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On TAP 1 May 2017
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The Issue in Brief...... 2 Matt Moon Executive Vice President What's On TAP for Banking and Finance? ...... 4 [email protected]
What's On TAP for Economic Growth? ...... 5 David Selman Senior Vice President
What’s On TAP for Energy and Environment? ...... 10 [email protected]
What's On TAP for Foreign Policy? ...... 13 Foster Morss Vice President, Research [email protected] What’s On TAP for Defense? ...... 14
What's On TAP for Healthcare? ...... 16
What's On TAP for Justice? ...... 17
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1 May 2017 ______The Issue in Brief
Banking and Finance
A one-week Continuing Resolution paused government shutdown fears, but negotiations are likely to face the same sticking points next week, plus additional demands that are already emerging, like bailing out Puerto Rico’s Medicaid fund and prohibiting agencies from denying health care funds for clinics that refuse to provide abortion services. Late last night, congressional negotiators announced they were close to agreement on a spending bill that pushes off many of these issues until September.
White House economic advisor Gary Cohn may be eyeing replacing Chair Janet Yellen at the Federal Reserve when her term expires in 2018. The White House is also close to naming a new IRS commissioner.
Economic Growth
President Trump unveiled his tax reform proposal, which includes simplified tax brackets with a top rate of 25%, a corporate tax rate of 15%, a territorial rather than a global tax system, a reduced capital gains tax rate, increase of the standard deduction, and elimination of the death tax and alternative minimum tax.
At the FCC, Commissioner Ajit Pai said he would seek to roll back the treatment of ISP’s as utilities and the net neutrality framework, possibly shifting those responsibilities to the FTC. The FCC will hold an open comment period in May before voting on how to proceed on these issues.
Trade
The President threatened to withdraw from NAFTA, but walked it back after conversations with North American leaders and White House advisors who support free trade, including Jared Kushner and Gary Cohn, and Agriculture Secretary Sonny Perdue who showed the President a map of U.S. areas that would be negatively impacted by the sudden withdrawal. While the Administration reviews their options for renegotiating NAFTA, the Commerce Department slapped a new and long-sought after tariff on Canadian lumber, the result of a break down in trade discussions from Obama’s last year in office.
Trump also signed two executive orders designed to rework the U.S. position on global trade. The first builds on earlier trade reviews to establish a 180-day review of all trade agreements to identify abuses by other countries. The second creates The White House Office of Trade and Manufacturing Policy, led by economic advisor Peter Navarro, which will advise the President on reducing the trade deficit and supporting “Buy American” policies.
Energy and Environment
The White House debate over the Paris Climate Agreement continues, with some advisors supporting walking away while others advocating renegotiating the U.S.’ financial commitments. Because there are no consequences for not meeting the terms of the agreement, it is likely to U.S. will not scuttle the Paris Agreement, but instead push for better terms and lower financial commitments. One way the President could meet the carbon emissions commitments is by supporting more natural gas and clean coal, although pro-gas policies may hurt coal efforts.
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President Trump signed two executive orders last week in an effort to increase domestic oil production, first by allowing offshore drilling in Arctic waters, and second by reviewing the use of the Antiquities Act to declare federal land “national monuments” without sufficient consultation with state and local officials. Some of these lands could be opened to leasing for oil exploration after the review is completed.
The President also signed an E.O. creating a task force, led by newly-confirmed Agriculture Secretary Sonny Perdue, to support rural America through easing regulations, increasing biotechnology investments, and addressing workforce concerns in an industry dependent on immigrant labor. Perdue has assured the industry the focus of immigration enforcement on farms will be on criminals and the Administration may support some provisions for guest workers in the future.
Foreign Policy
In a phone call to discuss North Korea and the drug war, President Trump invited controversial Philippines President Rodrigo Duterte to The White House to head off closer relations between the Philippines and China and Russia.
Secretary Tillerson will begin a “listening tour” at The State Department to gather input on how to restructure and slim down the department, with the intention of significantly reducing the workforce through attrition over the next two years. Tillerson also said he will delay appointing senior leaders for the Department until the restructuring plan is settled, a decision that will leave him hamstrung in major diplomatic efforts and overall management of the bureaucracy.
Defense
The President hosted ambassadors representing U.N. Security Council members at The White House to discuss the urgency of action against North Korea. At the meeting, Trump threatened to reduce U.S. contributions to the U.N. absent unified action against the rogue state. At the same time, the U.S. is preparing military options, and has placed THAAD missile defense systems in South Korea.
President Trump is also considering recommendations, including additional troop deployments, for addressing the war in Afghanistan, now in its 16th year, following Secretary Mattis’ visit with the country’s leaders.
