Blake Rutherford, Mark Alderman, and Howard Schweitzer, of Cozen O'Connor Public Strategies, give an update on the transition to the administration of Donald Trump and how this effects business and the political climate.
Blake: ... thanks to everyone for joining us for our call today. We're excited to launch a new series. We spent almost a year covering the 2016 Presidential election. All of that information and all of that content is available on iTunes, but we've now launched a new series, which we're calling "The Beltway Briefing", which will provide you and anyone else that may be interested with an update of what's happening in Washington as we enter the administration of Donald J. Trump. Issues that will effect not only business, but also the political climate both inside the beltway and certainly, from time to time, beyond.
My name is Blake Rutherford, I'm joined, as always, by Mark Alderman, chairman of Cozen O'Connor Public Strategies, and Howard Schweitzer, managing partner of Cozen O'Connor Public Strategies. Howard, Mark, great to be with you again.
Howard: Thanks, Blake.
Blake: It is a chilly day in the District of Columbia. I don't mean that anything beyond the weather, but it's a cold day here in Washington, and we are 10 days away from the inauguration of President Donald J. Trump. We have, over the past couple of weeks, seen a lot of developments as his administration is coming together, as his inner circle is being rounded out, so to speak. Most notably by the announcement that his son in law, Jared Kushner, would take a prominent role inside the White House. That is not only one of the lead stories above the fold in the New York Times today, but New York Magazine has a cover story ... the President's son-in-law. We have seen the beginnings, and as we talk now, Senator Jeff Sessions, President-elect Obama's nominee to be attorney-general, has begun his confirmation hearing, and over the course of the next several days we're going to see at least six confirmation hearings. I want to talk about that, and I want to talk about Trump's posture over the last couple of weeks. Really, to begin, Howard, I want to start with you. Inside view of the Trump transition: it is both at full speed and also winding down as we get to inauguration day and day one. What do you make of where we are in the transition process?
Howard: Well, Blake. Back to your cold day reference, I think most people in this town said that it would be a cold day in hell when Donald Trump got elected President of the United States, and I guess it's pretty cold in hell, because he's about to take the oath of office. The transition is proceeding, but, frankly, as we always said they would be, they're behind where they need to be. They are slow in getting people nominated for these positions and getting their ducks in a row, and they're still, frankly, coming up to speed across the government in terms of the things that need to be addressed in order to take the reins and start effectively on day one.
Blake: Certainly, the media attention's on the high-level posts, the cabinet secretaries. As you both know very well, there are some 4,000 positions that the administration will need to fill, that is a complicated process. Hiring, in general, is a complicated process. Hiring within the federal government is a particularly complicated process. What do you see the impact of that first 120, 160 days, being at the agency level, Howard, as they try and get these positions filled?
Howard: I'll tell you, I hear from people inside the career bureaucracy that they're scared. They're scared about what Trump coming in means for their roles, their power. It's not business as usual as far as the bureaucratic mindset going into this thing, but I think they'll very quickly realize this is business as usual, that Trump isn't going to have these agencies populated with tons of people at the very beginning, and as a result the bureaucracy is going to be what it always is, which is a powerful force, a force to be reckoned with, and they're going to realize that. That's one consequence of people not being in these jobs quickly.
Blake: Mark, what do you ... You saw this from ...
Mark: Howard, let me just follow up, if I may, on what Howard said. As Howard very well knows, there's actually one critical appointment that, at least as of yesterday, hadn't been made yet, and that was the head of the Presidential personnel office. What is going to happen shortly is the transition is going to stop hiring people for the government and the executive branch is going to start doing its own hiring through the Presidential personnel office, which is yet to be staffed up itself. I think what Howard said about it being a while before these agencies get populated is especially true, given that that appointment is yet to be made.
Blake: It's an interesting point, Mark, because it's one of the very interesting ironies of Trump, Howard, and you've written about this ...
Howard: Mm-hmm (affirmative).
Blake: ... which is, certainly, the President-elect coming in and really thinking that change happens quickly when, in effect, it is very difficult to get that bureaucracy moving. There's only so much that he's going to be able to achieve by executive order, which, as we know, every incoming President usually signs a large stack of executive orders. We would expect President Trump to do the same. Even still, the effect of that and getting those changes in place and executed requires people within the bureaucracy to make those kinds of things happen, and I sense that what the Trump inner circle may run headlong into is the fact that the bureaucracy's simply not going to move as fast. I wonder, too, should we be worried, and I mean this not in a political context, but just in an operation of government context. Should we be concerned, Howard, by the slowness of personnel?
