The Most Powerful Reject in the World

Is there anyone who wants to hang with Donald Trump?

He’s not wanted.

Not at funerals, though the Bush family, to show class and respect for tradition, held their noses and made an exception.

Not in England, where they turned him into a big, hideous blimp.

Not by moderate Republicans, or at least the shrinking club with a tenuous claim to that label, who pushed him away during the midterms as they fought for their survival and clung to their last shreds of self-respect.

And not by a 36-year-old Republican operative who is by most accounts the apotheosis of vanity and ambition — and who just turned down one of the most powerful roles in any administration, a job that welds you to the president’s side and gives you nearly unrivaled access to his thoughts.

Nick Ayers didn’t see enough upside to the welding. He could do without those thoughts. He said no to becoming Trump’s next chief of staff, and this wasn’t just the latest twist in “As The White House Turns.”

It was, really, the whole story — of a president who burns quickly through whatever good will he has, a president who represents infinitely more peril than promise, a president toward whom a shockingly small and diminishing number of people in Washington feel any real affection, a president more tolerated than respected, though even the tolerance wanes.

.. He’s forever fixated on how wanted he is (“My crowds!” “My ratings!”), but what’s more striking is how unwanted he is. And that’s not merely a function of the crests and dips that every president encounters. It’s not really about popularity at all.

.. It’s about how he behaves — and the predictable harvest of all that nastiness. While other presidents sought to hone the art of persuasion, he revels in his talent for repulsion: how many people he attacks (he styles this as boldness); how many people he offends (he pretties this up as authenticity); how many people he sends into exile.

.. Careerists who would normally pine for top jobs with a president assess his temper, behold his tweets, recall the mortifications of Jeff Sessions and Rex Tillerson, and run for the hills. Trump sits at the most coveted desk in the world, but almost no one wants to pull up a chair.

.. What happened with Ayers, who is finishing a stint as Mike Pence’s chief of staff, speaks pointedly to the president’s diminished state. Bear in mind that Trump had already started telling people that Ayers would succeed John Kelly as chief of staff, so Ayers’s decision was doubly humiliating. Bear in mind who Ayers is: not just any political climber but someone whose every breath is focused on his enhanced glory, a trait frequently mentioned by Republicans who have watched his rise (and who sense in him more than a bit of Trump).

They still groan and titter about the blast email that he sent out, unsolicited, after he signed on to manage Tim Pawlenty’s 2012 campaign for the Republican presidential nomination. It crowed about all the riches in the private sector that he was passing over. It hinted that his services had been sought by Pawlenty’s competitors: Sorry, guys. It assumed a broad, edge-of-seat audience for the minutiae of his mulling and maneuvering. In fact there were news stories that mockedthe self-aggrandizement of his announcement.

.. At most other times, under most other presidents, someone like Ayers would jump at chief of staff, no matter the job’s infamous rigors. It catapulted such political heavyweights as Dick Cheney, James Baker, Leon Panetta and Rahm Emanuel to greater recognition and relevance.

.. So Jared Kushner and Ivanka Trump counted on Ayers’s interest and connived to shove Kelly out — he’ll leave by year’s end — so that they could shimmy Ayers in. They counted wrong. Ever clueless and oh so useless, they didn’t adequately factor in Trump’s toxicity, and the president now looks every bit as isolated as he is.

.. “Trump was left at the altar,”

.. Administration officials like Steven Mnuchin and Mick Mulvaney practically put out news releases to make clear that Trump shouldn’t ask them to be chief of staff. He has no Plan B, just B-list options like Matt Whitaker, the acting attorney general.

.. As leaders go, he has never been much of a magnet. He unequivocally romped in the Republican primaries, but since then? He got nearly 3 million fewer votes than Hillary Clinton did, a gap so remarkable that he had to claim a conspiracy of illegal voting to console himself. When he first filled his cabinet, he hardly had his pick of the litter.

Many top Republicans wanted no part of him. Some who did enter the administration agonized beforehand: Were they helping the country or indulging someone who didn’t deserve it?

