Shutdown and the Wall. Year Not Ending Well for Trump.

At the December 11 famous televised meeting with Nancy Pelosi and Chuck Schumer, President Trump, in one of his exuberant moments, said that the “wall” was worth a government shutdown and he will be “proud to shut down the government…I will take the mantle.” Republican Senate Leader Mitch McConnell worked around Trump’s shutdown impulse on December 19 with a Senate voice vote. But, Trump under pressure from his base, demanded the House pass a new resolution with $5 billion for the wall. On December 20, they did, partially to prove they could after several failed efforts. Pelosi had claimed they didn’t have the votes. She even inspires Republicans to extra efforts.

House rebels (Freedom Caucus, such as Jim Jordon and Mark Meadows) and his far-right wing supporters – Rush Limbaugh, Ann Coulter, Laura Ingraham, Breitbart and Drudge – began criticizing Trump and Republicans and advocating a veto and holiday shutdown. They completely captured Trump and the White House and there may well be a shutdown into the new year.

The reality of the politics is that the wall is good for a segment of Trump’s base, but not much else and has considerable downsides. Most Republican leadership believe the wall is a presidential promise devoid of much real benefit for U.S.-Mexico border security and doesn’t have the support of the public. And, under no condition is an extra $3.4 billion for a construction project worth shutting down the U.S. government over the holidays. But, of course, arguing for the hardliners is that next year the House, under Democratic control, will be even less hospital to President Trump’s wall. The latest polls show:

• Building a wall between the U.S. and Mexico should not be a priority at all – 50%, or should be an immediate priority – 28% (NPR/PBS NewsHour/Marist poll, N1075, Nov. 28-Dec. 4, 2018)
• Oppose building a wall along the border with Mexico – 57% (CNN, N1015, Dec. 6-9, 2018)
• President Trump should compromise on the border wall to prevent gridlock – 57% (NPR/PBS NewsHour/Marist poll, N1075, Nov. 28-Dec. 4, 2018)

The Trump Correction. Dow Off 4000 Points Since October 3rd

The Dow, largely in tandem with other indexes, is deep in correction territory (off 16%, with 10% a correction). In fact, the technology-heavy NASDAQ is more than 20 percent off its recent high (22%), or a bear market. The Dow has given up more than half of the 7000 points of gain since Donald Trump was elected in November 2016. As the holiday break begins, the Dow has fallen 4383 points since its all-time high of 26828 hit on October 3 of this year. That’s a steep decline, much like the unbelievable ascent from 19000.

As the chart below shows, the Dow is now back to October 2017.

President Trump has relished taking credit for the market, especially as the politics of Washington during his first two years have been so chaotic and his character so confrontational. As 2018 ends and the presidential race begins in 2019, it appears Trump will not have a market as a talking point or a distraction for other problems.

Although the American economy continues to appear robust, and few economists see a recession, a host of warning signs are producing volatility and a more risk adverse investor.

• The Fed and other central banks are raising rates and reducing monitory stimulus
• Economies around the world are slowing, markets around the world are off and commodity prices declining (oil at $46 a barrel)
• Trade tensions with China and other U.S. partners are increasing

In terms of U.S. politics, nothing as 2019 begins appears calming for markets, Trump’s White House is ever more chaotic as Democrats prepare to take over the House, the Mueller investigation grinds along to an expected 2019 conclusion and Congress appears unable to reach a deal to keep the U.S. government open.

Read The Buzz:
Market Tops 26616 in January; Dow Drops 2600 Points – Correction Territory
The Color of Green
Trump Rally is Over

Mattis Resigns With Blast at Trump’s Leadership

In my blog on November 3, “We Are Going to Miss Mattis,” I highlighted Mattis’ advocacy of the rule of law in the Khashoggi murder and the importance of alliances based on trust and honesty. But, the post also cited his likely imminent departure. His influence was diminished and the Commander in Chief had disparaged him in an interview (Win or Lose, Trump is Changing the Team, Nov. 1, 2018).

He is not alone in his departure. A host of top officials are out as 2019 begins. Attorney General Jeff Sessions pushed out, John Kelly eased out and Nikki Haley resigns on good terms. It’s assumed Kirstjen Nielsen will be eased out soon.

