Diary

Assessing Trump's Cabinet - Part II (Economics)

The election of Donald Trump was based on a promise to disrupt the multi-decade, bi-partisan direction of the American economy. The manufacturing base has been decimated; the $600 billion annual foreign trade imbalance has hollowed out the economy; the $20 trillion national debt is unsustainable. This is a complex undertaking. The Executive Branch has the lead on trade and regulatory policies, but the House has the lead on budgetary and fiscal policy. The independent Federal Reserve dominates monetary policy. This is the swamp of lobbyists and self-interest. This is where populism meets the bi-partisan corporate establishment. The administration will succeed or fail based on the performance of Trump’s economic appointments.

Trump’s team has a mix of high powered Wall Street types, successful business outsiders with conservative agendas, and an inordinate number of “advisers” with vague portfolios and ample opportunity to sow confusion. Weaving together the conflicting threads will be a major challenge.

General Economic Direction – the top dogs.

– Former Goldman Sachs partner and hedge fund operator Steve Mnuchen for Treasury Secretary. (Jack Lew) The Treasury Department collects the country’s taxes, pays its bills, and oversees the banking system. The Secretary is the country’s Chief Financial Officer. It is one of the top three or four cabinet positions. Highly qualified.

– Goldman Sachs President and Chief Operating Officer Gary Cohn for Chairman of the National Economic Council. (Jeff Zients) This Chairman, part of the White House staff, coordinates positions and meetings attended by the Vice President and relevant cabinet secretaries – State; Treasury; Agriculture; Commerce; Labor; Housing and Urban Development; Transportation; Energy; Health and Human Services. Highly qualified.

– Congressman Mick Mulvany of South Carolina for the Office of Management and Budget. (Shaun Donovan) The OMB, the largest agency in the White House, prepares the President’s budget proposal, and oversees its implementation in the executive departments. It also coordinates the administration’s procurement, financial management, information, and regulatory policies. Mulvany is a founding member of the Freedom Caucus, and an extreme deficit hawk with little executive experience. His ability to reach agreements with Paul Ryan will be a key to the success of the Trump presidency. An ideological risk.

– Son-in-law, real estate developer Jared Kirshner to be a senior adviser on trade and Israel policy. Hopefully he will not have an end-run around Mnuchen, Cohn, Mulvany and the other appointees with specific positions and responsibilities. A help if he moderates Trump’s behavior; a significant problem if he has his own agenda.

Cabinet Positions

– Former surgeon, House Budget Committee Chair, and author of numerous “Repeal and Replace” bills, Tom Price to be Secretary of Health and Human Services. (Sylvia Burwell) He will have one task – replacing Obamacare – for which he is eminently well qualified.

– Billionaire investor Wilbur Ross for Commerce Secretary. (Penny Pritzker) Commerce is the voice of the business community with a mission to promote job creation and economic growth. Ross made his fortune restructuring companies in Rust Belt industries, and was an early Trump supporter. Questionable.

– Former Texas Governor Rick Perry at Energy. (Physicist Steven Chu). He will lead the resurgence of carbon-based energy – although Texas also leads the nation in wind energy. Energy also oversees the nation’s nuclear weapons laboratories. Excellent choice.

– Fast food industry magnate Andy Puzder at Labor. (Tom Perez) The department advocates for workers. On issues such as minimum wages and overtime pay Puzder will be a poke in the eye for the department’s traditional constituency. A good lawyer/businessman, but a questionable choice.

– Mitch McConnell’s wife, Elaine Chao, at Transportation. (Anthony Foxx) Her focus is safety and infrastructure. Qualified; popular.

– Surgeon and presidential candidate Dr. Ben Carson at Housing and Urban Development. (Julian Castro) He’s a smart and inspirational guy who grew up in public housing, but otherwise has no apparent qualifications. A risky choice for a low risk position.

– The Secretary of Agriculture, generally a non-controversial appointment, has not been named.

Trade

– Secretary of State Rex Tillerson will oversee the largest group of officials responsible for foreign trade, with a network of consuls around the world whose job it will be to support American companies wishing to sell abroad. The “America first” focus will be quite different with a businessman in charge instead of a traditional diplomat.

– Reagan administration veteran, and trade litigator Robert Lighthizer for Trade Representative. (Michael Froman) A hard line with China is anticipated. Well qualified.

– Trump Organization chief legal counsel Jason Greenblatt for Special Representative for International Negotiations. (new position) Hopefully he will work on specific deals under the direction of Tillerson or Lighthizer.

– Economist and author of “Death by China”, Peter Navarro to head the new National Trade Council in the White House. (new position) Navarro advocates for a fundamentally different trade relationship with China which currently has co-opted our major corporations. This could be good; the current “free trade” rules have been much to the benefit of China and to the detriment of American workers.

Regulation

– Wall Street lawyer Jay Clayton to the Securities and Exchange Commission. (Mary Jo White) Clayton will change the focus away from enforcement, much to the chagrin of Elizabeth Warren. Qualified, but probably too much an advocate for Wall Street.

-Oklahoma Attorney General and leading climate change skeptic Scott Pruitt for Environmental Protection Agency. (Gina McCarthy) Dismantling Obamacare and the assault on the EPA rank as the two most direct efforts to eliminate the Obama legacy. Well qualified.

– Eighty-year old billionaire activist investor Carl Icahn for Special Advisor for Regulatory Reform (new position) Much of this work will be done in the first six months.

This is an A-list, whether one agrees with the policy direction or not. There are two risks: too many cooks with undefined roles; and the yet to be determined battle between the budget cutters and those who would cut taxes and increase military spending. There is adequate intellectual heft and proven experience to massively improve the trade balance. Lets be optimists for a while.

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