Beltway Briefing: March 21

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 RutherfordMark Alderman, and Howard Schweitzer, of Cozen O'Connor Public Strategies, discuss the recent developments in politics and policy in Washington, D.C.

Blake: Thank you very much, and thanks to everyone for joining us today. My name is Blake Rutherford, and on our call, as always, Howard Schweitzer, the managing partner of Cozen O'Connor Public Strategies, and Mark Alderman, the chairman of Cozen O'Connor Public Strategies. Mark, Howard, great to be with you guys.

Howard: Thanks, Blake.

Mark: Thanks, Blake.

Blake: My bracket is officially busted, and I can-

Mark: Not Howard's.

Blake: Howard is the only one still in the game. While I think it would be more fun to prognosticate about the Sweet 16, I want to begin our discussion ...

Howard: Go Blue!

Blake: That's right ... ripped from the headlines. I want to start with what were, in a general political context, some rather extraordinary developments yesterday on Capitol Hill. You both are in Washington today. You have been on the Hill. We've all been on the Hill over the last several weeks. Yesterday, the director of the FBI, James Comey, testified before Congress, in which he made some very interesting revelations, the first of which was that there was no basis for the president's accusations that President Obama had wiretapped Trump Tower, and the second was that the FBI was conducting an investigation into the relationship between Trump's campaigns and Russia's interference.

Mark, I want to begin with you. Certainly, you can scan Twitter, you can go anywhere on the web, and this everywhere. What do you make of this at this stage? Is this something that is very serious for this administration? What are the political calculations that the Democrats are making by feeding this story?

Mark: Yes, I think, Blake, this is very serious for the country. Forget red and blue, R and D for the moment. It's very serious for the country when an enemy has hacked into our electoral process and the FBI is conducting an investigation into whether one of the presidential campaigns colluded with that enemy. That is very serious. What does it mean for the administration? What does it mean politically? I think we don't know yet because we don't know where it goes.

The most important thing that happened politically with Comey's testimony yesterday ... and, Blake, you and I are familiar with this from the presidential campaign ... the most important thing that happened with Comey's testimony is that it's not going away. This is going to continue to be an issue, and it is going to continue to be a distraction. It is going to continue to cost the administration time and, to a degree, capital. We don't know where it's going because we don't know what we're going to learn, but serious is a good word for it, I think.

Blake: Howard, what are your thoughts? We see and watch Congress engage in investigations quite frequently. Do you sense that, at this point, the director of the FBI's testimony has cost the Trump administration anything? I want to get your thoughts about that. Then I want to get your thoughts about the ramifications on their policy agenda. Let's start with the impact of the director's testimony yesterday.

Howard: Obviously significant from a political point of view and from a legal point of view, and extraordinary. Sometimes I think history unfolds right in front of your eyes and it's hard to see. Obviously, everybody knows this is a big deal, but this is of epic historic proportions, depending on the outcome. We have no idea what the outcome is going to be. I think we know it's not going to be that Obama was spying on Trump. Who knows what else it will be? I think it's much more consequential, Blake and Mark, for the long-term health of the Trump presidency, potentially, that it is impactful on the day-to-day agenda right now.

Blake: Howard, I want to stick with that theme because certainly, to the less sophisticated eye, one would think this is all the administration is dealing with. I know later in our call we're going to debunk that myth, to preview what I think both of you will say, but in terms of day-to-day in the West Wing ... You commented before, Howard, about the administration's slowness in building up their staff, the challenges of not being ready, of not using transition well. Do you think, though, that one of the challenges that this presents is that, with a short staff, there's only so much you can get to in a day, and putting out fires becomes priority number one?

Howard: Yeah, but it becomes priority number one for a small subset of people. Let's say you're Gary Cohn, the head of the NEC, the National Economic Council, former president of Goldman, and you're there in the West Wing. Sure, you're interested in this from a big-picture political perspective. It's not impacting your job. If you're Gary Cohn, it's not impacting what you're doing day-to-day. You're focused on the economic agenda. You're focused on infrastructure. You're focused on tax reform. You're focused on deregulation. You're focused on Dodd-Frank. You're not focused on this or even the long-term political consequences of it. You're focused on your job.

