US: President-elect Trump; “Personnel is Policy”

Published on December 8, 2016

For all the early criticism over President-elect Donald Trump’s transition team, cabinet selections, and the people parade in and out of Trump Tower, many of the major Cabinet posts have been announced already, well ahead of historic precedent – except for Secretary of State.

And on policy, while the terms of debate and legislative details are still far from being put in place (House Speaker Paul Ryan is paying a visit to Trump Tower tomorrow for further follow through on the FY2018 budget), there will be three priorities in the first 100 days: tax reform, the military, and infrastructure.

* First, on filling the Cabinet positions:

– Our understanding is that the nominee to be the next Secretary of State could come as soon as next week, and that it is likely to be either Republican Senator Bob Corker of Tennessee or Exxon Mobil CEO Rex Tillerson. Of the two, while Tillerson has made a strong impression on the President-elect, the moderate, center-right Corker, currently the chairman of the Senate Foreign Relations Committee, appears to be the favorite.

– John Bolton, the former Ambassador to the United Nations, is said to still be in the running, but despite his recent exhortations to the contrary, is seen as too hard line for the Trump foreign policy, especially for the top diplomatic job. Likewise, while they were both contenders at one time for the top State job, neither former Governor and 2012 GOP Presidential candidate Mitt Romney nor former New York City Mayor Rudy Giuliani are in the running anymore.

– The same goes for retired General David Petraeus who, though well-liked by the powers to be, would face a considerable confirmation battle over his plea bargain in sending classified emails to his then girlfriend when serving as Director of the Central Intelligence Agency. He is also seen as “one general too many” in an Administration already including three other retired generals in Homeland Security, the Department of Defense, and the National Security Advisor.

– Among other key nominees, one already announced appointment whose significance is being missed by markets is that of Elaine Chao, former Secretary of Labor under former president George W. Bush and Deputy Secretary of Transportation under former President George H.W. Bush. While commentators note Chao also happens to be married to Senate Majority Leader Mitch McConnell, they largely miss the direct line that should be drawn between the White House and Senate through Chao and the desire for a quick Senate passage of large infrastructure spending on major road and bridge projects, which should sail fairly easily through a GOP-majority House of Representatives. That linkage is not accidental, and is not missed by the Trump team.

– Intriguingly, the Trump Team is also considering bringing a Democratic Senator into the Cabinet with, we understand, North Dakota’s Heidi Heitkamp high on that list. Besides a display of bi-partisanship, Heitkamp is among those Democratic Senators from a state with a Republican governor, who could then appoint a Republican successor to the vacant Senate seat. While it is not entirely certain a Democratic Senator would accept the offer for that reason, one calculation going into the offer would be its boost in the GOP Senate majority from 52 (51 confirmed – with Louisiana still pending), to 53, or one seat closer to closing the 60 vote gap to overcome filibusters.

* On the early contours of tax reform and other policy priorities:

– The single biggest priority early in the Trump Administration will be on tax reforms, focused on reducing the tax burden for lower to middle income wage earners (see SGH 11/9/16, “US Elections: A Bull in a Bull Market”). The final tax rates will ultimately depend on the scored effects of the tax proposals on the size of the federal debt. In other words, the lowered tax rates could be tweaked higher to keep any increase in the estimated impact on the federal debt levels to a minimum.

– Perhaps underscoring his disdain for hard ideological positions, President-elect Trump is said to be quite cool on House Speaker Paul Ryan’s proposed entitlement reforms to reduce the trajectory of federal spending as a chief means to narrowing the deficit impact of the tax reforms. Resolution of those differences are slotted in the “to be dealt with later” column.

– President-elect Trump is likewise cool on the notion of financing the boost to infrastructure spending through public-private investment partnerships. It is not seen as especially practical, especially relative to the scale of many of the major road and bridge projects (think the multi-billion dollar Tappan Zee bridge construction currently underway). The money will just have to be found elsewhere.

– On the signature immigration issue, the incoming Administration will first focus on improving border controls, doubling the number of border agents to stop the inflow of new illegal immigrants across the southern border. But it may in fact be years before the presence of the current estimated 11 million plus illegal immigrants is likely to be tackled – if ever. But in terms of the “sanctuary cities,” the incoming Trump Administration will be quick to threaten all federal funding to those cities.

Above all, perhaps the single and starkest reality of the Trump Administration’s style and policies is that everything will be on the table, no sacred cows. Trump ran one of the most non-ideological campaigns of recent memory, running as a Republican but eschewing much of the mainstream Republican Party’s core ideological principles while freely and aggressively appealing to white blue collar workers who used to be the very base of the Democratic Party.

In that sense, Trump may be the first truly independent president, and certainly the most unpredictable one.

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