Healthcare
Although the Administration has made progress with conservative congressional leaders on a replacement for Obamacare, there is no new bill and no plan to hold a vote. Trump still faces the challenge of gaining support from moderate Republicans, many of whom are skeptical of any changes to protections for pre- existing conditions.
Justice
A federal judge blocked the President’s executive order withholding funds from Sanctuary Cities, and the Administration is expected to appeal the ruling to the 9th Circuit. The Department of Homeland Security opened its VOICE office to support victims of crime committed by illegal immigrants.
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Quick Takes:
• President Trump announced his intent to appoint Jovita Carranza to be Treasurer of the U.S. Carranza was previously Deputy Director of the Small Business Administration during the George W. Bush Administration.
One Week CR Pauses Shutdown
A One Week Continuing Resolution Paused Shutdown Fears, But Negotiations Are Likely To Face The Same Sticking Points Next Week, Plus Additional Demands That Are Already Emerging. Congress passed a one week continuing resolution to stop a government shutdown because little progress has been made towards a spending agreement that would fund the government through September. The White House, Congressional Republicans, and Congressional Democrats are all likely to run into the same disagreements next week, and the shape of a compromise remains unclear.
President Trump waivered on his commitment to funding Obamacare subsidies and funding for a border wall, but his Administration continued calls for an increase in defense spending. Congressional Democrats have argued the appropriations bill currently has too many “poison pills” for it to earn their support, including provisions to roll back Dodd-Frank regulations. Congressional Republicans have backed President Trump’s calls for increased defense spending and are also supporting an extension on healthcare benefits for miners.
Another week of negotiations allows Democrats, Republicans, and special interests more time to seek more concessions to keep the government open. Already, Democrats are calling for aid to Puerto Rico’s Medicaid program that is low on funds, and conservative Republicans are considering an amendment that would prevent the federal government from blocking funds for healthcare providers that refuse to offer abortion services.
Speculation On Yellen Successor Begins
Though Fed Chairwoman Janet Yellen’s Term Does Not End Until 2018, Speculation Is Growing That White House Economic Advisor Gary Cohn Is Interested In The Seat. Cohn meets President Trump’s wishes for someone willing to keep interest rates low and push the Board to consider rolling back regulations. Cohn has argued banks are over-capitalized, a key component of the Fed’s bank stress tests.
Also rumored to be in consideration are FDIC Vice President Thomas Hoenig who, as discussed in last week’s On TAP, signaled possible support for rolling back the FDIC’s Orderly Liquidation Authority;
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Stanford Economist John Taylor who served as Undersecretary of the Treasury during the George W. Bush Administration; and Former Fed Governor Kevin Warsh who has called for the Fed to come up with a “practicable long-term strategy.” While Trump recently declined to call Yellen “toast,” it is likely rumors about possible replacements will only gain steam moving forward.
New IRS Chief Coming Soon
Treasury Secretary Steven Mnuchin Claims The Administration Is Close To Naming A New IRS Commissioner. Treasury Secretary Steven Mnuchin says the Administration is close to naming a new IRS Commissioner, though he did not elaborate on a time table for the announcement or discuss any names that are under consideration. As previously discussed in On TAP, current Commissioner John Koskinen’s term ends in November, though House Republicans have continued to call for him to be fired sooner.
Freedom Caucus member Jim Jordan offered a resolution on impeachment during the last month of the Obama Administration, which was sent to the Judiciary Committee without further action. With tax filing season over, the Trump Administration may be looking to give the Freedom Caucus and grassroots conservatives a symbolic victory by dismissing Koskinen, even if he will only depart a few months before his term ends.
What's On TAP for Economic Growth?
Quick Takes:
• Robert Lighthizer’s nomination for United States Trade Representative was unanimously approved by the Senate Finance Committee. His nomination now moves to the full Senate, which has yet to schedule a vote.
• Alexander Acosta was confirmed as the next Labor Secretary. He is the final member of President Trump’s Cabinet to be confirmed.
Trump Unveils Tax Reform Plan
President Trump Announced The Administration’s Plan For Tax Reform, Which Is Largely Similar To Trump’s Original Tax Plan From September 2015 With A Few Key Differences. First, Trump’s new plan calls for a simplified three brackets with the top rate at 35% as opposed to his original plan’s four brackets with the highest rate at 25%, a step that helps lowers the cost and, because the
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plan will tax business income at a different, much lower rate, the higher top bracket will not significantly impact economic growth.
Second, the Administration’s outline introduces a territorial rather than a global tax system, which will be welcome news to those on Capitol Hill and at large corporations who currently hold large cash reserves overseas to avoid the high U.S. rate of taxation on those profits. Finally, the Trump plan proposes a much smaller standard deduction increase than what his campaign originally sought, which results in less benefits for Trump’s core supporters, although the benefits to many of them will still be substantial.
