Skip to Content

Trumponomics Daily—Wednesday, March 15

Goldman Sachs just expanded its beachhead inside the Trump administration. The president on Tuesday announced he’s tapping Jim Donovan, a managing director at the firm, to serve as deputy Treasury secretary. That would make Donovan the fifth Goldman alum to join the senior ranks of his team — a concentration that the president’s critics point to as a betrayal of his campaign pledges to curb Wall Street excesses, in part by targeting Goldman’s political muscle.

But the roster of onetime Goldman honchos now populating the administration comes with a giant asterisk, and it hangs over the name of Trump’s chief strategist, Steve Bannon. The rumpled consigliere worked in mergers and acquisitions at the bank in the late 1980s and has wandered widely since. Whatever formative impact that experience had on the then-young Harvard Business School graduate was unraveled, finally, by the financial crisis. The stock market crash in late 2008 wiped out the retirement savings of Bannon’s father, a lifelong AT&T worker. By Bannon’s own account, watching the banks that precipitated the collapse get bailed out while no such help came for his father hardened him into a populist firebrand. “Everything since then has come from there,” Bannon told the Wall Street Journal earlier this month. “All of it.”

He now leads an axis in the West Wing directly opposed to the worldview advanced by Treasury Secretary Steven Mnuchin and National Economic Council chairman Gary Cohn, fellow Goldman veterans. Where they represent a cosmopolitan, corporate-friendly globalism, Bannon is agitating for closed borders, reversing the tide of international economic integration, cracking down on Wall Street, and confronting radical Islamism. His fingerprints are on the dark language of Trump’s inaugural address and the travel ban that roiled the opening act of his presidency.

It’s not clear, however, whether Bannon has a decisive advantage shaping Trump’s approach. Investors insist the Trump era spells good news for the industry that earned Bannon’s enmity, with large-cap bank stocks continuing to outpace the market rally, in part on expectations of regulatory rollbacks (though a Dodd-Frank repeal has nearly fallen off the priority list). And fears that Trump, channeling Bannon’s protectionist instincts, would start a trade war with an important economic ally have so far gone unrealized (though the president iced the massive Pacific Rim trade pact as one of his first acts). In the near term, tax reform could provide the best signal yet of how Trump is inclined. Bannon favors a border adjustment tax pushed by Speaker Paul Ryan that would impose a steep levy on imports; Mnuchin and Cohn, by all accounts, do not. In the meantime, as Trump keeps staffing up, the résumés of his top aides obscure the organizing struggle behind the throne, pitting one Goldman alum against the rest.

Tory Newmyer

Must Reads

Here Are the Reasons Why the Fed Is Expected to Raise Interest Rates Wednesday [Fortune]

The Federal Reserve is expected to raise interest rates a quarter point, the second hike in three months, driven by strong job gains and creeping inflation.

GOP Senators Say House Health Bill Won’t Pass Without Changes [WSJ]

The CBO score showing the House proposal would lower insurance coverage by 24 million people has spooked Republican Senators, at least a dozen of whom now want major changes.

Donald Trump’s 2005 Tax Return Shows He Paid $38 Million in Federal Taxes [Fortune]

The two-page form shows Trump earned $150 million that year but doesn’t reveal the sources of his income.

CEOs Are Really Optimistic About the Economy [Fortune]

An index of CEO optimism about the outlook just saw its biggest jump since the last three months of 2009.

Trump Is Expected to Sign Off on Expanding Drug Tests for the Unemployed [Fortune]

The Senate on Tuesday sent the president a bill that will make it easier for states to drug test those seeking jobless benefits; the White House has said Trump will sign it into law.

Loose change

President Trump Puts His Name on Buildings, Steak and Vodka. But Not His Health Care Bill [Fortune]

The tax reform Donald Trump is pushing would have saved him $31 million in taxes in 2005 [Quartz]

How Realistic Is a U.S.-China Trade War? FedEx CEO Weighs In [Fortune]

8 Tricks for Defending Trump [Politico]