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Make sure you read all of this month’s special feature coverage leading up to President Trump’s First 100 Days here.
Since Franklin Delano Roosevelt’s New Deal swept through the American government in the early days of 1933, the first 100 days of a new president’s administration have taken on a special significance. And while there isn’t any specific reason why the first three months are more significant, the symbolic importance has been capitalized upon by many past administrations.
So, as the incoming Trump administration prepares to officially take office, there has been a great deal of focus on what they have planned for its first 100 days. The initial honeymoon between a new President and the country is frequently a period during which a new administration, ironically, has the most capacity to actually enact legislation and shape policy than at any other period during its run. As such, the implications for markets–and thus investors–as well as the broader economy over the next three months could potentially be huge.
So, to get a sense of what we can expect, let’s unpack what we can about Trump’s plan for the first 100 days. The details remain relatively sparse, between his appointments to cabinet positions and his campaign promises, we can begin to formulate a picture of what might be in store for Congress and the nation come January 20th. Over the next month, we’ll be drilling down into the specific investment themes and market sectors that could stand to benefit or struggle under the new administration, going in depth on what this prospective new administration is going to mean to entrepreneurs and investors, with a special eye on the country’s emerging growth companies. These first 100 days stand to give a clear sense of what markets and businesses can expect for the next four years, so we’re going to try and help investors know what to expect and what each step may mean moving forward.
So, to kick this series off, here’s a look at the details that can be gleaned from what we’ve seen thus far.
What’s Real and What’s Rhetoric?
Photo by Darron Birgenheier
There continues to be some swirling questions regarding just how much of Trump’s campaign agenda is going to come to fruition. Will he build the wall? Can we expect 45% tariffs on Chinese goods? Are mass deportations around the corner? Odds are, as with any politician, there’s a fair bit of campaign rhetoric that was just that. There is also, as with any president, a significant question with regards to what his policy proposals will look like after they encounter Congress. While Trump is entering office with majorities in both the House and Senate, they’re significantly smaller than the ones Obama entered with in 2009, and it’s since become clear that an organized minority opposition can confound plans. Obama spent most of his presidency touting the need for expanded infrastructure spending and comprehensive tax reform, while trying to shape the federal judiciary, and Mitch McConnell and a senate minority were able to block progress on any legislation or nomination by way of the filibuster, biding time until a Republican return to power in the house forced the administration to abandon many of the causes it held most dear.
So, even at this juncture, the precise nature of the beginning of the Trump administration remains speculative, as we wait to see how amenable Democrats prove to be toward Trump’s plans. Regardless, Trump will no doubt want to make good on as many of his campaign promises as possible, so we’ll start there. In late October, the campaign released a white paper of his “100-day action plan to make America great again,” and it’s likely the clearest plan yet we have to learn from. In fact, the brief video he released post election that outlined his plans mostly just rehashed what was included in that whitepaper in broad strokes.
Banking on Cleaning Corruption, Fixing Trade, and the Rule of Law
The first section of Trump’s white paper contains a number of plans for cleaning up Washington corruption, including term limits for Congress and strict limitations on how soon officials and their staff can enter the lobbying industry after leaving public service. The limitations on lobbying are certainly a welcome continuation of similar policies that were enacted under the Obama administration. One other interesting proposal is to limit the size and scope of the federal government through a hiring freeze on federal employees and a requirement that, for every new regulation planned, two existing regulations must be eliminated.
The second section is the one that’s likely to have the most specific and direct impact on the markets and the economy. Here is where Trump’s trade and energy policies appear to be outlined. Trump intends to withdraw from the TPP and “renegotiate NAFTA,” trying to pull back the rising tide of globalization and improve the trade deficit. Additionally, he intends to use his office to identify and fight any trade policies that hurt American workers. The Trump administration also directs a tougher policy stance on China, including labeling the country a currency manipulator. It proclaims a new commitment to the production of fossil fuels, lifting restrictions to mining as well as oil and gas drilling, and allowing for the construction of the Keystone Pipeline. Finally, it intends to cancel billions of dollars in payments to UN climate change programs to invest that money domestically on infrastructure and environment.
