The Intersection of Business and Government

This frequent column will explore not only the individual activities of business and government but also their inter-relationship. (See my piece Business Leaders Must Act to Save Our Democracy) Building on my professional experiences in both the public and private sectors, I developed and taught a course at New York University’s Robert F. Wagner Graduate School of Public Service entitled “The Intersection of Business and Government in the Nation’s Economy.” It’s an important subject that has not received sufficient emphasis in academia or in either of the sectors themselves.

Election ’18 Wrap-Up

As a former life-long Republican, I welcome the Democratic majority in the U.S. House of Representatives. At this point in our nation’s history the most important matter facing us is whether or not our democracy will survive the Trump presidency. With one house of congress now controlled by the other party, there will be a check on the executive branch, assuring survival of our freedom and liberty for at least two years. It will provide the public an opportunity to fully understand the challenges we face and a path forward to avoid a calamity.

The final results of the 2018 election are historic. The Democrats picked up 40 seats, the largest number ever in one election, and produced the widest percentage margin in modern times with Democratic candidates receiving 8.5% more votes than Republican House candidates. They would have flipped more seats but for the gerrymandering by Republican state legislators who were able to draw congressional districts that were lopsided in favor of their party.

Here is a chart from MSNBC that illustrates the magnitude of the Democratic landslide:

GOP Tax Bill Turned Out to be a Negative for Some Republicans

Congressional Republicans have touted their tax bill as a big accomplishment and many GOP members of congress had to defend their vote in the November election. This chart lists the 23 Republican House districts that were won by Hillary Clinton in 2016 and where the tax bill vote was crucial to the outcome. Many of these districts are in high tax states where a vote for the tax bill eliminated the deduction for state, local and sales taxes.  

Here are the election results: 
14 lost
7 retired or resigned
2 won

116th Congress

Here are two of my favorite tweets as the new congress was sworn in on January 3, 2019:

23 years ago, from a refugee camp in Kenya, my father and I arrived at an airport in Washington DC.

Today, we return to that same airport on the eve of my swearing in as the first Somali-American in Congress. #Hope #Ilhan 🙏🏾 pic.twitter.com/jVeP3DOipN

— Ilhan Omar (@IlhanMN) January 2, 2019

5 eyes. 5 arms. 4 legs. All American.

Welcome to Congress, @ElectJimBaird & @DanCrenshawTX. pic.twitter.com/NU7YnbAE4u

— Rep. Brian Mast (@RepBrianMast) January 3, 2019

Congressional Oversight to be Restored

The new House leadership should approach their constitutional oversight responsibilities with an overall strategic plan and timetable that will provide maximum opportunity for the American public to hear, absorb and understand the actions of the Trump campaign and the Trump administration that might be violations of the Constitution, criminal laws, and of our national security.

We can anticipate public hearings in the House on a variety of matters that voters to date have only a passing acquaintance with. They will include:

• Russian Involvement in 2016 Election
  A top to bottom review and investigation into Russian involvement in the 2016 elections by the House Intelligence Committee under the able leadership of Adam Schiff of California.

  To date the only information available to the public on this matter has come from court documents filed by the Special Counsel, Robert Mueller, and from the wacky comments made by Trump’s attorney Rudy Giuliani.

  While there may be some closed sessions of the committee to protect national security, many will be in open session and carried by the cable networks;

• Corruption in the Trump Administration
  A thorough investigation into corruption committed by Trump administration officials will be conducted by the Committee on Oversight and Government Reform, chaired by Elijah Cummings of Maryland.

  Hearings will include looking into possible wrongdoing by Commerce Secretary Wilbur Ross, former Secretary of Interior Ryan Zinke, Veterans Affairs Secretary David Shulkin, Secretary of Education, Betsy DeVos, former EPA Administrator Scott Pruitt, and, Presidential Advisor Jared Kushner;

• Questions About Appointment of Acting Attorney General
  A determination by the House Judiciary Committee, chaired by Jerold Nadler of New York, about the circumstances surrounding the appointment of Mathew Whitaker as Acting Attorney General and his failure to recuse himself from overseeing the Special Counsel investigation into Russian involvement in the elections.

  Eventually, there will be public hearings into the possible impeachment of Donald Trump for violations of his duties as president including his abuse of power and inability to perform the duties of the office of president as well as possible violations of civil and criminal laws, and,

• Foreign Financial Influence on the Trumps
  A Ways and Means Committee demanding a look at Trump’s tax returns to determine if Trump, and by extension his family members, might have been or are now being influenced by any financial dealings with foreign nations, foreign nationals or entities controlled by them.

