US Voters have Spoken – Now What?

By Steve Kopperud, SLK Strategies

When the smoke cleared in the wee hours of November 9, 2016, every pollster, pundit, and politico realized they got the United States (US) presidential election flat wrong. For 18 months, political insiders declared it could not happen, would not happen, and should not happen. Nevertheless, Donald J. Trump is now the 45th president-elect of the United States having “turned US politics on its head,” in the words of House Speaker Paul Ryan (R-WI), by handily defeating Democrat Hillary Clinton in the Electoral College, although Clinton won the popular vote.

For observers in Europe, the results of this US election is comparable to the recent United Kingdom Brexit vote to leave the European Union, another significant election outcome no one saw coming.

Trump won the White House by “overperforming” with rural, blue collar, and dissatisfied voters – many of whom voted for the first time – and his victory provided equally surprising coattails to help Republicans retain control of both the House and the Senate, suffering only minor losses in the process. For her part, Clinton admitted in her concession speech that she had underestimated “just how divided a country we are.” That underestimation was exacerbated by her campaign’s apparent write-off of “fly-over” Midwestern states, with the notable exception of Iowa. In the case of Wisconsin, a state that has not voted for a Republican presidential candidate since 1984 but was won by Trump, Clinton did not set foot in the state after her April primary loss to Senator Bernie Sanders (I-VT), apparently counting on history to repeat itself.

One veteran reporter for Politico, an inside-the-Beltway publication, wrote: “We were more than wrong. We were laughably oblivious. The entire Washington policy-media complex completely missed the mark. Not by inches or feet, but by miles. The joke is on us.”

Winning this political trifecta was on no one’s prediction list, save for Trump’s. The New York City real estate billionaire successfully transformed himself from East Coast dilettante and reality television star into “everyman,” the ultimate Washington, DC, outsider.

Trump’s campaign recognized early the deep divides along racial, gender, age, economic status, and rural-versus-city lines, but he also gave a very loud and often outrageous voice to those voters who felt voiceless. At the same time, opponents and analysts seriously underestimated the so-called “hidden Trump vote.” These were the voters of both sexes, all ethnicities, and from all walks of life and economic strata who saw Trump as the man who could “drain the swamp” in Washington, or those who could not bring themselves to vote for Clinton, for a myriad of reasons, but kept their political leaning a secret. Not only did Trump verbalize frustrations over stagnant wages, lost jobs, immigration, and taxes, he remained throughout the campaign beholden to no political action committee, special interest, or individual, save his personal banker.

Now that Trump has caught the firetruck that is the US presidency, what is he going to do with it? He rarely campaigned on specific policy alternatives but rather built support by speaking in headlines – “We’ll build a wall!” or “We’ll renegotiate NAFTA!” – or resorting to his infamous middle-of-the-night tweets. However, no matter the topic, relevant or not, it kept his message in the headlines and on television, saving him millions in political advertising.

Whether the successful strategy was his bombastic behavior or shunning of the conventional political playbook, Trump in many respects remains a policy cipher, begging the questions both at home and abroad: “What does this mean? What’s he going to do?”

Reality checks are needed. First, a bit of inside political baseball revealed in a presidential race most likened to hand-to-hand combat was the WikiLeaks item in which Clinton, during a 2013 private speech to the National Multifamily Housing Council, explained candidates and office holders generally hold two positions on political issues — a public position and a separate private position. This phenomenon is by no means limited to Democrats or to US politics.

The second reality check is that Trump does not occupy the far right of his party. Although he is no Tea Party member or arch conservative – the Republican far-righters evinced strong skepticism of his candidacy early on – Trump is more comfortable toward the middle right of the political spectrum, and it is from this position he will crank up his policy machine. This will test conservatives in the new Congress.

The third reality check when parsing Trump campaign promises is that while some of the reform he touted during the campaign (i.e., regulatory relief) can be achieved by unwinding President Barack Obama’s executive orders and through simple instructions to agencies and departments, the bulk of his marquee issues (e.g., border security, repeal/replacement of “Obamacare,” and Supreme Court nominees) rely on a cooperative Congress. The GOP controlling both chambers is about as comfortable as it gets for a Republican White House.

It is through these lenses that some of Trump’s sweeping policy statements should be viewed. For instance, take his opposition to the Trans-Pacific Partnership (TPP). In presentations by his surrogates to various agriculture and agribusiness groups during the campaign, it is obvious Trump understands the importance of international trade to growth within the livestock, poultry, and animal feed sectors. Given the priority placed on TPP by Obama – and Trump’s well-known distrust of multinational trade deals – his public position on trade is likely more open than it is protectionist or anti-global. In the final weeks of his campaign, he backed away from outright opposition of TPP, referring instead to the need to “fix the treaty so it creates and protects American jobs.”

