Beltway Briefing: Administration Growing Pains

Mark Alderman
202.912.4846
malderman@cozen.com

Blake Rutherford
(215) 665-6909
brutherford@cozen.com

Howard Schweitzer
202.912.4855
hschweitzer@cozen.com

Blake Rutherford, Mark Alderman, and Howard Schweitzer, of Cozen O'Connor Public Strategies, discuss the recent developments in politics and policy in DC.

Blake: My name is Blake Rutherford. I want to welcome all of you to another in our series of presidential calls, the Beltway Briefing, featuring my colleagues Mark Alderman, chairman of Cozen O'Connor Public Strategies and Howard Schweitzer, the managing partner of Cozen O'Connor Public Strategies. Mark, Howard, great to be with you guys.

Mark: Blake.

Howard: Blake, good to see you.

Blake: Let's dive right in. Mark, what are your impressions of the past week?

Mark: Wow. That is a big question, but justified I think, Blake, by the last week. The last week has been chaos. I think we are in for more before it gets better. The White House is not set up to govern the country, that's my take on the last week, and that is a problem.

Blake: Howard, what are your impressions of the past week?

Howard: The same. I guess I view it through the lens, Blake, of having been through this, a change in administration, many times. I understand that it does take a while to be ready to govern, but when 23 days into your administration you're firing your National Security Advisor, we're talking about a whole different level of dysfunction. Clearly, no one is firmly in charge. We've got a bunch of people that haven't don't this before, and it's not a good situation.

Blake: Mark, what do you think the most important thing is that happened last week?

Mark: Well, I haven't checked the news in the last couple of hours so I may already be behind. I think the most significant development was where Mike Pence sits in this administration. I think a lot of people, myself included, were of the opinion that Mike Pence was dead center and was somebody who had done some of this before, Howard, not the White House but had served in government. We find out now that a highly material fact emerged a couple weeks ago and nobody told the Vice President about it, including the President. That to me is meaningful.

Howard: By the way, that is surprising, but it's not a surprise if that makes any sense. It's surprising that given where they are in the transition and the role he played that it's bad that he didn't know, really bad. It's not at all surprising to me. I think if you go back and check the dates of our prior calls you'll hear me say that this administration, like every administration, is going to revolve around the President, not the Vice President. Yes, I think from a personnel point of view Pence has played a role in, the Vice President played a role in sourcing nominees for different spots, but this is the way it always goes. People are the President's people. The Vice President has some power, but is largely a ceremonial figure and is not in the flow of the main decision making in the Executive Branch.

Mark: I think if we check the tapes of recent calls we'll also hear you saying that this was going to get straightened out and that they'd bring a few people in who knew what they were doing and it would look very different in a little while. I wonder if you still think that because apropos of what you just said, of course the President is the center of the universe in the White House and I think it's going to be awful hard to fix this thing with this particular center of the universe.

Blake: With that in mind, Mark, what's your assessment of the Trump Administration at this stage? If you were to grade them, what grade would you give?

Mark: Well not even getting to the policy yet, which I of course disagree, but we aren't even there yet. That's one of the bulletins. We're not even at the policy part and they do not get a passing grade for governing. That's of enormous concern. It's a big, dangerous world and it is not good whether you were for him or against him, whether you want the executive order to stand or get thrown out on immigration. None of that matters nearly as much as every American has the right to expect competence from the Commander in Chief in this dangerous world, and we're not seeing it.

Blake: Howard, what's your assessment? What grade would you give the Trump Administration?

Howard: A D. D, they're off to a very rough start. Ironically, I was thinking about this last night, the thing they've done best was the Gorsuch roll out, which should've been the most difficult thing to do. Frankly, it's the easy stuff they've whiffed on.

Mark: Like telling the truth.

Howard: It's all, look, execution. There's a reason they call it the Executive Branch, it's all about execution. You've got to execute. You've got to have people that know what the heck they're doing, that know how to turn the lights on, that know where the bathrooms are, that know how to get stuff done, that know how to bring the agencies in. They are not ready for Prime Time. They don't have the team they need, and it's worrisome.

Blake: My next questions. Do you think the West Wing is organized appropriately?

