Trump’s Nixonian Pivot

December 21, 2016 |

bd-ts-122216-trump-nixon-cover-smNews of high-level appointments have been streaming out of Trump Tower all this week and last, and two trends are already clear: it’s a group mostly out of the business and military communities, and there’s a pivot to Russia on.

To us, it feels like the Nixon 1969 playbook, with one play run in reverse, and one new play not in existence at the time Nixon took on the presidency.

Now, keep in mind that Nixon was a minority president elected in a bruising and divisive campaign that saw Southern conservatives exit the Democratic party, mostly for the last time, and was electrified in a terrible way by the assassinations of Robert F. Kennedy and Martin Luther King. But Nixon of 1969 wasn’t the Nixon (yet) of Watergate. Those scandals lay far ahead and the comparison between Trump and Nixon is based on what transpired in 1968 and 2016, not the scandals of 1973-74.

The Environmental Protection Agency was created under the Nixon Administration, by the way, and Nixon was the first president that focused national attention on energy security in the wake of the first oil embargo, in 1973. So the themes of that presidency have direct application to today, and offer us a window of comparison where we might ask, how really different and radical is the Trump Administration — and how much apprehension is accordingly justifiable?

The Cabinet picks

You might wonder at all the business executives being appointed to high position in the Trump Administration, and after a generation in which mostly career politicians and bureaucrats have served in policy posts, it does feel strange. Even corporate Reagan appointees like Cap Weinberger at Defense and George Schultz at State were former Nixon cabinet members and Weinberger was a member of the California state cabinet before that — not exactly strangers to Washington, and not members of the “Drain the Swamp” Club that Trump has vowed to install.

In the winter of 1968-69, Nixon appointed an equally impressive array of corporate chieftains. Blount International CEO Winton Blount was made Postmaster-General (a cabinet post at the time). Continental Illinois CEO David Kennedy went to Treasury. Bond lawyer John Mitchell (Nixon’s law partner) became Attorney General. Investment banker Maurice Stans went to Commerce (after service in the Eisenhower Administration). George Romney, former CEO of American Motors and most recently serving as Governor of Michigan, went to HUD.

What does it mean when a Republican president-elect stacks his Cabinet with business figures instead of career politicians or academics? Not much really. The GOP has been a party of business since its formation in 1854 — it’s about the only thing Abraham Lincoln might recognize in a party which opposes large government investment in infrastructure, talks up states rights, doesn’t like blue states (although they don’t like grey states, either) and has low support amongst African-Americans.

So, relax. It means that the GOP will run an administration that dislikes the spread of federal government — not the principle of government — and likes government to leave business alone, more or less. As in Nixon days, Reagan days, and Bush days.

The arrival of Oklahoma A-G Pruitt at EPA

Perhaps most troubling to the bioenergy sector has been the nomination of Oklahoma Attorney General Scott Pruitt to lead the Environmental Protection Agency.

As the American Coalition for Ethanol noted:

“While President-elect Trump enthusiastically campaigned in support of ethanol, as the Oklahoma Attorney General, Mr. Pruitt filed a “friend of the court” brief in support of a lawsuit by the American Petroleum Institute and Grocery Manufacturers Association to overturn EPA’s approval of E15 for 2001 model-year and newer vehicles. Moreover, Mr. Pruitt has called the RFS “unworkable.” 

So, ACE is circling the wagons on this one.

“We encourage you to contact your Senators and urge them to secure commitments from Mr. Pruitt to remove regulatory restrictions on the use of E15 and flex fuels and to publicly agree with President-elect Trump’s position in support of the U.S. ethanol industry and the Renewable Fuel Standard (RFS) before agreeing to cast affirmative votes for Pruitt during the confirmation process.”

“Given the role EPA has in clearing regulatory roadblocks for ethanol to compete in the marketplace, it is critically important for ACE members and ethanol advocates from all walks-of-life to encourage their U.S. Senators to ensure Mr. Pruitt will keep the RFS on track and remove government restrictions on the use of higher blends of ethanol before they vote to confirm him to lead EPA,” according to ACE.”

We’d rate that as a milld 4 on a scale of 10 on the DC Panic Scale. It rates an 7.5 on the Flex Your Political Muscle Scale, but it’s kind of weird. The Senate Environment and Public Works committee is stacked with senators from Oklahoma, Louisiana, Alaska, West Virginia, Wyoming and Idaho — so, expecteth not a rejection of the Pruitt nomination. But rather think of it as a call on Senators Deb Fisher of Nebraska and Mike Rounds of South Dakota to get some clarity on Administrator-designate Pruitt’s views on “keeping the RFS on track.”

