency - Nomura

Analysts at Nomura note that Trump seems committed to a very large fiscal stimulus, implemented largely through a tax reform that will significantly lower tax rates and this is an objective that he shares with the Republicans in Congress.

Key Quotes 

“That said there is still uncertainty in a number of important areas. First, there is an inevitable trade-off between speed and the breadth of tax reform. The House plan is an ambitious blueprint for a very significant transformation of the corporate and individual income tax. It will take time to work through Congress. But that means we may not get fiscal stimulus for some time. Another possibility is a less ambitious tax reform that mainly lowers some key tax rates which could be implemented more rapidly.”

“On spending Trump’s priorities are less clear. He has frequently talked about substantially increasing infrastructure investment, but he has not offered a specific proposal for how to achieve that objective. Similarly, he has talked about rebuilding the US military, but without specifics on spending. He has also talked about reducing the debt and deficit, again without specifics.”