Howard: No. I mean clearly it's not. You have Kellyanne Conway who is clearly not in the loop, going out and defending things and the White House being in an entirely different place. You have an Executive Order being rolled out without proper Agency vetting that sparked protests in airports across the country. You've got a disconnected group that doesn't have the reigns of government yet. Clearly not, they need to get somebody in there. Trump needs to get somebody in there who understands how things work, who has done this before. He needs to give that person his full authority and let them do their job.

Blake: Mark, what significance should we place on these management issues? I'm going to get to the policy in a minute. What significance should we place on the management issues?

Mark: I think we should place tremendous significance on these management issues, because as I said a second ago, this is a dangerous world. The United States is in the middle of it, and the President is the Commander in Chief of the most important country on the planet. They have to be ready when a test comes. We have to hope that a test doesn't come. We have to first of all hope that Howard is right, that it can be fixed. I have my doubts because saying that the President has to give someone his full authority ...

Howard: I understand what you're saying.

Mark: ... Is saying that we need a different president because we know that's not happening. I am concerned that we'd be ready when a test comes, because the world will test this President.

Howard: I'm concerned too. Look, I think I may have said this on our last call, my view when it was eight and a half years ago and I was doing the bailout, our mantra was the policy will be debated for decades and should be, and that's one thing. Execution is totally unacceptable to fail on execution.

Mark: Right.

Howard: Right now these guys are failing on execution. These are all self inflicted wounds. They're not things coming from the outside. They're not externalities. Of course I agree with what you're saying ...

Mark: Are you adjusting your D down to an F or a failing grade? Do you actually pass ...

Howard: ... No, because I think they get one notch up for ...

Mark: ... For Gorsuch?

Howard: ... For the Gorsuch roll out and for ...

Mark: That was five minutes.

Howard: ... And for the fact that some of this is the normal progression from a campaign to governing. Look, he choose to run his campaign the way he did. It's what got him elected. He chooses to Tweet and do everything the way he does. You live by the sword, you die by the sword. These are self inflicted wounds and I don't think that declaring war on the intelligence community is working out particularly well for this administration. They need to adjust course.

Mark: The question is whether these wounds are circumstantial or characterological. Are they caused by these circumstances of a new administration, the campaign being what it was, too much happening at once, a dangerous world, or is this about the character of the President and the men around him; men with one exception whose ...

Howard: Not one exception.

Mark: ... exceptional. Well, one exceptional exception at least. We will find out, circumstantial or characterological. I fear it's the latter.

Howard: Look, it's both because every President comes in and, Lord knows Barack Obama did, with their characterological strengths and weaknesses. This is certainly different and certainly we had our misgivings during the campaign. It is both circumstantial and a matter of character. The President has to ... I think some of what's happening is good in the sense that ... Yeah.

Mark: Okay.

Howard: Mark's eyebrows.

Mark: I'm listening.

Howard: Mark and Blake both raised their eyebrows, for those of you listening.

Mark: I'm still waiting to ask you other than Kellyanne who the other women in positions of power in this White House are.

Howard: I think you're referring to the President's daughter.

Mark: I wasn't aware that she was a Federal employee. I would like to hear what was good.

Howard: Can I explain why it's good?

Mark: Yes.

Howard: They need serious wake up call.

Mark: Okay.

Howard: No, I mean, look it is what it is. They need a serious wake up call.

Mark: We have to hope the wake up call doesn't get anymore serious than it is.

Howard: Look, it's really serious. You could look at it different ways. You could look at it in terms of ... I'm glad I made you guys laugh. You can look at it in terms of the broader issue set around the election and Russia. That's obviously a hugely significant issue and there's nothing good about that. The shakeup, the very early screw up by Flynn and the shakeup, you know what these guys needed their clocks cleaned. I think from that point of view, better that Mike Flynn screw up and clean their clocks than that Al Qaeda screw up or that they clean their clocks. You know what I'm trying to say. They needed a wake up call. Guess what, they got it. If you want to look to make lemonade out of lemons, that's one way to look at this.

Mark: I will stipulate that it's good that Mike Flynn is gone. I'll go that far, there's one good thing that's happened.

Howard: No, you're making light of it, but the ...

Mark: No, it's serious ...

Howard: ... the point is ...

Mark: ... that it's good that he's gone.

Howard: ... Yeah, well I ...

Mark: If he's replaced with someone more responsible and more ...

Howard: That's not the point. The point is ...

Mark: ... truthful ...