When Barbara Bush died in April, it was clear to Trump that he shouldn’t travel to Texas to pay his respects. When John McCain died in August, Trump was told to skip the funeral.

The heads of countries that share America’s purported values (pre-Trump, at least) reproach and recoil from him. Prominent corporate leaders rebuke him, despite his administration’s business-friendly policies.

.. By one analysis of the midterms, the overall vote count for Democratic candidates for the House was 8.6 percentage points higher than for Republican candidates.

His wife takes public shots at him. Old friends tattle to prosecutors; new friends don’t exist. Talk about a twist: He sought the presidency, as so many others surely did, because it’s the ultimate validation. But it has given him his bitterest taste yet of rejection.

Kelly’s Exit Only a Part of Looming White House Staff Remake

Homeland Security Secretary Kirstjen Nielsen could be next to depart

President Trump’s removal of John Kelly as his top aide is part of a rolling staff makeover that could soon result in the departure of Homeland Security Secretary Kirstjen Nielsen, White House officials and people close to the administration said.

..  When Mr. Trump and National Security Adviser John Bolton faulted her for not taking sufficiently bold steps to shore up the border, Mr. Kelly would defend Ms. Nielsen’s performance.

.. With Mr. Kelly on his way out, Ms. Nielsen is increasingly vulnerable. and department officials are bracing for a change, past and present administration officials said. “People there are waiting for the guillotine,”
A current department official said Ms. Nielsen wouldn’t resign, leaving it to the president to fire her. “She loves this,” the official said. “They’d have to drag her out of here.”
.. Having failed to lock in Mr. Ayers, Mr. Trump quizzed some of his advisers about potential candidates, people familiar with the conversations said. One person recommended Matthew Whitaker, now the acting attorney general. Mr. Trump said in reply that he liked Mr. Whitaker, who White House officials said is a viable candidate if not a favorite for the job.
.. Another candidate is Energy Secretary Rick Perry, a former Texas governor, people close to the White House said.  Over the weekend, a White House official said Treasury Secretary Steven Mnuchin wasn’t in the running. But another White House official said Tuesday Mr. Mnuchin is being discussed internally as a potential candidate. His preference is to remain Treasury secretary, a person familiar with his thinking said.
.. Another corner of the White House that is in the midst of an overhaul is the White House counsel’s office, which has been hollowed out since the departure of Donald McGahn in October. The counsel’s office will be on the front lines of skirmishes with the new Democratic House majority
.. On Monday, Mr. McGahn’s successor, Washington attorney Pat Cipollone, started work and has been given a mandate to fortify an office that had dwindled to about 20 lawyers— half the number who were there in President Barack Obama’s White House.

China Prepares Policy to Increase Access for Foreign Companies

Some U.S. officials are likely to see Beijing’s move away from its controversial Made in China 2025 policy as more cosmetic than real

.. Odds that the new plan will go far enough in addressing U.S. complaints are long. President Xi and others in the Chinese leadership are used to exercising a strong hand in the economy. Many bureaucracies and state-owned enterprises benefit from the unfettered access to resources that come with big government initiatives and so don’t want to be hampered by the greater competition of a level playing field.

.. Officials in the Trump administration have called Made in China 2025 a threat to fair competition, saying it encourages state subsidies for domestic companies and forces technology transfer from foreign partners. Some U.S. officials are likely to see the changes as more cosmetic than real
.. A key concession under consideration would be dropping the numerical targets for market share by Chinese companies, these people said. Made in China 2025 sets defined goals of raising domestic content of core components and materials to 40% by 2020 and 70% by 2025, an increase that comes at the expense of foreign competitors.

.. President Xi’s economic adviser, Vice Premier Liu He, and other senior officials have criticized Made in China 2025 for creating waste. Cheap loans made available by various levels of government, for example, have led to extreme overcapacity among electric-vehicle battery makers in the past couple of years, making the sector less viable.