Howard: No. Look, it takes any administration, under the best of circumstances, 6 months to get its sea legs, to get out of campaign mode, to get their people in place, to take the reins and actually govern. It's going to take longer for this administration, but should we be worried? No, because there is this apparatus that's out there. If you're Trump, you've got to worry because there's going to be rhetoric meets reality point, at which he begins to be held to account.
Howard: Everybody's following his tweets, and I'm tweeting about his tweets. "What_the_Trump", but he's making bold promises, and he's got to be able to execute on his agenda, or the people that voted for him are going to get frustrated pretty darn quickly.
Blake: I want to come back to two big issues, one being the wall, the other being repealing the affordable care act, in a minute. Mark, before we get to that, obviously the big news of the day is confirmation hearings. They have begun. As I mentioned, Senator Jeff Sessions is before the Senate now. His nomination for attorney-general being discussed and debated. What do you make, generally, of the confirmation process as it begins? General thoughts and things to be on the lookout for, and then I want to talk about the role of the Democrats. First, just wanted to get some general thoughts.
Mark: I think, generally, the confirmation hearings are being scheduled in a bunch, as they were 8 years ago as well. I think all of the drama about too much too soon is a little bit misguided, because that's how every new President, especially changing from one party to the other, has to stand up his government. I think it's going to come and go in a relative hurry, and I think that maybe one doesn't get through that's not withstanding all of the sound and fury. You're going to see Trump's appointments taking their oaths of office within the next couple of weeks.
Blake: Howard, today it's Sessions, as I mentioned, and also John Kelly, the nominee for homeland security. Tomorrow it's Rex Tillerson at state, and Elaine Chao, and then on Thursday it's John Mattis at defense and Mike Pompeo at CIA, and that, right now, will get us through the week. They've delayed a couple of hearings that were scheduled for this week, now, until next week. What do you make of that lineup? Any particular challenges for the Trump team?
Howard: I think it's good. They're going to press hard on Sessions, but he's going to get confirmed. Mostly because he's a member of the club. They're going to press hard on Tillerson. He's going to get confirmed. The Senate's going to use it as an opportunity, both sides of the aisle, to lay markers on Russia, but he's going to get confirmed. Mnuchin, at treasury, is the one where I see the most vulnerability right now.
Blake: Do you make that because of his past business practices? What do you think the real challenges would be there?
Howard: This is where it gets interesting. I think he's vulnerable because of his association with IndyMac and the financial crisis and home foreclosures, et cetera. He's even more vulnerable because Mike Pence wanted Jeb Hensarling in that job, and not Steve Mnuchin, and they, frankly, have surrounded him with a bit of a weak team as they send him up to the hill to go through the confirmation process, and I think there are a lot of people on team Trump that aren't going to shed a tear if he goes down.
Blake: Mm-hmm (affirmative).
Howard: I think that if you're the Democrats, and you're looking to throw down on one thing where you think coming out of the election you're going to resonate with the American people, it's Elizabeth Warren, it's the financial crisis, it's Goldman, and I see them going after him.
Blake: That's an interesting point, Mark, and a nice segue to the posture of the Democrats during the confirmation process. Do you, if you're leader Schumer and Elizabeth Warren, et cetera, do you look to really try and strike down one of these nominees if it fits an appropriate political narrative for your party, as Howard described?
Mark: Sure, absolutely. That, in fact, is what I've been told by a number of Democratic Senators, including the minority leader himself, but they need to pick and choose with great care, because they're going to be able to knock off one, they hope. The goal is to hold 48 Democrats for one of these, and find three Republicans, and at least send a message that they can stop something. Maybe it's Mnuchin, I think Howard's commentary is spot-on, but there's another one that everybody is looking at on our side of the aisle, and that is General Pruitt, Scott Pruitt at EPA. There's an enormous coalition already formed of environmental types and climate-change types, and there is a chance that that is where the Democrats decide to throw down their 48 votes and look for three others if they can find them. Finding those other three votes is not going to be easy with any of these nominees, Mnuchin or Pruitt, but I would watch for one all-out push by the d's, and they just may stop somebody.
Howard: I just don't see it on the EPA, because ... I mean, there's going to be an all-out push, but I don't see the r's backing down on Pruitt. I don't see Trump backing down on Pruitt. As we were told by a Democratic United States Senator, he's qualified for the job. Whether you agree or disagree with him on policy is another issue, but he's qualified for the job, and so I see them not trying to ... I mean, it'll look like they're trying to take him down, but what the d's are going to do across the board on these confirmation hearings, Mark and Blake, is they're going to lay markers. These are as much about laying policy markers, they're as much about holding these individuals to account when they come back to the hill later on, when they begin to execute as agency heads, as it is an up or down vote. In fact, much more so.
