Gary Gensler's warning
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Every president tests the limits of their power. Gary Gensler has never seen anything like this.
'From Clinton to Bush to Obama — even the first Trump term – those were kind of more traditional policy pivots,' Gensler, who previously led the Securities and Exchange Commission and Commodity Futures Trading Commission, said in an interview. 'These are big, consequential, historic pivots.'
Gensler — along with economists Simon Johnson, Ugo Panizza and Beatrice Weder di Mauro — has co-edited a volume of essays published by the Centre for Economic Policy Research that assess how President Donald Trump's actions in the early days of his second term have reverberated across the global economy. The Trump 2.0 agenda, in their view, could lead to 'a profound weakening of both US economic dynamism and the global system it once led.'
That view also holds for how the president has transformed regulatory and enforcement activity within the federal government's administrative agencies, according to Gensler, an MIT professor. Trump has largely been successful — at least so far — in his efforts to oust regulators from agencies, defying an almost century-old legal precedent that has shielded such appointees from being fired for political reasons. He has also used novel legal strategies in an attempt to loosen rules affecting everything from energy production to showerhead water pressure.
Other presidents have sought to sidestep time-consuming rulemaking processes or to fire agency leaders who are unfriendly to their agenda. Where Trump stands out, in Gensler's view, is how those efforts are dovetailing with directives that give the White House's Office of Management and Budget and the attorney general more say in how quasi-independent federal agencies promulgate and apply their rules.
That's likely to lead to greater oscillation in policy — creating new challenges for private sector investment — while raising the likelihood that special interests will hold even more sway in the rulemaking process, Gensler said. Subjecting these agencies to even greater political influence also raises the risk of error and poses a threat to the rule of law, he added.
We are now in 'a period where all those normative behaviors are being questioned,' Gensler said. 'The tools of government, the authorities of government, are being used for individual — sometimes transactional-oriented — goals.'
In a statement, White House spokesperson Kush Desai said 'the only special interest guiding President Trump's decision-making is the best interest of the American people — hence why this Administration has rebuffed one special interest group after another to make historic progress on lowering drug prices, ending decades of broken 'free' trade deals, and securing our country's national and economic security.'
While many industries have certainly blanched at Trump's drug pricing and tariff policies, his promises to slash regulations were a draw during the campaign. Business leaders and investors were sharply critical of President Joe Biden's agency chiefs — Gensler included — for being heavy-handed in their approach to both regulation and enforcement. Trump's appeal to Wall Street chieftains, crypto bros and energy tycoons alike stemmed from his pledge to spur growth by unshackling those industries from regulatory regimes they considered onerous and arbitrary.
But the president's approach has also created risks that are severe and largely unprecedented in the modern era, Gensler said. As the White House concentrates power on federal rulemaking and enforcement, it may limit the extent to which businesses weigh in on Trump's broader agenda. Businesses may tread carefully before weighing in against Trump's policy agenda — particularly if their investment plans or growth depend on the approval of federal regulators, he said.
Trump's policies are pressing 'the limits that those private sector actors understood about presidential authority,' he said. 'It's a wider set of considerations as to how you express your point of view.'
IT'S MONDAY — And if you thought you'd get a chance at a breather before the July 4 holiday, think again. As always, send MM tips and pitches to me at ssutton@politico.com.
Driving the Week
Monday … Atlanta Fed President Raphael Bostic speaks on the economic outlook and monetary policy before an MNI Livestreamed Connect Video Conference at 10 a.m. … Chicago Fed President Austan Goolsbee speaks at the Aspen Idea Festival at 1 p.m. …
Tuesday … … Fed Chair Jerome Powell participates in a policy panel before the European Central Bank Forum on Central Banking 2025 in Sintra, Portugal, at 9:30 a.m. … The Labor Department will release the Job Openings and Labor Turnover Survey (JOLTS) at 10 a.m. … The ISM Manufacturing Index is out at 10 a.m. … Former Sen. Heidi Heitkamp, (D-N.D.) American Enterprise Institute President Robert Doar, Brookings Institution president Ceclia Elena Rouse and former New Hampshire Gov. Chris Sununu speak at 1:30 p.m. at the launch of 'America's Rural Future: Announcing the Brookings-AEI Commission on U.S. Rural Prosperity.'
Wednesday … ADP will release its private sector employment report for June at 8:15 a.m. … Acting CFTC Chair Caroline Pham will participate in a fireside chat at City & Financial Global's City Week 2025 at 9:45 a.m. …
Thursday … The Labor Department will release the June jobs report at 8:30 a.m. … The ISM Services Index will be released at 10 a.m. … The Securities and Exchange Commission has a closed meeting at 2 p.m. …
Friday … Hope you enjoy the fireworks! (Unlikely, if you happen to be my dog).