Mattis “retired” according to President Trump. In fact, his resignation letter made clear he quit over major policy disagreements with the President and his national security team. The letter never praised nor thanked Trump, but highlighted specific criticism for Trump’s alliance policy, especially with NATO, and his approach toward “malign actors and strategic competitors.”

The key paragraph:
Because you have the right to have a Secretary of Defense whose views are better aligned with yours on these and other subjects, I believe it is right for me to step down from my position.

Mattis, as opposed to most senior officials departing the Trump administration, was ahead of the President’s tweet and framed the issue to his specification. Some language follows:

Alliances:
One core belief I have always held is that our strength as a nation is inextricably linked to the strength of our unique and comprehensive system of alliances and partnerships. While the US remains the indispensable nation in the free world, we cannot protect our interests or serve that role effectively without maintaining strong alliances and showing respect to those allies. 

…we must use all tools of American power to provide for the common defense, including providing effective leadership to our alliances. NATO's 29 democracies demonstrated that strength in their commitment to fighting alongside us following the 9-11 attack on America. The Defeat-ISIS coalition of 74 nations is further proof.

China and Russia:
Similarly, I believe we must be resolute and unambiguous in our approach to those countries whose strategic interests are increasingly in tension with ours. It is clear that China and Russia, for example, want to shape a world consistent with their authoritarian model - gaining veto authority over other nations' economic, diplomatic, and security decisions - to promote their own interests at the expense of their neighbors, America and our allies. That is why we must use all the tools of American power to provide for the common defense.

Respect for Allies, Clear-eyed About Adversaries:
My views on treating allies with respect and also being clear-eyed about both malign actors and strategic competitors are strongly held and informed by over four decades of immersion in these issues. We must do everything possible to advance an international order that is most conducive to our security, prosperity and values, and we are strengthened in this effort by the solidarity of our alliances.

Read full resignation letter here

Senate Says “No” to Trump on Khashoggi and Yemen War

President Trump and his top representatives, Secretary of State Pompeo and Defense Secretary Mattis, were told as clearly as possible that their Middle East policy related to Saudi Arabia cannot be guided by Trump’s view of foreign policy stripped of America’s historic commitment to human rights and rule of law.

The Senate also, reflecting the midterm vote and repeated polls, began to assert a more aggressive oversite of the administration’s foreign policy. They passed a resolution condemning Crown Prince Mohammed bin Salman (MBS) for the murder of Jamal Khashoggi (unanimous support) and a second resolution ending U.S. military support for the Saudi-led war in Yemen (passed 56 to 41). (See The Buzz: John Brennan and CIA Director Gina Haspel, 12-7-18)

Although the sense of the foreign policy establishment is that the administration is correct about the importance of the Saudi-U.S. relationship, there is a considerable disagreement whether it should be the centerpiece of a Middle East strategy and if MBS is likely to be a reliable partner. But, there is near universal disapproval of Trump’s articulation of a crass “America First” imperative and his distortion of the intelligence community’s judgement of the facts of the murder and MBS’s involvement.

The latest polls indicate that the Khashoggi affair may reflect as big a defeat for Trump’s foreign policy credibility as the Helsinki Summit with President Putin last summer.

Polling results on the Khashoggi murder:

• 52% - disapprove the way Trump is handling the U.S. Saudi relationship (CNN poll, N1015, Dec. 6-9, 2018)
• 60% - don’t believe the Saudi government’s story about Khashoggi’s death (YouGov, Oct. 24, 2018)
• 66% - U.S. response hasn’t been tough enough on Saudi Arabia’s role (CNN poll, N1015, Dec. 6-9, 2018)
• 77% - believe there should be a consequence for Saudi Arabia’s actions (Quinnipiac, N1148, Dec. 12-17, 2018)

Is 2019 a Year for Democracy?

Will 2019 be the year that the American system reasserts its Democratic foundation? The midterm election was the first sign that the failure of Congress to say no to President Trump beyond a few dissident Republican voices (e.g., McCain, Flake, Corker) was coming to an end. The national congressional vote provided Democrats with 40 seats and control of appropriations, authorization and investigative committees and functions. The pass in the House is over.

