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President Trump: A Preview of the First 100 Days 

Peter Lefkin 

Inside the Beltway 

Peter Lefkin

1/20/2017 

At the outset of his presidency, Donald Trump is facing the most scrutinized first 100 days in the history of the office. In a time that will set the tone for the next four years, Peter Lefkin previews the hot-button issues confronting the new president.

Key Takeaways

  • New US presidents come into office with an ambitious agenda and are determined to put their personal stamp on the office during their first 100 days.
  • While much has been made of the Republican majority in Congress, it bears repeating that Democrats have a significant 48 vote minority in the US Senate.
  • Trump will face dissent not only from Democratic lawmakers, but also from many within his own party, especially on issues such as trade, infrastructure spending and immigration.

President Trump takes charge

Almost all new presidents come into office with an ambitious agenda and are determined to put their personal stamp on the office during in their first 100 days. Donald Trump is clearly no exception and the promises he made, in the parlance of his political speeches, are huge. But while much has been made of the Republican majority in Congress, it bears repeating that Democrats have a significant 48 vote minority in the US Senate, adding compromise and complication to wide range of issues Trump will be facing as outlined here.

At the outset of his presidency, Trump's popularity is measured at historic lows and he has not been helped by persistent Tweeting.
Trump’s popularity is measured at historic lows for a new US president
However, he has been able to allay at least some critics, and has given them some comfort by his cabinet picks, most of whom seem competent and strong enough to be the side rails that keep an unruly truck from careening off the road.

Infrastructure spending

President Trump has repeatedly criticized America's infrastructure and also the need to put people back to work rebuilding that infrastructure. This is one issue, however, where he and his party are far apart. His Republican caucus is not entirely convinced that extensive infrastructure spending is needed, particularly if there is no easy way to pay for it. In 2009, they voted unanimously against President Obama's stimulus package and decried pork belly spending and this remains part of their DNA. Trump might get more support from Democrats who welcome the jobs, and would also enjoy watching an early internal battle between the new President and Republican Congressional leaders over how to pay for it.

Trade

The President-elect spoke with unusual stridency about trade during the campaign, but even his supporters would admit that it will be hard to deliver on his promises. With respect to key trading partners, Mexican and US manufacturing components are too intermingled and a promised 35% tariff, with its threat of Mexican retaliation, would create havoc on both economies. China is of tremendous importance to the US and global economy at large and has tremendous leverage to retaliate. This goes beyond blocking US imports to include a wide range of issues including cyber security, cooperation in North Korea and the issuance and buying of Treasury debt. In the weeks leading up to the inauguration, Trump has created corporate angst with his tweets against General Motors, Toyota and a few other companies whom he accuses of exporting US jobs. This has raised fears in corporate board rooms about who might be next.

The Federal Reserve

As a candidate for office, Trump derided the easy monetary policy of low interest rates of the Janet Yellen-led Fed.
Given vacancies on the Federal Reserve Board, Trump could appoint a majority of its members
But as President especially as one with a real estate background, Trump might feel differently if higher interest rates squelch his hoped for economic growth. There are currently two vacancies on the seven-seat Federal Reserve Board of Governors, and over the next few years the Chairmanship of Janet Yellen will expire as will the Vice Chairmanship of Stanley Fischer. This could give Trump the ability to appoint a majority of the Board in a fairly short period of time.

Regulatory environment

The power of the presidency as evidenced by President Obama can be enormous when it comes to new regulations. Trump has already said he would halt and reverse any number of Obama initiatives, including those on climate change, worker overtime pay and the new Department of Labor (DOL) fiduciary duty rule which imposes complex standards and expanded liabilities for financial services firms. Trump has also vowed to repeal the Dodd-Frank Act, which regulates the banking industry at significant cost to the industry. While most banks want Dodd-Frank reformed, many have already invested significantly in compliance and don't necessarily want to completely gut the law. While reversing executive orders can be done fast, overturning regulations takes a bit more time and may be harder than expected. However, it could still get done and in some ways Trump has more latitude here than in other areas.

Tax reform

The ultimate goal of Trump's tax reforms is to reduce the tax rate for corporations and individuals and broaden the tax base. To accomplish this, Trump has said that there is no reason why a tax bill has to be revenue neutral, while Senate Majority Leader McConnell,
The recent Republican budget resolution projects $9 trillion more in debt. So much for Republican fiscal rectitude
reflecting most of the Republican Caucus, says it must be neutral. McConnell has in mind the federal budget deficit, which was close to $600 billion for the 2016 fiscal year and is expected to get much larger due in part to aging baby boomers and higher interest rates on the national debt. US gross national debt as a percentage of gross domestic product has risen from 28% in 2008 to 72% now, and this number is expected to go higher still. The recent Republican budget resolution, which passed the House and Senate in early January, projects an increase of the public debt by $9 trillion over the next decade. So much for Republican austerity and fiscal rectitude.