While The Trump Plan Offers A Clear Set Of Principles For The Administration’s Tax Reform Efforts, There Are Still Several Questions The White House Has Yet To Answer. For example, the Administration has yet to determine at which income levels to set the three individual tax rates. It also calls for eliminating “targeted tax breaks,” but the question remains what tax breaks will be protected. National Economic Council (NEC) Director Gary Cohn said the Administration would keep the mortgage interest, charitable giving, and retirement savings breaks, but was not clear if The White House would stop there. Cohn said the tax breaks being targeted for elimination “are mainly benefits to high-income individuals.”
To help avoid hurting small businesses when eliminating these breaks, the plan calls for giving business income reported on personal returns the same treatment (and 15% rate) as corporate taxes. Trump’s plan notably did not include any reference to the House GOP’s Border Adjustment Tax (BAT), which Treasury Secretary Steve Mnuchin said The White House could not support “in its current form.” Though he did not specify what the concerns were, Mnuchin said the Administration had not discarded the idea entirely, but was in the process of discussing revisions for BAT with Congress.
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Despite The Various Uncertainties Of Trump’s Tax Plan, The White House Was Not Expected To Unveil A Plan With Heavy Legislative Language, And Congressional Republicans Are Now Expected To Craft A Bill The President Can Sign. The plan’s corporate tax cut down to 15 percent is a provision Trump included in earlier tax reform plans and is one of the critical elements to his plan. Lowering the rate from 35 to 15 percent is seen as a key way Trump could stop tax inversion. The outline also states there would be a “one-time tax on trillions of dollars held overseas” for businesses. There were reports suggesting Trump was considering 10 percent, which would represent a 25 percent decrease from the current rate, but the plan did not include a specific number.
At the same time, Trump was not expected to unveil a plan with detailed legislative language and instead intended to use the outline as a starting point for negotiation with Congress. While many Democrats, like Minority Leader Chuck Schumer (D-NY), criticized Trump’s plan for cutting the corporate tax rate down to 15 percent, Trump likely is using his traditional tactic of proposing a radical plan in order to negotiate for a more moderate deal. The process is still likely to take a matter of months as Congressional Republicans take Trump’s guiding principles and craft legislation that would satisfactory to the various wings of the party.
Trump Threatens NAFTA Withdrawal As Commerce Targets Canadian Lumber
President Trump Was Prepared To Begin The Process To Withdraw The U.S. From The North American Free Trade Agreement (NAFTA), But Later Agreed With Mexico And Canada To Start Renegotiating The Trade Agreement Instead. Last week, the Administration had reportedly drafted an executive order that would have started the process for the U.S. to withdraw from the NAFTA. The news came only a few days after the Commerce Department announced punitive tariffs against Canadian softwood lumber and President Trump has long said Mexico is engaging in unfair trade practices. However, Trump later spoke with Mexican President Peña Nieto and Canadian Prime Minister Justin Trudeau, and the three nations agreed to start renegotiating the 23-year-old trade agreement.
Trump Was Reportedly “All Set To Terminate” The Agreement On Day 100 Of His Presidency, But His Staff Was Deeply Divided On The Issue. On one side were the West Wing nationalists, including White House National Trade Council Director Peter Navarro, who drafted the E.O., and strategist Steve Bannon. On the other side were trade moderates like Commerce Secretary Wilbur Ross and Agriculture Secretary Sonny Perdue. Perdue reportedly brought in a map showing areas of the county that would be the hardest hit from a NAFTA withdrawal, and noted that many areas were part of “Trump country.” Trump’s decision not to withdraw from NAFTA suggests he is continuing the trend of bowing to more pragmatic policies.
Last Week, Commerce Secretary Wilbur Ross Announced The United States Will Impose A 20 Percent Tariff On Canadian Softwood Lumber Imports. Ross cited Canada’s protectionist policies, which include high tariffs on imported dairy products, as one of the motivators behind the tariff. The tariff will affect nearly $5 billion worth of lumber and was quickly condemned by the Canada. However, the news was not all that surprising as the lumber dispute between the U.S. and Canada was revived
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last year when a new softwood lumber deal fell apart during the final months of the Obama Administration.
The tariff will likely please U.S. lumber producers, whose national association filed a petition with the Commerce Department back in November asking for the federal government to impose tariffs. The new tariff also comes as both countries prepare for an upcoming renegotiation of NAFTA later this year. Back in late January, the Administration said Canada has a “very special status” and was unlikely to be hit hard by changes to NAFTA. However, the announcement suggests Trump is following through on his promise to crack down on unfair trade practices. Canadian Prime Minister Justin Trudeau spoke to President Trump about the tariff last week where he said Canada rejected these “baseless allegations.”
