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Capital Brief: Inside The Trump Administration's Growing Pains  - Washington D Usa White House C America 1641327

Source: Max Pixel

As President Donald Trump blasts the mainstream media for peddling fake news, here's a quick look at the key issues all investors should keep an eye on from Hedgeye's JT Taylor and our team of Washington Policy analysts in D.C.

BLUNT TALK

#Russia #FlynnResignation

Capital Brief: Inside The Trump Administration's Growing Pains  - roy blunt wiki
Source: Flickr 

Democrats have called for investigations into the ties between Russia and the Trump Administration, and now following Flynn’s resignation Republicans are starting to hop on board. Republican Senator and Senate Select Committee on Intelligence member Roy Blunt has joined them in their calls for an investigation and Majority Leader McConnell has now said it is highly likely the committee will probe Flynn’s Russia ties.

Blunt believes that every president can reexamine their relationship with any country, but wants to find out if their is a larger problem in the Administration's relationship with Russia.

POLARIZING EXPRESS

#GOP #Trump

Capital Brief: Inside The Trump Administration's Growing Pains  - trump 2 15

Although the Trump Presidency has experienced some growing pains early on, one thing he has been able to count on is support from Republicans in the House and most of the Republicans in the Senate. On the other hand, what Trump has not been able to rely on so far is crossing the aisle to get votes from Democrats - particularly in the House.  

Again, it’s still early, but if trends and the hyper-partisanship continue, Trump and his Republican allies will likely go it alone in the House and focus their energies on winning over a handful of Dems in the Senate.

FREEDOM FIGHTERS FOIL

#FreedomCaucus #Obamacare

Capital Brief: Inside The Trump Administration's Growing Pains  - dont tread

Source: Flickr 

Even though Republicans have control of the House, Senate, and White House, the Freedom Caucus is still not satisfied with the way things are, well, progressing. The conservative caucus voted to oppose an ACA repeal bill if it does not go as far as the repeal measure that President Obama vetoed in 2015.  

This bill killed the core elements of the law including subsidies, taxes, mandates, and Medicaid expansion. The Freedom Caucus isn’t just focused on repeal though, they will support adding elements of replacement to a quick repeal as long as it meets their stringent demands.

DON’T BANK ON IT

Three years ago former House Ways and Means Chairman Dave Camp proposed a tax on banks and other financial institutions as part of a tax reform proposal. The tax received major push back from the industry, but tax reform didn’t move forward with Obama in office.

Now the Republicans are in control of Washington, banks are looking to make sure the tax doesn’t re-enter the picture. As we get closer to the start of the tax reform process, expect banks to push much harder to avoid any sort of bank tax that would allow Republicans to pay for lowering tax rates.

DIVIDED ON DEFENSE

The Pentagon will forward its supplemental request for the FY 2017 budget to OMB on March 1 and an expanded FY 2018 budget on May 1.  Both items are splitting Republican members on the Hill. The The FY 2017 supplemental request will be for at least the $15B approved by the House last fall and could be for as much as $40B as discussed by Senator John McCain and others.

While the urgent need to improve near term readiness is universally accepted, how to pay for it is not. An increase in Pentagon spending in 2017 could be done passing a baseline budget that conforms to the Budget Control Act and then plussing up the OCO by the $15-$40B being discussed. Not improbable.

Any expansion to the FY 2018 budget, however, will require changes to the Budget Control Act and a budget resolution that lays out a broader and longer term discussion of government finances. That can wait until this summer/fall but will expose the rifts among Republican fiscal conservatives, Republican hawks and Democrats.

CALL REPLAY: GENERAL EMO GARDNER ON NATIONAL SECURITY

Our Senior Defense Policy Analyst Emo Gardner spoke about the Flynn resignation, its impact and what’s next. You can listen to the replay here.

AT&T LIKELY WINNER OF PUBLIC SAFETY NETWORK CONTRACT

Our Senior Telecom & Media Policy Analyst Paul Glenchur writes the AT&T is likely to win the public safety network contract. Rules discouraging state opt-outs should boost network and contract value. You can read the full analysis here.

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