I subscribe to an investing newsletter by an ex-Goldman Sachs analyst that uses a mathematical calculation for recognizing market trends that is nearly always spot on. I’m not going to provide any proprietary information since this is a paid subscription but his weekly newsletter is usually a tour-de-force in derp. This guy is a Der Trumpinfuhrer true believer, amazing for a supposedly intelligent and educated person. All we ever hear about is the racist, sexist, stupid faction of mouth-breathing, knuckle-dragging Drumpf supporters that attend his stupid rallies….but if a big chunk of the moneyed elite thinks this way in this country, I’d say we are in for a truck load of problems. Anyway, I thought you all might be interested in how one of the money guys in the fever swamps views the world….it’s really pretty amazing:
Trump Pivots To New Top Priority: Drain The Swamp
Public officials get elected for a certain limited amount of time. In that time they need to make changes to the laws, the policies and the personnel. If they fail to make changes, they fail. A good politician uses his time to the fullest. In politics, time is everything.
The fact that Trump and the Congress have nothing to show after 6 months is a big failure. Unlike the Obama administration where gridlock and doing nothing was celebrated for many years, we expect more from Trump and Congress now. Obama’s brief 2 years of power resulted in an economy grinding to a complete halt after massive tax hikes embedded in Obamacare, highway robbery of middle class health care and strangling of America’s energy and mining economy. If America hadn’t elected a Republican House to thwart Obama’s agenda, we wouldn’t be having an 8 year bull market. We would still be in recession. But still those 2 years of full Democrat power were enough to give us the monster that Obamacare is. Yes, the uninsured rate went from 18% to 10% from 2010 to 2018, but instead of introducing a payroll or investment tax for covering these extra 10% (like it was done for Medicaid and Medicare) and debating the merits of that tax and who should pay for it, Obama and the Democrats decided to disguise this redistribution scheme as rising insurance premiums across the board for everybody who is a healthy and an able bodied worker. A very regressive policy decision and a complete betrayal of the middle class by Democrats. That is why Democrats lost over 1000 legislative seats in the last 5-6 years. The Republicans were tasked over the last 6 years by the American people to change the design of this policy. Republicans have now proposed a design in which states decide the generosity of their health care benefits and allow the insurance market to function as before. They also defined government funds to pay for people with pre-existing conditions and specified that those funds be paid for with existing medical taxes and with contributions by states. After the health care negotiations failed, we learn that this is a design that Nancy Pelosi now openly supports! What a surprise! Because it obviously makes sense and it is a good, common sense policy. But this is not why Nancy Pelosi has flipped.
Health care is a clear and present danger to the economy. The rising premiums for 2018 in just 2 to 3 months are going to wreak havoc in the budgets of many regular Americans this fall. Many will have to drop insurance or will have to pay 30% more in premiums which will obliterate their discretionary spending. The blowup of Obamacare is a big problem and that is why fixing it was a first order of business in 2017. But things have changed. Like Mike Tyson says “Everybody has a plan until they get punched in the face.” The Republican plan was Health Care, Taxes, Infrastructure. But we are kind of still stuck on Health Care as prominent Republican (in name only) McCain delivered a knockout punch this week.
In the aftermath of this failure, Trump’s political ascendance has never been stronger. The clear political loser of this fiasco is the Neocon GOP – the Ryans, the McConnells, the McCains. The Neocon GOP is the one that failed to come to an agreement. The Freedom Caucus agreed to a deal in the House. But the Moderate GOP in the Senate didn’t. The optics will not be easily forgotten. Freedom Caucus and Trump look good. Neocons look bad. But this is also a failure of Democrats. No matter how they spin it, they are the ones that passed Obamacare and they are the ones who worked to undermine efforts to fix it. And that is why Nancy Pelosi is trying to find a way out of her party’s predicament. It is why Chuck Schumer waived to the Democrats not to celebrate the failure.
The Trump response has been very swift and very appropriate. Prince Rebus or Reince Priebus (sorry) was humiliated by Scaramucci and kicked out as White House Chief of Staff. Rience Priebus is Wisconsin Republican party friend of Paul Ryan (Speaker of the House). Trump allowed the Ryan GOP to run things for 6 months and all he got was a big donut (zero). Trump is a businessman, he will not tolerate and spend precious political time on failures (like Obama did in defending Hillary over Benghazi). You either deliver or somebody else will. That is why I like Trump.