Blake: Mark, what are-

Mark: Howard, I think you're right, of course, that not everyone in the White House is consumed with Russia. Some are consumed with healthcare, which we're about to get to. I do think that the longer-term consequences are highly relevant to everyone in the administration because of the potential impact on the president's relationship with the Congressional Republicans. That's what this is all about politically. It's about at what point, if any ... if any ... at what point the Congressional Republicans say, "Enough is enough. We're no longer listening to this guy."

One of the things to remember about yesterday, Blake, as a congressional baseball matter, if you will, is Paul Ryan did not have to let that hearing happen, and it did not have to get conducted the way it did with the ranking member opening with 15 minutes of remarks. Now, the Republicans did not dump on Trump, but they did let the hearing roll out, and they didn't come to his defense. You have to watch that trendline to see where the relationship is going.

Howard: There are all sorts of political calculations that Paul Ryan and the rest of the Republicans in the Senate and the House are making about how to deal with him on this, but I think, Mark and Blake, what people are telling me, what I'm hearing, is put your head down and do your job. Yeah, people are thinking about the bigger picture, political implications, but the Republicans in ... My answer to your question, Mark, how long they stick with him, is, if this ever turns into an impeachable matter, that's when this breaks. Until then, they have no choice but to stick with him, to a very significant extent. They've got priorities, things they want to get done. The only way to do them is to do them with the president. Until we get to a true breaking point, I don't think you're going to see a lot of breakage between the caucus and the White House.

Blake: Let's talk about that ... I guess arguably, because we'll touch on two ... the biggest policy priority, which is the repeal and replace of the Affordable Care Act, which has been moving at a swift pace and is ripe for a vote, at least by all accounts as of this call, for Thursday. Mark, you're in Washington working on this issue today. I thought you might just give us an inside look at what you're seeing and hearing on the Hill.

Mark: What we're seeing and hearing, Blake, is conventional congressional whipping of the vote and sweetening of the pot to get to 216. There's some vacancies in the House, so 216 is the majority that the bill needs. There has been some movement in that direction. The most recent movement was the wholesale buy-in of the upstate New York Republican delegation based on some tinkering with an arcane Medicaid provision about whether the county or the state gets to pick who gets paid. There is a lot of politicking, small-P politicking, going on on the Hill. I would say, as of 12:15 on Tuesday, I think they'll get there on Thursday. What happens next is a whole different conversation.

Blake: Howard, what are your thoughts about where we stand in terms of this healthcare debate? Certainly, we have a lot of folks who have a stake in this, and we are saying, as Mark described, sweetening of the deal to try and get to 216. What do you make of the current healthcare dynamic? I ask that question part in context to the relationship over the Russian dynamic and what it all presents for this particular policy piece.

Howard: I really think they're independent of one another. The changes in the House sweetened it in two directions, sweetened it for the moderates and sweetened it for the conservatives. I agree with Mark, I think it will pass. I think when it goes to the Senate, all the sweetener is going to be on the moderate side of the equation. I think there's a reasonable chance that something passes the Senate and then gets kicked back to the House, and that's going to be tough because it's either going to be pass or not. They're not going to kick it back again. It's either going to get done or it isn't, and that's where we'll end up on the bill.

Mark: I think, Blake, if I may just jump in ...

Blake: Please.

Mark: ... with a little wonky comment for 30 seconds. Howard is, of course, right that it got sweetened in both directions, for conservatives and moderates alike, but the sweetening for the moderates is on the health exchange side and finding some extra money for senior citizens, whose premiums would have been catastrophic and unaffordable otherwise. The sweetening on the Medicaid side is just deeper and deeper cutting. I think there's going to be a real issue on the Senate side in whether they can get by with that, especially since ... We'll save this for another call, but you alluded to it, Howard. The Senate may be able to reconcile with 50 votes some of this, but some of it they can't. It's just a whole different calculus over there, so 'stay tuned' is really the message on repeal and replace.

Howard: Yeah.

Blake: Howard, go ahead.

Howard: No, that's fine. I'll leave it to you.

