The Trump Agenda

What Donald Trump said on the campaign trail and what he intends to do as President could be two very different things. But certain issues need to be looked at keeping in mind his campaign stance. A reality check from Allianz of America’s Peter Lefkin (senior vice president of government and external affairs) and Andrew Stevens (senior director of government and external affairs)...

* FEDERAL RESERVE: Janet Yellen’s leadership of the U.S. central bank is in serious doubt as some think she will not wait for her term to end in 2018 and may resign. Trump made Yellen’s position at the Fed a key part of his campaign. He also seemed to argue for keeping interest rates low for longer. Given the market’s reaction to his win, he may get that.

* DODD FRANK ACT: Trump will likely neuter the Consumer Financial Protection Bureau, which has been taking aggressive actions against lenders. He will appoint new chairmen of the Securities and Exchange Commission and the Commodity Futures Trading Commission, people who will undeniably have a more deregulatory philosophy than the current leadership.  

* OBAMACARE: Trump has promised to repeal and replace the Affordable Care Act, known better as Obamacare. However, he has also said he will not deny healthcare to anyone. This means he has to come up with a proposal that does not take away insurance from the 20 million Americans who were extended coverage under Obamacare. Repealing the Act will be quite the challenge, given that the Republicans are yet to agree on an alternative plan. It will also result in a budget deficit of at least $137 billion under Washington’s antiquated budget rules. So Trump would have to figure out how to find a balance, which is easier said than done.

* LABOR DEPARTMENT FIDUCIARY DUTY REGULATION: There is now a real possibility that the regulation creating a new fiduciary duty obligation for sellers or producers of retirement products can be scrapped. Funding for the regulation can be blocked or it can be repealed. The new labor secretary can seek to rewrite the regulation but it might take time. A fast solution could be the Trump administration not defending the regulation in the cases filed in U.S. district courts by trade bodies representing financial services companies. This could boost the chances of the regulation being overturned by the courts. April 2017 is when the regulation comes into effect. Product sellers have mostly opposed the regulation. But prudence dictates working to ensure compliance until there is clarity.

* INFRASTRUCTURE SPENDING: Trump and Hillary Clinton had both agreed that the United States needed massive infrastructure investment. Trump had promised to do at least “double” what Clinton had proposed, which could be as much as $1 trillion. If and how he makes good on this promise remains to be seen.

* CLIMATE CHANGE: The Environmental Protection Agency’s Clean Power Plan, which curbs coal-fired power plant emissions, could be revised. Trump has so far shown no interest in climate change. Commitments made by President Barack Obama in international accords could be negated.

* TRADE: President Obama’s dream of reviving the Trans Pacific Partnership in the upcoming lame duck session of Congress is now dead. The Transatlantic Trade and Investment Partnership (TTIP) is on life support and Trump is unlikely to try reviving it. He has also said that he would renegotiate NAFTA or pull out of it.

* BUDGET DEFICIT AND ENTITLEMENT REFORM: The budget deficit widened in 2016. Outlays for Medicare, Medicaid and social security now account for a tenth of the gross domestic product. The problem will worsen as Baby Boomers retire and the full impact of Obamacare is felt. Trump has said he sees no reason to cut Medicare and social security benefits as the shortfall could be taken care of by stimulating economic growth. But most think this may not be enough, especially when rates on federal debt rise. The issue cannot be ignored over the longer term.

As with all content published on this site, these statements are subject to our Forward Looking Statement disclaimer:


Thomas Atkins
Allianz SE
Phone +49 89 3800 2960
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