Trump Orders Broader Review Of U.S. Trade Agreements And WTO
Over The Weekend, Trump Signed An Executive Order Directing A Review Of All U.S. Trade Agreements. The first executive order instructs the Commerce Department and the U.S. Trade Representative’s Office to conduct a 180-day “comprehensive performance review” of all current U.S. trade agreements, including NAFTA, and to identify violations or abuses of any current trade agreement or World Trade Organization (WTO) rule.
Commerce Secretary Wilbur Ross clarified that this order builds on the E.O. President Trump signed back in March to review U.S. trade deficits by asking, “of all the possible causes” of U.S. trade deficits, “what portion of the problem is attributable to various trade agreements?” In addition to reviewing trade agreements like NAFTA, the order also calls on the Commerce Department and USTR to pay close attention to the WTO. When asked if the review recommends withdrawing from the WTO, Ross said there is “always the potential for amending organizations’ charters.”
Trump Taps Navarro For New Office Focused On “Buy American”
Trump Also Signed An Executive Order Creating A White House Office Of Trade And Manufacturing Policy (OTMP), Led By Peter Navarro. The new office will serve as a Buy American enforcement arm of Trump’s policies, and act as a liaison between The White House and the Commerce Department. The office is set to be led Peter Navarro, who was originally slated to oversee The White House National Trade Council (NTC).
While some reports claim Navarro will continue to lead the NTC in addition to this new office, the NTC, as we have noted in On TAP before, was “never officially established.” Even one of the NTC’s two announced staffers, Rolf Lundberg, never started his job at the Council and left in February for a private sector position. Furthermore, Navarro reportedly was prevented from hiring additional staffers for the NTC and was forced to “rely on other agencies lending him personnel.”
It remains unclear if the NTC will ever officially exist, and it is more likely Navarro will consolidate his trade responsibilities within the new OTMP. Navarro recently suffered a minor setback when Trump decided not to sign the executive order he drafted that would have started the process of withdrawing
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the U.S. from NAFTA. However, the decision to have Navarro lead OTMP suggests he will continue to influence national trade policy.
FCC Chairman Offers More Details On Changes To Net Neutrality Rules
During A Speech Last Week, FCC Chairman Ajit Pai Announced He Would Ask The FCC Next Month To Begin Rolling Back The Regulatory Framework For Net Neutrality And Would Take Suggestions For Replacement Regulations. Pai plans to reverse the common carrier classification that allows the FCC to subject ISPs to utility-style regulation. It also would eliminate an internet general conduct standard that allows the FCC to have broad oversight authority over ISP behavior on a case- by-case basis. Pai intends to hold a vote to open a public comment period on his proposal during the FCC’s May meeting.
It remains unclear what the FCC would do after reversing the regulatory classification. Pai agrees with the essence of net neutrality and that broadband companies should not block or slow web traffic. However, he disagrees with labeling internet service providers as utilities. Pai privately suggested ceding authority of internet oversight to the Federal Trade Commission (FTC) and hoping broadband providers would voluntarily commit to adhere to net neutrality principles, which companies like Comcast have already started doing. Whether he will pursue this plan also remains unclear. Once the FCC votes in May to solicit public comments on Pai’s proposal, it may spur activism and protests similar to past pushes on the net neutrality issue.
Nominee For Deputy HUD
President Trump Announced His Intent To Nominate Pamela Patenaude As Deputy Secretary Of The Department Of Housing And Urban Development. Patenaude is currently the President of the J. Ronald Terwilliger Foundation for America’s Families and serves as Director of the Bipartisan Policy Center Housing Commission. She previously served as Assistant Secretary for Community Planning and Development at HUD from 2005 to 2007 and Assistant Deputy Secretary of Field Policy and Management at HUD from 2001 to 2005.
Her nomination was quickly praised by the Mortgage Bankers Association, the National Association of Realtors, the National Association of Home Builders, the National Association of Hispanic Real Estate Professionals, and the National Housing Conference. Patenaude also received the backing of Senator Lindsay Graham (R-SC) and former Senator Kelly Ayotte (R-NH). Her experience with HUD under the Bush Administration and her backing from many prominent housing associations suggests Patenaude is well-respected and is unlikely to be a contentious candidate.
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TAP Page 9 The Administration Project 1 May 2017 ______What’s On TAP for Energy and Environment?