Blake: I was going to ask, in terms of where things stand, let's talk about ... The policy is, of course, fascinating. Let's, though, talk about the politics because, again, at some stage the two converge. Are Republicans, Howard, do you think better off passing this bill in the House, knowing that it is going to run into a stonewall in the Senate, or ... I think, maybe as you suggested last week, there is political opportunity even if the bill fails. I thought you might just unpack the politics for us from a Republican perspective.

Howard: My view is that, yes, the House is better off passing something. The Republican caucus as a whole is probably better off passing something out of the House. I think if a bill passes at the end of the day, they're ultimately setting themselves up for some political pain in 2018 because it's not going to be ... They're doing the same thing that the Democrats did with the original passage of the ACA, which is set yourself up with a bad bill to be shellacked politically, but I think the calculus they're making is we promised the American people ... and the calculus Trump is making is I promised this to the American people, and come hell or high water, I'm going to deliver. It has huge implications for keeping the White House in 2020, and we'll deal with the details. Tom Price will deal with the details through regulation and through another bill. We'll get it to a better place, but we've got to make good on our promise.

Blake: Mark, your reaction to that? The Democrats have acknowledged, to a degree, that there are tweaks that need to be made. Certainly, it's unlikely that their caucus is going to find next to any support for these tweaks. What do you make of the politics of repeal and replace? Do the Democrats have ... are they in a strong position now, or are they negotiating from a weaker vantage point?

Mark: At the moment, the Democrats aren't negotiating at all. That'll start if and when it gets to the Senate. Going back to what I said a second ago, there are a million things going on in this healthcare legislation, but most fundamentally there are two things. Most fundamentally, it is how do we fix the healthcare exchanges under the Affordable Care Act -- because everybody agrees they aren't working -- and it is how deep can we cut Medicaid. How deep can we cut Medicaid is just a red and blue, R and D issue. Maybe your home state senator Tom Cotton has been heard on that. Maybe there are a couple of Republicans who won't go that far when it gets to the Senate.

As a political matter, by and large, the people hurt by cutting Medicaid are not Republican voters and not Trump voters. The people hurt by not fixing the healthcare exchanges, or making them worse, frankly, as some believe the original proposal does, those people are the people showing up at these town hall meetings and yelling at the Republicans. Those are the people that the president is trying to protect, which is why, when the bill got adjusted, you saw more money being put into seniors on the exchanges and more money being taken away from poor people in the Medicaid program.

Howard: Blake, back on the politics, I think one of the things that's interesting is you've got a lot of Republicans saying, "We have the best negotiator-in-chief, and he's going to fix this." As I said last week on our call, this is all about ownership. Who owns the passage or failure to pass of this thing and the contents? You've got to look at every communication everybody's making through that lens because that's the game that they're playing.

Blake: The one thing that is interesting to me about the state of Washington, DC, today is that we also have a Supreme Court nominee who is on day two of his hearings, and yet it seems to be very far in the background, which I guess perhaps is a testament to the media's interest in Russia and healthcare. Briefly, before we pivot to what all this noise really means practically, Mark, what do you make of DC, and more the country at large, not really focused as intently on Judge Gorsuch's nomination as we almost always are when a Supreme Court nominee is put forward?

Mark: I think it is in part, Blake, what you said, which is the media bandwidth is being consumed by Russia and healthcare, so this is plainly a third-place finisher in the competition for shelf space. I think it's another thing, as well. Really, the only drama in the Gorsuch process is the progressives in the Democratic Party pushing the Democratic Senate Caucus to oppose Gorsuch. The result was known the day that Trump made this announcement. This man, five years ago, was confirmed with 99 votes in the United States Senate. If it weren't a stolen seat, there wouldn't be all of the little bit of noise that there is. He's going to get confirmed. I think he gets confirmed with 60 votes, but if necessary Mitch McConnell will pull a Harry Reid and invoke the nuclear option, and pass the nomination with 50 and Mike Pence breaking the tie, if necessary. I think one reason it is third place on the list is that the result is known. It's only about the drama.

Blake: Howard, before we pivot to the practical realities of this, I want to touch on something that we're certainly keenly focused on, which is infrastructure and transportation. Just briefly, we had a question come in about an omnibus spending bill that would be focused on infrastructure and transportation. I just wanted to get your thoughts. What are you hearing out of the Congress in terms of where infrastructure and transportation is going? As Mark just said, the media is consumed with other things, but things are happening. I thought you might just touch on what you're hearing from the Hill on transportation and infrastructure.