Howard: It's about the President. The President needed an early wake up call. He needed to know that, guess what, you can't always win. You're not always going to win. You declare war on the intelligence community and the bureaucracy, they're going to find a way to bite you. This is a very early lesson. I think ...

Mark: Where's the evidence that the lesson has been learned? Pre-Inauguration he declared war on the intelligence agencies. He now has a wake up call about what that means in his new job, and this morning his response to that wake up call was a Tweet storm condemning his own intelligence agency.

Howard: Not there yet.

Mark: Lesson not learned.

Howard: Not yet. Look, I grant you that he is somebody who probably has a more challenging time than a Barack Obama learning lessons, okay, or a George W. Bush, or anybody else for that matter.

Mark: The nostalgia for George W. Bush is extraordinary.

Howard: All I'm saying is from a lemonade out of lemons point of view, he needed to get his clock cleaned early and he did. Maybe something good comes out of that.

Blake: Let's move on and talk about policy, because we have seen really, I think, one significant policy come out of this White House, which is the travel ban which is now on hold. Mark, what are your impressions from a policy perspective about this White House?

Mark: I think we have had a blizzard of Executive Orders that with one or two exceptions have done nothing, have not yet implemented. They have restated the President's policy on various issues, but other than the immigration ban and perhaps yesterday's order on financial disclosure, which I confess to not having studied, I don't think we are at the policy part of the program yet. I think all of the dysfunction has prevented this administration from beginning to execute on its policy prerogatives, one of which is to work with Congress on a repair, repeal, replacement on healthcare, on tax reform. Congress is working hard, the other end of Pennsylvania Avenue, on its own. As we said last week there is a lot of writing going on and debating going on. There has been so far, Blake, no policy. I should've given a much shorter answer: what policy?

Blake: Right. That's sort of the situation. Howard, Congress is not obligated to wait on the President to do anything, and they have done nothing. What is your impression of all this from a policy perspective?

Howard: There are two major things that, maybe call it three, that I think are on the agenda for this year. Obamacare clearly a mess, tax reform and infrastructure, and then there are lots of other things that are going to happen as well, but those are the three big ones. It's my understanding, April, May timeframe for a tax reform bill in the House. There is work going on. There is work going on on Obamacare. Some of our former colleagues are doing it. I'm not at all surprised or concerned that there hasn't been any major legislation introduced yet, except that ... You only have so much political capital to spend in this town. What's going on with the dysfunction is clearly costing this administration political capital. It's costing them leverage. It's costing them the ability to get things done that business and the stock market are expecting. It's worrisome in the longer term. It's not a concern for me that it has been light to date.

Blake: Mark, what do you think next week will bring?

Mark: I wish I had the answer to that, Blake. I am hopeful that next week brings a new and improved National Security Advisor, hopeful that next week brings some progress on healthcare. Howard is right, there is work being done. There was a regulation or order rather issued this morning trying to sure up the healthcare exchanges which are troubled and certainly need help. I'm hopeful that next week brings some progress, some progress on infrastructure, on tax reform, on work that needs to be done.

Blake: Howard, what do you think next week will bring?

Howard: I think a reexamination of personnel, of needs, of operating style and further engagement by the Senate and House Republican leadership with this administration to tell them to get their act together. That's what happens next. The Republicans and Congress have been getting more and more pushback from their constituents. They don't like what they see. I think there are a lot of people that all this is white noise, or in the heartland, but Congress is feeling the pressure. They don't like the media scrutiny. They don't like where this is going. They don't like the de-legitimization. Congress, I think Mitch McConnell and Paul Ryan need to go to the White House and they need to put pressure on the President to right the ship. That's what I fundamentally hope next week brings.

Blake: Mark, do you think if that were to happen that the President would actually adhere to the demands of Republican leadership?

Mark: I hope so. I have a concern that this particular President is not going to be that good at learning these lessons, but I hope so. I think one of the other things that we are understandably ignoring at least for the moment is what all of this means for the Democrats, not nationally or 2020 or any of that. We are living day by day here with this thing. All of this is making it much harder for the Democrats to cooperate with the Republicans and the administration to get something done. I keep saying the same thing the same way. There are things that need to get done for the good of the country, and none of this is helping any of that happen.

Howard: Look, there's a lot more serious policy talk happening around town than I think you guys are giving the Republicans credit for.