Quick Takes:
• Former Governor Sonny Perdue was confirmed as Secretary of Agriculture last Monday by a vote of 87-11 in the Senate. Perdue was immediately brought into assist with NAFTA discussions with President Trump (see Economic Growth section) and is expected to next focus on identifying burdensome regulations on the agriculture industry for repeal.
• Dave Bernhardt, chair of the natural resource law practice at Brownstein Hyatt Farber and Schreck, LLP, has been nominated to serve as Deputy Secretary of the Interior. Bernhardt is at least the second lawyer from Brownstein Hyatt, a firm with close ties to Trump, nominated to serve in the Trump Administration after Makan Delrahim became President Trump’s DOJ Antitrust nominee. Mr. Bernhardt served as leader of the Trump transition team for Interior while employed with the firm. Mr. Bernhardt served in several positions in the Interior Department under the Bush Administration, including Solicitor. Mr. Bernhard is also a former member of the Board of Virginia Game and Inland Fisheries.
• FERC Commissioner Colette Honorable announced she will step down from the commission when her term expires in June. Honorable’s retirement will leave the five-member commission, which was already without a quorum, with only one commissioner, meaning it cannot rule on energy projects and regulatory issues. The Trump Administration has not announced nominees for the vacant seats on the commission.
Rural American Task Force Created
President Trump Signed An Executive Order Establishing A Task Force To Review Ways To Support Rural America. Secretary of Agriculture Sonny Perdue has been named to lead a task force established by President Donald Trump’s executive order signed last Tuesday. This task force will conduct a 180-day review of concerns in rural America and identify regulations that hinder growth in the U.S. agricultural and rural economies. The executive order calls for the task force to focus on specific issues including advancing biotechnology, food safety regulations for produce farmers, and ensuring farmers have access to a reliable workforce.
President Trump’s stance on illegal immigration has placed pressure on the farming industry, where an estimated 46 percent of the workforce are illegal immigrants. In response to concerns by farmers about losing their workforces, Secretary Perdue has commented that he will be working with this task force to design a program to remove criminals but help farmers hire immigrants, potentially creating a new visa program or revising the existing H-2A or H-2B visas. This executive order is the first action taken by the Trump Administration aimed specifically to support American farmers due to the long waiting period for Secretary Perdue to be confirmed.
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President Trump Orders Review Of National Monuments
President Trump Signs An Executive Order To Review The Antiquities Act And Federal Monuments Designations. President Trump has signed an executive order directing Interior Secretary Ryan Zinke to review two dozen national monuments that were created since January 1, 1996. This executive order also tasks Zinke with creating legislative solutions to scale back the 1906 Antiquities Act which grants authority for the President to establish national monuments on federal lands. President Trump stated that the executive order was in response to its abuse by the Obama Administration, which placed 265 million acres under control of the federal government without properly addressing the concerns of local governments and citizens.
This order allows for the Trump Administration to reopen swaths of land that have been previously walled off from leasing to private companies, creating jobs and profit for local communities. This order has already been attacked by environmental activists as the Trump Administration attempting to “give- away” land to mining and oil companies. This claim is factually incorrect, as the order does not call for the repeal of any monuments, merely the re-evaluation of the size of national lands 100,000 acres and higher in accordance with the wishes of the local and state governments. This executive order demonstrates again the Trump Administration’s dedication to exploring all options to pull back federal regulations and return power to local governments.
President Trump Approves Renewed Offshore Drilling In Arctic
President Trump Signed An Executive Order Instructing The Interior Department To Open Offshore Drilling Last Friday. The order instructs the Interior Department to open the Arctic waters for offshore oil and gas drilling, enabling the U.S. to compete for energy in the Arctic with Russia, who recently announced long-term plans to bring 32 oil rigs to the region. The order also orders a review of the five-year offshore leasing plan passed by the Obama Administration and to review areas along the Pacific and Atlantic outer continental shelves for leasing to oil and gas developers.
This executive order is one of the strongest moves by the Trump Administration to support the oil industry after President Obama’s abrupt order limiting oil and gas companies’ ability to lease federal land. As energy security is one of the cornerstones of President Trump’s energy plan, American investment in what experts estimate to be 10% of the world’s oil and natural gas reserves is an obvious step in that direction. These resources are already in contention with other world powers, as Russia continues its attempts to claim 460,000 square miles of the arctic as national territory to secure their grip on those resources.
Paris Debate Rages In White House
Several White House Officials Met Last Thursday To Debate Whether The United States Should Remain In The Paris Climate Change Agreement. EPA Administrator Scott Pruitt and Chief Strategist Steve Bannon have both advocated for withdrawal, arguing the treaty will negatively impact the United States’ energy industry and result in economic hardships on American companies.
