Felicia: Welcome to In the Public Interest, a podcast from WilmerHale. I’m Felicia Ellsworth.
Michael: And I’m Michael Dawson. Felicia and I are partners at WilmerHale, an international law firm that works at the intersection of government and business.
Felicia: We’re thrilled to be back for season five. Whether you’ve been with us since episode one or this is your first time tuning in, we’re excited to have you join us. If you have episode ideas or feedback, we’d love to hear from you, so please email us at [email protected].
Michael: We’re kicking off this season with a topic we’re bound to revisit over the next few months: the Second Trump Administration. On Monday, January 20th, President Trump was inaugurated for his second, non-consecutive term. He enters office at a time of significant political polarization, but also with a unified Congress under Republican control and having won a plurality of the popular vote. Amid this evolving political landscape, we’re fortunate to be joined by three experts in public policy and legislative affairs to help us understand what to expect in the first 100 days and beyond with the new Administration.
Felicia: Alyssa DaCunha is a Partner at the firm and Co-Chair of the Congressional Investigations Practice and the Crisis Management and Strategic Response Group. Rob Lehman is a Senior Public Policy Advisor at the firm and Co-Chair of the Public Policy and Legislative Affairs Practice. And Jonathan Yarowsky is a Partner at the firm and Co-Chair of the Public Policy and Legislative Affairs Practice along with Rob. We recorded this episode shortly before President Trump’s inauguration on January 20th. We will not be discussing any specific developments that may have occurred in the initial days of the Administration, but Alyssa, Rob, and Jon’s insights here provide a longer-term analysis of what we can expect from the Administration in the first stretch of governance.
Felicia: For more resources on how to best prepare for and navigate the second Trump Administration and the 119th Congress, please visit our post-election update center at wilmerhale.com and at the link in the show notes.
Felicia: Alyssa, Rob and Jon, thank you so much for joining us today on the Podcast.
Alyssa: Great to be here. Thanks for having us.
Rob: Great to be here. Thanks.
Jonathan: Good to be here.
Felicia: So, lots to discuss on the topic. Alyssa, what should the Republican Party’s platform signal to us about overall priorities for the incoming administration and the first 100 days in particular?
Alyssa: Well, I think you can tell a lot just from the reporting around who's going to be seated on the dais for the inauguration. And it's a lot of tech executives and corporate executives more broadly. And you can also read that into who's been making the trek down to Mar-a-Lago. To say the least, this is an administration that clearly plans to be very welcoming to business and focused on rolling back regulatory hurdles to growth. In terms of differences from the prior Trump administration, this is going to be a much more organized operation, and I think you're seeing that both in terms of the landing teams and the advisors to the administration. Again, this draws heavily from the business community, and I think that tells you a lot about what you can expect from the administration.
Felicia: Let's dig in a little bit on the legislative agenda. Rob, tax policy was a big priority for President Trump during his first administration. So just curious how you're thinking about tax reform in the second Trump administration.
Rob: Thanks, Felicia. You're right. I think after immigration, tax reform is the top of the Trump and GOP congressional agenda. With the coming expiration of the 2017 tax law, there'll be approximately $5 trillion dollars in tax policies that need to either be renewed, altered, or let expire. During the campaign, President Trump also promised a couple more popular but very expensive new proposals. So, he's proposed, and we expect Congress to consider, eliminating the tax on tips, eliminating the tax on social security benefits, eliminating the current SALT deduction cap, also lowering the corporate tax rate for businesses. So altogether, these new promises are estimated to cost another $4 trillion dollars. With very small margins in the House and the Senate, this is going to be a very challenging tightrope to pass such complex and massive bills in a short period of time. The real question is going to be, how are they going to pay for these $9 trillion dollars in benefits and which industry is going to be receiving those benefits and paying for those?
Felicia: I want to ask Jon a couple of questions about foreign policy, obviously very closely watched topic during the election. How do you expect the Trump administration to approach the conflicts in Ukraine and the Middle East, escalating tensions in China and some of the many other significant foreign policy issues that we're facing right now?
Jonathan: Well, in some ways, foreign policy has already started under Trump, given his involvement in reaching a ceasefire in Gaza. I think the real sense building is that President Trump really wants to create a different security arrangement in the whole Middle East and build upon the Abraham Accords and other kinds of agreements that he had really spent a lot of time on. The Middle East will be front and center.
Ukraine will be a little slower to get started, but it will get started in 100 days because of where he has made statements and we really do expect not that he will personally be meeting with people, but Marco Rubio and others will be over in Ukraine. But there are other things that are going on and will be revealing in many ways about how he wants to deal with international alliances. We have three international conferences coming up this year that will be well covered. The Munich Security Conference, the G7 in Canada, and then the G20 later in the year. Who goes for the United States? How deeply do we participate? Statements coming out of that may be very different than what we've seen in the last four years because I think the President has made very clear he is trying to define American interests first and foremost. International alliances won't be thrown over, but they may be redefined. In the defense realm, he will really encourage alliances, whether it's Australia, NATO, Taiwan, all need to contribute more if they want our deep involvement.