Immigration

We can expect stronger enforcement and more jawboning on immigration, but nothing nearly as draconian as that which was talked about during the campaign. Trump has already partially retreated with respect to his campaign statements that he would immediately reverse President Obama's Deferred Action for Childhood Arrivals. This has allowed 740,000 immigrants to obtain work permits with another 7,000 being approved every month. In recent statements, Trump has somewhat backed away from this although he has not said anything specifically on what he intends to do.

Independent commissions

By spring of 2017, there is likely to be a new Chairman for both the Securities and Exchange Commission (SEC) along with the Commodity Futures Trading Commission (CFTC). And given that these new chairmen will almost certainly be Republican, we can expect more reliance on market forces rather than regulation to promote competition and consumer protection. With respect to the SEC, you could expect a retreat from many of the increased disclosure requirements that have emerged during the last eight years, ranging from investment in fossil fuels, to executive pay/employee pay ratios, to the extent of measuring the level of minority and women workplace in management positions.

We may also see Congress step in and restructure the Consumer Financial Protection Bureau, which currently is run by one person and operates without Congressional funding or oversight. Some Republicans would like to close it down, but the more likely path will be to turn into a five-person commission like the SEC and CFTC. This would then be subject to Congressional oversight and adhere to public notice and comment procedures that other government entities are subject to.

Housing policy

Donald Trump's choice for Treasury Secretary Steven Mnunchin has said that Fannie Mae and Freddie Mac, which guarantee the interest and principal on roughly two-thirds of American mortgages, should be privatized but not closed. Congressman Jeb Hensarling (R-TX), the powerful House Financial Services Chairman, is anxious to make his mark by blowing up both Fannie and Freddie. In the end, I would anticipate some sort of compromise that moves closer to what Mnunchin wants than that being pursued by Hensarling.

Affordable Care Act

Since the Affordable Care Act (ACA) was enacted in 2010, the Republicans have voted repeatedly to repeal it, knowing it would face a certain veto from President Obama. Both Trump and Congressional Republicans want to repeal it and replace it with something else, although there is no consensus on what this might be. House Speaker Paul Ryan (R-WI) wants to create a voucher-based private health insurance program with financial assistance to those in need. In the meantime, hanging in the balance are the 19 million people currently insured under the ACA.

Taking a step in the right direction, Trump made a good move in nominating Congressman Tom Price (R-GA) to be Secretary of Health and Human Services. He is a surgeon who has done a lot of work and thinking on this matter during his six terms in Congress. The inclination was initially to repeal the law but keep it in effect for at least two years and use the time to come up with something else. This plan has since come under attack, even from Trump himself who promised, without understanding how complex it is, that Congress would repeal and replace the law with something else very soon. This is easier said than done. Trump has at times embraced a single payer system which is strongly opposed by Congressional Republicans. He also said he wants to jawbone down the prices of pharmaceuticals, which is another area where he might have a problem with people in his own party, but not with the Democrats, who agree at least on this one matter with him.

Trump's opportunity to reduce tensions

After years of rancor between Republicans and Democrats, it would be good to get bipartisan cooperation and this brings forth a level of public consensus that adds legitimacy and support for the things that are being done. Given the age we are living in, I have no illusions that this will occur. However, I do see developing fissures between the new president and Congress on issues relating to spending and deficits. As a developer and candidate, Trump has never abhorred debt. This is one principle that usually unites the Republican Party, even though they deviate from this when it serves their purposes.

I remain a bit hopeful that given the new president's lack of policy knowledge and experience in Washington that the Congress will restore the power provided to them in the United States constitution, which has been significantly eroded be the federal government for decades now
Donald Trump has the opportunity to pivot in a way which reduces the tensions that divide us.
I think it would be helpful in forging a consensus and compel Congress to take more responsibility for their actions and for the people they serve.

As the new US president takes office, the American people stand in fear and hope, probably in ways never really experienced before in modern times. With the nation and the world's eyes on him, Donald Trump has the opportunity to pivot in a way which reduces the tensions that divide us. Let's hope he does it and that he is met with reciprocation by his opponents as well as restraint and understanding from those who supported him. We are all in this together and the sooner that we all recognize this, the better that we will all be.
The material contains the current opinions of the author, which are subject to change without notice. Statements concerning financial market trends are based on current market conditions, which will fluctuate. References to specific securities and issuers are for illustrative purposes only and are not intended to be, and should not be interpreted as, recommendations to purchase or sell such securities. Forecasts and estimates have certain inherent limitations, and are not intended to be relied upon as advice or interpreted as a recommendation.



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