U.S. Republicans are not expected to push major tax cuts through Congress this year, according to a majority of economists in a Reuters poll, who in any case were skeptical that the legislation would provide a significant boost to the economy.
While optimism about a tax overhaul has helped push the U.S. stock market up for most of this year, the administration of President Donald Trump, a Republican, is still seeking its first major legislative win after almost a year in office.
Skepticism about major tax cuts has been growing over the past two weeks, causing share prices to wobble.
The House of Representatives on Thursday approved a package of tax reductions estimated to raise the federal deficit by nearly $1.5 trillion over a decade. The Senate, where the Republican majority is slimmer, will be the focus for debate.
Nearly two-thirds of the more than 60 economists who answered an extra question in the Nov. 13-17 poll, which mostly took place before the tax cuts passed the House, said they were not confident the administration would get the legislation passed this year.
"We feel that if it does pass next year, it is likely to be less ambitious and more focused on temporary cuts than reform," Ajay Rajadhyaksha, head of macro research at Barclays, wrote in a note.
The effect of tax cuts would probably be muted because of a lack of wage growth and a high level of employment, he added.
In a Reuters poll last month, a strong majority of economists said the U.S. economy did not need a big fiscal stimulus at this late stage of the business cycle.
This month's poll of more than 100 economists showed most respondents had upgraded their near-term forecasts for the U.S. economy, which they expect to grow just above the roughly 2 percent trend rate over the next two years but with muted inflation.
When asked what the economy needs most, the top pick was increased infrastructure spending. Nearly as many said the United States ought to join the Trans-Pacific Partnership trade agreement - Trump pulled the nation out of negotiations just days after becoming president - as those choosing tax cuts.