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Trumponomics Daily—Tuesday, February 14

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
@torynewmyer
tory_newmyer@fortune.com

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