Wall Street remains nervous that Trump truly is anti-trade and that his antipathy toward China may turn into high import tariffs on imported goods, particularly those made in China. Again, imposing staggering import tariffs is not something Trump could do in splendid isolation and Congress is highly unlikely to stage a full retreat from the global marketplace.

The Reformer
Trump’s position on immigration reform can be tossed into the same public/private/middle-of-the-road position basket. Nearly 12 million undocumented workers in the United States cannot be rounded up and deported no matter how much that notion might appeal to the Trump base. Such a move would be chilling on its face as it runs counter to this country’s immigrant history, but perhaps more pragmatically, such a move would cripple several industries that rely upon immigrant labor, including meat and poultry processing, dairy, and fruit/vegetable harvesting and processing.

Trump must deliver on his promise of economic “reform” writ large. Exit interviews at polling places across the country revealed several voter blocs shifted slightly to Trump in the last days of the campaign, including a surprising number of Hispanics, women – educated or not – and educated white men, all who ignored Trump’s gaffes, held their noses, and voted for economic self-interest. It is this economic self-interest – both personal and corporate – to which Trump must pay laser-like attention in his first 100 days in office.

Reviewing Trump’s top 10 policy headlines from the campaign, tax reform in the form of lower corporate and personal rates and disappearing loopholes, infrastructure spending, border security, repeal/replacement of the Affordable Care Act (ACA), and an end to the “war on coal” top the economic issues list. Seizing on that list, the National Association of Manufacturers (NAM) called for Trump to release a spending plan within his first 100 days in office. Such a plan, said NAM, must include:
• specific policy and program actions the Trump administration will take to accelerate US economic recovery;
• the administration’s plans to rehabilitate US infrastructure;
• a detailed plan for comprehensive tax reform, both corporate and private; and
• a blueprint for regulatory reform, such as which Obama administration rules disappear and when.

On the legislative front, Trump will no doubt make his debut on Capitol Hill with a plan to repeal and/or replace the ACA (known as “Obamacare”) along with naming a nominee for the vacant Supreme Court seat of the late Justice Antonin Scalia. Both of these actions will take place early in the first few months of Trump’s presidency.

Next, his team will begin working with House Speaker Ryan, Ways and Means Committee Chair Kevin Brady (R-TX), and Senator Orrin Hatch (R-UT), chair of the Senate Finance Committee, on comprehensive tax reform. Trump wants to see current personal tax rates shrink to three lower rates, capping at 33 percent, and cutting the corporate tax rate from 30-plus percent – “the most uncompetitive corporate tax rate in the world” – to 15 to 20 percent, while devising a one-time repatriation scheme on US corporate profits stashed abroad to avoid US taxes.

The Republican commitment to a rewrite of Dodd-Frank financial regulations will take a back burner to tax reform. As one senior Republican senator said on election night when asked about Senate priorities, “Dodd-Frank has many tentacles; unwinding it will take time.”

On the regulatory front, Trump the candidate promised at every opportunity he would return regulatory certainty to business. To that end, he has pledged to immediately rescind the Environmental Protection Agency’s (EPA’s) and US Army Corps of Engineers’ waters of the US rulemaking, deemed a regulatory power grab by the Obama administration and opposed by just about all affected industries, including agriculture and agribusiness. At the same time, expect Trump to instruct EPA to withdraw or shelve Obama’s clean air plan, rescinding proposed rules to force mandates on existing and new utility plants to effectively eliminate coal as a fuel in order to reduce carbon dioxide and other greenhouse gas emissions. Also likely to be scrapped or ignored will be US participation in the Paris Agreement on global warming and climate change. In essence, Trump will kill off the Obama environmental legacy within days of taking office.

The Office of the US Trade Representative under Trump will be a very busy bunch in 2017 given the president-elect’s positions on trade agreements. He has promised to kill off TPP if it cannot be reinvented, renegotiate the North American Free Trade Agreement (NAFTA), and take a hard line with European Union negotiators over the future of the Transatlantic Trade and Investment Partnership bilateral trade treaty with the United States. Canadian Prime Minister Justin Trudeau said, “If the Americans want to talk about NAFTA, I’m more than happy to talk about it.” Mexico is willing to “modernize” NAFTA, said Mexican Foreign Minister Claudia Ruiz Massieu, but will not renegotiate the pact.

