Democrats, Not Trump, Are Driving Policy

(Bloomberg View) -- Enough about Donald Trump's first 100 days. On the 101st day, Congress came to a rare bipartisan agreement funding the federal government through September. This showed who really holds power in the Trump era: Democrats.

After last November's election, when Republicans had consolidated power and held both chambers of Congress as well as the White House, the question was who would be driving policy. Would it be the Trump administration, perhaps led by populist mastermind Steve Bannon? Would it be House Speaker Paul Ryan, a man with a reputation as a policy wonk with a vision for government? Would it be the ideological House Freedom Caucus, demanding that the new Republican-led government live up to the promises the party made to its base during the Obama years? All have tried to lead at some point this year, but the recently agreed-upon budget deal shows that instead, it's Democrats who appear to be in charge.

Democrats have the leverage in Washington now because Republicans haven't figured out how to govern on their own. The first Republican attempt at legislation was Paul Ryan's American Health Care Act. That failed in part because it didn't repeal Obamacare as the House Freedom Caucus insisted. The Trump administration tried to influence the legislative agenda by putting forth its budget blueprint in mid-March, which included draconian cuts to various departments. Yet the only parts of that budget that made it into the final agreement were modest spending increases for defense spending and border security, without any of the corresponding cuts. This happened because Republicans couldn't come to an agreement on the budget on their own, meaning Democratic votes were needed for passage, and Democrats wouldn't sign on to anything with big spending cuts.

The House Freedom Caucus has tried to assert itself in the latest round of health-care negotiations, but with another House recess scheduled to begin on Thursday, Republicans have yet to find the votes for it. Tax reform may come to a similar conclusion, as the Trump outline presented last week would lead to budget deficits that will be unpalatable to some Republicans, and its proposal to end the state and local income tax deduction is likely to meet resistance with House Republicans hailing from high-tax states like New York, New Jersey and California.

Even though Democrats control neither branch of Congress nor the presidency, the legislative scoreboard shows they're the ones in control. They got what they wanted out of budget negotiations and have successfully blocked Republicans on everything else. And neither Trump nor Republicans in Congress have figured out how to move legislation related to health care, taxes or spending without Democratic support.

While passing legislation may be a struggle for now, Trump's flexibility on policy details is significant should Democrats make major electoral gains in the 2018 midterms. Financial stocks briefly sold off on Monday when Trump said he was open to breaking up the big banks. This occurred right after he said he was open to raising the gas tax to pay for infrastructure. On health care, he's taken so many positions that it's impossible to pin him down to any specific policy stance.

The emerging view may be that Trump just wants to sign legislation that he can take credit for, regardless of the substance of the bills. After all, he's on the verge of signing a government funding bill that's more in line with Democratic priorities than his own. Since he hasn't been willing to stand up for any of his or his party's policy priorities so far, should Democrats retake the House in 2018, there's no reason to think he wouldn't sign legislation passed by Democrats in the House if it makes it to his desk. On policy, the author of "The Art of the Deal" doesn't seem to have any policy deal-breakers.

A president without any fixed policy vision or breaking points is no authoritarian. He makes the legislature more powerful than it's been in decades. If Republicans can't come to internal agreement on major legislation, and Democrats are the ones with leverage, then complete inaction might become a best-case scenario for the GOP.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Conor Sen is a Bloomberg View columnist. He is a portfolio manager for New River Investments in Atlanta and has been a contributor to the Atlantic and Business Insider.

To contact the author of this story: Conor Sen at csen9@bloomberg.net.

To contact the editor responsible for this story: Philip Gray at philipgray@bloomberg.net.

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