Blake: That's an interesting point, too, because we're not only seeing markers in policy. The one thing I say about the EPA, it's such a potent political issue for even moderate Democrats, I think, are going to ... I'm not suggesting that Pruitt pulls any Democrats, but if you look at where the EPA is, boy, it's politically potent for the Republicans to get away from this over-regulation point on the EPA that's just worked so well for them.
Blake: I want to pivot to ... Not only are we expecting to see policy markers, we're also expecting to see political markers, and one of the interesting things, Mark, that I wanted to get your take on, was Senator Corey Booker's decision to testify against Jeff Sessions. That's never happened before, and I think I'll be interested in your take. It seems to me that has as much to do about Booker being able to test out some themes and get his own markers down about some critical criminal justice issues, which may help him 4 years from now, but I wanted to get your thoughts.
Mark: Well, I think you just shared my thoughts, actually, with the reference to 4 years from now, and especially the criminal justice part. Senator Booker is deeply and sincerely interested in and committed to criminal justice reform, but at the same time this is an opportunity for him to debut his 2020 chances, and all of that is absolutely in the air on the Democratic side down there. This is a party that is about to lose its leader when the President, about whom we're going to talk in a minute, leaves office, and I think that Booker's decision, which is not going to stop the Sessions nomination, I completely agree with Howard that Sessions is going to get confirmed, but I think that Booker saw a platform that he couldn't resist, and I think that this is the beginning of a number of applications for the candidate job in 2020.
Howard: The biggest threat to Jeff Sessions is Jeff Sessions. It's having been voted down in 1986.
Blake: Well, it'll be interesting. I think we've got confirmation hearings over the course of the next 3 days, and then certainly next week, so we'll begin to see more of this, and certainly have more to talk about on our next call. Mark, I wanted to pivot away from confirmation, and to the point about the President, and the fact that the Democrats are losing their leader. Tonight the President will deliver his farewell address from Chicago, and I wanted to get a sense from you. You were there before there was a day one, and it's got to be both a very bittersweet moment, certainly in the context of the administration coming to the end, but I wanted to just get your thoughts. We haven't oftentimes just talked about your first meeting with him, and then what you think the President might say tonight, so I just wanted to have a little conversation about that.
Mark: Well, we will hear, tonight, what the President thinks of all this. There've been 44 farewell addresses. 41 or two have come and gone. Occasionally, George Washington, Dwight Eisenhower, occasionally it is a speech of continuing consequence. I am hopeful that the speech tonight will be like those. I think what the President is going to do is go back to the beginning, and put his presidency in context.
I think that we will hear about the crisis, with which Howard is personally and intimately familiar from his Tarp service, the economic crisis that this country was in when Barack Obama took office, and we can argue all we please about whether it was the presidency or the market or the gods or the tides of the ocean, but the fact is that when he took office we were shedding 800, 900,000 jobs a month. The markets were at very low points, and today the markets are at historic highs. The country has created 15 million jobs, unemployment is under 5%. I think you're going to hear a lot about what it looked like in Grant Park 8 years ago, and what it looks like now, and then you'll hear about the legacy, of course, and I would expect the President to make a very direct and very public appeal to the President-elect and to the Congress to preserve the legacy that he believes is most important, certainly the Affordable Care Act being, I believe for tonight's purposes, at the top of that list.
Blake: Howard, we're beginning to see, along those lines, some movement within Republican party circles. Certainly Donald Trump made repeal of the Affordable Care Act a signature component of his platform. The Congress is beginning to look at how to do that, and what that means. I want to dive into that a little bit, because I think the consequence of that certainly is going to have a relationship to, obviously, the healthcare community at large. If you're the President tonight, how do you strike the right thematic tone? Knowing that you have been, at least throughout the course of this transition, we have heard from the inside, both engaged with President-elect Trump, helpful to the extent there is an opportunity to be so, and also, I think, courteous to the events of transition. How do you strike the right tone, but also draw those contrasts?
Howard: Everything's political.
Howard: There's a lot of stuff, some of which we are dealing with on behalf of our clients, that is happening in the waning days of the Obama administration here, some of it very public, some of it very not public, but stuff happening that is an attempt to box Trump in, and it's all political. We're going to see that in the speech tonight. That's how Obama does this. He basically says, in more eloquent words, there are tens of millions of people that didn't have health insurance and now do, and we're better off as a result, and you can't leave those people out in the cold. It kind of puts it on Trump to deal with that issue.