In addition, with China, there will be a lot of consistency in terms of the restrictions that the Biden administration has put in and the sanctions. But there will be some differences too. How deeply and fervently this administration will fight to protect Taiwan against any kind of incursion from the mainland may be different. And it won't be walking away from Taiwan, but it may be a redefined posture. Finally, President Trump in his first term spent a lot of time with Cuba and Venezuela and other countries. I think other than making sure that Mexico and others follow our immigration policy to come, he will give much less attention to that than he did in the first term.
Felicia: Rob, I was wondering if you could speak about what the first Trump administration's approach to tariffs was, then the Biden administration and what we expect to see that'll be different in this second Trump administration.
Rob: President Trump put about $300 billion on tariffs on China using the 301 tool, and for the most part, the Biden administration kept those tariffs on. There's been some modification, but for the most part, continued that policy. What's interesting is that Trump calls himself the “tariff man” and he's very proud to use this tool. I consider tariffs for President Trump sort of the Swiss army knife of public policy. It can do a whole series of things. For President Trump, tariffs can help stop unfair trade from China. It can stop illegal immigration from Mexico. It can stop the flow of fentanyl from countries. It can reduce the trade deficit. It can increase revenue to the U.S. government. And it can also just be used as a negotiating tool. You've had countries like Mexico and Canada already agree to change their behavior. So, it's a demonstration that it can be an effective tool. No one is going to be surprised if he puts tariffs in place but what's going to be the reciprocal behavior from Canada and Mexico and the EU and particularly China when we put these tariffs on? And that's really going to be the big question. Finally, we mentioned in the tax reform context, there needs to be a significant increase in revenue to pay for some of these existing tax benefits and then the expansion of some of these new benefits. And tariffs could play an important role. An across-the-board tariff of 10% would raise approximately $2.5 trillion dollars. So, it's a lot of money that could potentially be used, and there's a real open question now, will Trump do that unilaterally? Will Congress do a portion of it? And that's going to be something we'll be following very closely.
Felicia: Alyssa, you mentioned expecting a more pro-business administration. Jon, what do we think financial institutions might see under the second Trump administration?
Jonathan: I think what we will see primarily is less stringent enforcement in another number of areas. I think there'll be very stiff enforcement in the various agencies. But I do think there will be a shift over to try to build in more innovation, more flexibility for companies to compete. Remember, the president has a lot of leeway to make foreign policy decisions. But in the executive branch, they're going to be tied to the rules that exist. And if they really want to change rules, there's going to have to be agency action to do that. And that will take time and effort. I do think, though, that the enforcement agenda will slacken, with much more discretion and certainly in the crypto space. We know that the President wants to make the US the crypto capital of the planet. And I do think he'll find a lot of receptivity in Congress. A lot of progress was made last Congress by Chairman McHenry, to move a stablecoin bill through the Financial Services Committee. But also, a new framework for crypto. Crypto really wants rules because they don't want to have four years of growth and involvement in the financial system and then suddenly have that taken away through a new administration. They don't want that. They want some rules. Then the question is really the balance between federal and state jurisdiction. There's a lot of sympathy and receptivity to having states have some role in this. The Fed will be a big player in making decisions about the framework. But again, the Fed has not changed, at least for the first year. So, this will be an interesting area.
Felicia: What do we expect to see out of the SEC in this new administration?
Jonathan: Paul Atkins, who I think will sail through confirmation, will take over as chair. Atkins was at the SEC previously, starting in 2002, and he really has a clear record. He was against what he viewed as undue penalties against large corporations for technical violations of rules. But he was very firm on investor protection. He will try to encourage a lot of innovation where he can do that. But I also think that he will be part of trying to help structure a new regime for crypto, and also try to figure out how to define the categories of primary and secondary transactions with crypto. The courts have kind of a hybrid analysis going on and I think that may be something that he will devote a lot of attention to because that will give us some clarity about the rules of the road for crypto. I think you'll see a lot of collegial work between the three or four financial agencies, but Paul will have a leading role.
Felicia: Let's shift back to Congress. Alyssa, the Trump administration is coming in with Republican control in both the House and the Senate, as he did in his first term. What do we expect in terms of congressional oversight, and how does that set up the incoming administration in terms of achieving their goals?
Alyssa: I think it's going be a very, very busy area. I would point out two things in particular. First, as you mentioned with unified Republican control of both houses of Congress, albeit with some very narrow majorities in the House and even the Senate to a certain extent, and then also the executive branch, we would expect to see Congress focus more of its investigative powers on the private sector as opposed to conducting oversight of an administration that was under control of the opposite party. So that's a shift from the last Congress and probably means that we can expect a very significant number of investigative inquiries using both voluntary and compulsory processes and requests for senior leaders to testify. The second thing is that I would expect to see oversight activity that is designed to make the case for the legislative and policy reforms that are most important to the Trump administration. So, you might see, for example, hearings focused on the impact of immigration on border communities or potential national security risks. Or you could have hearings focused on building the case for the benefits of expanding the tax benefits that Rob was just talking about. I think a lot of our clients probably feel like that is oversight that would not touch on the private sector. But what we found over the years of doing this work is that our clients are often drawn in through what we like to call “bank shot” investigations, which is you may be a government contractor in a particular area and you may not feel that your company has a policy perspective on a given issue. But if you are a custodian of records because you provide services in a relevant area, or if your company has been cited in some review as having benefited from corporate tax benefits, you may find yourself called as a so-called friendly witness to make the case for expanding tax benefits or be called upon to provide records that may be relevant to evaluating the government's activity in particular areas.
