The Budget Is All About Negotiating
The "Art of the Deal" is key to understanding the president's approach.
Last week, the Trump administration released its first budget blueprint entitled, “America First: A Budget Blueprint to Make America Great Again.” The document was quickly met with a combination of derision and venom by both sides of the political aisle. Numerous Republicans and Democrats on Capitol Hill, as well as many commentators, were quick to attack Donald Trump’s suggested cuts to non-defense and homeland security funding as heartless, simplistic and unrealistic. Even conservative news sources considered the proposal flawed in many areas. In their denunciations, however, many of the critics seemed to overlook an important factor in their analysis: Trump is a businessman at heart, not a politician, and that he is hard-wired for negotiation and showmanship. His proposed budget is but the opening salvo in the federal budget process.
Trump’s ascension to the highest office in the land is unprecedented. His remarkable victory was fueled by a combination of frustration with political elites in Washington and his uncanny ability to connect to a significant portion of the American electorate that felt forgotten and left behind. Since his inauguration in January, Trump’s on-going transformation from unorthodox capitalist to the most powerful man in the world has revealed a septuagenarian who is slowly coming to terms with his new environment while simultaneously trying to figure how he can best leverage his business acumen to solve America’s problems.
The 62-page budget produced by Trump and the Office of Management and Budget (OMB) is reflection of this metamorphosis and it reflects two themes. The first is that the president and his team are serious about cutting discretionary spending and are putting a renewed emphasis on funding defense and homeland security projects. Second, and most importantly, the document sets the tone for future debates with Congress and provides additional insight into how Trump views deal making.
Over his many years in the public eye, Trump has written and talked extensively about negotiation. In his 1987 best seller, “The Art of the Deal,” he wrote about the importance of being flexible and not being tied to a particular approach: “I never get too attached to one deal or one approach. For starters, I keep a lot of balls in the air, because most deals fall out, no matter how promising they seem at first.”
His philosophy hasn’t changed much as evidenced by his recent comments about the way forward on health care. During his first cabinet meeting last week, Trump was quoted as saying, “It’s a big, fat, beautiful negotiation. Hopefully we’ll come up with something that’s going to be really terrific.”
Individuals who have worked for Trump in the private sector say the best way to understand the mogul is to examine how he makes transactions. George H. Ross, a lawyer who has represented Trump in many major real estate transactions, wrote a book in 2006 entitled, “Trump-Style Negotiation: Powerful Strategies and Tactics for Mastering Every Deal.” One passage in the book captures Trump’s philosophy on negotiation and how he utilizes an unusual tactic. “In many cases, your success is going to depend on your ability to think in reverse, something Trump is a master of. Thinking in reverse comes into play when you make a proposal that is so outrageous that you know it has no chance of acceptance in its raw form and then reversing your course and agreeing to modify your proposal to make it more palatable for the other side.”
The “skinny” budget blueprint exemplifies this approach. Trump and his team fully understand that they will have to address non-discretionary programs like Social Security, Medicare, Medicaid, and interest on the debt — those things consume the lion’s share of the budget — but they have given themselves until late spring to develop a plan for this portion of the budget. In the interim, Trump will charge OMB Director Mick Mulvaney and portions of his cabinet to develop viable budget solutions that reflect his vision of the future.
The president has a lot riding on the full submission in May and for it to be taken seriously it will have to contain a long-term plan to address the national debt. A well-thought out budget submission will put him in a strong negotiating position, a position that he loves to occupy.