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Mauldin – What I Learned In Washington DC

John Mauldin – What I Learned In Washington DC, January 22, 2017

  1. You might have the impression that Trump transition team is in complete disarray. Talking with leaders of transition team did not leave me with that impression. They have broken down into over 30 departments and have created a “landing document” which will be handed off to the “beachhead teams” who will then execute the plans
  2. Two general types of agency plans: (1) those where the culture of the department has to be changed; (2) those where the current staff seems to be doing its job but the culture surrounding the department has to be dealt with; first can be handled by the executive branch and the second needs to be dealt with by congressional action
  3. Trump’s management style is going to drive the media nuts. He is bringing in people to execute his vision and he’s going to expect them to get it done. He will jump in when needed but he will mostly be paying attention to his team’s performance. There will be more than usual amount of personnel turnover in the first six months and media will portray it as chaos – from Trump’s perspective, this is a good thing in terms of his longer-term goal
  4. Everyone in the new administration and Congress agrees there is going to be significant tax reform. There is absolutely no consensus on what that tax reform should actually look like. Failure to deliver something that at least comes close to meeting expectations will have a significant negative impact on both the economy and the markets
  5. Everyone seems convinced that Obamacare will be repealed but there is a considerable difference in the plans that would replace it. My guess is that there will be relief for small businesses and move towards significant health savings account. People will have more ability to tailor insurance to their personal needs
  6. Dodd-Frank is going to be restructured. Also very likely that the new DOL rule one fiduciaries and ERISA plans will at least be postponed if not significantly changed
  7. Anecdotally, Steve Moore and Larry Kudlow were meeting with Trump and Trump asked them if they would like to be part of his economic advisory team during the campaign. They told Trump that he can’t use them because they believe in free trade. And Trump then said, “But we agree on nearly everything else. Let’s agree to disagree on trade and figure out where we can work together.” Not many presidents are willing to have that level of disagreement from the outset
  8. General understanding that the biggest problems are going to be in dealing with the entrenched bureaucracy. It is highly likely that Congress will pass legislation that requires any department making a ruling that could cost over $100 million to get congressional approval for that rule
  9. There are literally thousands of presidential appointees that don’t have to be approved by the Senate, but the proper procedure is to wait until the cabinet-level officers and senior management are in place so that they can have input on those appointments
  10. Congress has been passing hundreds of pieces of legislation, knowing that they would be vetoed and never see the light of day (under Obama). I think we will see a great deal of legislation passed in the first six months to one year. These are bills that have already been through committee and have enough support to get action
Source: Mauldin Economics
Image Source: King World News

 

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