Of course, the success of the abovementioned reforms will hinge mightily on who winds up on the Trump team, both inside the White House and at the top of critical departments and agencies. The candidate and his surrogates told audiences throughout the campaign that Trump would name people to his cabinet who had actual real-world experience in the policies and programs overseen by their respective department or agency. At one point, Trump asked an Iowa audience, “What do you think about a farmer as head of EPA?”

Filling the Cabinet
The Trump transition team is in place and the agency action portion of the gang subdivides into defense, national security, economic issues, domestic issues (where agriculture resides), management and budget, and “agency transformation and innovation.” Nearly the entire administration fits into one of these six silos. Few names of specific individuals circulated during the campaign because the media largely assumed Clinton would win and focused on handicapping her cabinet selections. However, Trump’s challenge is to surround himself with smart, experienced people wise to the operation of government from the inside and with a talent for working with Congress.

However, running as an “outsider” means his slate of potential cabinet members and agency heads cannot reflect conventional Washington, DC. He is expected to pick business and industry types along with recognized conservative notables to staff his administration. As of press time, the only confirmed team members were Republican National Committee Chairman Reince Priebus as White House chief of staff and Breitbart’s Steve Bannon as chief White House strategist and senior counselor, an enormously influential post.

Some speculate that campaign remarks and allegations considered demeaning to women will cut the number of women willing to serve in a Trump cabinet, but former Alaska Governor Sarah Palin, who was Senator John McCain’s (R-AZ) presidential running mate in 2008, has made no secret of her desire to enter the Trump cabinet and he has said he would like to appoint her to a cabinet job, according to reports. His inner circle of advisors does include seasoned political veterans, including former New York City Mayor Rudy Giuliani, New Jersey Governor Chris Christie, and former House Speaker Newt Gingrich. His congressional allies are few and far between as only a couple of senators – Bob Corker (R-TN) and Jeff Sessions (R-AL) – came out publicly to support Trump during the campaign.

When it comes to agriculture and agribusiness, Trump’s campaign created a national agriculture advisory committee that began with about 30 members – including several well-known Washington, DC, figures, as well as governors and state-elected officials – and ballooned to over 70 by Election Day. For secretary of agriculture, a slot most often awarded to a farm-belt governor, names mentioned include Texas Commissioner of Agriculture Sid Miller, who is campaigning for the slot and apparently shares Trump’s fascination with ill-advised tweets; Kansas Governor Sam Brownback; former Nebraska Governor Dave Heinemann; former Georgia Governor Sonny Perdue; and former Texas Governor Rick Perry, who chased the 2016 GOP presidential nomination early on. Charles Herbster, a Nebraska Angus breeder and business tycoon who chaired the Trump ag advisory committee, is also mentioned along with Chuck Conner, president of the National Council of Farmer Cooperatives, who was President George W. Bush’s special assistant for food and agriculture as well as deputy secretary of agriculture in Bush’s second term. Conner was the keynote speaker at the National Renderers Association annual convention this past October. Bruce Rastetter, an Iowa ethanol executive and major donor, is also discussed for the ag secretary slot.

For secretary of Health and Human Services, which oversees all things Food and Drug Administration related, including animal feed, the short list currently includes former presidential hopeful Dr. Ben Carson and Florida Governor Rick Scott. Over at the Department of Energy, Oklahoma billionaire and long-time Trump friend Harold G. Hamm, chief executive offer of Continental Resources, leads the list and for Department of Labor, the top of the prospect list is occupied by Victoria Lipnic, commissioner of the Equal Opportunity Commission and a former assistant secretary of labor from 2002-2009

Gingrich is often mentioned as a logical secretary of state nominee as is Corker, who chairs the Senate Foreign Relations Committee. Former United Nations Ambassador John Bolton is also on the short list. Steven Mnuchin, a veteran of Goldman Sachs and Trump’s finance director, is seen as a logical treasury department secretary, but Jamie Dimon, chief executive officer of JP Morgan, has also been talked about. Giuliani is seen leading the pack for attorney general, with Christie as a possibility.

Forest Lucas, co-founder of Lucas Oil and primary underwriter of anti-activist group Protect the Harvest, is considered a leading contender for interior secretary, though Trump’s son, Donald Trump Jr., is rumored to be eyeing the job. However, Trump has said none of his children will be part of his administration.

No matter how you slice it, Trump and Congress get two years to make good on campaign promises to energize the economy while bringing regulatory relief, tax reform, and certainty to the business community. Everyone wants to feel better two years from now than they do today. The US voting public is notoriously fickle and infamously impatient.

December 2016 RENDER | back