Policy Paralysis Grips Washington
Author: Greg Valliere
May 23, 2019
NANCY PELOSI’S WAR AGAINST THE PRESIDENT: The diminutive 79-year-old Speaker of the House is determined to deny Donald Trump a second term, and she may succeed. Sources we talk with believe she wants to portray Trump as unstable and incapable of cutting deals, his alleged strong suit. Her strategy is to bait Trump, which she did yesterday — and, predictably, he rose to the bait.
TRUMP IS TRAPPED: The courts are closing in on him, and Robert Mueller will be heard from soon. Trump would welcome an impeachment inquiry in the House, in our opinion, which he could point to as proof of a “witch hunt” against him and his followers. But Pelosi won’t give him that foil; she prefers to let events unfold in the courts, which have ruled against Trump on his greatest vulnerability — his finances, where many smoking guns lurk.
THE LIKELIHOOD OF ENDLESS HOUSE INVESTIGATIONS has infuriated the president, so he hit back yesterday with a self-inflicted wound: a pledge to halt negotiations on all legislation until the investigations cease. They won’t cease,and Trump’s reaction was just what Pelosi wants — policy paralysis, bolstering her narrative that Trump is incompetent and incapable of negotiating deals.
THIS HAS IMPLICATIONS FOR THE MARKETS: The image of a flailing and weakened president, bogged down by numerous investigations, surely must make the Chinese think they can gain the upper hand in trade talks; at some point, Trump will need a deal — any deal — to bolster his shaky re-election prospects.
AS FOR LEGISLATION, ALL BETS ARE OFF after yesterday’s ugly confrontation at the White House. A budget deal, which looked so promising just 24 hours ago, needs a sign-off from Trump and Pelosi, but that’s not coming soon — and she has the ultimate leverage: agreeing to raise the debt ceiling, something Trump needs from her. As for an infrastructure deal, you’ve got to be kidding . . .
THE AMERICAN PUBLIC DOESN’T CARE MUCH ABOUT THIS: We were in the Midwest this week, where the Pelosi-Trump chess game generates little attention, and the Mueller report is old news. There’s an uneasiness, however, about the economy and the deepening recession in the Farm Belt, where anxiety persists over a trade war.
THE WILD CARD, AS USUAL, is Congressional Republicans. There have been very few defections from Trump in public, but in private many GOP veterans are whispering to each other that Trump is more trouble than he’s worth. Everyone wonders: who will defect next?
A PUBLIC PERCEPTION OF POLICY PARALYSIS could prompt voters to conclude that the far right and the far left are both part of the problem — a scenario that could be perfect for an affable moderate like Joe Biden, who’s now the front-runner to win the presidency in 2020, which of course is Nancy Pelosi’s ultimate goal.
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