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| | President Donald Trump’s early economic agenda is leaning heavily on the trade and immigration campaign pledges that helped Republicans make critical inroads with historically Democratic voter blocs. Now, a driving force behind the GOP’s pitch to working-class voters is warning that the further unleashing of Elon Musk’s Department of Government Efficiency could hamper Trump’s momentum. “Elon Musk is not actually a popular person, and the frame of politics that the DOGE crew is pushing is not an effective brand of politics,” said Oren Cass, the founder and chief economist of the right-wing think tank American Compass. Musk and Trump have set lofty goals for DOGE, saying they’d like to slash as much as $2 trillion in federal spending by the time the group’s efforts are scheduled to conclude on July 4, 2026. Cass — a former Mitt Romney adviser who has challenged orthodox Republican stances on free trade and tax policy — said DOGE teams have largely avoided substantive cuts to federal programs that affect the day-to-day perceptions of voters beyond the Beltway. If that changes, it would create “big political problems very quickly,” Cass said. Of course, ducking the challenge posed by major programs like Medicare and Social Security has muted DOGE’s actual impact on government spending. And Republicans are facing intense pressure to find ways to pay for the extension of tax cuts that Cass has long contended are unnecessary and fiscally irresponsible. “Trump [is] on both sides of it — in a sense,” he added. The president says “‘everything's on the table’ when they're talking about how big the cuts are going to be, and then also that none of it's on the table when you’re talking about preserving the services that people care about.” “At the point where rhetoric needs reality, you can't do both of those things,” Cass said. His comments underscore how quickly divisions within the Republican Party have emerged as Trump plows ahead with parallel efforts to shrink the government and extend the 2017 tax cuts that are projected to cost the federal government trillions in revenue over the next decade. The American Compass founder says he shares the Trump administration’s appetite for cuts, but if those efforts are designed to preserve tax cuts that would largely benefit the wealthy — and foist the cost on future generations — it would amount to “a trainwreck that everyone can see coming.” Despite his critique of Musk’s effectiveness, Cass told MM that he’s bullish on some of Trump’s initial economic personnel and policy decisions — offering praise for his trade agenda and for Federal Trade Commission Chair Andrew Ferguson’s decision to keep 2023 merger guidelines in effect. Vice President JD Vance, Secretary of State Marco Rubio and Trump’s nominee to lead the Labor Department, former Rep. Lori Chavez-DeRemer (R-Ore.), are all upgrades from Trump’s first Cabinet, he said, which makes the “case for a ton of optimism.” Still, there’s “been a lot of stuff that's more haphazard and would benefit from kind of being rolled out more gradually,” he added. IT’S TUESDAY — For econ policy thoughts, Wall Street tips, personnel moves or general thoughts, email Sam at ssutton@politico.com.
| | | | Donald Trump's unprecedented effort to reshape the federal government is consuming Washington. To track this seismic shift, we're relaunching one of our signature newsletters. Sign up to get West Wing Playbook: Remaking Government in your inbox. | | | | | | | Bank of America CEO Brian Moynihan will speak at The Economic Club of Washington, D.C. at 8:30 a.m. … House Financial Services Committee holds a hearing on “Examining Policies to Counter China” at 10 a.m. … The Conference Board’s consumer confidence survey is out at 10 a.m. … The Fed’s Michael Barr will speak about financial crisis management at the Yale University School of Management's Program on Financial Stability at 11:45 a.m. … Speaking of tax policy — Treasury Secretary Scott Bessent is planning to convene weekly meetings with top congressional Republicans as policymakers chart a path forward on Trump’s tax agenda, Benjamin Guggenheim reports. Attendees will include Senate Majority Leader John Thune, House Speaker Mike Johnson, House Ways and Means Chair Jason Smith (R-Mo.) and Senate Finance Chair Mike Crapo (R-Idaho.). Rough day for DOGE — The White House on Monday backed down on Musk’s call for every federal employee to submit five things they had accomplished in the last week or face dismissal, Megan Messerly reports. — U.S. District Judge Deborah Boardman, a Maryland-based appointee of President Joe Biden, ruled that the Education Department and the Office of Personnel Management — the government’s massive HR department — may not share information about federal employees and student loan borrowers with DOGE. Boardman’s 33-page order is “the most wide-ranging block on DOGE’s activities to date,” Kyle Cheney and Josh Gerstein report. — At the Department of Housing and Urban Development, television screens at headquarters on Monday “played a lewd AI-generated video targeting President Donald Trump and Elon Musk, in an apparent employee protest of looming cuts at the agency,” Katy O’Donnell reports. — From Michael Stratford: “A federal judge on Monday pressed the Trump administration on who exactly runs the U.S. Department of Government Efficiency Service that’s tied to billionaire Elon Musk and said she had ‘concerns’ the group may be operating in an unconstitutional manner.” — Sen. Elizabeth Warren, the ranking Democrat on Senate Banking, will host a forum at 2 p.m. on DOGE’s work at the Consumer Financial Protection Bureau. In a statement, the Massachusetts Democrat said Musk and Trump’s actions have frozen dozens of ongoing cases, “including actions against companies alleged to have overcharged military servicemembers on loans, systematically hung up on Social Security recipients, and forced junk fees on truck drivers. Americans won’t see a penny in relief from the companies that have scammed them.” Full steam ahead? — Trump on Monday said he plans to move ahead with 25 percent tariffs on all Canadian and Mexican goods beginning early next week, Doug Palmer reports. “The tariffs are going forward on time, on schedule,” Trump said at a joint press conference with French President Emmanuel Macron. — The S&P 500 dropped on Trump’s announcement, according to The WSJ’s Ed Ballard and Owen Tucker-Smith. The Nasdaq also fell, though analysts chalked those losses up to uncertainty around artificial intelligence investments. Imminent? — The NYT’s Constant Méheut: “Ukraine and the United States are closing in on an agreement that would grant Washington a share of Kyiv’s revenues from natural resources, President Trump and a Ukrainian government official said Monday, after an intense pressure campaign from the American president to strike a deal.”
