With market and economy chugging along, some see fewer reasons for tax cuts

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President Donald Trump discusses the federal budget as Treasury Secretary Steve Mnuchin (R) looks on in the Roosevelt Room of the White House on February 22, 2017 in Washington, DC.

With the current economy chugging along and the markets seemingly functioning on autopilot, tax reform, and certainly tax cuts, might not be the best top priority, according to some economists.

“I don’t think that given the strength of the labor market and the tightness of the labor market that the economy needs any fiscal stimulus,” said Ed Yardeni, an economist who is supportive of a simplified tax code and lower corporate taxation in general. “It ain’t broke so there’s no reason to fix it.”

Congress left Washington for its summer recess with several items awaiting on return: the debt ceiling, government funding and tax reform chief among them. Administration officials have talked about getting taxes at the front of the agenda before the end of the year.

Yardeni and other economists acknowledge tax reform overall would be a long-term benefit. U.S. corporations face higher taxes than most other parts of the world and the code is complex and riddled with loopholes.

Taking away those loopholes and lowering the rate would free up money to invest in business and possibly encourage more companies to stay in the U.S. rather than seek to move their headquarters abroad.

But there’s the question of how much Congress will be able to tackle when it reconvenes. Health care reform failed after multiple efforts, and the immediate need will be raising the debt ceiling — a legislative block on the amount of money the government can borrow — and passing a spending bill. Both have fall deadlines.

There may be bi-partisan support for raising the debt ceiling, but sure enough some lawmakers will use their votes on that as a bargaining chip to push a short-term funding bill that doesn’t make significant changes and postpones a bigger policy fight.

If Congress is unable to reach a grand bargain on tax reform, it may default to some tax cuts to at least claim some victory for advancing the administration’s agenda. That could spell trouble if cuts are not covered by revenue found elsewhere, economists said.