The most important and unprecedented fact about the transition is the one getting the least attention and discussion: it isn't happening. It hasn't begun and it seems likely at this point that there won't be any kind of handover and rapid learning ramp-up period at all. Incoming Trump political appointees are still totally locked out from access to all government resources, facilities, and personnel - even those designated to work on transition landing teams, and this fully three weeks after the the election, with only 8 weeks remaining until the inauguration, and with no reason to hope that the impasse regarding the content of the transition agreements will be resolved. It's bad news for the ability of the incoming people to hit the ground running.
The outgoing administration is locking them out, and it claims that the reason is that it's essential for Trump to sign their version of a memorandum of agreement without reservation or modification, which includes legally binding provisions regarding duties of transparency and disclosure of personal information. Trump's lawyers, who are battle-hardened veterans of the campaign of constant unrestricted lawfare, say this requirement is not critical to anything, and included as a poison pill they know Trump will refuse to sign, because by doing so it will just open him up and provide a novel basis for further personalized lawfare harassment efforts of malicious prosecution against him and his people.
Apparently first time around GSA turned over all of Trump transition communications to Comey without consent of Trump campaign and without a court order. This time around an MOU has been signed so that the transition can proceed without any federal resources to protect transition team members from the obstructionist schemes and dirty tricks of
"Neither Trump nor his appointees to head government agencies have demonstrated even the slightest curiosity about how those agencies actually function. After Trump’s election in November 2016, nobody from his soon-to-be-inaugurated administration visited federal agencies despite thorough preparation within those agencies to assist in a traditionally nonpartisan transition. Lewis primarily focuses on the Energy Department, the Agriculture Department, and the Commerce Department. To provide context, he contrasts the competent transition teams assembled after the previous elections of George W. Bush and Barack Obama."
-- Kirkus Reviews on The Fifth Risk, by Michael Lewis
You should be Incredulous. The bit about not visiting federal agencies is simply false, which I know from direct personal experience of meeting Trump transition team members at a major headquarters as early as the Thursday after the election. They were still astonished that they had won, which they had not expected to do, and they were very motivated to learn the ropes as quickly as possible. Making such a false claim and then reporting and publishing it with reckless disregard as to its falseness constitutes actual malice in defamation law and is just part of a dirty smear campaign.
As usual, Arnold, I am nodding my head as I read your posts. I will offer that as one who worked for 10 years in contract research with the government operatives in USDA, EPA, and FDA, I loudly applauding the concept of DOGE, even though I will be stupefied if it succeeds. The Swamp is very deep.
Be careful with your stats. Liars, damn liars, and statisticians.
It is true that low skill, low wage illegal immigrants are almost certain to reduce per capital GDP, at least in the short term. That doesn't mean they lower the per capita GDP of everyone else.
I'm strongly against illegals, and think they should all be deported.
But economically, they're probably a small net positive, because they're being underpaid for the value they produce, which is instead going a bit to the customers and more to the owners.
The news headlines of deadbeat illegals is also real, but if it is less than about 5%, 50k per million, my guess is that it's net positive, despite the 5% getting more govt benefits than they're worth economically.
US illegals are generally far more productive than EU Islamic immigrants mostly going for the benefits.
Cutting all benefits to illegal immigrants should be an early Trump move.
Lack of management experience. The argument would have more force if the recent and current crop of those in Governments with their alleged prior management experience hadn’t delivered our World into the dangerous, social and economical ruin that it now is. Politicians generally have no management experience, being in some form of government at some level is not management. None would last a week as managers in a company.
There isn't much else to focus on at this stage of the transition besides cabinet appointees, but it is hard to determine how much some of these picks matter in the long run, given how turbulent Trump's first cabinet was. He went through many political appointees, some lasting only a few weeks, even in critical positions.