But, there are other signs democracy is back. Forty-four former U.S. senators published a well reported letter in the Washington Post in early December, including four from Colorado – Gary Hart, Tim Wirth, Ben Nighthorse Campbell and Mark Udall (where were Wayne Allard and Hank Brown?), urging current members of the Senate to be “steadfast and zealous guardians of our democracy.”

Excerpts to Senate colleagues
44 Senators
December 10, 2018

As former members of the U.S. Senate, Democrats and Republicans, it is our shared view that we are entering a dangerous period, and we feel an obligation to speak up about serious challenges to the rule of law, the Constitution, our governing institutions and our national security.

. . .

We are at an inflection point in which the foundational principles of our democracy and our national security interests are at stake, and the rule of law and the ability of our institutions to function freely and independently must be upheld.

. . .

At other critical moments in our history, when constitutional crises have threatened our foundations, it has been the Senate that has stood in defense of our democracy. Today is once again such a time.
Regardless of party affiliation, ideological leanings or geography, as former members of this great body, we urge current and future senators to be steadfast and zealous guardians of our democracy by ensuring that partisanship or self-interest not replace national interest.

Along with ten Republicans, including D’Amato (NY), Danforth (MO), Simpson (WY) and Warner (VA), the 32 Democrats included many moderates, such as Bayh (Ind.), DeConcini (AZ) and Nunn (GA).

Read letter here

Perlmutter Wins, DeGette Loses

The Democratic House election of their leaders for the 2019-20 session has provided the platform that picked winners and losers in Colorado’s delegation and likely will affect party politics of 2020.

Nancy Pelosi will be the Speaker, and although that has been assumed for weeks in spite of a handful of dissidents, Ed Perlmutter, one of the hold-outs, managed to craft the compromise that the party has been looking for. According to the Perlmutter formula, Pelosi will serve no more than two additional terms. She initially resisted a term-limit, arguing it would hurt her clout to represent the House and ability to control the caucus. But, two terms pushes the date after the next election and secures her position of authority.

Perlmutter, who had a mercurial 2017 with his ill-fated announcement and withdrawal for governor, is now back in position as the leader of the delegation.

Unfortunately for Diana DeGette, Colorado’s longest serving member, her ambition to become the Democratic Caucus Whip was stymied quickly by the previous Whip, Jim Clyburn (currently Assistant Democratic Leader), and his allies in the Black Caucus. Clyburn, who will return to the Whip job when Democrats take over, just removed DeGette from the Deputy Whip position she’s held for 14 years. After 11 terms, the undercurrent among Denver Democrats suggesting it’s time for her retirement is likely to get louder.

Hence, Perlmutter is now a frontrunner to take on Senator Gardner, if he’s interested, and DeGette may be nearing the end.

Ed Perlmutter and Diana DeGette

Read The Hill: DeGette dropped from chief deputy whip spot

The Democratic Frontrunners: The Three B’s – Biden, Bernie and Beto

The first Des Moines Register poll is out (with CNN), and of the 30 or so Democrats running for president, twenty were tested and Joe Biden, Bernie Sanders and Beto O’Rourke are at the top of Iowan Democrats’ preference. It is more than a year ahead of the first in the nation’s Iowa caucus, but the polls are starting as are the campaigns (Hickenlooper had 1%).

Biden’s early advantage is that he simply has the top name identification, but he also represents the pragmatic, we need experience concern that Democrats have given President Trump is the non-stop attack campaigner.

Sanders hasn’t stopped campaigning after losing to Hillary Clinton in 2016 and has a base of more independent and younger voters who like his outside status and generous plans for reshaping America. Although his views appear somewhat antiquated, like a dog-eared copy of “Das Kapital,” they received a shot in the arm from the out of left field win of socialist Alexandria Ocasio-Cortez in the 2018 New York primary.

Beto O’Rourke is the Obama of the 2019 field. He ran a spectacular, although losing race in the state Democrats would most like to win - Texas. He has looks and a manner that draws crowds, and possibly most important, he collected millions of dollars of donations online and from national donors.

Needless to say, it’s early with a massive field of candidates. If 2016 was a surprise, both for the path to nomination and the election results, this one will likely be just as unpredictable.

See:
CNN: Iowa Poll: First poll of likely caucusgoers finds Biden, Sanders, O’Rourke atop the field
OpinionToday.com tweet