Washington Wonderland - Mr. Unprecedented Goes to Washington

January 19, 2017

The new president comes to Washington this week amid shaky poll numbers, mixed messaging about what he really envisions in terms of health care reform, tax policy and a national infrastructure plan, and a Republican Congress that just isn’t sure what to make of it all.  Anxiety is high despite the fact that Trump insiders have appeared in the corridors of New York, Davos, and this city this week to assure everyone not to worry and that they simply have to get used to thinking differently about how and what the incoming president communicates. In other words, “Stay calm and carry on.”

Political reality (i.e. the political self-interests of elected officials) has a way of splashing cold water in the face of every incoming administration. But this time around the water may be colder than usual. GOP insiders are already quietly screaming that you can’t toss “border adjustment” and still pay for massive corporate tax cuts, just like you can’t opt for “universal coverage” when the funding formulas are designed for “universal access.” And while no one is really yearning to find out how to pay for a $1 trillion infrastructure plan, they wonder how you suddenly turn to courting Democratic votes for that excursion after you’ve spent months hitting the minority party over the head on health care and taxes. 

The safest bet: By the end of the first 100 days of the Trump administration (around April 30th) we will know whether the new president or the Republican Congressional leadership will have prevailed in the race to spell out the details of the big policy agenda items.  Or, in other words, who’s really running the show.
Centers of Power
While the Trump administration is still far from fully staffing almost every level below senior cabinet positions, and many of those will not be filled until February, it’s not stopping Washington observers from already trying to figure out who will be the major decision makers in each policy area. When it comes to the economy and the interests of corporate America and Wall Street, keen eyes are suggesting that the stage is being set for competing power centers in and around the West Wing.

First, there’s Wilbur Ross, the incoming Secretary of Commerce. The billionaire investor is so well regarded in the upper echelons of the business community (and obviously has the ear of the new president) that he may overshadow the man who could be his main rival, incoming Treasury Secretary Steve Mnuchin. But both may be competing with Mnuchin’s fellow Goldman Sachs alumni within the White House – Steve Bannon, senior strategist to the president and part of the “chief of staff” troika, Gary Cohn, chairman of the National Economic Council, and Dina Habib Powell, assistant to the president and senior counselor for economic initiatives. Then there will be Carl Icahn, a close Trump associate expected to function as an informal advisor on financial regulatory reform.

There are no think tank economists, academics or former federal financial regulators in the bunch. Instead they are real world operators, a collection of strong personalities who, for the most part, are used to running their own businesses and setting their own agendas. As such, they are likely to produce competing visions for economic policy in the new administration. Setting competitors in place with the intention of ensuring internal conflict is supposedly one of the hallmarks of Trump’s corporate operational style. Many are anxious to see not only whether this management model can function in a city used to top-down decision making but just who among the group will emerge as the chief power broker for business interests.

Test Case
The fate of Richard Cordray, the director of the embattled Consumer Financial Protection Bureau (CFPB), has suddenly become a “big thing” for both sides in Washington. Conservative Republicans and representatives of the financial services industry are demanding that the new president strike early and fire Cordray from the office ASAP rather than waiting for his current term to expire in 2018.  Early indications are that President Trump is preparing to do just that, with reports that he has already chosen former Rep. Randy Neugebauer (R., Texas) as Cordray’s replacement.

Among some conservatives this decision is being viewed as a first big test of the new president’s ideological bona fides and an early sign that business interests will indeed prevail in the Trump administration. At the same time it will be a huge poke in the eye with a sharp stick to senate Democrats. The new Senate Minority Leader, Chuck Schumer (D., New York), Vermont Sen. Bernie Sanders (I), and Massachusetts Sen. Elizabeth Warren (D), the operative leaders of the party in exile, have just joined forces in a letter asking Trump not to do it. When he pulls the trigger Democrats will howl.   
The Counterintuitive Midterms
After the 2008 election of President Obama, many Democrats in Washington assumed that they not only had a lock on the presidency, but that they were well positioned to hold their Congressional majorities for a long time. That theory crashed and burned just two short years later. It’s worth remembering this in light of last November’s election results. Similarly, in the post-victory glow, many senior Republicans around the Trump campaign hold the opinion that Trump’s wins in the industrial Midwest signal serious vulnerabilities for Democrats in next year’s midterm elections, in particular those incumbent Democratic senators up for election in states that Trump won last year. But several analysts already looking ahead to November 2018 caution that midterm elections almost always run on a very different dynamic than presidential years.

The truth is that vulnerable Congressional Democrats suddenly find themselves in a much stronger position this far out because Hillary Clinton is not getting ready to enter the White House. While they have a hair raising number of seats to defend, recent history tells us that midterms have become the most potent opportunity for the party out of power to send a message, in this case to President Trump. While he’s arguing that his election results have put him in a commanding position to campaign against unruly Democrats who will not play ball with his administration on the big policy issues, even the mega-popular Ronald Reagan had no coattails and lost control of the Senate in the 1996 midterms. Plus, this time around, Republicans will once more have to worry about primary challenges, not so much from Tea Party aligned candidates as from true believing Trump voters whom the new president may seek to use to punish his lukewarm supporters in the House and Senate.

Veteran observers agree that by November 2018 the incoming administration’s success rate on promises kept, the state of the economy, and the president’s approval ratings by the fall of that year, will all be of much more critical political import than last November’s Electoral College results.

Washington Wisdom

“He is going to test our democracy as it has never been tested.”
John Dean, former White House counsel to President Richard Nixon, on President Donald Trump.

“Whether he’s ready or not is even more indiscernible than usual. He’s never held public office. He’s never been a governor. He’s never been a senator and we don’t have a lot of votes that give you a pattern of what he thinks….In terms of Congress, I can assure you that we’re not ready.”
Rep. Tom Cole (R., Oklahoma), on President Trump.

“They’re politically protected but not anymore.”
President-Elect Donald Trump, on the pharmaceutical industry, suggesting that his administration will negotiate directly with the industry to secure lower drug prices for the government’s Medicare program.

“Someone around him better tell him to focus.”
Former Rep. Joe Scarborough, host of MSNBC’s “Morning Joe,” on the incoming president.

“Nobody wants to know what the Clinton’s think – they’re totally checked out. It’s falling on us just by default.”
Anonymous aide to President Obama, explaining that Democrats now want the outgoing president to signal who he wants to lead the Democratic National Committee.

“If his popularity broadly speaking continues to dip or does not strengthen, members then don’t have an incentive to jump through hoops for him.”
Former Republican National Committee Chairman Michael Steele, opining that President-Elect Trump’s low approval ratings will have an impact on how Republican members of Congress respond to his policy plans.

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