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Other advisors, including senior advisor Jared Kushner and Secretary Of State Rex Tillerson, advocated for staying in the agreement while attempting to renegotiate the U.S.’ financial commitments under the treaty. These commitments include the United States’ $3 billion pledge to the Green Climate Fund, which provides funds to poorer countries to address climate change. Energy Secretary Rick Perry has also argued for renegotiating, rather than exiting, the pact.
Trump Expressed Concerns About The Financial Commitments The Agreement Requires. President Trump seemed to side with the latter group. When asked about the commitments demanded by the Paris Agreement in a recent interview, Trump said, “It’s not a fair situation because they (other members) are paying virtually nothing and we are paying massive amounts of money…I can say this, we want to be treated fairly.” The Paris Agreement has no consequences for failing to meet its commitments, so it is unlikely other signatories will follow through with their commitments either.
But Trump May Opt To Remain In The Agreement Even Without Renegotiations Due To The Lack Of Consequences For Not Meeting The Targets. For the time being, the President is likely to remain in the agreement, but if he can’t renegotiate the terms of the climate deal, he may not follow through on the treaty’s commitments, which have yet to be submitted to the Senate for ratification.
While Obama argued Senate consideration was not necessary, as it was an executive agreement rather than a full treaty, the fact that it is not ratified by the Senate means that President Trump can unilaterally begin the 4-year withdrawal process. President Trump has said that he plans on announcing his decision on the Paris Agreement “in about two weeks.” The uncertainty of the agreement’s legal status, however, may open it to legal challenges regardless of Trump’s decision to remain or withdraw.
Trump Can Work To Reduce Carbon Emissions As Required By The Pact By Continuing His Support For Natural Gas, But Would Risk Undermining Coal. Should Trump decide to remain in the Paris treaty, his Administration can begin to lower carbon emissions by more aggressively supporting natural gas, as natural gas not only burns cleaner but also is cheaper to use for electricity generation. Indeed, they have already begun to take such steps.
However, as we noted before, this policy would directly harm the coal industry, which faces heavy competition from natural gas as a primary fuel for electrical generation due to the fact coal is more expensive and more carbon intensive. As a result, any pro-natural gas actions by the Administration will risk undermining any pro-coal policy.
While the Administration has supported the construction of carbon capture plants such as the recently opened Petra Nova “clean coal” facility, they are likely to prioritize jobs over hitting a carbon emissions target. Due to this calculation, we expect the Administration to push for increased natural gas use moderately rather than aggressively so as not to impact the coal industry too heavily.
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TAP Page 12 The Administration Project 1 May 2017 ______What's On TAP for Foreign Policy?
Quick Takes:
• President Trump will meet with Australian Prime Minister Malcolm Turnbull in New York City. Trump reportedly had a contentious phone call with Turnbull a few months ago over a deal with President Obama to resettle refugees in the United States. Trump informed Turnbull that their call was his “worst call by far” with a foreign leader, and abruptly ended the conversation before its expected end time. The meeting follows Vice President Pence’s visit to Australia last week as part of his Asia tour, where he attempted to ease these tensions by pledging to abide by the refugee agreement. Pence and Turnbull also discussed North Korea and called for China to apply greater pressure on this rogue state.
• The Trump Administration announced sanctions barring 271 employees of the Syrian government’s Scientific Studies and Research Center from conducting financial transactions with American people or companies. The U.S. claims this agency is responsible for producing the chemical weapons that were used in the sarin attack a few weeks ago.
• On Thursday, Argentinian President Mauricio Macri visited The White House. In the meeting, Trump discussed the deteriorating conditions in Venezuela, calling the country “a mess.”
• TV reporter Heather Nauert was hired as a spokesperson for the State Department. Nauert previously worked for Fox News and ABC News.
• Ivanka Trump attended a women’s panel in Berlin at the invitation of German Chancellor Angela Merkel. During the visit, Ivanka announced she is working to create a global fund for women entrepreneurs that will be managed by the World Bank. Canada, Germany, and a few Middle Eastern countries have already pledged to contribute to the effort.
Although some have already questioned the ethics of such a fund, comparing it the Clinton Global Initiative, having the World Bank manage it should help prevent the conflicts of interest and charges of self-enrichment that dogged the Clintons’ foundation. The trip and announcement served as further indication that Ivanka is taking on a key role in economic and public diplomacy for her father’s administration.
• President Trump spoke with the controversial Philippines President Rodrigo Duterte on Saturday. The two leaders discussed the threat of North Korea and the war on drugs Duterte coordinated in the Philippines. Before being elected President, Duterte served as Mayor of Davao, and he has been accused of permitting anti-drug dealer death squads to commit thousands of murders during that tenure.
