There is a meme going around among President Donald Trump's supporters and some savvy investors who keep telling me all his bluster and histrionics are a ruse for a more calculated man who understands the art of the deal better than everyone. Trump will ultimately outfox his opponents on the way to tax cuts, health care reform and a successful presidency, just as he outfoxed all those seasoned politicians during the 2016 election.
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He is, in their hagiographic phraseology: “10 steps ahead of all of us.”
If you believe that, you will also believe Mexico will pay for “The Wall.”
Sorry, if there’s anything we have learned so far from the experiment known as the “Trump Presidency,” is that it still is an experiment, with a large margin of error that includes petty feuds with his own staff (think Attorney General Jeff Sessions) and lots of mindless tweeting. He has appointed some great people, such as Neil Gorsuch to the Supreme Court. He has some great policies: His tax cut plan, his extreme vetting of immigrants from places where people want to kills lots of Americans, and his various executive orders that are unwinding the job-killing regulatory apparatus that grew to immense proportions during the Obama years.
But the guy who authored a famous book known as “The Art of The Deal,” has proven particularly amateurish at deal making. Despite having both chambers of Congress controlled by his own party, he has few legislative achievements. His ObamaCare fix never happened after he remarked that a House GOP plan he supported was too cruel and refused to give a single Oval Office address to push his plan.
Now, for some unknown reason, and with tax cuts and a lot more on the line, he just backdoored everyone from House Speaker Paul Ryan to his own Treasury secretary by oddly joining forces with Democrats such as Senate and House Minority Leaders Chuck Schumer and Nancy Pelosi in a three-month, temporary debt ceiling “compromise.” In exchange, he got hurricane relief but he basically handed the minority party in country near veto rights on his budget and tax plan.
All this from the guy who sold himself as the greatest dealmaker of all time.
Keep in mind, no Democrat in their right mind would vote against hurricane aid even if it were attached to a debt ceiling suspension for the next nine months to a year. That was the betting of both Ryan and Trump’s own Treasury Secretary Steve Mnuchin. And with the debt ceiling out of the way, the GOP would have an easier time passing a tax cut package.
But with no hurricane relief attached to the next debt ceiling extension, the leverage moves to Pelosi-Schumer because Trump will need Democratic votes for the extension, and in return they will be demanding compromises on the taxes and the budget.
Of course, the GOP could pass tax cuts, come up with budget cuts, Wall financing in a legislative nanosecond (i.e. the next 90 days), as Trump has demanded in a recent tweet, but even the most proficient and functional Congress probably couldn’t achieve that one. In other words, tax cuts including the 15% corporate tax rate from 35% and individual reductions that Trump touted during the campaign as the “biggest since Reagan” will be held hostage to Schumer and Pelosi.
Art of the deal, this ain’t.
So why did Trump do something both stupid and antithetical to his and his party’s stated desires? For that you have to understand Trump, a man of impetuous, often petty instincts, who is said to have been simmering mad at the GOP leadership (Ryan, and Senate Majority Leader Mitch McConnell) over what he believes is their failure to reform ObamaCare and wanted to teach them a lesson.
All of which might sound good for an episode of The Apprentice, but it’s pretty lousy political bargaining. First, while Ryan and McConnell have their faults, Pelosi and Schumer are the last people Trump should trust to help the long-term prospects of his presidency. Forget tax cuts, are two committed liberal ever going to screw their base for Wall funding?
You know the answer. And that brings me back to the “genius” of the guy who resides in the White House. I’m not saying Trump is dumb, but that he does and says some dumb things when his emotions get the best of him (recall his comments about Sen. John McCain’s war record). I know Trump the businessman, and he’s no racist, but in a fit of fury he oddly drew a moral equivalence between Neo Nazis and various protesters in Charlottesville. And it cost his presidency dearly.
Maybe he thinks kissing up to Schumer and Pelosi is a twofer: he can stick it to Ryan and McConnell and he can cozy up to the left for his cherished Wall.
But that ignores the fact that the Democratic Party has way too much invested in casting Trump as a bad guy on everything from Russian election meddling, to his broader populist policy agenda—so the incentives for Schumer and Pelosi to hand Trump a real victory are pretty thin.
So are the chances of real, meaningful tax cuts. If they don’t happen (Or we get some watered down version) the markets will certainly sell off. Less certain will be whether some of Trump's most ardent supporters will finally admit he isn’t as smart as they think he is.