Where things stand on the big, beautiful bill — Senate Republicans cleared a major procedural hurdle on Saturday night that opened the door for a marathon reading of the bill and the start of debate, which was ongoing by the time your MM host hit the hay on Sunday night. A final vote is expected later today.
— The Senate's parliamentarian advised lawmakers on Sunday that several provisions violate the chamber's strict rules for budget reconciliation bills, Katherine Tully-McManus reports. Democrats are sharpening their attacks on how the measure will weaken or eliminate health coverage for millions of Americans, and budget hawks in the House are still howling.
— So, how much will the bill cost? Depends on who you ask. Senate Republicans are attempting to use an unconventional accounting tactic that makes it appear as though the legislation has little effect on deficits. Senate Budget Chair Lindsey Graham (R-S.C.) on Sunday evening took the floor handwritten sign touting a new Congressional Budget Office score estimating the megabill would save about a half-trillion dollars, assuming tax cuts are extended indefinitely against what's known as a 'current policy baseline.'
— Senate Minority Leader Chuck Schumer had another, more traditional, way of looking at it. Under the CBO estimate cited by the New York Democrat, Trump's bill adds $4.45 trillion to deficits.
Tillis out — Medicaid cuts were a big reason why Sen. Thom Tillis voted 'no' on the procedural vote. Trump blasted the North Carolina Republican for doing so and — hours later — Tillis announced he would retire at the end of his term, Jordain Carney reports. Tillis, a major voice on Senate Banking, had been expected to seek reelection.
We good? — Now that the so-called revenge tax was nixed from a sweeping domestic policy megabill, G7 countries have agreed to exempt the United States from applying a 15 percent minimum corporate tax rate, Gregorio Sorgi and Giorgio Leali report.
Winning them over — Zohran Mamdani, whose victory over Andrew Cuomo in the New York City Democratic mayoral primary sent Wall Street into a tizzy, said on NBC's Meet the Press that billionaires shouldn't exist. 'It is so much money in a moment of such inequality, and ultimately, what we need more of is equality across our city and across our state and across our country,' the Queens assemblyman said. 'And I look forward to working with everyone, including billionaires, to make a city that is fairer for all of them.'
Fed File
'Stubborn mule' — Trump on Friday encouraged Fed Chair Jerome Powell to resign, labeling him a 'stubborn mule' who has 'Trump derangement syndrome' for refusing to lower interest rates, Colby Smith reports.
— Trump's repeated attacks on the Fed's independence and 'breathtaking fiscal policy excess' could diminish the U.S.'s status as a safe haven for foreign investors, according to economists polled by the Financial Times.
Counterprogramming — Rates are elevated, recent economic data has been a mixed bag and Trump is at war with the Fed. Nevertheless, 'the summer stock rally is broadening beyond big tech,' write Hannah Erin Lang and Roshan Fernandez in the WSJ.
At the regulators
Stress test — The Fed's annual stress tests of big banks determined that major financial institutions would be able to withstand a severe recession that significantly hits the real estate sector, Victoria Guida reports.
New faces at Treasury — Jasper Goodman reports that Treasury Secretary Scott Bessent has tapped Connor Dunn and John Poulson as deputy assistant secretaries for legislative affairs and hired John Crews as deputy assistant secretary for financial institutions policy. The hires — first reported in Friday afternoon's Playbook — include nearly a dozen policy roles across the department.
Ripple's pullback — Declan Harty reports that crypto giant Ripple Labs is dropping its appeal of an earlier court decision in its legal fight against the SEC, CEO Brad Garlinghouse posted Friday on X, moving the nearly five-year-old case one step closer to its end. The SEC is also expected to drop its appeal in the case, Garlinghouse said.
'We're closing this chapter once and for all, and focusing on what's most important — building the Internet of Value,' Garlinghouse wrote. 'Lock in.'
Jobs report
New era at American Investment Council — Will Dunham has been hired to replace outgoing president and CEO Drew Maloney as the head of the private equity industry's primary lobbying group in Washington. Dunham, currently the vice president of government affairs at AIC, 'is going to do a fantastic job helping the AIC continue to grow, promoting private investment's essential role across America, and delivering value for our members,' said Maloney in a statement.
Jasmin Alemán is now VP of U.S. government and regulatory affairs for BNP Paribas. She previously was a congressional affairs specialist at the Office of the Comptroller of the Currency, and is a Ritchie Torres and Chuck Schumer alum. — Daniel Lippman
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