As President Trump and the Republican-controlled Congress take office, they bring the potential to generate dynamic change in many areas of the financial services industry and markets more broadly. These areas include business regulation, tax policy, and trade policy – each of which informs the work of financial advisors. I recently sat down with Bob Marsh, a principal at OB-C Group, a bipartisan boutique lobbying firm in Washington, D.C., to discuss the Trump agenda, the Republican party, and what potential policy changes could be expected in the near term.
There’s been a lot of talk around Trump’s cabinet appointees. In your view, are they establishment? Are they Wall Street? What do Trump’s appointments signal about his agenda?
Marsh: Unlike a lot of president‐elects, Donald Trump came in without a lot of IOUs. He’s really had a free rein to decide who he would like to have on his cabinet. I think it’s an interesting group of people. They’re all successful in their own fields [and] all accomplished. When you set up a White House – having been part of two transitions in the past – some debate goes on [about] whether or not the White House is strong, or the White House is lesser and you have a stronger cabinet. I think that this is going to be a strong cabinet. I don’t think [Trump] wants any one group of people to feel like they dominate his agenda. He dominates his own agenda.
So the cabinet is likely to have a lot of say in the direction the country takes?
Marsh: Well I think what you will see – and this is speculation – but [President Trump] very much seems to be like a CEO. I think that’s where he’s comfortable. So he picks these people to sort of drive a certain agenda, but the agenda is going to be driven by where he wants it to go.
Can you talk a little bit about the Republican Party? Are they united behind Trump?
Marsh: I think it’s an excellent question. The Republican Party here in Congress is a bifurcated group, because you do have the Tea Party folks who aren’t necessarily what I would call Trump Republicans, and the you have the old guard, the people that Trump campaigned against who have been around [D.C.] and have been in Republican politics a long time. That is the schism. But Trump is very effective at the bully pulpit and his base will be energized to make their word known to Congress if they feel it’s the right thing to do.
How might a Trump presidency differ from past administrations?
Marsh: I feel like [Trump] will spend as little time as he has to in the White House. He seems to like to get involved in what’s going on in the country as a whole and I think that’s going to be an effective tool for him if he continues to do that – and I think he will. Even the instinctual things that he’s been talking about where he’s not getting the briefing every day – “I don’t need to be repeated the same things every day”- those kinds of things signal a different kind of White House feel than we’ve seen in a long time. I don’t necessarily think it’s a threatening feel, by the way. I think it was needed and I think some of the old guard in D.C. and some of the old traditions in D.C. will be shaken up quite a bit.
How do you see the Trump agenda playing out in collaboration with a Republican-controlled Congress?
Marsh: The way our system’s set up, even if it’s a one‐party dominated system, it’s still very hard to deal with the congressional group of 535 independently elected people. I would think that in the first year, if the Republicans set a certain limited agenda – whether it’s tax policy or immigration and border control. The question is, on Obamacare, do they actually replace it immediately? Or do they work out a plan and take some time to do that? Some in the Tea Party world want to blow it up and start right away in changing it. A lot of people feel like that would be too drastic of a change for the system, [that] it takes about a three‐year wind‐down. A lot of conservative Republicans feel that’s too slow.
We also have Trump’s words about dealing with [the North American Free Trade Agreement] [and] big discussions on climate change. He has a lot of people engaged who feel like we need to sort of roll back on some of the things we’ve been doing on climate change.
In that atmosphere, how might congressional politics influence policymaking and legislation?
Marsh: The Senate is still fairly well‐split. It’s 52 [Republican seats], 48 [Democratic seats]. But you still need a 60-vote margin on most things. It doesn’t look like the filibuster rule is going to be changed. Once you get through the first six months, election season starts up fairly quick. Every member of the House is up [for reelection] in two years. They all get worried, particularly these days about [losing primary elections]. So, on the Republican side, they worry about getting challenged from the right. On the Democrat side, [they’re] worried about getting challenged on the left. I happen to think if the Democrats are going to make any political gains in the next two years, it will be in the House.
How might President Trump approach foreign relations?
Marsh: Well, I think the signaling he’s been doing in regard to Mid‐East politics, into Russia and China and some of the trade signaling [with] Mexico – all that is different than what we’ve had in a long time. I don’t know whether or not there’s going to be ability for him to deliver on a lot of those signals, because it takes a lot and we’re not the only country in the world. While we’re the most powerful country in the world, we don’t have the strength that we once had internationally. We’ve got a lot of problems to face internally, too.
What’s your view on what the Trump White House might mean for financial services?
Marsh: There will be some changes in Dodd‐Frank. I don’t know how long it’s going to take and I don’t know exactly what’s going to be done. I don’t think it’s going to be quite as extreme as some think, because I think there still is a lot of angst about [the 2008 Financial Crisis]. Some members of Congress were around when they had to pass bailouts. I think tax policy – there will be some significant changes. But I think if the Republicans are smart they will look more at small business, engine‐driving kinds of tax policy.
Everything will be driven by how it can be phrased in terms of job growth. Even though the [nominal] unemployment rate has come down quite a bit in the last few years, there’s still a lot of people who just stopped looking for work. Wages have been stagnant, so I think that’s where they’re focused.
Investment professionals can download the NatixisTalks app to hear the full discussion with Bob Marsh on our Politics and Policy podcast. Stay up to date on market and industry trends on our Latest Insights page.
This material is provided for informational purposes only and should not be construed as investment advice. The views and opinions expressed above may change based on market and other conditions. There can be no assurance that developments will transpire as forecasted.
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