Trump To GOP: Drop Dead

George Yacik - Contributor - Fed & Interest Rates

As much as I don’t like the fact that President Trump had to make a deal with the Devils – i.e., Democrats – to reach a temporary budget agreement, he did the only sensible thing he could do to avoid a government shutdown. He was able to increase the government’s borrowing limit and get emergency aid for Hurricane Harvey victims, all in one fell swoop.

Rather than wait around for the do-nothing Republicans in Congress to, well, do nothing, Trump agreed to a deal with the likes of Chuck Schumer and Nancy Pelosi to at least get something done that needed to be done quickly. Was it the deal he really wanted? No. Was it the best deal? Probably not. Was it the best deal he could get right now under the circumstances? Probably. That’s politics.

But it might lead to bigger, better and more important agreements down the road, most immediately tax reform, and that was more likely Trump’s primary goal. He knew he couldn’t rely on Republicans for that.

We know from Trump’s public comments, books and other remarks over the past 40 years or so in the real estate business that he has had to swallow hard and make distasteful deals countless times with disagreeable people that in an ideal world he would probably not make, but they were the best he could get at the time, and were often necessary to reach his ultimate goals. This doesn’t seem any different than doing what’s necessary to build a skyscraper in Manhattan – only with much bigger stakes.

One thing the budget deal did show loud and clear is that Trump is now more solidly our first Third Party President, with his formal ties to the Republican Party fraying by the day. And no doubt much of Trump’s support base – also nominally Republican – were happy to see him tell the likes of Mitch McConnell and Paul Ryan to stick it. They asked for it.

The Trump base no doubt got a lot of satisfaction listening to GOP congressional leaders whining about the sheer gall and disrespect Trump showed them by going around their backs and making a deal with the minority opposition. But after the embarrassment they caused themselves and Trump during the repeal-and-replace fiasco, the president finally realized that he was wasting his time expecting the Republicans to come through.

Will Trump get any credit for acting in a bipartisan fashion and reaching across the aisle to compromise with the Democrats for the good of the country? I’m not holding my breath. But that is exactly what he did, and it may be the tonic the Republicans needed to be poured down their throats to stop taking their voters for granted and the Democrats to get over losing the election and start working together.

Let’s hope this is a fresh start and Washington can now get moving to accomplish some things.

Besides tax reform, Trump will probably need that bipartisan support to take advantage of the huge opportunity he has before him in filling four open seats on the seven-member board of governors of the Federal Reserve, including the top two spots.

As we know, Fed Vice Chair Stanley Fischer unexpectedly announced that he would be leaving sometime in the middle of next month, well before his term is scheduled to end next June. Janet Yellen’s term as Fed chair is due to end next February. Next to filling Supreme Court vacancies, these are arguably the most important positions a president can fill that directly touch the lives of American citizens.

One person who has supposedly fallen out of favor to replace Yellen – should Trump decide to replace her – is Gary Cohn, the former president of Goldman Sachs and now Trump’s chief economic advisor. According to the Wall Street Journal and echoed by other publications, Cohn may have blown his chances for the top Fed job when he criticized the president’s remarks about the events in Charlottesville, Va., last month.

I’m not entirely convinced of that.

Cohn, a liberal Democrat, will be playing an instrumental role in getting a tax relief package through Congress this year. The president trusts Cohn’s financial judgment. Despite their political and other differences, Trump probably won’t hold those against Cohn in possibly naming him to the Fed. And if he feels he really can’t rely on Cohn to be a team player but trusts his abilities, what better place to put him than on the Fed?

Cohn would be a huge breath of fresh air on a central bank overly populated with academics and economists as opposed to business and financial professionals with real-world experience.

As Cohn’s former boss at Goldman Sachs, Lloyd Blankfein, described him as a possible Fed chair, “He would be a different kind of person. Not an academic. I don’t know that he reads a lot of policy papers, let alone writes them, but there’s nobody who understands markets better.”

That’s the kind of person we desperately need at the Fed.

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George Yacik Contributor - Fed & Interest Rates

Disclosure: This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from for their opinion.

4 thoughts on “Trump To GOP: Drop Dead

  1. Most unfortunate in your "analysis" is your labeling democracts as "devils." Let it be known that some of these "devils" i.e. union members, were the disillusioned few that helped elect DonaldTrump. You are part and parcel of the extreme, partisan factions of the republican or conservative party that assured Trump's victory on a populists agenda begging to explode .

    By far, Donald Trump is not a "first Thid Party" candidate. He did what any chief executive should do and reach across the aisle to get concensus - - something that has been happening since this country was founded. By the way, its noted that this was basically the only thing this president has been able to accomplish legislatively since he took office (execpt for executive orders). You can blame the "establishment" and the "Devils" but quite simply, Donald Trump is no "Mr. Smith goes to Washington."

    In so far as the FED vacancies---you can bet your bottom dollar that no matter how qualified and experience, The Don operates on absolute loyalty first. Look for that in prospective appointees and therein you will have your answers to Fed vacancies.

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