Cozen Currents: Are Trump and MAGA One in The Same?

“Famously the author of “The Art of the Deal,” President Donald Trump considers himself more of a dealmaker than an ideologue. He sees the world as zero sum and aims to gain maximum leverage. As a result, he’s not as wedded to nonintervention as some in the MAGA movement.” — Howard Schweitzer, CEO, Cozen O’Connor Public Strategies

The Cozen Lens

• President Trump’s decision to attack Iran tests what “America First” means in his second term.
• Senate GOP leadership is in the midst of last-minute negotiations with holdouts over modifications to the chamber’s reconciliation bill ahead of the party’s self-imposed July 4th deadline to pass the One Big, Beautiful Bill Act.
• Even if President Trump likely doesn’t pull the trigger on trying to fire Jerome Powell, his pressure campaign could extend to naming a shadow chair of the Federal Reserve early.

Subscribe to Cozen Currents

Iran Tests What “America First” Means

Ramifications of Trump’s Choice. President Trump’s decision to join Israel in its attack on Iran puts the meaning of “America First” to the test.

• When Trump first ran for president, in 2016, he rose to prominence amid a crowded field as a different type of Republican. Among his many disruptions to politics as normal, he broke with the GOP foreign policy orthodoxy of the George W. Bush era and a backlash to the Iraq War helped him win the nomination. In addition to hardline immigration enforcement and protectionism, keeping out of foreign entanglements is another pillar of “America First.”
• His choice to attack Iran’s nuclear program challenges the “America First” philosophy of avoiding foreign wars, though CNN reported that the United States told Iran via back channels that the strikes would be “contained” to the nuclear sites.

A Divided GOP. The war between Israel and Iran has exposed splits in Trump’s MAGA coalition.

• The conflict has highlighted divisions within the Republican Party between more traditional hawks and MAGA noninterventionists.
• Moreover, some Trump allies warned against US intervention in the Israel-Iran conflict. Rep. Marjorie Taylor Greene (R-GA) said on X that “anyone slobbering for the U.S. to become fully involved in the Israel/Iran war is not America First/MAGA” and Tucker Carlson spoke out against US military intervention in the region in an appearance on Stephen Bannon’s podcast.
• Publicly, Vice President JD Vance, the most prominent member of the MAGA noninterventionist school, deferred to Trump. “He may decide he needs to take further action to end Iranian enrichment […] I believe the president has earned some trust on this issue,” he said in a post on X. Privately, however, he took his own stance. Reuters reported that on a call between top US and Israeli officials, Vance pushed for the United States to not get involved in Israel’s war in Iran. Trump has publicly rebuked Director of National Intelligence Tulsi Gabbard, another high-profile noninterventionist.

Defining “America First.” Ultimately, “America First” is what Trump makes of it.

• Trump has asserted that he personally defines what “America First” means. “Well, considering that I’m the one that developed ‘America First,’ and considering that the term wasn’t used until I came along, I think I’m the one that decides that,” he said to the Atlantic. (The phrase “America First” predates Trump in US politics but he is responsible for popularizing it in recent years).
• While Trump initially engaged in diplomacy with Iran after taking office for his second term, a strike isn’t necessarily inconsistent with his flexible definition of “America First.” During his first term, Trump ordered the January 2020 assassination of Iranian General Qasem Soleimani.
• The MAGA movement is centered around popular support for Trump and initial reactions to this weekend’s operation from MAGA thought leaders online were positive. Nevertheless, if US involvement in the conflict were to widen or Trump becomes more willing to rely on military strikes in future flashpoints after viewing this engagement as a success, he could risk eroding support among his base.

One Big Beautiful Bill Enters Home Stretch

Reconciliation (the Senate’s Version). The Senate Finance Committee released the tax and Medicaid titles of the reconciliation bill last week, revealing major differences with the House-passed version of the legislation.

• Beyond extending the expiring provisions of the Tax Cuts and Jobs Act, Senate GOP lawmakers chose to go bigger on the tax side of the bill than their House counterparts, making permanent a trio of popular business tax deductions for companies with large research, development, and machinery expenditures. Senate GOP tax writers also made permanent a boost to the Child Tax Credit, an increase in the standard deduction, the Opportunity Zone program, and an expansion of the Low Income Housing Tax Credit program, among other measures.
• A major sticking point for Senate GOP moderates, the upper chamber’s tax writers relaxed many of the House-passed timelines for phasing out the Inflation Reduction Act’s (IRA) green energy tax credits. While the Senate’s bill largely keeps in place end-of-year phase outs for the bill’s electric vehicle tax credits, investments in baseload energy sources like geothermal, nuclear, and hydropower are able to receive the most valuable tech-neutral IRA credits well into the 2030s. Wind and solar projects would receive slightly better treatment than they do under the House-passed bill although their ability to utilize the most valuable tech-neutral credits would be fully eliminated by 2028.
• To offset the cost of the permanent tax provisions and the relaxed IRA phase outs, Senate GOP lawmakers took a more aggressive approach to reforming the Medicaid program. Unlike in the House-passed bill, which would freeze state Medicaid provider tax rates at their current levels, the Senate bill would phase down the maximum provider tax a state in the Medicaid expansion population can levy beginning in 2027, reaching a ceiling of 3.5 percent in 2031. KFF News reports that 48 states have at least one provider tax above 3.5 percent while 38 states have at least one provider tax over 5.5 percent (the current provider tax ceiling is six percent).