Secretary of Defense James Mattis Resigns

Four Star General James Mattis after being much maligned by President Trump finally had had enough and resigned on December 20th as the head of the nation’s armed services. Foreign adversaries were pleased; allies were not.

Mattis was seen as someone who frequently tried to redirect the president away from his most outrageous military and foreign policy ideas. Trump’s abrupt announcement that he was pulling troops out of Syria sent shock waves around the world. There was no heads up given to our friends while the decision was praised by Vladimir Putin. Trump’s unilateral decision will undoubtedly be the subject of a hearing by the House Foreign Affairs Committee. It should be noted that Trump as he came into office often praised “my generals.” Those generals, McMaster, Kelly, Flynn and now Mattis have all departed the administration. Only Flynn was fired, for lying to the FBI.

Read Secretary Mattis’s letter of resignation.

Recent Public-Private Sector Activities Affecting You and Your Families

Regulation of Big Tech: The likes of Facebook, Google and Twitter have been humbled, their reputations tarnished and their share price clobbered by concerns over misinformation, censorship and data abuse according to Greg Ip, one of my favorite Wall Street Journal columnist. How congress deals with the issues of privacy, free speech, and the shear size and reach of these huge social media firms remains to be seen. The European Union as well as the U.S. Congress will be addressing these matters. Whatever Congress or the EU decide to do jointly or separately, it will affect you and everyone else on the planet.

Passing on Political Contributions: A recent report by the Center for Political Accountability states that many corporations in the S&P 500 are foregoing making political contributions and that several major companies have reported they have no engagement in corporate political spending. They include Goldman Sachs Group, IBM and Schlumberger.

Smarter Regulations: According to Cass Sunstein, Harvard law professor and Obama’ s Administrator of the White House Office of Information and Regulatory Affairs, the quiet revolution in the past 40 years began under Ronald Reagan requiring federal agencies to perform a cost-benefit analysis and then demonstrate that the benefits of the proposed rule outweigh the cost has mostly been embraced by President Trump.

How Corporations Spent Their Tax Cut: Last year’s corporate tax cut (repatriation of U.S. profits parked overseas) amounted to $2.3 trillion. While it has sparked increases in corporate spending on new plants and equipment as well as on research and development—all laudable uses—about a third of the savings has also been spent on share buybacks.

This often increases the price a share of stock can command in the stock market, making shareholders happy. It also increases the opportunity for senior corporate officials to receive bonuses based on the share price of their stock. Looks like a win-win situation. However, with the stock market’s fourth quarter swoon, the S&P closed down 4.1% for the year (including dividends). So far the win-win looks more like a lose-lose based on year-end accounting. Corporate managers don’t get their bonus, shareholders are now owners of a lower valued stock (average of -4.1%) and the whole thing vanished into thin air over Wall Street.

On the Lighter Side

Sports Imitating Politics or Vice Versa: Is Dan Snyder the Donald Trump of the NFL?Washington Redskins owner Dan Snyder believes the rules do not apply to him. Not in owning a sports team or in cutting down a forest of trees on U.S. Park Service property that blocked his view from his palatial mansion on the Potomac River.

A recent Washington Post story relates how Snyder has single handedly ruined one of the top franchises in the NFL, sent fans packing, and impulsively makes decisions that turn out to be wrong and then blames others. Sound familiar?

Donald Trump, who famously wanted an NFL franchise but was never granted one, has, instead, orchestrated a hostile takeover of the once-admired GOP team. The Republican team, like the DC football team, is experiencing what was referred to in the past as “Redskin fever” but in reverse, having fewer and fewer followers. Soon the party will reach the depths now experienced by the once proud Redskins fans. Past GOP voters may follow the course taken by disappointed Redskin fans whom are showing up to games sporting the opponent’s jersey. Voters may take the same path—rooting for a different team or stay home on game/election day. In politics or sports that is a losing proposition. 

Deep Thoughts

When the admirable Tiberius upon becoming emperor, received a message from the Senate in which the conscript fathers assured him that whatever legislation he wanted would be automatically passed by them, he sent back word that this was outrageous. “Suppose the emperor is ill or mad or incompetent?” He returned their message. They sent it again. His response: “How eager you are to be slaves.” Tacitus (Annals 3.65)

Photo Credits:
2018 Popular Vote Margins (MSNBC)
Politics Complicate Tax Vote for GOP, 11/9/17 (The Wall Street Journal)
A once-proud franchise, the Redskins are showing signs of foundational cracks, 12/29/18 (Washington Post)