.. The Trump administration has pushed the “competitive neutrality” principle, making sure that it was part of the renegotiated North American Free Trade Agreement, known as the U.S.-Mexico-Canada Agreement. Under the concept, governments are prohibited from favoring state-owned companies over privately owned ones.

.. The idea was a favorite of prior U.S. administrations as well and became part of the Trans-Pacific Partnership

.. Vice Premier Liu, has told his U.S. counterparts, Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer, that China is planning to reduce auto tariffs and boost purchases of soybeans and other crops.

 

.. But the U.S. wants structural issues like Made in China 2025 and other policies addressed in any full trade deal.

.. “Any progress on addressing global concerns regarding the Made in China 2025 plan should be benchmarked not against new slogans and broad formulations,” said Jeremie Waterman, president of the China Center at the U.S. Chamber of Commerce. “It should be benchmarked against very detailed concerns regarding subsidies, standard setting, procurement and others.”

 

President Trump Bashes the Fed. This Is How the Fed Chief Responds.

Jerome Powell’s playbook includes making allies outside the Oval Office, never talking politics and sticking to the economy.

Federal Reserve leaders for the past quarter-century have made decisions about interest rates without being pressured by the president.

President Trump has broken that streak, calling the central bank “crazy” for raising rates and more than once saying the Fed is damaging the economy. That has prompted Fed Chairman Jerome Powell to update playbook rules for dealing with a president annoyed by America’s central bank.

Rule 1: Speak not of Mr. Trump.

Rule 2: When provoked, don’t engage.

Rule 3: Make allies outside the Oval Office.

Rule 4: Talk about the economy, not politics.

.. Mr. Trump blamed the Fed for October’s stock market selloff, calling the central bank “out of control.” The president told The Wall Street Journal Oct. 23 that Mr. Powell seemed to enjoy raising rates.

Not since the 1990s has a president leaned so hard on the Fed chief and never so publicly. On Monday, Mr. Trump told the Journal: “I think the Fed right now is a much bigger problem than China.

.. The Fed’s benchmark interest rate is now in a range between 2% and 2.25%, well below long-run averages. The central bank is expected to raise rates by a quarter-percentage-point at its Dec. 18-19 meeting.

Mr. Powell says he is raising rates to return them to a more normal setting and avoid the type of boom-and-bust economy that ended in past recessions.

.. Mr. Trump has said he doesn’t plan on firing Mr. Powell, and it isn’t clear he could. The Federal Reserve Act states a Fed governor can only be removed for cause, a high bar that courts and legal scholars have interpreted to mean malfeasance or neglect.

.. The Fed’s credibility could suffer

  • if investors believe its commitment to guard against inflation has been compromised by politics, or
  • if Mr. Trump’s attacks sour the public’s view of the central bank.

“At some point, it becomes very damaging to the institution to be perceived as not acting in the best interest of America,” former Fed Chairwoman Janet Yellen said in an interview.

.. Mr. Powell has told others that he knows the president’s criticism could make his life unpleasant, but that he wouldn’t respond to political pressure. People close to Mr. Powell said he understood that history would judge him on policy decisions made over his four-year term.

  • President Lyndon B. Johnson once summoned Fed Chairman William McChesney Martin to his Texas ranch to berate him for raising interest rates, saying it was despicable, according to Mr. Martin’s account.
  • One low point for the central bank came when President Richard Nixon privately pressured Fed Chairman Arthur Burns to keep rates low before the 1972 election, according to Oval Office recordings. Mr. Burns kept rates low and inflation accelerated.

.. Shortly after President Reagan’s inauguration, a White House staffer asked Fed Chairman Paul Volcker if he wanted to host the new president at the Fed. Mr. Volcker declined, but replied he would be happy to meet the president anywhere else. They settled on the Treasury Department as a neutral ground.

Top Reagan administration officials frequently criticized Mr. Volcker, who presided over rate increases that triggered recessions in 1980 and 1981. But President Reagan refrained. “He just never did it,” Mr. Volcker said in an interview last year.