That will be one key difference between the Trump and Biden administrations, but there will also be more similarities this time. Trump seems to want to take a page out of Biden's book by overusing executive orders, which bypass cabinet secretaries. Trump is older than Biden was four years ago, and he has many people attempting to gain influence on policy and angling to be his successor. The role that Musk and Vance will play in particular will be interesting. Musk and Trump will probably fall out when their egos collide at some point, but if not, that could undermine Vance's role. If Vance does become more like a Dick Cheney type of VP because Trump doesn't have the energy or the stamina for tackling the bureaucracy, that could radically change the administration because Vance likely has a very different managerial style from Trump.
On the immigration and GDP issue, BLS only sees job growth of 6.7 million over 2023 - 2033. The largest increase predicted being 800,000 in home health care. Many other fast growing occupations do not require a degree either. https://www.bls.gov/emp/tables/fastest-growing-occupations.htm Legal immigration already brings in a million people per year and half of US college graduates are under employed with something like 12 percent of college graduates in the 25 to 27 age range not in school and earning less than $25,000 annually per the Boston Fed. Just not seeing an unmet demand for college graduates slowing economic growth. Interestingly, one recent employer survey found the largest projected hiring to be in the miscellaneous manufacturing industry. https://www.naceweb.org/job-market/trends-and-predictions/job-outlook-spring-update-overall-hiring-dips-but-most-employers-will-maintain-or-increase-hiring
Seems like a chicken and egg situation: would increased supply stimulate increased demand? Or should policy seek to increase demand first and see if supply responds?
In the war against bureaucracy, which is far tougher and as important as against current woke colleges, management experience is far less important than the internal power to fire subordinates who fail to perform. Firing the good performer is a far far smaller mistake, in practice today, than Not firing the poor performer.
This might be the single biggest driver of private orgs over govt orgs better performance, yet it seems understudied in management science. Similarly, as I was about to agree with Arnold about the importance of the management team, I’m wondering about case studies of govt agencies becoming rapidly better. Lots of changes for the worse indicate many pitfalls, but don’t give me confidence about how to rapidly change for the better.
Nor, alone, does Musk firing 80% of twitter. However, combined with Argentina’s excellent performance under Milei, cutting & cutting sounds better than any other strategy.
Trump’s picks supporting a wide coalition is important. Choosing a pro-union Rep for Labor might be lousy, against Big Business, but also great for pushing union member voters to vote & become Republicans, thus combining econ interest with culture.
#6 lesson of Senate independence is likely wrong, by Gabe. While it does show Senate power, Trump giving them what want, No Gaetz, makes it easier for Trump on other picks and harder for the Senate Reps to say no. The Art of The Deal author is sure to include such pressures in his calculations, whether consciously or thru his gut. (Probably more gut, more accurate And authentic than rationality.)
Don’t recall any real criticism of Biden picks by Arnold, tho he frequently complained about Trump’s. The current wimpy war supporters at Defense & State have been terrible—lousy results from Afghanistan to Ukraine to Iran to Israel to …
Iraq. Still a democracy, just voted in a law allowing 9 year old girls to be wed, making divorce tougher. (We need Human Rights for individuals more than just voting).
Real tests of confirmations yet to come in a 53-47 Rep Senate.
Lots of things going on at Twitter but to the extent that the loss of workers contributed to the HUGE revenue drop, it's not clear his staff cut was a net gain.
I agree dead wood can be bad for a company but every situation is different. Some places need bodies more than stars. Hiring and firing to find the right people takes time and is expensive. Few are always a great or always bad. Sometimes it is matter of matching them with the right boss or finding the right job position. I'd argue that more often than not if an organization se ms to have lots of bad employees the root problem is bad leadership and firing a bunch of people won't fix that.
When Chu got the Job for DOE I was around some of the under secrataries and lobbyists. They were joking they could run circles around him and do what they want because Chu had no idea how DC operates. Rumsfeld knew how back room Washington runs. That is the difference with figurehead VS power.
"Striking budget deals with them that reward efficiency and cost-cutting is an option that deserves a broad test." Capretta is backwards here.
Trump's picks start firing first, 10%? 5%? 1%?, getting rid of some future Trump haters, gaining fearful respect (dominance, not prestige), and THEN, maybe, makes some deals with those left.