Howard: High on the president's list of agenda items, but behind healthcare, obviously, which we've talked about, and tax reform. It's there. There's less enthusiasm among the Republicans in Congress for a lot of infrastructure spending, a big spending package, than Trump might like. I think there will come a time where he'll put the pedal to the metal on it, but this isn't that time. In the budget that was released last week, they did pull ... This is a little bit of a game, but the budget takes some of the infrastructure money that's out there out of its regular channels and seeks to repackage it in a broader infrastructure package, which is really not consequential, in my opinion. It's a priority, but today it's a distant priority. We're just not there yet.

Blake: Okay. I want to pivot now to ... We talked about these massive political issues that are, at least, affecting what we read and talk about, but this is only a part of broader government activity around a number of issues. We just talked about infrastructure and spending. Howard, I want to come back to you and get a sense, for people who are on the call, what I'm going to call the K Street perspective. What are your thoughts right now about the relationship between K Street and the administration? Do you sense that there is a means to effectively engage? If so, what does that engagement look like? I want to just preface the question for our listeners by saying one of the things that I hear often is "It really just seems like nothing can get done." I want to know if we can debunk that myth a little bit, so, Howard, I want to get your thoughts.

Howard: I think a lot is getting done, can get done. If you're somebody that has an issue, if your company has an issue that you need to deal with at, let's say, the Department of Transportation or the Environmental Protection Agency, you're not impacted by healthcare, you're not impacted by Russia. You need to get in there and advocate for your issue, and that includes into the administration and includes up to the Hill. Every Senate office, every House office has somebody who's focusing at least part-time, and really, these days, full-time, on the healthcare bill, but there are lots of other people doing lots of other things. The members have bandwidth, and they're not stopping their advocacy on behalf of constituent interests or stopping their responsibilities as chairmen, or subcommittee chairmen, or members, or ranking members of committees or subcommittees.

The business of Washington goes on. It's very important to engage, and it's very important to engage now. Now, in terms of the administration, as we've been saying, they're anything other than fully staffed. They are so far away from being set up to govern, it's ridiculous. At the end of the year, they will be, but there's a lot happening, and you've got to get in and talk to people. If you're Scott Pruitt at the EPA, you've got an agenda, and the president has an agenda, and you're focused on running your agency and executing on your agenda, not this bigger-picture political stuff at all. You've got to be talking to those people if you've got an environmental issue.

Blake: Yeah. Mark, I wanted to get your thoughts on that, as well. One of the challenges that I hear from people is "Yeah, but how? It seems like they're not staffed. We're not really sure who to engage with." Practically, I thought you might just offer some insight from your perspective of watching the administration start up back in 2009. Practically, what do people need to be thinking about other than picking up the phone and calling you?

Mark: I hope they're thinking about that, Blake, but a couple of observations from the work we're doing for the people who have picked up the phone and called. Not everybody is not staffed. For example, the secretary's office at HHS is staffed and active and engaged, as is the White House Domestic Policy Council, not only on this massive legislation that is pending, but also on the programs and the regulations that they have pledged to take a look at, pledged to change. CMS is staffing up at HHS. Not everybody is not staffed, and certainly HHS is open for business. They will be more so when the repeal and replace passes.

Secondly, the agencies, some of them -- EPA is a great example, Howard -- that aren't yet staffed, are getting staffed. Pruitt made a whole host of appointments yesterday. I think what is happening in a number of agencies is the landing teams that got in there late, and were fingers in the dike in the early days, are now being replaced by the actual appointee and the appointee's appointees. I do think that some of these agencies will be more open for business than they have been. I think where that is still not true, and still unlikely to be true for some time, is in the White House itself. In an administration that is so executive-centric ... not because of this administration; that has been a trend, as we've discussed, for decades ... I think that that's where the distractions are having an impact. I do think out in the agencies that there is, as Howard says, a lot of work getting done.

