For investors, the press release Senator Mitch McConnell put out today is important as it shows how the political landscape has changed under President Donald Trump. It’s important to keep in mind that in the past programs such as those outlined by the Republican leader would have been strongly opposed by many Republicans.
For example, during the 2008 financial crisis Republicans initially defeated the Trouble Asset Relief Program (TARP) package meant to support the U.S. economy. Picking “winners and losers” using government programs has long been a big issue for Republicans and has led to their opposition to many large government programs.
As I have written in the past, President Trump isn’t a career Republican, and for most of his life was a NY Democrat. While he will sometimes give a throwaway line on deficit-spending, in reality it seems he has no problem with increasing it, as many Republicans do. At today’s (March 19) briefing the President has made clear he wants to work on a bipartisan basis to get a bill passed fast.
Over the next few days, the White House, Senate Republicans and House Democrats will start to fashion another bill. In drafting the previous bill that the President signed last Tuesday night (March 17), Senator McConnell stood on the sidelines and let Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin write the bill. The press release from Senator McConnell is a clear indication of his starting point in the negotiations on the next bill.
Investors will be closely watching how Speaker Pelosi responds as she will need to make sure that there are House Democratic ideas and policies in the package. I think the President’s comments today (March 19) that limit on stock buybacks and CEO pay are signs of his thinking that can be more in line with Democrats than Republicans.
This will move relatively quickly. Stay tuned for new developments.