Blake: I want to talk about the repeal of the Affordable Care Act, because certainly this has been in the news, I want to talk about, procedurally, what it actually means. It looks like as early as Thursday the Senate's going to approve some parliamentary language that's going to give it the opportunities of budget resolution to sort of fast-track the repeal. Then, based on the current circumstance, January 27th would be the deadline whereby both House and Senate would have to refer out repeal legislation. We've seen some movement within the GOP from Senator Bob Corker, from Senator Tom Cotton from the House freedom caucus, who have said, "Look, we really can't go down this repeal road without a replacement solution. It's [inaudible 00:23:54], certainly there's no way we could have a repeal solution ready by January 27th". He's asked for a delay until March to really try and figure it out, but then Mark, as you mentioned on a call several weeks ago, the repeal strategy is, "We'll repeal now, but we'll delay effect for a while until we can figure out the replacement strategy". The House freedom caucus has put up a fight to that, as well. Howard, I wanted to get your sense. It doesn't seem like, at this point, that repeal may be as smooth as, I think, leader McConnell had hoped. What do you make of that?
Howard: Of course not, because it's a law that has broad and significant impacts on the population, and you can't just do away with it. There are plenty of Republican Senators out there, and members of Congress, that feel like it's helping their constituents even though it's politically toxic, and they don't want to just pull the rug out from under their constituents.
Blake: It's so interesting, Mark, because we have seen, and certainly you were involved in the passage of the Affordable Care Act, and we have seen, in even red states, programs like Medicaid expansion, which have really helped states, they've helped rural hospital systems, they've helped millions of people who couldn't otherwise afford health insurance get on health insurance, which, of course, then has helped the industry at large. I was surprised today by a story in the New York Times where it said the health lobby, which was so influential in the passage of the Affordable Care Act is sitting on the sidelines right now, in part because they don't want to alienate the administration, in part because when Trump tweets something it has a direct effect on the bottom line of their business. What do you make about that political dynamic as we look at the repeal issue in broader context?
Mark: I think that the healthcare lobby is sitting on the sidelines, waiting to see when the replacement debate comes. I think there will be re-engagement as soon as the opportunity arises, but right now it's a very strange time because we have, of course, the new Congress and it is moving forward with repeal, and I believe some partial replacements. Speaker Ryan, by the way, this morning said exactly that. That he expects that there will be a concurrent repeal and replacement of certain elements of the act, but you have the Congress moving forward and Donald Trump isn't President yet, so I think you are going to see people coming off the sidelines once there is full engagement on that.
The entire saga of the Affordable Care Act, if I may just digress for sixty seconds, the entire saga is, in a sense, a metaphor for the entire Obama presidency. The President got this thing passed, but barely, as everybody remembers. He and many of us are very proud of it, and believe that it is an achievement worth saving, but it never got explained. It never got sold. It never got stood up, and certainly never got amended because of categorical Republican resistance. You find yourself, now, in that never-never land of many people who supported Donald Trump enthusiastically, exuberantly, all of the sudden realizing that they're covered by the Affordable Care Act, and that this thing going away is not necessarily what they had in mind. I think we're going to see a lot of what Howard said earlier, the rhetoric and the reality catching up with each other, and so many people said during the campaign, Kellyanne Conway said it yesterday, that you can't listen to Donald Trump's words, you can't take them seriously. You have to just believe what's in his heart. The words that a lot of people, though, voted for are going to collide, now, with their interests, and it is going to be an adventure starting at noon next Friday.
Howard: Look, this is fundamentally the difference between being on the outside looking in and having the reins of government. This is rhetoric meets reality, it's rhetoric of the last 6 years or whatever it is colliding with the Republicans owning whatever happens next. This is classic. This is, obviously, the most visible way to see it, but it's happening across the government in a number of respects.
Blake: The other sort of big issue that we've heard about over the course of the last ten days is, and we come back to it, the wall. Are we going to build a wall, and who's going to pay for it? I was on Fox News over the weekend talking about the wall, and that's the other issue. Right now, it certainly seems that Trump wants to build the wall, but the American tax payers are going to have to foot the bill for that. Mark, in terms of the Democrats posture to Trump's other big issue. What do you make about the debate about the wall, and do you sense that that's something that we're seriously going to entertain in that first hundred day period?