Howard: It is hard to figure out who to talk to in some of these situations. You don't know who's coming. You don't know who's going. It's really important to be able to connect in to people you know. In a touch of irony, far from draining the swamp, I think here at the beginning of the administration the swamp is deepening because everybody is drinking from a fire hose. You need to be able to connect in to people you know, which some people can and some people can't. There is this question around who's who and who do you talk to.

I'll tell you, there's nothing new about this movie from the following perspective. I've written about this. We wrote about it, Mark. You and I wrote about it. I wrote about it during the election. The first people in are always the campaign types. They're always the loyalists. Then the "professionals" come in to run these agencies, the people that are expected to deal with more of the substance, not the politics. There's a tug of war between, in this case, the Trumpsters and the people that are more substantive, and the people that are more substantive inside the agencies almost always win, which isn't to say that the White House doesn't have a ... The White House absolutely has a say in who the people are.

For example, many deputy positions, cabinet secretary-level positions are still open, and those are positions that may well be filled by "loyalists," by people that have been politically associated with Trump, maybe more than the head of the agency, but they have no power. The head of the agency has all the power. That's the way the executive branch works. That's absolutely who the appointees look to from a decision-making perspective. They don't look to the deputy. They look to the secretary, or the administrator, or whoever the head of the agency is. To summarize that, I think the Trump loyalist campaign people are either already beginning to burn off, maybe embodied in a deputy or a senior person or two, but they're just less relevant as time goes on, and people that are more substantive reign supreme.

Mark: Howard, with one exception, which is that this White House has been placing in the agencies loyalists who are a liaison between the agency and the White House on policy and politics, above the traditional White House liaison. Every administration has White House liaison who function at a lower level and a service level, if you will. There are people being placed in these agencies to make sure that the White House knows what's going on and is heard about what it wants to be going on. I wouldn't discount the Trump loyalists who have been placed in these positions by the White House just yet. I think what you're saying about the landing teams and some of the campaign people is very true.

Howard: I'm just telling you, as time goes by, I've seen these happen multiple times. You can call the position whatever you want to call it. There's no question about who's running the Environmental Protection Agency. There is no question about who is running the Department of Defense. There's no question about who is running the Department of Transportation. That's who people look to.

The White House is important. The White House is the White House. I'm just telling you, Mark, I've seen it many times, this isn't going to be any different at the end of the day ... and it depends on the issue. You have your issue. You've got to map out who the players are. Let's say it is healthcare, okay? You've got Price at HHS. You've got Price people in the White House. Price came from the Hill. You've got Pence. Those are the moving parts.

Mark: Seema Verma at CMS is ...

Howard: Right.

Mark: ... a Pence person from Indiana, of course.

Howard: She's from Indiana.

Mark: That's why I say not everyone is not staffed. Healthcare is an exception to that. You might want to ask Secretary Mattis who in fact is running the Department of Defense since the White House vetoed his choice for a deputy. With that note, I agree.

Howard: Look, that's bad, but my point is, yeah, they vetoed his choices for deputies, but at the end of the day, so they put [inaudible 00:37:08] in there as deputy? Big deal. Mattis is still running the Defense Department. The point is you've got to really map this stuff out and think about it in the context of your particular agency and your particular issue, where the pressure points are, where the politics lead, where it does connect into the White House, what charge the head of the agency has, why is the head of the agency, why is he or she there, and take a very strategic and tailored approach to your issue, as opposed to falling into the trap which we were talking about earlier, which is these huge things are going on, and nothing is getting done in Washington, and nobody is in these jobs. This isn't a time to be asleep at the wheel. It's a time to be very active, but very strategic and thoughtful about how you get things done.

Blake: I think that's an excellent note to wind down our call today. Certainly, a lot of activity happening and a lot of good insight and advice on this call. Mark and Howard, I appreciate you taking the time, and I thank everyone who has joined us. Next week, we're going to have a special guest join our call. We're going to dive into the issues of tax reform, and we'll have some more information that we'll get out to you about that. I think, as we've seen with healthcare, and as we've talked about previously with the relationship between healthcare and tax reform as these two very, very big and intertwined issues, I think it will be an insightful call, so I hope you will join us for that. As always, comments and questions are welcome. Presidential analysis at cozen.com. With that ...