Good evening. We’ve got news on the Trump transition, a look at the GOP’s tax plans and a Fed rate cut, but before we get to that, a programming note: We’ll be back in your inbox on Monday.
Trump Names His New Chief of Staff
President-elect Donald Trump on Thursday announced that Susie Wiles, the 67-year-old political operative who led his presidential campaign, will be his White House chief of staff.
“Susie Wiles just helped me achieve one of the greatest political victories in American history, and was an integral part of both my 2016 and 2020 successful campaigns,” Trump said in a statement. “Susie is tough, smart, innovative, and is universally admired and respected. Susie will continue to work tirelessly to Make America Great Again. It is a well deserved honor to have Susie as the first-ever female Chief of Staff in United States history. I have no doubt that she will make our country proud.”
As Trump prepares for his return to the White House, gleeful Republicans and distraught Democrats are already looking ahead to how a second term might play out, with the expectation that Trump brings a far stronger understanding of how to use the levers of power in Washington, D.C., than he had in 2017 — and now faces far fewer limits on his power and fewer obstacles to enacting his agenda, with more carefully chosen allies and loyalists by his side.
“Trump returns to power as the head of a Republican Party that has been remade in his image over the last eight years and as the architect of a conservative-leaning judiciary that has helped to eliminate his legal perils,” Andy Sullivan of Reuters notes. “And he'll be able to claim a broad mandate from the public as only the second Republican presidential candidate since 1988 to win the popular vote.”
Well before Trump won a second term, his allies were preparing for a return to power, both in terms of policy and personnel. "We're looking at younger, more MAGA folks. More MAGA and less Republican than in the past," one unnamed donor told Reuters.
Trump’s transition team is being led by Howard Lutnick, the billionaire CEO of financial firm Cantor Fitzgerald, and Linda McMahon, Trump former head of the Small Business Administration also known as the co-founder of World Wrestling Entertainment. Trump allies are reportedly already jockeying for their preferred positions in the incoming administration, and the president-elect could announce some key appointments within days. With Republicans likely to control at least 53 seats in the Senate, Trump appears likely to face less friction in having key appointees approved.
A hedge fund manager for Treasury secretary? Scott Bessent, a hedge fund manager and top Trump fundraiser, has served as an economic adviser to Trump, and the president-elect has praised him often on the campaign trail. Bessent is reportedly already searching for potential deputies, according to the Financial Times.
“A billionaire who made his fortune betting against the Japanese yen with liberal philanthropist George Soros, he has backed many of Trump’s economic policies, including imposing wide-ranging tariffs on imports,” the FT’s Demetri Sevastopulo and Colby Smith write. “Bessent has also backed unorthodox policies that economists and investors warn could increase volatility. Earlier this year, he floated the idea of nominating a ‘shadow’ chair of the Federal Reserve, who would not sit on the US central bank’s policymaking committee but would give guidance on the future direction of monetary policy. Such an unprecedented move would undermine the influence of Jay Powell, the current Fed chair.”
Another billionaire hedge fund manager, John Paulson, is reportedly also a possible contender for the Treasury job, as is Robert Lighthizer, Trump’s former trade representative, whose name has also come up as a potential chief of staff.
Trump’s top diplomat: Sen. Marco Rubio of Florida, who was among the finalists to be Trump’s vice president, is being mentioned as a possible secretary of state along with Tennessee Sen. Bill Hagerty, who was Trump’s ambassador to Japan from August 2017 to July 2019, and Richard Grenell, who was Trump’s ambassador to Germany, among other administration posts.
What roles will RFK Jr. and Elon Musk have? Those two high-profile supporters aren’t likely to get Cabinet posts, but will likely still have massive influence, with Robert F. Kennedy Jr. slated for a role overseeing healthcare programs and Musk expected to head a “government efficiency” panel tasked with slashing spending.
Biden Pledges a Peaceful Transfer of Power
President Joe Biden pledged a peaceful transfer of power Thursday in his first address to the nation since his party suffered a stinging and sweeping election defeat that will return Donald Trump to the presidency and could still leave Republicans in control of both chambers of Congress.