Rob: I might add one comment to Alyssa's good points there. She used the word of a “unified” Republican control. And I think “unified” is really important when you have a small majority and very independent thinking group in the House of Representatives. I think one of the things that we should continue to look at, there are certain metrics and dates that Congress will set out for themselves. So when they have to fund the government, when the debt ceiling is going to come up, and different groups of Republicans don't agree on the policies to advance those. And so on spending, they're going to need Democrats to vote for that. And that's where it's going to set up some real tensions between Republicans when they have to work with Democrats against some of even what President Trump wants.
Felicia: We've talked a lot about Article 1 and Article 2. So, let's move on to my favorite, Article 3, and talk a little bit about the judiciary. Jon, we know that one of the hallmarks of the first Trump administration was the nomination and appointment of a large number of federal judges. The Biden administration also made some really large strides in that respect as well. Where do the appointments stand and how important are they vis-a-vis the administration's other agenda items?
Jonathan: Well, they both did historically incredibly well. In fact, they came within one judicial confirmation of each other. Biden had 235, Trump had 234. And combined, those two administrations now have filled out 50% of the judiciary.
Felicia: Wow.
Jonathan: It's a changed judiciary. President Trump comes in with fewer vacancies than he did in his first term. The real question, of course, is whether Republican appointees would take senior status and open up new vacancies. I really think they will keep to a younger demographic, as they did in the first term, so that there'd be longevity for life term appointments. But the real crisis in the courts is that the caseloads are just burgeoning for the federal district court level primarily. And it really impacts primarily business interests. Why? Well, because each district court has both a criminal docket and a civil docket. But because of constitutional requirements, the criminal doctrine always takes precedent. So, it just pushes back, because there's no time limit for civil cases, a lot of the business disputes and litigation. So, we really need more judges.
Felicia: So, Alyssa, maybe I can ask you to get your crystal ball out and talk about a court that has no current vacancies, the Supreme Court. What do we expect to see there? A lot of musings about whether either Justice Thomas or Justice Alito might retire.
Alyssa: Well, I would say they're probably just musings to use the word that you used, Felicia. I don't think there's any reason to think that's happening imminently, but four years is a long time, and a lot can change. And given the climate and where we are as a country, there's certainly a good chance that a justice could read some tea leaves, say three years out and decide that this would be the right time. But I don't think we have any reason to think that's happening imminently.
Felicia: Jon, how do you expect the Loper-Bright decision to affect this administration or factor into the Trump administration's efforts towards deregulation?
Jonathan: You know, all the activity in this area about the breadth of authority that agencies have and deferring to such authority has undergone such sea change in the last few years. Where it stands is that this is a two-edged sword. In many ways, the Biden administration was hamstrung in some of its litigation over the agencies. But every president, starting with President Trump, is going to have to run into this and make a decision. Polarization in Congress is not making new legislative direction possible, which is really the base requirement. The irony is that even though I think you will see agencies under this new administration move quickly to try to get some rulemakings, with where we stand, if they really want to vitiate a prior rulemaking, that the Biden administration did, they just can't take a quick expedited effort. They have to start all over. That takes time. In addition, if they get beyond the pale of what authority that people think is proper, they will get challenged in the courts. So, we are going to watch, I think, a real slowdown in the executive branch activity. Now, on the other hand, President Trump has talked about the administrative state and wanting to cut down on that. And so, in some ways, fewer rules may satisfy his base and other folks in thinking that the country is riding itself from too much agency strangulation.
Felicia: Well, certainly going to be a busy first 100 days to be sure and beyond. And we'll have to have this group back maybe after 150 days and see how we did. But in the meantime, thank you all so much for joining us and for sharing your views. Really enjoyed the conversation.
Rob: Thank you.
Jonathan: Thank you.
Alyssa: Thanks for having us, Felicia.
Felicia: And thank you, everyone listening, for tuning in to this episode of In the Public Interest. We hope you’ll join us for our next episode. If you enjoyed this podcast, please take a minute to share with a friend, and subscribe, rate and review us wherever you listen to your podcasts. If you have any questions regarding this episode, please email them to us at [email protected].
Michael: For our WilmerHale Alumni in the audience, thank you for listening. We are really proud of our extended community, including alumni in government, the nonprofit space, academia, other firms, and leadership positions in corporations around the world. If you haven’t already, please join our alumni center, at alumni.wilmerhale.com, so we can stay better connected.
Michael: Our show today was produced by Arpi Youssoufian, sound engineering and editing by Bryan Benenati, marketing by Emily Freeman and her team, all under the leadership of Executive Producers Kaylene Khosla and Matt O’Malley. Thank you for listening.
Felicia: See you next time on In the Public Interest.