President Duterte has publicly called for his country to cut ties with the U.S. and has said he wishes to work more closely with Russia and China on economic and military affairs. President Duterte later walked back his statement, saying his comments were focused on wanting to avoid involvement in a conflict between the U.S. and China due to his countries strong trade relations
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with China. President Trump extended an invitation to The White House to President Duterte, seeking to repair the relationship between the U.S. and the Philippines which had frayed under the Obama Administration with President Duterte infamously calling President Obama a “son of a whore.”
Tillerson Announces Plans To Restructure State Department
According To His Spokesperson, Secretary Tillerson Will Engage In A Listening Tour At The State Department To Determine How To Restructure The Department. After Tillerson makes this determination, he will begin to fill out his leadership team based off this new structure. There are currently nearly 200 political appointee positions that Tillerson has yet to fill. Tillerson is seeking to cut 2,300 U.S. diplomats and civil servants, comprising about 9 percent of the State Department. These cuts will be phased in over two years and will largely be implemented by not replacing employees who retire or quit. This plan appears to be an attempt to implement the President’s vision outlined in his budget outline, which called for a 28 percent cut in the agency.
What’s On TAP for Defense?
Quick Takes:
• David Clarke, sheriff of Milwaukee County, Wisconsin, is under consideration for the appointment of Assistant Secretary at DHS’ Office of Partnership and Engagement, which coordinates outreach to state and local law enforcement. Clarke is a longtime supporter of President Trump and spoke at the Republican National Convention. Clarke has come under investigation in recent days for the death of Terrill Thomas, who died of dehydration at the Milwaukee County jail when guards turned off water to his cell in April 2016. Clarke has also been criticized for participating in a NRA-backed trip in 2015 to Russia, during which he met with Dmitry Rogozin, a deputy to President Vladimir Putin. The DHS position does not require Senate confirmation.
Trump Administration Signals Urgency On North Korea
As Part Of His Diplomatic Strategy Against North Korea, The President Hosted All Of The U.N. Security Council Ambassadors At The White House. At the event, Trump argued “the Council must be prepared to impose additional and stronger sanctions on North Korean nuclear and ballistic missile programs.” Echoing the President on Friday while chairing a meeting of the U.N. Security Council, Secretary Tillerson called on the body to act “before North Korea does,” and argued “the threat of a North Korean attack on Seoul or Tokyo is real.”
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As previously discussed in On TAP, the Administration’s strategy in confronting North Korea has largely been focused on pressuring China to cooperate on the issue. However, the focus on the U.N. may reflect a broader diplomatic strategy. Although China has the most leverage over North Korea because of their close economic relationship, many countries have sanctions against North Korea but weakly enforce them.
The President May Attempt To Use His Threat To Defund The U.N. As Leverage To Secure Concessions On North Korea. In his remarks, the President reminded the Ambassadors that the U.S. pays for 22 percent of the U.N. budget and “almost 30 percent of the United Nations peacekeeping.” Trump has previously stated he may slash funding for the U.N. Based on his record of using his more outlandish statements as leverage to attain specific concessions, the President may repeat this threat if the U.N. fails to pass additional and stricter sanctions against North Korea.
The Administration Is Taking Steps To Better Prepare For A Potential Military Clash With North Korea, While Demanding The South Koreans Contribute More To Their Defense. In an interview with Reuters last week, Trump stated there was “absolutely…a chance that we could end up having a major, major conflict with North Korea.” Reflecting how seriously the Administration takes this threat, on Wednesday, the President held a briefing on North Korea for the entire Senate at The White House, with the rare sight of all 100 members boarding charter buses for the trip up Pennsylvania Avenue. The briefing reportedly focused on the economic and diplomatic pressure being applied on the rogue regime. This focus may be an attempt to convince lawmakers that all options will be exhausted before the President considers using force because maintaining Congressional support will be critical to the success of any military action.
The same day, the U.S. deployed the Terminal High Altitude Area Defense (THAAD) missile defense system to South Korea, fulfilling an agreement that was announced in 2016. However, the President has also asserted that South Korea should pay for THAAD deployment, estimated to be roughly $1 billion, demonstrating that even as Trump adopts a more hawkish posture, he has not dropped his pledge to make U.S. allies contribute more to their defense. The threat of North Korea may give the President leverage to secure concessions from the South Koreans on this front, however this demand also risks creating tensions with this ally at a critical time.
