Washington Weekly: Trump’s Agenda

The Senate held a number of confirmation hearings for President-elect Trump’s nominees (see below) and passed a procedural vote to advance an immigration bill that would require detention of undocumented immigrants who commit certain crimes. The House passed three bills to require Title IX compliance in athletics to be based off of assigned sex at birth, to deport or deny US entry to foreign nationals who have been convicted of or committed sex offenses or domestic violence and to reduce double taxation of individuals and businesses operating in both the US and Taiwan.

The Senate will work to confirm Trump administration nominations and vote on the immigration bill mentioned above. The House will vote on a bill to address forest and wildfire management and will likely vote on the Senate-passed immigration bill.

Filling Out the Team.

The Senate was busy this week with hearings on 12 individuals chosen by President-elect Trump to serve in cabinet-level positions. One of the nominees (for Attorney General, Pam Bondi) had two hearings. The sometimes-contentious hearings give the individuals an opportunity to outline, promote and defend their credentials and views. The hearings will be followed by a vote in committee and then votes in the full Senate. Confirmation hearings can provide an important basis on which Senators make their calls on whether to support a given nominee or not. This week, Defense Department Secretary nominee Pete Hegseth (one of the more controversial Trump picks) seemed like he might have cleared the bar for approval in his hearing. After assessing all 12 nominees in their hearings this week, we think all of them will be approved by the Senate, beginning with Senator Marco Rubio (R-FL) as Secretary of State next week.

On Deck.

We count at least 12 cabinet-level nominees who will have their confirmation hearing next week or later. These include Robert F. Kennedy, Jr. (Health and Human Services Secretary), Tulsi Gabbard, (National Intelligence Director) and Kash Patel (FBI director). Those three will be subject to highly publicized hearings. Gabbard’s nomination seems to be the most vulnerable at this time, and her fate will be determined by a handful of Republican Senators. It’s still possible that all of the Trump nominees considered by the Senate in the first few weeks will be approved, which will be a big win for the President-elect.

Pace of Trump’s Executive Actions.

Following next week’s inauguration, President Trump is expected to issue dozens of executive orders. Many will be symbolic and will follow up on promises made on the campaign trail last year. Most won’t have a direct impact initially, but instead will prompt regulatory and other actions by relevant federal agencies. The majority will require leadership at the relevant agencies to put the orders in motion through the bureaucracy, which is why the quick approval of the cabinet member nominees noted above is key. Trump’s executive actions next week will be most pronounced on immigration and energy issues but will also cover a wider range of regulatory actions. Rather than providing for immediate action, next week’s executive actions are a sign of what is to come later in the year and of what issues are priorities for the new administration going forward.

Trump’s Signature.

The Senate is expected to soon approve two bills passed by the House relating to immigration and Israel that will be sent to President Trump for his signature. These would be the first two bills he signs as president in his second term. The first bill would require federal detainment of undocumented migrants who are accused of certain crimes in the US. The second would impose US sanctions on senior officials of the International Criminal Court who issued arrest warrants to senior Israeli officials over their handling of the war in Gaza. Both measures have drawn bipartisan support and reflect the President-elect’s early focus on illegal immigration and support for Israel. Since the immigration bill was amended in the Senate, it will need to go back to the House for another approval, which we expect to occur in the next two weeks.

LA Fires.

President-elect Trump likely didn’t expect to be focusing on devastating fires in Los Angeles in the first days of his new term. Funding for recovery from natural disasters of this magnitude is largely a federal responsibility (once private insurance obligations are met). Support for disaster aid generally has had bipartisan support in Congress even if it triggers deficit spending. But, will California be different? Trump’s frosty relationship with many California officials, particularly Governor Gavin Newsom, are well known and the President-elect and others have been critical of the local management of the fires. Although Congress just last month approved a bill containing $110 billion in deficit spending to provide relief from recent natural disasters (mostly the flooding in the south), more funding will be needed to accommodate relief efforts in Los Angeles. It will take several more weeks to know how much Los Angeles will need for the recovery, which will then trigger a request for assistance from the federal government. Trump will continue to be vocal in his criticism of CA officials throughout the process. He and allies in Congress may try to condition the aid to enactment of certain state actions. There may be some drama, but we are confident that CA will get the money it needs, most likely through a government funding bill that will need to be passed by March 14.

About that Deficit.

Various House Republicans, including Budget Committee Chairman Jodey Arrington, floated different options this week to reduce the federal budget deficit through spending cuts. Deficit reduction will be a major focus this year. Congress will need to wrestle with two government funding bills, a debt ceiling extension, expiring tax provisions and new spending on immigration enforcement and defense. The proposals, if enacted, would cut over $5 trillion over ten years, which would be significant. While the funding cuts don’t apply to current Social Security or Medicare benefits, they include reductions and reforms to Medicaid and some other entitlement programs. Republican leaders may pick and choose from some of these options as they advance more partisan measures, such as budget reconciliation bills. However, most of the spending reduction proposals would not muster bipartisan support. We give some credit to Chairman Arrington for beginning the debate over deficit reduction by putting some options on the table. Meaningful deficit reduction will require courage and hard votes in Congress and the White House, and we think those are still in short supply in Washington. We’d love to be proven wrong.

TikTok Clock.

In April of last year, Congress passed a bipartisan bill to force TikTok’s Chinese parent company ByteDance to divest from the app. The clock is ticking for TikTok, as the law set a deadline of this Sunday (January 19) for such a deal to occur. TikTok has been challenging the constitutionality of the law in court. Earlier today, the Supreme Court ruled to uphold the law that forces the sale if ByteDance does not divest from TikTok. With that, the company may need to shut down the popular social media app on Sunday. President-elect Trump has professed his support for TikTok and has pledged to try to help the company in the US. The law allows for a 90-day delay and the Trump administration is considering applying that delay as part of a blitz of executive orders expected after Trump takes office on January 20. At this point, a delay of the ban seems likely, but this move would just buy additional time for ByteDance to try to arrange a sale.

State and Local Tax Deduction.

Negotiations on a significant tax bill to address the expiring provisions of the 2017 tax law are well underway among House and Senate Republicans. A group of House Republicans from California, New York and New Jersey met with President-elect Trump this past weekend to discuss the future of the $10,000 cap on the state and local tax (SALT) deduction. While Trump campaigned on increasing the cap, he is now serving more as a mediator between those Republicans who want to expand the cap (or eliminate it entirely) and other Republicans who value the revenue it raises and want to keep it in place. The former side will likely win out since their votes will be needed to pass any final tax bill. The two sides are now negotiating on a final deduction amount. We think the amount might be $20,000, although the amount could be different for married couples and individuals. An outcome is very fluid, but we do believe that there will be some level of SALT relief for taxpayers in high-tax states.

Trump’s Agenda.

If you missed our publication from last week on what we expect from Trump and Washington in 2025, it is attached here.

Trump’s Honeymoon.

President Trump will begin his second term with a 47% favorability rating, a significant rebound from when he left office four years ago (with a 34% approval rating). This is lower than Biden (54%), Bush (51%) and Obama’s (61%) approval on inauguration day but higher than when Trump began his first term (45%) in 2017. Virtually every president receives an approval bump upon taking office, commonly referred to as their “honeymoon” period. Yet, Trump’s recovery is notable since it’s rare for a president to regain favorability after a drop, let alone surpass his favorability from his first-term inauguration. Trump’s favorability has significantly improved since he left office, but with a return to the constant spotlight it remains to be seen how Americans will feel about the president going forward.