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Trumponomics Daily—Tuesday, February 14

February 14, 2017, 3:46 PM UTC

Washington is reeling today from last night’s bombshell resignation by Michael Flynn, President Trump’s national security advisor. The former Army lieutenant general had been the subject of intensifying speculation since the revelation Friday that he’d misled the vice president and others about his pre-inaugural talks with the Russian ambassador over lifting sanctions. But the vise closed on him finally last night with an explosive Washington Post report that then-acting Attorney General Sally Yates informed top White House officials late last month that Flynn’s handling of the situation left him vulnerable to Russian blackmail. Considering what we still don’t know (precisely what did the White House, including the president, know and when? Was Flynn was freelancing in his talks with the Russians or acting on instructions?), the resignation is far from the end of the story.

Its immediate repercussions may be contained to the realm of national security, but the story will continue demanding attention at the highest levels of the administration, with inevitable spillover effects on the economic agenda. Some questions for business to watch as it plays out:

Who can speak credibly for the administration?

Kellyanne Conway — counselor to the president and one of his favored media surrogates — went on MSNBC on Monday afternoon and declared that Flynn had Trump’s “full confidence.” An hour later, White House press secretary Sean Spicer issued a statement undercutting that claim, indicating that Trump in fact was “evaluating the situation.” But Spicer has his own believability issues, on the Flynn story and beyond it. When the administration needs to deploy its go-to spokespeople to speak on economic policy, how much stock will business leaders be able to place in the reliability of the information they’re conveying?

Can this president effectively compartmentalize?

Bill Clinton’s White House popularized a term for how that president could forge ahead on some fronts while his administration was beset on others by scandal and investigations: He compartmentalized. That is, Clinton seemed to have a preternatural talent for separating competing claims on his attention and boxing away distractions to stay on task with other pressing business. Trump, by all appearances, is Clinton’s inverse in that regard. He seems either unwilling or unable to let the most inconsequential provocations slide. The crisis consuming the leadership of his national security team will provide an early test of Trump’s ability to forge ahead with his ambitious domestic agenda.

What does the president learn from this?

Flynn earned his spot in the president’s innermost circle by distinguishing himself as an early and unflinching Trump defender on the campaign trail. Just last week, Trump nixed Secretary of State Rex Tillerson’s handpicked deputy — Elliott Abrams, a seasoned diplomat with experience under two Republican presidents — after he discovered Abrams had been highly critical of him last year. But as Trump looks to stabilize a bumpy rollout and fill out scores of posts in his administration (including many key economic assignments), his best choices will sometimes be practiced hands who opposed his candidacy. Can he put the success of his presidency above the value he invests in demonstrated loyalty?

Tory Newmyer

Must Reads

Senate Confirms President Trump’s Treasury Secretary Pick Steven Mnuchin [Fortune]

A divided Senate voted along party lines to confirm the Goldman Sachs alum and hedge fund executive as Treasury secretary, with Democrats raising hackles that Mnuchin ran a “foreclosure machine” during the financial crisis as head of OneWest Bank.

Labor secretary nominee Andrew Puzder in jeopardy [CNN]

Four Republican senators are withholding support from the fast food executive, setting off a furious blitz by Senate Majority Leader Mitch McConnell and allies in the business community to salvage the nomination by securing two of those votes.

How Two of Trump’s Cabinet Picks Made Hundreds of Millions From ‘Sweetheart’ Government Deals [Fortune]

As businessmen, Treasury Secretary Steven Mnuchin and Commerce Secretary nominee Wilbur Ross both were enriched to the tune of hundreds of millions of dollars by deals they struck with the government that left taxpayers poorer.

Retail CEOs head to Washington to try to kill U.S. border tax [Reuters]

Top executives from eight of the country’s biggest retailers, including Target and Best Buy, are descending on Capitol Hill on Wednesday to make their case against a levy on imports that House Republicans favor.

These 21 Companies Back the GOP’s Proposed Border Adjustment Tax [Fortune]

Retail giants aligned against the border adjustment tax got a better look Monday at their lobbying foes in the fight ahead. A coalition pushing the tax released a partial list of its membership, and it includes corporate powerhouses Boeing, Caterpillar, General Electric, Honeywell,  Oracle, and Pfizer, among others.

Exclusive: Planned Parenthood Just Got a $1 Million Donation From This Businesswoman [Fortune]

Billionaire casino magnate Elaine Wynn says her contribution was inspired by the Women’s March on Washington and Facebook COO Sheryl Sandberg’s decision to contribute the same amount.

Number of the day

$50 million

The amount that the Wall Street Journal estimates that drug giant Genentech spends on lobbying every year, despite reporting only roughly a tenth as much under the federal lobbying disclosure law. The revelation comes in a stunning yarn detailing the rise and fall of a young and highly ambitious operative who ran the company's Washington office. The full scale of the scandal remains to be seen, but this piece of information suggests how the modern lobbying industry exists, iceberg-like, with most of its heft obscured beneath the surface of what companies publicly acknowledge.

Loose change

Trump expects only 'tweaking' of trade relationship with Canada [Reuters]

U.S. Eyes New Tactic to Press China [WSJ]

GM and Toyota Are Lobbying Congress for Looser Self-Driving Car Rules [Fortune]

Ivanka Trump Gathered These Female CEOs to Meet with the President and Justin Trudeau [Fortune]

Yahoo Grilled by Senators Over Hacking [Fortune]

A little-known California law is Silicon Valley's secret weapon [Vox]

It’s Probably a Bad Idea to Sell Stocks Because You Fear Trump [NYT]

The auto industry is pushing Trump to revisit emission regulations [Business Insider]

Bill Gates: New nationalism could put global health in danger [USA Today]