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What We’re Hearing on Capitol Hill

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What We’re Hearing on Capitol Hill

Author: Greg Valliere

April 9, 2019

AFTER TWO GREAT WEEKS OF SEEING CLIENTS AND COLLEAGUES IN CANADA, we spent yesterday on Capitol Hill, mostly listening. We got an earful:

MEMBERS OF BOTH PARTIES are aghast over Donald Trump’s purge of the Department of Homeland Security, apparently at the behest of his ruthless 33-year-old aide Stephen Miller. Republicans we talked with worry that the separation of children from parents will resume, and they worry that the border may be shut — a huge economic issue. “Trump is un-hinged over the surge of illegal immigrants, it’s his core issue, and he’ll do anything — and fire anyone — to avoid blame,” a Republican staffer told us.

HEARINGS AND SUBPOENAS: Democrats we talked with are eager to begin hearings on the Mueller report; William Barr will testify soon, followed — eventually — by Mueller himself. There’s a widespread opinion in both parties that Trump isn’t out of the woods yet, but impeachment is unlikely and conviction is extremely unlikely. There’s a widespread consensus that more damaging revelations are coming; both parties disagree on whether the public eventually will tire of this mess.

BENEATH THE RADAR — THE BUDGET: Democrats are divided on many issues; they’re bickering in public over details in the House budget for fiscal 2020. Moderates want to raise spending caps a little, while progressives want a huge increase, comparable to the expected enormous hike for Pentagon outlays. A predictable budget brawl over this and the debt ceiling looms this fall, with one clear outcome: spending and deficits are headed higher.

THE LEGISLATIVE OUTLOOK: There’s a surprising consensus that an infrastructure bill could move later this year, although there’s little agreement on the details. The deep antipathy toward drug companies could lead to legislation that would seek to curb prices. There’s also no love on Capitol Hill for the tech industry or financial services firms, although we see no imminent legislative risk.

TRUMP VS. THE FED: The economic IQ on Capitol Hill is abysmal, so issues like monetary policy usually break down to personalities. There’s widespread support for Jerome Powell, and a sense that Trump’s criticism of the Fed is reckless. Yet Republicans feel that interest rates should be lower, in light of tame inflation. Most Republicans are likely to support the nomination of Stephen Moore to the Fed board, but his prospects are shaky. We detected little support for Herman Cain, whose train-wreck nomination may be scuttled by summer.

TRADE WARS: There’s surprising support for a hard line with China, and within both parties there’s a concern that a final deal later this spring might be exceedingly modest. There’s no enthusiasm for ratifying the NAFTA replacement, which may languish for many months. And there’s concern that a new trade fight over tariffs looms with the European Union.

THE 2020 ELECTION: We talked with Democrats who grudgingly agree that Joe Biden is still the favorite for the nomination despite his indiscretions, but there’s little enthusiasm. Beto O’Rourke has charisma but needs gravitas, many Democrats agree. They all consider Kamala Harris a serious candidate and they shake their heads at Bernie Sanders’ popularity and fundraising. “It’s not a real strong field,” one Democrat told us.

TRUMP, A TWO-TERM PRESIDENT? Virtually no one — especially in private — has anything good to say about Trump, who squandered an opportunity to act magnanimously after Mueller ruled that there was no collusion. Instead, Trump looked for new targets like the Fed, relishing fights that keep the Trump name in the news. “If the economy stays strong, he’s the favorite in 2020,” a demoralized Democrat told us, and most Republicans agree despite their distaste for him.

THE WILD CARD: More than one person inquired yesterday about Ruth Bader Ginsburg, who is a neighbor. “What are you hearing about her health?” people inquire (she looks frail, but what a strong woman). The most overlooked story in Washington is the sharp move rightward in the courts, navigated brilliantly by Mitch McConnell. A fresh Supreme Court vacancy could complete the transformation of the judiciary for the next two decades.


The views expressed in this blog are those of the author and do not necessarily represent the opinions of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies.

The views expressed in this blog are provided as a general source of information based on information available as of the date of publication and should not be considered as personal investment advice or an offer or solicitation to buy and/or sell securities. Speculation or stated believes about future events, such as market or economic conditions, company or security performance, or other projections represent the beliefs of the author and do not necessarily represent the view of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies. Every effort has been made to ensure accuracy in these commentaries at the time of publication; however, accuracy cannot be guaranteed. Market conditions may change and AGF accepts no responsibility for individual investment decisions arising from the use of or reliance on the information contained herein. Any financial projections are based on the opinions of the author and should not be considered as a forecast. The forward looking statements and opinions may be affected by changing economic circumstances and are subject to a number of uncertainties that may cause actual results to differ materially from those contemplated in the forward looking statements. The information contained in this commentary is designed to provide you with general information related to the political and economic environment in the United States. It is not intended to be comprehensive investment advice applicable to the circumstances of the individual.

AGF Investments is a group of wholly owned subsidiaries of AGF Management Limited, a Canadian reporting issuer. The subsidiaries included in AGF Investments are AGF Investments Inc. (AGFI), AGF Investments America Inc. (AGFA), AGF Investments LLC (AGFUS) and AGF International Advisors Company Limited (AGFIA). AGFA and AGFUS are registered advisors in the U.S. AGFI is a registered as a portfolio manager across Canadian securities commissions. AGFIA is regulated by the Central Bank of Ireland and registered with the Australian Securities & Investments Commission. The subsidiaries that form AGF Investments manage a variety of mandates comprised of equity, fixed income and balanced assets.

About AGF Management Limited

Founded in 1957, AGF Management Limited (AGF) is an independent and globally diverse asset management firm. AGF brings a disciplined approach to delivering excellence in investment management through its fundamental, quantitative, alternative and high-net-worth businesses focused on providing an exceptional client experience. AGF’s suite of investment solutions extends globally to a wide range of clients, from financial advisors and individual investors to institutional investors including pension plans, corporate plans, sovereign wealth funds and endowments and foundations.

For further information, please visit AGF.com.

©2023 AGF Management Limited. All rights reserved.

Written by

Greg Valliere

Greg Valliere

Chief U.S. Policy Strategist

AGF Investments

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