“We are in a democracy, and the will of the people always prevails,” Biden said from the White House Rose Garden. “Yesterday, I spoke with President-elect Trump and congratulated him on his victory. I assured him that I would direct my entire administration to work with his team to ensure a peaceful and orderly transition. That is what the American people deserve.”
Biden also said he hopes the nation can lay to rest any questions about the integrity of the electoral system. “It is honest. It is fair. It is transparent. It can be trusted, win or lose,” Biden said, implicitly scolding Trump, who sought to subvert the results of the 2020 election and had also raised baseless claims of Democratic heating this year before it became apparent that he would cruise to a decisive victory.
Biden also praised Vice President Kamala Harris and the campaign she ran. Some Democrats have blamed the 81-year-old Biden for her loss, suggesting that the outcome might have been different if he had left the race sooner, among other complaints.
With his legacy at stake, Biden promoted his administration’s record. “Don’t forget all that we accomplished,” he said in remarks directed at his supporters. “It has been a historic presidency, not because I’m president but because of what we’ve done, what you have done. A presidency for all Americans. Much of the work we’ve done is already being felt by the people. The vast majority will not be felt – will be felt over the next 10 years. We have legislation we passed that is only now just really kicking in.”
Biden also pointed to his infrastructure bill, and said he leaves behind the strongest economy in the world. “Setbacks are unavoidable, but giving up is unforgivable,” Biden said as he sought to console his staff and urge them to stay engaged. “Remember, a defeat does not mean we are defeated. We lost this battle. The America of your dreams is calling for you to get back up.”
Trump Wants Tax Cuts in a Hurry
Republicans are reportedly scrambling to find ways to enact President-elect Donald Trump’s proposals for an extensive array of tax cuts when he returns to power, with an eye toward giving the new president a major legislative victory in his first 100 days.
During the campaign, Trump pledged a variety of new and unusual cuts, including the elimination of taxes on tips, overtime pay and Social Security benefits, and the list seemed to grow longer every week. The new administration will also have to address the tax cuts from Trump’s 2017 tax law that are scheduled to expire at the end of 2025, as well as a potential reduction in the corporate tax rate — all against a backdrop of soaring budget deficits and rising national debt.
The Washington Post’s Jacob Bogage reports that the attitude among Republican leaders toward the complex tax situation is “just go,” which suggests they plan to do as much as possible as quickly as possible, even if details are still anything but clear. “Rip the Band-Aid and run and just plow it through,” one conservative lobbyist told Bogage.
Idaho’s Mike Crapo, who will lead the Finance committee in the Republican-controlled Senate, indicated earlier this year that he is interested in major changes in tax policy. “Everything is in play,” he said over the summer.
Rep. Jason Smith, the Missouri Republican who chairs the tax-writing House Ways and Means Committee — a position he is expected to maintain if the GOP retains its hold on the House — said earlier this fall that the process will not be easy. “There’s just going to have to be a lot of dials adjusted. I have to thread the needle to pass a bill,” he said, per the Post. “I just want to make sure it’s the optimum tax rate and what that is. But we also have to make sure we’re fiscally smart.”
One key question is how quickly policymakers can move. Liam Donovan, a Republican strategist, told The New York Times that lawmakers have a massive job ahead of them. “Nobody wants to acknowledge at all the sheer enormity of the challenge,” he said. “There’s a reckoning coming.”
A mighty price tag: Although much depends on the details of the nascent legislation, it’s a good bet that the price tag will be substantial. The fiscal hawks at the Committee for a Responsible Federal Budget have estimated that Trump’s proposals — including extending the 2017 tax cuts, lowering the corporate tax rate from 21% to 15%, and ending taxes on tips, overtime and Social Security — would cost upwards of $9 trillion over 10 years.
Republican policymakers will likely look for ways to reduce the cost, at least on paper. One option might be to use revenues from Trump’s proposed tariffs to offset the cost of tax cuts, though that could be tricky since there is little agreement on how those tariffs might play out.
In September, Crapo said lawmakers might consider avoiding an offset for the roughly $4 trillion cost of extending the 2017 tax cuts, simply by changing the way the extension is treated in a future reconciliation bill, shifting from a “current law” basis to a “current policy” basis. “I do not believe that pro-growth tax policy needs to be offset in a very rigid way,” he said.