.. President George H.W. Bush’s Treasury Secretary Nicholas Brady cut off regular breakfasts with Fed Chairman Alan Greenspan to show his disapproval of tight-money policies in 1992. Mr. Brady stopped inviting Mr. Greenspan to dinner parties and golf dates at Augusta National.

One of Mr. Brady’s deputies at the time was Mr. Powell, who served as an appointee in the Treasury’s domestic policy office. Mr. Powell, 65, graduated from Princeton and Georgetown University law school.

.. In 1994, President Clinton was upset that Mr. Greenspan’s rate increases threatened a delicate deficit-reduction plan that Mr. Clinton had guided through Congress.

Mr. Clinton’s unhappiness “never was communicated to me,” said Mr. Greenspan, who added he heard about it much later. Economic adviser Robert Rubin convinced the president it was best to lay off the central bank to show investors that the Fed was apolitical.

.. While Mr. Trump complains loudly, his top economic advisers conduct business as usual with Mr. Powell; that includes Treasury Secretary Steven Mnuchin, National Economic Council director Lawrence Kudlow and Council of Economic Advisers chairman Kevin Hassett.

Mr. Kudlow and Mr. Powell have bonded over their back troubles. Mr. Powell shared the name of his doctor, “who’s been a terrific help to me,” Mr. Kudlow said in an interview. “I’m not kidding.”

.. Before he became chairman, Mr. Powell was the Fed’s point person on bank regulation, just as the Trump administration took shape. That put Mr. Powell in regular contact with Mr. Mnuchin, a newcomer to Washington. Mr. Mnuchin later backed Mr. Powell for the chairman job.

Mr. Trump has since taken out his frustration on Mr. Mnuchin, according to a person familiar with the matter, saying recently, “I thought you told me he was going to be good.

.. After Mr. Trump publicly complained about Mr. Powell this summer, Mr. Mnuchin said in a TV interview that he was “a phenomenal leader at the Fed.”

 .. In fact, Mr. Powell is the kind of Fed leader the White House wants, Mr. Kudlow said, because he is skeptical of traditional economic models that say inflation rises when unemployment falls.

With an unemployment rate of 3.7%, near a half-century low, traditional models suggest the Fed engage in aggressive interest rate increases. Mr. Powell, who isn’t a trained economist, views the models with greater skepticism than some macroeconomists.

.. “Jay is questioning a lot of the traditional Fed dogma with the board staff and their models,” said Mr. Kudlow.

.. Mr. Trump’s economic advisers have helped Mr. Powell cement control of the central bank, securing a cast of Fed deputies and governors who appear to be allies. All three rate increases this year have passed by unanimous vote of the Fed’s rate-setting committee.

.. The president, on the other hand, sees no reason to continue with rate increases because inflation is modest, he has said. He wants rates low to foster fast growth.

.. Several people who know Mr. Trump say his long career in real estate informs his view of rising interest rates, which have put a damper on his businesses. Mr. Trump’s firms sought bankruptcy protection after borrowing costs rose in the early 1990s and in the mid-2000s.

Mr. Trump told the Journal in October the Fed chief has surprised him, because he thought Mr. Powell was a “low interest-rate guy.”

.. Mr. Powell, a Republican and Washington native with a 40-year career spanning government, finance and law, recognizes that Fed authority depends more on Congress than the White House

“Our decisions can’t be reversed by the administration,” Mr. Powell said earlier this month in Dallas. “Of course, Congress can do whatever it wants.”

.. Messrs. Coons and Sen. Jeff Flake (R., Ariz.) later decided to send Mr. Trump a letter telling him to lay off the Fed.

“You appear to be telling the Fed what to do with interest rates, which we believe is unconstructive and dangerous,” the senators wrote the president.

.. In his new memoir, Mr. Volcker described how White House chief of staff James A. Baker III, with President Reagan watching silently, ordered the Fed chairman not to raise interest rates before the 1984 election.

Mr. Volcker, who wasn’t planning to lift rates anyway, didn’t tell colleagues or lawmakers about the episode. Mr. Baker has said he didn’t recall that.