| | Thin margin — Consumers provided a bedrock for the U.S. economy’s outperformance coming out of the Covid-19 pandemic. Economic growth is increasingly reliant on the wealthy, writes The WSJ’s Rachel Louise Ensign. What do you mean, capex uncertainty? — After meeting with Trump last week, Apple CEO Tim Cook pledged to invest $500 billion in the U.S. over the next four years, Reuters reports. — Meanwhile, Starbucks is planning to slash more than 1,100 corporate jobs to “operate more efficiently, increase accountability, reduce complexity and drive better integration,” per WaPo’s Jaclyn Peiser.
| | Regulatory clarity? — P&I’s Lydia Tomkiw: “The Securities and Exchange Commission’s new guidance earlier this month on investor activism and engagement with portfolio companies has thrown asset managers into confusion, with some of the industry’s largest firms, including BlackRock and Vanguard, putting a temporary pause on meetings.” — The FT: “Amundi CIO says Donald Trump’s move to rein in regulators is a ‘big mistake’” The great unwind — The SEC closed its investigation of Robinhood’s cryptocurrency business on Monday, Declan Harty reports. It’s another sign that the markets overseer will take a much softer approach on digital assets regulation during Trump’s second term. Quintenz steps back from a16zcrypto — Trump’s pick to run the CFTC, Brian Quintenz, is “stepping away” from his role as head of policy for Andreessen Horowitz’s crypto arm as he awaits Senate confirmation, according to an automated message from his email at the firm, Declan reports. If confirmed, Quintenz is expected to formally leave the firm as well as the board of Kalshi.
| | First in MM: House Rs press SEC to delay Treasury clearing rule — Top Republicans on the House Financial Services Committee are pressing the SEC to delay implementation of a rule that would force Wall Street to move more U.S. Treasury trading through clearinghouses, Jasper Goodman reports. In a letter to acting SEC Chair Mark Uyeda on Monday led by Rep. Frank Lucas (R-Okla.), lawmakers including Financial Services Chair French Hill (R-Ark.) wrote that the rule, passed by the commission in 2023, "is a significant change to U.S. Treasury market structure, and many unanswered questions remain." Parts of the rule are set to begin taking effect at the end of next month. "Given the challenges that many market participants face to come into compliance prior to the deadlines, it is prudent that the timeline be extended to ensure no market disruption," they wrote. The SEC did not immediately respond to a request for comment Monday evening. Drumbeat — Senate Banking’s top Democrat Sen. Elizabeth Warren sent a 23-page letter with 62 multi-part questions to Federal Housing Finance Agency director nominee Bill Pulte ahead of Thursday’s confirmation hearing, Katy reports. And yes, Warren asked about whether congressional action is needed to free Fannie and Freddie from government control. The great crypto rollback — Benjamin also reports that Ways and Means is planning a markup Wednesday of a resolution that would overturn new IRS reporting requirements for certain crypto brokers. My mentor? That’d be my editor, who I cherish everyday — Sen. Dave McCormick (R-Pa.) and his wife Dina Powell McCormick, a Goldman Sachs alum and former Trump administration official, published a new book on mentorship featuring interviews with Blackstone Group’s Stephen Schwarzman, Maryland Gov. Wes Moore and others, report Mike Allen and Noah Bressner of Axios.
| | New world — The U.S. voted against a United Nations resolution condemning Russia’s invasion of Ukraine on the third anniversary of the conflict, Eric Bazail-Eimil reports. Notably, Ukraine and its allies nixed a separate U.S.-led resolution that called for peace but “made no reference to Russia’s role in launching a full-scale military campaign against Ukraine.” — During the press conference with Macron, Trump said, “Russian President Vladimir Putin was ready to accept European peacekeepers in Ukraine in a potential breakthrough that could help end the Kremlin's war against Kyiv.” | | | | Follow us on Twitter | | | | Follow us | | | |
