Editor's Note: Below is an institutional research note published on 6/28/18 by Macro Policy analyst JT Taylor and Legal Catalysts analyst Paul Glenchur. To access their institutional research email sales@hedgeye.com.
The Senate is closely divided with Republicans barely in charge heading into November's midterm elections. Against this backdrop, the White House will attempt to win Senate confirmation of President Trump's nominee to replace retiring Justice Anthony Kennedy.
Absent a specific nominee, it is impossible to speculate about particular changes in the law in various substantive areas resulting from a change in the Court's composition, but this is clearly an opportunity for the president to lock down a pro-business, deregulatory majority for the next several years.
We believe core conservatives would be happy with a pick like DC Circuit Court of Appeals Judge Brett Kavanaugh. He wrote the opinion striking down the constitutional authority of Richard Cordray, the aggressively regulatory former head of the Consumer Financial Protection Bureau. He would solidify a conservative, deregulatory majority on the high court and likely remain on the Court for at least 20 years (he is 53).
But Senate Democrats, already insisting the nomination come after a new Senate is seated following the midterm elections, will probably mount massive opposition to Judge Kavanaugh. The threat of a replay of the failed Judge Robert Bork nomination from 1987 (which eventually led to Justice Kennedy's nomination) seems relatively high.
We note, however, that prior to the nomination of Justice Neil Gorsuch, the Trump list of 25 potential nominees did not include Judge Kavanaugh. He was recently added to the list identifying the candidates now under consideration to replace Justice Kennedy. We believe he is very well-liked within the Trump Administration.
There are several other strong candidates, including a few who were interviewed by President Trump before his selection of Justice Gorsuch. The vetting process does not have to take a long time here. Federal Judges Amul Thapar (Sixth Circuit), Ray Kethledge (Sixth Circuit), Thomas Hardiman (Third Circuit) and William Pryor (Eleventh Circuit) could be on the short list again.
The White House is probably aiming for a July nomination (reports this morning speculate before July 10 when Trump leaves for an extended overseas trip) followed by a Senate confirmation vote in early fall, in time for the Court's next term set to begin in early October. Majority Leader Mitch McConnell has already indicated that the Senate will stay through most of August, facilitating this timing scenario.
But as always, the politics of the situation are tricky.
Moderate Republicans like Senators Susan Collins (ME) and Lisa Murkowski (AK) could face severe pressure to oppose a strong conservative choice. Republican Senators Bob Corker (TN) and Jeff Flake (AZ) have been significant Trump critics and could be wild cards. It is questionable whether ailing Republican Senator John McCain (AZ) will even participate in this process. Thus, the narrow 51-49 Republican majority may struggle to push the nominee through the process. Of course, in a 50-50 tie, Vice President Mike Pence would provide the decisive vote.
The White House likely hopes that Democrats Joe Manchin (WV), Joe Donnelly (IN) and Heidi Heitkamp (ND) could be in play as all three are up for reelection this fall and represent states Trump won easily in the 2016 Presidential election.
The White House could pursue a Plan A and Plan B strategy. It may be possible to nominate a strong conservative in July and fall back on a lame duck session nominee if the initial candidate fails to win confirmation. If the Republicans lose the Senate majority, the White House could hope that a moderate nominee could win confirmation. If the Republicans expand their majority in the midterms, they could return to a nominee with strong conservative support.
This is a chess game and one of the most unpredictable factors is President Trump himself. He will likely interview a few final candidates before announcing his nominee, and his personal interactions and gut instinct following his interviews of potential nominees will guide his ultimate decision.
The strategic and timing considerations are complex here. We would guess that Judge Kavanaugh (a former law clerk to Justice Kennedy) makes sense as the preferred White House choice and a dream candidate for conservatives, but the Administration would need full confidence it can win the messaging war and navigate the turbulent partisan waters.