Blake: I'm going to step in for just a minute. I think what we want to focus our attention on is this notion of where we think that policy is taking place and why it seems to elude what I think people on the call are hearing, which is that there's no talk about. I have Politico pulled up now and there's not one policy story. We can read the headlines. It's a Netanyahu meeting, it's Puzder threatening Oprah, it's GOP can't repeal Obamacare, it's Brian Fallon and Trump getting into it. There is no policy talk in the journalism world. Where's it actually happening do you think?

Howard: For example on the order adjustment tax, which is I think the single biggest issue in Washington this year outside of Obamacare. It has to do with how you tax imports and exports. There's tons of discussion going on around the VAT. Paul Ryan was up with the Senate Republicans yesterday briefing them on his view of the VAT, the House Republican leadership view of the VAT. There are tons of think tank discussions and lots of thinking going on around issues like that, that being one of the biggest. It does get, I think, more press than people realize. There's a lot of that going on.

Blake: Let's shift our discussion to if you're a client, for example, and you are listening to this call. Hopefully there are many. You're looking at Washington, four weeks in, Howard what should your posture be toward this administration?

Howard: The same as it was going in. You've got to be engaged. Don't buy the head fakes. Don't listen to the noise. There are discussions going on on the details of policy. It's a mistake to assume that they're wholly and confident and nothing is happening. There's a lot happening. You got to be engaged, and don't pull away because they appear to be dysfunctional. I think some of the dysfunction is magnified because everything with Trump is magnified, but there's a lot going on behind the scenes.

Mark: I agree with that in a couple of respects. I think it is hard to engage with the White House at this point because the White House is in crisis. However, the agencies are going about their business and there are discussions taking place as Howard says in all of those places, in which it is still possible to participate and important to participate, because so much of governing happens down below. Down below is still up and running. In Congress, the same. I think the members themselves may be a little more distracted by all that's going on than is good for the progress, but their staffs and the committee staffs are hard at work on tax reform and healthcare and infrastructure and other issues. To agree and echo what Howard said, participating in those conversations is still possible and important.

Howard: Even members. I talked to a member of the Ways and Means Committee recently who said, "I'm just going to keep doing my job." That's my approach to dealing with Trump's Washington is I am going to keep doing my job. It's not that I'm not paying attention to what he's Tweeting, but I'm not allowing myself to get distracted by it. I'm working on tax reform, and that's where my focus is. I'm going to do my job. I'm hearing that more and more.

Blake: I want to build upon this notion of engagement and kind of drill down into what that means for the folks listening to the call, someone who says, "Look, I hear you. Engage." Let's start with the Executive Branch. Mark, you did just say you thought it was a bit more difficult to engage with them. What strategies do clients, do businesses, need to employ to get their issue into the conversation?

Mark: Well I'm going to resist the obvious answer of [inaudible 00:27:04]. Other than that, engagement is exactly what the word says. Engagement is calling, engagement is writing, engagement is emailing, engagement is reaching out to people who are in the mix both in office and in the government, in the permanent government in Washington that exists beyond the bureaucracy. One of the things that I think has been interesting to me is that, as Howard says, a lot of members are just trying to do their jobs. All of the attention that has been focused on the various offices, mostly in the nomination process with now Secretary DeVos and others, I always thought that was kind of just noise, but in talking with a couple of members and their staffs, they're paying attention. They are most definitely paying attention to what the market is telling them, what their constituents and others are telling them. Making noise is sort of the answer.

Howard: My answer is jobs. If you want to connect to this administration, you have to show that whatever your issue is, you have to be prepared to speak to that from a jobs point of view, Blake. Clearly that was the central focus of this campaign. Trade and all of that, it's what it's all about. Whatever your issue is, you need to connect that to this administration's agenda. This administration's agenda first and foremost is jobs and economic wellbeing. That's the strategy that anyone needs to have in mind when they're talking about how to engage these guys.

Blake: It's a blend of finding the right message if I'm hearing both of you correctly. It's a blend of finding the right message and then finding the right touchpoints with which to share that message. That's on the Executive side. What about the Legislative side, Howard? What strategies do you think, considering the circumstances that we've been discussing, what strategies do you employ if you need to engage with the Legislative Branch?