However, let’s keep in mind one thing. While the EPA has wide discretion when it comes to setting renewable fuel targets for cellulosic biofuels (staring with 2018, for this Administration) and biomass-basel diesel (starting in 2019), the power of the agency to waive down Congressionally-Mandated volumes of other fuels is an attempt to increase federal regulatory control that a) even the Obama Administration finally abandoned in the face of lawsuits from industry and b) kinda goes against the general Trump theme of being for domestic energy production and manufacturing.

So, let’s wait and see on that one.

Pathways and more pathways

A more obvious area of concern for EPA is its oversight of pathway approvals for new fuels. We would hope that the EPA would find a way to speed up the advance of new fuels, instead of trapping them in the swamp that we’re supposed to be draining.

If you think about it, think about the career of William Ruckleshaus, an Indiana Republican who originally headed the EPA in 1970 upon its founding, and headed the agency again in the early 1980s after the Superfund debacle emerged. Ruckleshaus was no left-wing zealot, despite taking charge of the administration’s environmental agenda. After all, Ruckleshaus headed to Weyerhaeuser following his second EPA term. Yet, nor was he a right-wing deconstructionist bomb-thrower determined to subvert the instrument he led. Finding common ground — putting environmentalism and sustainability into the corporate dialogue while designing processes and standards that would be as clear and smooth as possible for the regulated companies to follow. That was Ruckleshaus’ vision — neither a captive of the left or the right.

Today, corporations embrace environmental and social sustainability — it’s part of the fabric of how they operate. Ethical always? Hardly. There are lapses minor and material in character — that’s the purpose of enforcement of course. But the presence of crime shouldn’t damn an entire population to penal servitude — and the proper attitude of the regulator should not be to cuff everyone in advance because they know someone will steal and they can’t pinpoint which one.

That’s a traditional view of many who would call themselves environmentalists or outdoorsmen and women — who cherish natural resources, clean air and water and so on. We might well see more of this perspective over at EPA in the remainder of the decade for better or worse.

The arrival of Governor Perry at Energy

Given that Governor Perry once petitioned the EPA to suspend the Renewable Fuel Standard, there’s some apprehension over the arrival of the Governor in DC to head the Department of Energy, a department that he vowed, when running for President in 2012, to eliminate. Sort of. In the “Oops” debate that ended his Presidential bid, he famously could not remember one of three US federal departments he pledged to abolish. The one he forgot? Energy.

However, let’s focus on the fact that the Obama Administration refocused the DOE, when it came to bioenergy, on R&D program. Commercialization support was generally focused on the Department of Agriculture as part of its rural development mandate — there have been some exceptions but generally the lead program at DOE for fuels and chemicals is the Bioenergy technologies Office (BETO), and there’s no national consensus on rolling back R&D related to energy security. As the new civilian head of the nation’s nuclear program, we’ll see what Governor Perry does with that — but in general we expect a continuation of “all of the above” R&D efforts on energy as a vital national resource.

The arrival of Mr. Tillerson at State

There’s going to be a fair bit of scrutiny of ExxonMobil Chairman and CEO Rex Tillerson as Secretary of State, primarily over Russian ties. It’s been some time since a Secretary of State has been appointed from the business community, from the engineering profession, and from someone who has spent their career at one company.

On the other hand, FDR appointed Edward Stettinus as Secretary of State in 1944 — mostly a lifelong executive at General Motors who had become chairman of US Steel at the time of his appointment.

You might also recall that Eisenhower’s Secretary of State, John Foster Dulles, successfully advocated for the overthrow of the Guatemalan government in 1954, a policy favored by his former client, the United Fruit Company (n.b. Dulles, amazingly, remained on the UFC payroll during his time at State). Also, you may recall that CIA Director Allen Dulles served on the UFC board during the Administration.

That was then, this is now. But still.

The China and Russia policy

The Nixon playbook was reasonably clear on policy towards the Soviet Union. Pivot towards China by satisfying Chinese aspirations on Taiwan, a permanent seat on the UN Security Council, and related issues. In turn, pursue a policy of detente with the Soviets. The policy would have more success in the 1980s when the Reagan Administration accelerated defense spending, promoting a shift in Soviet spending that ultimately strangled the weak economy.

