October 15, 2018
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Trump spat with Steve Bannon threatens the populist economic agenda

Mary Schwalm | AP
Mary Schwalm | AP
Steve Bannon, speaks during an event in Manchester, New Hampshire, Nov. 9, 2017. President Donald Trump is blasting his former chief strategist ahead of the release of a new, unflattering book. Trump says in the statement that when Bannon was fired, “he not only lost his job, he lost his mind.“ A new book by writer Michael Wolff offers a series of explosive revelations, including that Trump never expected to win the 2016 race.

President Donald Trump’s breakup with his former chief strategist Steve Bannon had all the stuff of a good telenovela: insults aimed at family members, sniffy one-upmanship, charges and countercharges of treason and insanity. It could also carry consequences for Trump’s economic agenda.

The president stands on the threshold of pushing forward on two fronts — infrastructure and trade — that helped define his populist campaign.

But he’ll cross it with his populist bona fides in tatters. Trump is touting a new tax law that distributes the bulk of its benefits to the wealthy and well-connected. And he’s got the poll numbers to show for it, closing the year with the lowest approval rating of any new president in modern history.

What would be different if Trump had kept Bannon in the fold?

At the time Bannon left in August, he was leaning on the president to embrace a soak-the-rich strategy for his signature tax overhaul. He wanted the measure to jack up the top marginal rate for the highest-income earners to pay for a deeper cut focused on the working and middle classes.

Congressional Republicans, having settled on a strategy to marginalize Democrats, were never likely to go along (and it’s unclear Trump would have embraced such a strategy). And the circumstances of Bannon’s exit — amid the firestorm after Trump equivocated on the white supremacist rally in Charlottesville — helped stiffen Democratic resolve against working with his administration.

Yet, there’s no question the Trump officials whom Bannon derided as globalists, namely Treasury Secretary Steven Mnuchin and chief economic adviser Gary Cohn, are ascendant in his absence. Per Axios, the two are trying to contain the president’s protectionist instincts as he confronts a slew of decisions on trade matters and tariffs. And the calls will be Trump’s to make, as The New York Times’s Ana Swanson reports:

“In 2018, Mr. Trump will have several opportunities to punish foreign rivals as the final decider in a series of unusual trade cases that were initiated last year. These cases, which were brought under little-used provisions of trade laws, give the president broad authority to impose sweeping tariffs or quotas on foreign products.

“The United States has numerous other routine trade cases in the works — like Boeing’s fight with the Canadian plane maker Bombardier. But the ones heading to Mr. Trump’s desk are unique because they fall to the president alone, rather than career bureaucrats, to decide …

“The president has long hammered China for taking advantage of the United States on trade, and threatened to impose penalties as a result. Now, with a special investigation on China drawing to a close, he appears to have his chance … The results of the investigation aren’t due until August, but trade analysts say they could arrive within weeks. They suggest that the administration might consider restrictions on Chinese investment in the United States, as well as tariffs on Chinese products.”

Trump’s administration is also putting the finishing touches on a major infrastructure proposal. Sources briefed on the plan say it will call for investing $200 billion, with half of that directed toward incentivizing state and local governments to find new resources for public works. The proposal will also earmark $50 billion in block grants for rural infrastructure, such as expanding broadband access; another $25 billion would go toward big, complex projects such as replacing the Brent Spence Bridge, which connects Cincinnati to Covington, Kentucky; and the last $25 billion would go toward projects with innovative forms of financing.

Major business groups are gearing up to push for the proposal. Whether it will draw similarly enthusiastic support from labor unions remains to be seen. Targeting those traditionally Democratic allies was a priority of Bannon’s from the administration’s early days.

As Michael Wolff reports in the forthcoming book, the president at the time bristled at the suggestion the idea wasn’t his own, a sore spot revealed during a lunch with MSNBC host Joe Scarborough:

“After Jared and Ivanka joined them for lunch, Trump continued to cast for positive impressions of his first week. Scarborough praised the president for having invited leaders of the steel unions to the White House. At which point Jared interjected that reaching out to unions, a Democratic constituency, was Bannon’s doing, that this was ‘the Bannon way.’

“‘Bannon?’ the president said, jumping on his son-in-law. ‘That wasn’t Bannon’s idea. That was my idea. It’s the Trump way, not the Bannon way.’”

It isn’t clear how far the Trump administration’s infrastructure proposal would go toward specifying its preferred financing mechanisms for new projects. But the United Steelworkers, for one, is making clear that it opposes the public-private partnership model still under consideration.

“We just passed a huge tax cut that will substantially further the country’s debt. Despite that, the country is in dire needs of massive infrastructure investment,” USW International Vice President Tom Conway said in a statement. “Making these repairs is the function of government and a good way to put hard working Americans to work. Any proposal to privatize funding of these projects would be another way to make the rich richer and stick working Americans with the bill.”

They may have other options.

For one, an odd-bedfellows coalition of bipartisan sponsors — organized by Sam Geduldig, a Republican lobbyist at CGCN Group, and Mike Williams, a Democratic lobbyist with the Williams Group — is preparing to offer its own proposal that takes a more recognizably populist approach.

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