It is important to note that the issues of Health Care Reform and Tax Reform are GOP issues, not Trump issues. They are Paul Ryan’s Better Way issues. The Trump issues are locking down illegal-immigration, getting rid of gangs, putting up a Border Wall, fixing the electoral system and infrastructure spending. Tax cuts are not the basis of Trump populism. Steve Bannon is calling for HIGHER marginal tax rates on the rich, after all. Cuts in Medical entitlement spending is not what Trump campaigned on. Trump has always said he will not touch entitlements. Trump campaigned on fixing Obamacare by reducing government regulation of health care, not on cutting medical entitlements. When you get down to the details, Trump and the Neocon GOP have different priorities and proposals on almost everything.
New Sheriff Means New Priorities
The elevation of General Kelly to White House Chief of Staff signals that Trump is no longer on board with the Neocon GOP agenda. While the GOP wants to move on to Tax Reform, will they be able to now that Democrats and Trump are going to be screaming about health care falling apart into the fall when insurance premiums rise again and millions can’t get coverage? Talking about tax reform for the rich while people get hammered with another $300 in monthly payments is not going work out well for the GOP. The elevation of Kelly (who was the current Homeland Security head elected by bipartisan 88-11 Senate vote) means that Trump will want to focus on his core non-economic issues – illegal immigration crackdown, gang cleanup, Border Wall. Trump is doubling down on the culture war and is leaving the Republican agenda aside. What does that mean for tax reform? It is dead. Tax reform will not survive the Democratic onslaught and will not survive the Liberal Senate. It will not survive Steve Bannon. There will be no time to discuss tax reform.
As you have probably noticed Trump is out on the stump again. We have already entered the 2018 electoral season. There are 33 Senate seats up for grabs – 25 of them Democratic and about 10 of them in states that Trump won big. It is very important for Trump that these seats are all taken by Trump Republicans. Not Neocon GOP Republicans, but Trump Republicans. In 2018, expect the following factions to grow bigger – Freedom Caucus and Trump Republicans and Sanders Communists. The Clinton Globalists and moderate GOP ranks are going to get obliterated in 2018. The delusional press will continue to focus on the fight between Clinton Globalists vs Neocon GOP, but until the 2018 election is over the press will not understand that they have been covering the battle of an ever shrinking group which is far removed from its best days. Corey Lewandowski is already out in Ohio supporting Trump endorsed candidates for Governor (yes John Kasich will soon be a footnote) and other legislative positions. For the next year, you can expect Trump to be in full-blown campaign mode and most of the stuff happening in Congress will be used as political fodder against the Neocon GOP and the Clinton Democrats by both Bernie Sanders and Trump. That is why we had “single payer” amendment vote – the GOP wanted Democrats to vote on it so they can hang it on them next year. Predictably the measure was voted down 0-57. Yes, 43 Democratic Senators voted “present” and declined to endorse single-payer healthcare!
So for the rest of 2018, I expect the Border Wall and the Budget and the Debt Ceiling to be the predominant issues with a return to grand negotiation on Health Care between Republicans and Democrats at some point. The House may make some noise on Tax Reform early on in September but that will get drowned out by the Budget negotiations and coming Government Shutdown on October 1st.
Lastly, Trump is making “Drain The Swamp” a top priority. This means getting Trump people to run the government. Expect Trump to be constantly fighting with various GOP senators like Murkowski and McCain. Murkowski, as chair of the Senate Energy Committee, has declined to consider 6 positions nominated by Trump. McCain as chair of the Senate Armed Services committee is playing similar games as well. So is Lamar Alexander as Chair of the Health & Education services. The Senate does not want to confirm Trump’s appointees and NeoconSenators like McCain and Alexander are acting as top opposition. So the fight on this front is going on behind the scenes and is perhaps more important that big ticket legislation. It is also a very ugly fight that largely goes unreported. It is very important to staff government with Trump appointees. Trump will very likely focus on that in the 2nd half to the detriment of big ticket legislation.
Through deregulation Trump can enact enough economic growth and will largely get the credit for that. But for political reasons, he is probably better off with a do-nothing Congress and in the position of blaming Congress for its inaction and failures every step of the way going forward.That is how he gets a Trump takeover of the Republican Party at the Congressional and Senatorial level. The only way for the Neocons in Congress to score political points against Trump is to deliver bills of economic importance to his desk. But can they? Trump is sitting with the pen waiting…