Another option would be to limit the scope of Trump’s proposed cuts. For example, the tax exemption for Social Security benefits could be limited via an income threshold. John Paulson, a billionaire hedge fund manager who has been advising Trump, told the Times that such limits have been discussed by the president-elect’s team. “You need to keep the concept of what he wants to achieve, and put guardrails around it so you achieve the goals, but lower the revenue impact,” he said. “And I have discussed that with members of his economic team, and they’re all cognizant of that.”
But according to the Post’s Bogage, the most likely source of offsetting revenues is a claw-back of some of the climate change-focused spending included in the Inflation Reduction Act, a move that could reduce spending by billions and “satisfy Republican objectives to unwind much of President Joe Biden’s legacy.”
Quote of the Day
“No.”
− Federal Reserve Chairman Jerome Powell, when asked by reporters at a news conference Thursday if he would resign if President-Elect Trump asks him to step down. Powell later said that the president does not have the power to fire or demote him. “Not permitted under the law,” Powell said.
Trump appointed Powell in 2017 to a term that ends in 2026, but he has criticized the Fed chief repeatedly and said during the presidential campaign that he feels he, as president, should be able to weigh in on interest rate moves.
Powell told reporters Thursday that the election would have no near-term effects on Fed policy. The central bank on Thursday announced another quarter-point rate cut as it tries to balance a cooling job market with inflation that has moved closer to officials’ annual target. “Inflation has made progress toward the Committee's 2 percent objective but remains somewhat elevated,” Fed policymakers said in a statement.
Powell also told reporters that the central bank will take a wait-and-see attitude toward the possibility of another rate cut in December.
Fiscal News Roundup
- Trump Taps Susie Wiles to Be White House Chief of Staff – Washington Post
- Biden Urges Americans to 'Bring Down the Temperature' After Trump's US Election Win – Reuters
- Trump’s Newest Economic Guides Are Not Like His Old Ones – New York Times
- Trump Allies, Private Sector Quietly Prepare for Mass Detention of Immigrants – CNN
- Trump Says There's 'No Price Tag' for His Mass Deportation Plan – NBC News
- For Trump and Republicans in Congress, ‘Everything is in Play’ on Tax Cuts – Washington Post
- Republicans Grapple With How Far They Can Take Trump Tax Cuts – New York Times
- Trump’s Tax Ideas Could Affect Homeowners, Older Adults and Middle Class – Washington Post
- Federal Workers Prepare for Cuts, Forced Relocations in Trump’s Second Term – Washington Post
- Wall Street Salivates Over a New Trump Boom – Wall Street Journal
- Fed Cuts Rates Again, Latest Sign That Inflation Is Coming Under Control – New York Times
- Powell Says He Would Not Resign as Fed Chief if Trump Asked for His Resignation – CNBC
- Trump Readies to Name 'Fearless' Conservative Judges in Second Term – Reuters
- US Military Ready to Carry Out Lawful Orders of Next Trump Administration, Avoid Politics, Pentagon Chief Says – Reuters
Views and Analysis
- Devastated Democrats Play the Blame Game, and Stare at a Dark Future – Reid J. Epstein, Lisa Lerer and Nicholas Nehamas, New York Times
- Trump Will Face Fewer Speed Bumps in Washington During His Second Term – Andy Sullivan, Reuters
- Trump Has a ‘Super Clear’ Mandate on Taxes — But Here’s Why It’s Not a Done Deal – Andrew Keshner, MarketWatch
- Trump Says He’ll Claw Back Unspent Money From the IRA. That May Not Be Easy – Henry Epp, Marketplace
- Get Ready for Trump-flation – Robert Kuttner, American Prospect
- Republican Self-Degradation Continues. Democratic Self-Sabotage Helped – George F. Will, Washington Post
- Harris Lost the Very Voters She Needed the Most – Timothy Noah, New Republic
- A ‘Republic if We Can Keep it.’ Perhaps We Cannot – Jennifer Rubin, Washington Post