Trying to Make Sense of the Nonsense in Washington

I invested about 14 years of my career leading real estate finance-oriented national trade groups in Washington, D. C. Testifying before House and Senate committees frequently and being responsible for sizable staffs of regulatory and legislative lobbyists meant playing an integral role influencing federal regulations and legislation favored or opposed by our trade group's members. In the process I came to appreciate how difficult it is to understand and to pass meaningful regulations and laws even when opposing views are not far apart. Unlike the disarray so rampant in Washington, D.C. today, where it feels like the circus came to town, with a full cast of clowns.

When I look at the nasty debates between the Trump Administration and the Congress in general, not to mention disagreements within parties and between the House and Senate, all I can think of is a pearl of wisdom passed along to me by a veteran Capitol Hill lobbyist, the late Burton Wood. When I first arrived in Washington, he took me aside and forewarned me about making sense of what transpires in Washington with these words: "Never let logic cloud your vision".

I can't imagine how such a dysfunctional group of politicians in Washington, D.C. can possibly hope to pass meaningful federal legislation that is both responsible and beneficial to a majority of Americans.   It is tough to understand thoroughly the ultimate impact of even just one piece of legislation, much less if you look at the headline issues of the day taken as a group: healthcare "reform" (beauty being in the eyes of the beholder), repatriation of corporate earnings from overseas, "simplification" (beauty...again) of corporate and personal income tax rates, reductions in or the elimination of estate taxes, changes in the standard deduction and in the deductions for state and local income taxes and local property taxes. Whew! No credible person could possibly understand, much less explain the likely impacts of the interaction of all of these legislative proposals, if enacted simultaneously. 

Then, just for fun, add to the mix a Federal Reserve Board of Governors champing at the bit to raise interest rates, thereby crippling a still soft recovery and shrinking the market values of trillions of dollars of government and corporate securities held in institutional and personal portfolios today. If ever there were a "hidden tax" in America its parenthood would flow from Federal Reserve policies to raise rates, especially prematurely. Unlike in China, where central planning is the essence of their federal government, in the United States we reject central planning and the power it amasses--except in the case of the Federal Reserve.  Year in and year out the Federal Reserve Board acts as a central planning agency, one with the ability to exercise greater unfettered power and produce greater impacts on the global economy than the United States Congress and the Administration combined.

Historically, truly major legislative changes have only occurred in the aftermath of national crises, the equivalent of locking barn doors after the livestock have escaped, and with about the same level of success as the barn door analogy. In 2017, politics, not crises, are driving legislative initiatives.  No one in either political party, and sometimes even few within the same party, want to give credit or the upper hand to anyone else.  As a result, I sleep easier in the belief that nothing more than legislative posturing will be accomplished between now and year end, that is, year-end 2018.