Mnuchin warns of 'significant' stock market drop if tax reform fails

treasury Secretary Steven T. Mnuchin said Tuesday that failure to pass the Republican tax overhaul would trigger a “significant” drop in the stock market, which has rallied to record highs in recent months.

His warning, which some market analysts disputed, came as a new poll showed 52% of Americans oppose the tax plan, which is centered on huge cuts for corporations.

Only a third of respondents in the CNN poll said they supported the proposal from the Trump administration and congressional Republican leaders, which lawmakers are scrambling to turn into legislation.

With Congress facing a difficult task in passing a tax bill by the end of the year, Mnuchin increased the stakes by saying the recent stock market rally would end if the effort fails.

"'There is no question that the rally in the stock market has baked into it reasonably high expectations of us getting tax cuts and tax reform done,” Mnuchin told Politico in a podcast interview that aired Tuesday.

“I think to the extent we get the tax deal done, the stock market will go up higher,” he said. “But there's no question in my mind that if we don't get it done you're going to see a reversal of a significant amount of these gains.”

President Trump has repeatedly touted the stock market gains since his election last fall. The Dow Jones industrial average is up about 27% and the Standard & Poor’s 500 index is up about 20%.