Now, let’s see the policy in reverse. The pivot is now towards a rapprochement with Russia — possibly on a wide range of issues. The appointment of a corporate chief with long experience in Russia as Secretary of State is a policy marker. Increased visibility for links with Taiwan are another sign. Russia shares a long border with China and is a traditional rival. It may not prove as tempting as the pivot to China — which re-activated long US-China ties and also took into account that the Soviet economy was weak and needed to be strategically stressed. That’s less an option with the comparatively robust Chinese economy.

The issue is whether Europe is the long-range focus of US defense policy, or whether Trump will follow Obama’s pivot toward the Pacific. The EU may find itself taking more of a lead on the continent, if it chooses to form a bulwark against Russian expansionism. Settling a US-Russian consensus on the Middle East may well be in focus, not to mention countering any Chinese feelings of adventurism when it comes to operations in the South China Sea.

So, this move is classic Nixonism — triangulation. And something that Clinton employed domestically in the 1990s to achieve his policy goals. How far it will go under the new Administration, we’ll see.

For the time being, expect all of this to impact bioenergy very little, except in one way. The Administration will be far too focused on trade, immigration, tax and foreign relations to work hard on energy policy, so status quo may well be the order of the day. New policy will be hard to accomplish, old policy will be hard to push aside, where intense White House focus is required.

The tweeting

There’s probably nothing that Richard Nixon, wherever he is, looks at with more regret and longing than the fact that he didn’t have a Twitter account. He craved a direct dialogue with the American people, and despised the control that news media had over the access channels of radio, television and print.

He thought that the news media was hopelessly biased against him, and his unhappiness over negative reporting led ultimately and almost directly to Watergate — which began in bugging efforts related to stopping news leaks out of the Administration.

Twitter offers direct access, if limited in the length of nuanced discussion, to an audience of millions. And Nixon would have loved the ability of Twitter to focus negative attention onto adversaries — a transformation of the bully pulpit to the bullying pulpit. He developed the original Enemies list, memories of which resurfaced in recent days when it transpired that a member of the Trump transition team sent a 74-question questionnaire over the the DOE, with questions for career civil servants ranging from membership in professional organizations to activities related to climate change.

It was termed a “loyalty” survey, was swiftly rejected by DOE, and disavowed by the Trump transition. They said that the staffer responsible had been “counseled”. Whether that was an “attaboy, but not that way” or a whoopin’ behind the woodshed, we haven’t learned.

Draining the Swamp

“Drain the Swamp” and “Lock Her Up” make for exciting community singalongs in the far right ranks of the Republican party, but we’ll have to see if anything substantive happens either to Secretary Clinton or the DC Establishment.

BIO’s Brent Erickson, who served as a staffer for Wyoming GOP senator Alan Simpson before heading to the American Petroleum Institute and then BIO, was having nothing of it when it comes to Trump’s chances of really draining anything in a substantive way.

“The swamp always wins,” he told The Digest.

The Bottom Line

For those who view the incoming Trump Administration with horror, we can offer a few guidelines.

First, apply perspective. Not much new happens under the sun, look at ancient patterns and you’ll see some of the same plays being run by this incoming Administration as we have in the past.

Second, apply patience. Let’s see what the Trump Administration does, instead of what we think it might do. Until January 20th, it’s all words. Then the deeds begin. Let’s see what the deeds are and measure actions and results. And we might apply some sensible amounts of benefit of the doubt between now and then.

Third, avoid between now and January 20th all media reports based on unnamed transition team sources,. Some of those reports will be true, but many won’t, and you’ll give yourself a heart attack between now and then following all the rumors.

Fourth, avoid any reports at all that draw conclusions ahead of necessary facts. Such as “War is coming with China,” or “Trump will be the best / Trump will be the worst president in history.” Time will tell. Editorial commentary that gets out ahead of the facts is axe-grinding, not journalism. Good times or terrible times may lie ahead, but there’s no point in making things worse with guesswork.

Finally, if you find yourself unable to cheer on President-elect Trump, or cheer his election, consider at least some well-wishing. It’s all very easy to say nasty things about the competence or lack thereof of the captain of the ship, but remember that you’re on the ship too, and will go down with it, too. America’s story is bigger than any president or presidency, and it’s story of freedom. Even the freedom to make the wrong choice, should wrong choices be made.

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