Mark: I doubt, frankly, that that becomes a priority. It was certainly a rhetorical centerpiece of the campaign, but I think that finding the money to build it is going to prove a challenge for a lot of the Republican caucus, not to mention the Democratic caucus, for different reasons, of course. I would be surprised if that turns out to be a major to-do in the first hundred days. I think you're going to see immigration tackled, I believe, Blake and Howard, on day one. I think the famous threat to repeal every executive order that President Obama did, on day one, of course was rhetoric. The reality is that it will hardly be every one. One that I think you will see is President Obama's executive order, which deferred enforcement of the immigration laws against some 700,000 young, undocumented resident aliens. I would be surprised if that doesn't disappear with the stroke of a pen on day 1.
Blake: Howard, let's talk about day 1, because that's certainly, obviously, ten days away. What else do you think we can expect to see day 1 of the Trump administration?
Howard: I think a broad freeze on all current regulatory activity, and a very thorough review of all the stuff that I alluded to earlier, that the current administration is doing on its way out the door. When you boil it all down, those are the major themes, plus the policy rollback, like Mark was referring to.
Mark: I think there are going to be a couple of very specific executive order repeals, though. Just to name a few, I think you will see the Dakota Access and XL pipelines approved by executive order on day 1. I think you will see the very contentious Obama order that insurers cover contraceptive advice repealed with the stroke of a pen on day 1. It'll be very interesting to see what he does with trade. I think you may see, on day 1, executive orders serving notice, which is how it works in a complicated procedural way, that he intends to pull out of the TPP, and that he intends to renegotiate NAFTA. I would expect some very focused executive orders that simply repudiate some of these celebrated steps that the Obama administration took.
Howard: Just back to the wall, for a second, because he's been tweeting about that a lot.
Howard: If I was Chuck Schumer, I would just let him twist in the wind because if he's going to build a wall, we are going to pay for it. It's going to take an act of Congress, and, as I tweeted earlier this week, it's going to take an act of God to get the Mexicans to pay for it. Mexicans aren't paying for the wall, he has to break his promise, on some level, the dems should just let him twist in the wind.
Blake: The reason that I raise that is because if we see a challenge to repeal and replace, or if that becomes a roadblock, and then, certainly, the issue of the wall, Trump's sort of 0 for 2, if you will, of what becomes his, Mark, your point, rhetorical platform, but a lot of people rallied around both of those issues. I wonder, as we wind down this call, I thought we might talk about the inaugural address and what we might hear from Trump in that speech. I know we're going to be back on January 19th for a call, but we make a lot about inaugural addresses. Some memorable, some not. Mark, from your perspective, if you're President-elect Trump, what do you do with your inaugural address?
Mark: Well, I've said this a number of times, Blake, in these calls. I'm not that good at predicting what this guy is going to do, but if I were advising him, which is also something that [inaudible 00:35:36] happened yet, I would hope that he will give an inaugural address that is worthy of the occasion, that is worthy of the office, that is worthy of the transition, and that, frankly, echoes the, to a lot of people, very impressive and a little bit surprising remarks that he made at 3 or 4 AM on election night. He promised, then, to be the President of all the people. He was extremely gracious in victory towards Secretary Clinton and President Obama, and I would hope that that is the note that he strikes again. You wouldn't predict that based on his twitter feed, Howard, but I'm sure he's getting that advice from some of the folks around him, and we can hope that that's what we hear on the 20th.
Howard: I think he's a lot smarter than I, and the three of us, and everybody else gave him credit for over the course of the campaign, and I think he has had, and continues to have, a political thesis by which he has both run his campaign, is running his transition, and will run his government, and that all relates to the impact of globalization on the United States. We see that in his trade policy, we see it in his immigration policy, and we see it in other areas as well. How this country, as a country, adapts to a world that is rapidly changing from an economic point of view, is something that, in different forms, I see him continuing to try to address and deal with as President, because it's the source of his political power in the first place.
My view, in terms of what he will talk about in his inaugural address, is just that. What are the things that ... "Make America Great Again", we'll hear that 800 times in the speech, but how are we going to do that? How has the world changed, and how do we adapt, and how do we make people feel more economically secure? That's why he won, people haven't felt that, and I think we'll hear from him his antidote for that problem.
Blake: Well, more to follow in the week ahead. I certainly want to thank everyone for listening to the call. Comments and feedback are certainly always welcome. You can reach us at PresidentialAnalysis@Cozen.com. Follow us on iTunes or SoundCloud, where you can download all of our past calls and subscribe to all of our future calls, to the extent you can't make them going forward, but Mark, Howard, great to be back with you. Always a lively and fun discussion. Thanks for everyone for listening today.