Mattis Visits Afghanistan
On Monday, Secretary Mattis Traveled To Afghanistan To Meet With U.S. Military And Afghan Leaders. Mattis is expected to make a recommendation to the President shortly on how the Administration will approach the ongoing quagmire now in its 16th year. In February, the top U.S. military commander in Afghanistan, General John W. Nicholson, told Congress he needed “a few thousand” more troops. Although Trump called the invasion of Afghanistan a “terrible mistake” during the campaign, he also argued “you probably have to” keep troops there for an extended period “because that thing will collapse.” The President may be open to sending additional troops to Afghanistan if he views it as necessary to preserve stability in the country and to prevent ISIS from gaining a stronger foothold.
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TAP Page 15 The Administration Project 1 May 2017 ______What's On TAP for Healthcare?
Quick Takes:
• The Senate Committee on Health, Education, Labor, and Pensions (HELP) approved Scott Gottlieb, the nominee for FDA Commissioner, by a 14-9 vote. Gottlieb received unanimous Republican support and the votes of two Democrats, Sheldon Whitehouse and Michael Bennet. While he continues to face Democrat objections over his ties to various firms that are regulated by the FDA, he is almost certain to be confirmed by the full Senate in the coming weeks.
• President Trump signed an executive order creating an Office of Accountability and Whistleblower Protection at the VA for employees to report on misconduct or duplication in the agency. VA employees who exposed abuses at the agency in 2014 often reported facing retribution for their actions.
• President Trump nominated Charmaine Yoest to be Assistant Secretary of Health and Human Services for Public Affairs. Yoest was previously a Senior Fellow at American Values, a conservative organization led by Gary Bauer, and the President of Americans United for Life. Yoest also served as a Senior Advisor to Mike Huckabee’s 2008 presidential campaign.
Trump Makes Progress On Health Care But Fails To Achieve A Vote
Trump Failed To Achieve A House Vote On Obamacare Repeal Last Week, But He Did Secure Conservative Support Behind The Bill. As previously discussed in On TAP, the President was pressuring the House to vote on health care reform last week. However, this action was highly unlikely because the House was focused on avoiding a government shutdown. Despite this public posturing, The White House probably knew they would not be able to force a vote, but used this demand to create pressure on lawmakers to move the ball forward.
As a result, the House Freedom Caucus and conservative groups, such as the Club for Growth, FreedomWorks, and Heritage Action for America, who had previously signaled a greater openness to supporting the bill, have now formally endorsed a compromise plan that allows states to opt out of certain essential health benefits mandated by Obamacare.
This approach of focusing on broadly applying pressure on lawmakers to make progress, while allowing them to work out their differences over the details of policy, contrasts with the Administration’s first attempt to push through a bill by taking sides in these internal debates and attempting to force the bill through by threatening skeptical members in the first health care vote debacle. This change suggests some of the lessons the Administration learned from that failure may influence their approach in future legislative battles, such as tax reform.
Trump Now Faces The Challenge Of Gaining The Support Of Moderate Republicans, Many Of Whom Are Skeptical Of Any Changes To Protections For Pre-Existing Conditions. 18 moderate members have already come out against the new compromise bill, while many others are leaning
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against voting for it or have yet to declare a position. Republicans can only lose the votes of 21 of their members and still pass the bill. The GOP leadership is reportedly considering increasing funding for high-risk pools to win these votes.
What's On TAP for Justice?
Quick Takes:
• The Senate Judiciary Committee postponed a confirmation hearing for Makan Delrahim, President Trump’s nominee to lead the DOJ’s Antitrust Division, originally scheduled for this past Wednesday, April 26th, claiming they were waiting on “one piece of paperwork” before they can reschedule.
• Homeland Security Secretary John Kelly has officially opened The Victims of Immigration Crime Engagement (VOICE) office within DHS to provide support to victims of crimes committed by undocumented immigrants. The creation of this office was ordered by President Trump in January to provide additional support to American citizens who have fallen victim to crimes committed by illegal immigrants.
Sanctuary City E.O. Halted By Federal Judge
Trump’s Executive Order Blocking Funds To Sanctuary Cities Has Been Halted By A Federal Judge. U.S. District Court Judge William Orrick has issued a preliminary injunction against President Trump’s executive order mandating that federal officials cut off grants for Sanctuary Cities that do not provide assistance to federal authorities in locating and detaining illegal immigrants. Orrick cited public comments made by both President Trump and Attorney General Jeff Sessions as evidence that the executive order overstepped the executive branch’s authority by placing restrictions on already assigned federal funds.
This marks another immigration action blocked by the judiciary following President Trump’s public struggles with his travel ban executive order. President Trump has already pledged to appeal this case to the Ninth Circuit Court of Appeals and to the Supreme Court if necessary. As the case is appealed, we can expect the Trump Administration to call on the precedent of South Dakota v. Dole, in which the Supreme Court found that the federal government could withhold funds from states that did not conform to federal policy as long as such actions were not coercive.
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