One month after Goldman gave up on Trump being able to pass any major (or minor) tax package in 2017, overnight - in the aftermath of Senate GOP's deplorable failure to find the needed 51 votes to " repeal and replace" Obamacare- Goldman's Washington analyst Alec Phillips throws up his hands, and no longer believes that passage of Obamacare is possible.

In a note that looks at the current state of health legislation, titled appropriately enough "Nearing the End", Goldman summarizes that Senate Republican leaders have postponed the vote on health legislation that had been tentatively scheduled this week. A vote is possible in two weeks, but further delays are possible. 

Phillips does note that there are still some arguments in favor of eventual enactment: Republicans will be under pressure to follow through on a long-standing political commitment, and the estimated deficit reduction and tax cuts in the health bill could be useful in passing tax legislation later. Fixing the existing program for the coming year will also be necessary.

However, he is skeptical and says that "these factors are likely to be outweighed by the political obstacles. Estimates of the potential increase in the uninsured population seem unlikely to improve substantially even after revisions to the bill. Public support for the effort is also weak, and intraparty divisions appear to pose too many obstacles. At this point, enactment of broad health legislation like the House passed or the Senate is contemplating seems unlikely."

That said, Goldman is not too worried about the implications of the Senate's failure, saying that "the prospects for passage should also be somewhat less important to broader financial markets than they might have been several months ago. The debate over health legislation is likely to end—either with enactment or a failed vote—by mid- to late July, allowing the rest of the budget process to proceed, eventually leading to consideration of tax legislation. In the less likely scenario that broad health legislation is enacted, there would be few near-term economic effects as most of the changes do not take effect until 2020."

Goldman's full note:

Health Legislation: Nearing the End

Markets are once again focused on the potential for a congressional vote on health legislation, this time regarding the Senate's Better Care Reconciliation Act (BCRA). This is presumably due to the need to move beyond the health bill before tax legislation can be addressed, as discussed below, and because of the broader signal that passage of a health bill might send regarding the rest of the Trump agenda.

However, the effort to replace the Affordable Care Act (ACA) has been set back once again with the announcement that no vote will be held for at least another two weeks. At that point, there are three potential options:

Passage: If Senate Republican leaders are able to muster a majority in favor of a health bill, the bill would move back to the House for at least one more vote. The outcome there would depend on the details of the final product, but a bill that can manage to win support of 50 of 52 politically diverse Senate Republicans would probably be able to pass the House and become law.

Defeat: Major legislation is rarely rejected on the House or Senate floor, since congressional leaders usually know whether there is adequate support. However, it is clearly possible that this bill could end in a failed vote; if Senate Republican leaders determine that there is very little chance of ever coming up with an acceptable compromise, they might allow a vote against the bill to provide a more definitive end to the process and, possibly, as a way to pivot to a short-term bipartisan effort to stabilize the individual health insurance market for 2018.

Delay: As of this writing, Senate Republican leaders have opted to delay the vote for at least two weeks, until the week of July 10. A delay could be interpreted as a sign that Republican leaders believe there is a chance of gaining support over the next two weeks for a modified bill. However, it might also simply signal that leaders are not quite ready to give up on the effort, even if they recognize that the odds of eventual enactment are low. Further delays cannot be ruled out, though we would be very surprised if the Senate debate continues past late July.