The third section focuses on plans for “restoring security and the constitutional rule of law.” This includes rolling back executive actions from the Obama administration and appointing a new Supreme Court justice. It also delves into plans surrounding immigration policies, promising to deport the two million undocumented immigrants with criminal histories, suspending immigration from trouble-plagued regions where proper vetting isn’t possible, and canceling federal funding to so-called sanctuary cities.
Slashing Taxes and Replacing Obamacare
From there, the white paper outlines a legislative agenda that supports many of the same ideas outlined before, as well as certain other major promises from the campaign trail. The first is the proposal for slashing and simplifying the tax code that was a centerpiece of the Trump campaign, including cutting business tax rates from 35% to 15% and reducing the number of tax brackets for income taxes. There is also a plan to impose major new taxes to those American companies that offshore manufacturing jobs and then attempt to import goods into the country. There’s also the proposed boost to infrastructure spending that plans to use tax incentives to create public-private partnerships that will boost infrastructure spending.
Another major proposal is the removal of the Affordable Care Act, to be replaced with a new system, something that has tremendous potential to remake the American economy. What will replace it isn’t yet known, but Trump is clear about shifting Medicaid funding to block grants, allowing states to make their own decisions about where the money should be spent, and allowing insurance plans to be sold across state lines to boost competition. It also stipulates that the FDA removes red tape to open up approval of new drug applications.
The remaining legislation proposed includes goals of limiting illegal immigration, reducing crime, boosting military spending, cleaning up political corruption, and allowing for affordable child and elder care.
A Clear Statement That’s Pro-Business and Pro-Growth
This is, of course, all based on the mindset of Trump prior to his winning the election. However, the window into his administration’s plans provided by examining his proposed cabinet to this point appears to be in line with much of what we see above. Proposed Treasury Secretary Steven Mnuchin has already suggested that he wants to see significant portions of the regulations in the Dodd-Frank Act stripped away, including the “complicated” Volcker Rule. Likewise, former Texas Governor Rick Perry’s role as Energy Secretary would likely be one where he continued to roll back regulations to benefit oil and gas producers in a similar capacity to his time in Texas. For that matter, appointing Rex Tillerson, the CEO of Exxon Mobil (XOM) as Secretary of State would seem to indicate he’s dead serious about putting expansion of energy production front and center.
Trump’s anti-trade/pro-infrastructure stance is at odds with previous statements made by incoming Labor Secretary Andrew Puzder, but the cabinet as a whole appears to be extremely pro-business and pro-growth. It includes a number of billionaires and other successful entrepreneurs, showing that Trump’s insistence on tying the success of the economy to that of businesses remains firm.
And on Day 101, America was Great… Again!
Photo by the3cats
Ultimately, Trump appears to still be on track to spend his first 100 days pushing for a legislative agenda that’s very much in line with what he proposed on the campaign trail. Even allotting for a certain amount of exaggeration in Trump’s blustery stance during rallies, it’s not hard to imagine things rolling out in a similar fashion to how they were described while he was campaigning.
There’s clearly going to be the need for some of his proposed legislation to shift as the details are hammered out with congressional Republicans, but the likelihood that there will be a ton of pushback there seems unlikely. Democrats may take some firm stands, particularly on the proposed changes to the tax code and Obamacare, but they’re operating from a position of weakness. What’s more, much of what Trump is proposing won’t require Congress’ approval. His capacity to push through major changes solely through the office of the presidency could very well mean he will be able to stick to his campaign promises somewhat closely.
Keep coming back for the rest of this month as we continue to explore what, exactly, is in store for markets under the new Trump administration. Be sure to read:
- January 2017: Trump’s First 100 Days
- Reality vs. Rhetoric: What Will President Trump Really Do?
- Investors Love These ‘Trump Bump’ Sectors, But Should They?
- How Much Will ‘Making America Great Again’ Cost Consumers?
- Analyst Interview: What Wedbush Thinks of the Trump Trade
- Can These Trump Rally Winners Keep Paying Off for Investors?
- Trump’s First 100 Days Has Arrived. Now What?