Howard: Well, again, jobs. Jobs, jobs, jobs, and we're a lot better off than we were eight years ago when I was busy bailing out the financial system, but it's still what absolutely moves the needle in Washington. It's a follow the money approach so to speak. You look for where the jobs are. You look for where to influence things. You've got to be engaged with Republican leadership. Depending upon the issue, be very attuned to whether the House or the Senate is the driving force. I think traditionally in Washington, the Upper Chamber, the Senate, is where everybody expects the real policy to come from, but on things like tax reform, I'm expecting the House to drive much more of the policy this year on issues like that.

Then don't write off the Democrats, the Senate Democrats I should say. The House Democrats you can write off, except from a kind of public relations point of view. I think, by the way, they're doing a decent job of doing their job in that regard, Crowley and Pelosi, et cetera. Don't write of the Senate Democrats because you still need 60 votes to get most pieces of legislation passed. They're still very powerful. I think that's important.

Blake: Mark, you talked about earlier that there was sort of down staff the work being done at the agency level. You represent a lot of companies in regulated industries where their issue isn't going to be jobs. It's not going to be advocacy, it's going to be management, managing their business, managing the regulatory landscape, which admittedly the President has said he wants to change. What do you do strategically in that context?

Mark: Well, I was going to drop a footnote, Blake, on exactly that regarding healthcare. Healthcare is 20% of the economy. Healthcare is up first in fixing anything. I think the speaker said this morning, I heard, that healthcare has to come before tax reform because of the magnitude of the issue. I can tell you from personal involvement, professional involvement, there is a sincere interest in solutions in healthcare, NHS, CMS, in the House, in the Senate, both sides of the isle. I think that people with ideas, people with thoughts, people with solutions are very welcome in Washington right now. I think that the door is wide open and you can walk in the front door. It doesn't require much more than taking your idea to the Capitol and talking to the people who are working on this because they know they don't know what to do. They are looking for help. I think a strategy for anyone involved in healthcare is to take your ideas to Washington.

Howard: Yeah, that's a great point.

Blake: Mark just said that the door is wide open, which would suggest to me that your opinion is that the DC climate is conducive to getting things done, not immediately, but perhaps over time, otherwise what would be the point of taking your issue to Washington. Howard, I wanted to get your reaction to that?

Howard: I think it is, Blake. Look, the White House is to get it back together, but I think some of the Cabinet choices have been good, some of them less good. By and large I think they're qualified and solid people. I think Trump wants to do business. [inaudible 00:34:20] the business community has high expectations of this administration. I do think that there are areas where they're over anticipating what can get done, like in the financial regulatory realm. There are areas where they're overly optimistic and areas where they're overly pessimistic. That will all even itself out, but things are going to get done.

Blake: Mark, I'll be honest. I've exhausted all my questions, so I am going to ask you just to sort of summarize our call for today. What comes next? If you're sitting and looking out over the national mall, what comes next in Washington?

Mark: I think, Blake, that if we step back and take a look over the national mall and then they fly over the Capitol, the White House is in crisis. That is enormously unsettling to the nation. We've had our discussion here about how to fix that, if in fact it can be. Other than the assassination, Mrs. Lincoln, as the saying goes, Washington is still standing. I was there yesterday. Howard was there this morning. It's open for business. Congress goes on. The civil service goes on and thank God the military goes on. I think that the foundations of government are moving at their usual glacial pace, but nonetheless moving. I think what we see next is a little bit of movement on healthcare, a little bit of movement on infrastructure, a little bit of movement on tax reform and more. While we all hope for the safety of the country, the White House figures out how to govern.

Blake: Howard, the last word is yours.

Howard: Blake, I think that we need to watch the stock market because that, to me, is certainly early on a referendum on positive expectations for this presidency and Trump's Washington, I'll say broadly. The market moved up to an all-time high. It's back down a little bit, but I think business has high expectations for what's going to get done. They're baked into the market. As chaos begins to take hold here, we need to watch what happens really carefully. God forbid there's some sort of bigger shock to the system. I think we could see a very significant reaction. I'm watching the market closely as a referendum on Trump and the expectations for the future.

Blake: Well it's certainly an interesting time, gentleman. Thank you very much for joining us, and thanks to everyone for listening.

Howard: Thanks.

Mark: Thank you, Blake.

Speaker 4: Ladies and gentleman, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your line.