The Road to the President’s Desk. With all of the Senate’s changes to the reconciliation bill come new concerns from Senate and House GOP lawmakers that need to be addressed before the upper chamber can vote on the legislation.

• The Senate’s more aggressive approach to Medicaid reforms is facing the fiercest opposition from Senate GOP lawmakers. A handful of moderates are negotiating with Senate GOP leadership on ways to blunt the bill’s impact on rural hospitals while House GOP moderates warn that the new provider tax provision can’t pass the lower chamber. GOP leadership is separately being pulled in two directions on the IRA’s green energy tax credits, with moderates seeking further extensions of certain credits while fiscal hawks threaten to vote against the bill if it doesn’t fully repeal the IRA. The same dynamic permeates the debate over how to address the cap on the State and Local Tax Deduction with senators seeking a full elimination of the deduction and House GOP moderates fighting to preserve the lower chamber’s quadrupled cap.
• Policy debates aren’t the only roadblock Senate GOP leadership needs to clear. The Senate parliamentarian has ruled that a number of consequential provisions must be stripped out of the bill over violations of the Senate’s strict reconciliation rules. Those include the state cost-sharing requirement for nutrition assistance funds, a major revenue raiser, the elimination of the Consumer Financial Protection Bureau’s funding, and a provision limiting federal courts’ use of injunctions, among other measures.
• To get the bill to President Trump’s desk by the White House’s July 4th deadline, Senate GOP lawmakers will need to resolve their internal negotiations and either eliminate or replace the provisions that violate Senate rules in a matter of days. To speed the process of finalizing the bill, both the White House and Senate leadership are pressuring House GOP lawmakers to take up and pass the Senate’s bill without modifications once it gets to the lower chamber. Still, despite the White House’s insistence, the hard deadline for the bill to get to Trump’s desk is the X-date, or the date by which the US won’t be able to meet its financial obligations, something the Congressional Budget Office projects won’t hit until mid-August at the earliest.

Trump Casts a Shadow Over the Fed?

Porgy and Bessent. Treasury Secretary Scott Bessent’s name has been floated as a potential contender to replace Federal Reserve Chair Jerome Powell but his potential candidacy is not without issues.

• Speaking to reporters earlier this month, President Trump criticized Powell as a “numbskull” for not cutting interest rates. Despite having appointed Powell himself in 2018, railing against the chair of the Federal Reserve is a throughline going back all the way to Trump’s first term. Powell’s term as Fed chair ends in May 2026, raising questions about who will replace him.
• Bloomberg reported that figures in Trump’s orbit support the consideration of Bessent as Powell’s successor. He has emerged as a point of credibility for the markets amid an unconventional administration. “I think it was Scott who was always trying to take on the protectionists in the White House, who were always pressing Trump to go big on the tariffs,” Trump ally Stephen Moore told Reuters.
• The president may not consciously acknowledge this dynamic but could be convinced that replacing Bessent with an alternative who can earn the trust of Wall Street would be a hassle. This doesn’t mean that Trump wouldn’t want Bessent helming the Fed but that having to fill a vacancy at the Treasury Department would be creating a challenge where there doesn’t need to be one. Trump has been vocal about his desire for a Fed that embraces lower rates and his ideal Fed chair candidate would be more pliant yet someone that the markets can accept with a degree of credibility.

“You’re Fired.” Despite the possibility that Trump could try to fire Powell outright, the probable course of action is just to wait him out while trying to reduce his influence.

• Among many other moves to boldly expand executive power, Trump has endeavored to assert control over independent agencies. Following a first-term Trump bid to fire the head of the Consumer Financial Protection Bureau, the Supreme Court has opened the floodgates for the president to dismiss previously insulated agency heads at will. In just a few months, Trump has extended the practice to multimember commissions, like the National Labor Relations Board, the Nuclear Regulatory Commission, the Merit Systems Protection Board, and the Federal Election Commission.
• The ultimate legality of these moves depends on a Supreme Court re-visitation of a previous decision, Humphrey’s Executor, which especially protected multimember agency heads from being fired at will. Although the court will likely overrule the long-standing precedent, they have also indicated that they may not extend the argument to its logical conclusion. The court explicitly exempted the Federal Reserve from an order granting the administration’s request to uphold firings at these agencies, citing the organization as a “uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States.”
• While firing Powell is legally dubious, perhaps the greater deterrence is the way the market would respond to such a brazen attack on the Federal Reserve’s independence. Other intermediary steps, like requiring the president be consulted on interest-rate decisions or subjecting Fed regulations to White House review, have also been discussed in Trump circles. Another way to minimize Powell’s influence would be to name his replacement early, with the nominee then acting as a shadow chair. Possible candidates include former Fed Governor Kevin Warsh, National Economic Council Director Kevin Hassett, Fed Governor Christopher Waller, and former World Bank President David Malpass.

Share

Share this...

Facebook

Pinterest

Twitter

Linkedin