With part of the deal being that those who fail to perform get fired.
The firing of some has to come first, because if it doesn't happen until after deal failure, all the deals will fail.
My preference remains 80% fired and accept some office chaos, but if the checks go out to the SS & Medicaid recipients, most Rep voters & middle America won't mind too much. Don't own the Libs - fire'em.
Maybe easier if they're locked out till after inauguration.
Besset: He should be aiming for much less than a 3% deficit. The objective should be deficits = Σ(expenditures with NPV>0). I do not think the Σ(expenditures with NPV>0) is 3% of GDP.
The 3 million petroleum production may be an exaggeration of the benefit of lifting the of the Biden restrictions
I also doubt that the Administration can find and be willing to eliminate much growth inhibiting inefficacy. Especially with Trump creating new infancies with tariffs and deportations
The objectives are good, but it's interesting that of the three objectives the only one that fall in his bailiwick is deficits reduction through tax increases. Will he be wiling to take on the Boss over that?
Yeah. I would argue that doesn't make much sense, not that there's anything wrong with borrowing for TRULY productive investments. The problem is that means everything funded by taxes can be crap.
"producing an additional 3 million barrels of oil or its equivalent a day" is a stretch, and not necessarily going to make economic sense for the producers...
This is a ~7% increase assuming he means nat gas + crude oil (a charitable interpretation, that counts nat gas as barrels of oil by conversion factor of 115 BCF current production to ~19 million barrels of oil equivalent). The word "equivalent" could be doing a lot of work there since you could go broader and include things like NGL (nat gas liquids) for an even lower actual rate of production increase. Perhaps most of the production increase he is thinking about is nat-gas, primarily for LNG export, but on the crude oil production side most energy people (in the business) are shaking their heads at increasing production given current & anticipated incentives.
If this was just oil, 3mbbl would be ~15% increase in production.
"cutting the budget deficit to 3% of gross domestic product by 2028, spurring GDP growth of 3% through deregulation and producing an additional 3 million barrels of oil or its equivalent a day."
"These seem like smart, achievable goals."
How? 25% tariffs on our biggest trading partners? Seriously, I don't see them cutting enough spending to get to 3%. Are they going to cut defense, social security, or Medicare? The 3% GDP growth goal is good but rather modest. And it is far more likely to be met via the business cycle than anything the government does, though the tariffs would ensure we didn't meet it.
Let's get creative. How can we use technology to protect ourselves from our so-called protectors? Our protectors being the employees and representatives in government empowered to protect our rights. I would feel better about these appointments if we had access to video camera feeds transmitting the contents of their work conversations. Even better yet, can we place body cams on our representatives and government employees that only turn off when they enter the restroom or leave the office?
Looking at the Senate DOGE caucus membership (https://www.ernst.senate.gov/news/press-releases/ernst-creates-senate-doge-caucus-to-eliminate-government-waste ) DOD reform will be, as it always has been, a lost cause. Nobody there with real Armed Services clout. The best one might hope for is revival of the old practice of discretionary non-defense cuts being matched dollar for dollar with defense cuts. DOD is incapable of spending effectively so an ineffectual Hegseth might not be the worst possible outcome.
"If we gain college graduates while losing unskilled labor, the gain in productivity growth might help reach the GDP growth target."
I would think for the numbers to be remotely comparable they would have to be too small to make any difference in the short term. I don't see there being a huge number of college grad immigrants in the next four years.
Much of the favorable commentary I see about Trump's nominations seems driven more by partisan and ideological thinking than by any substantive knowledge of political appointments or managerial execution.
The most important and unprecedented fact about the transition is the one getting the least attention and discussion: it isn't happening. It hasn't begun and it seems likely at this point that there won't be any kind of handover and rapid learning ramp-up period at all. Incoming Trump political appointees are still totally locked out from access to all government resources, facilities, and personnel - even those designated to work on transition landing teams, and this fully three weeks after the the election, with only 8 weeks remaining until the inauguration, and with no reason to hope that the impasse regarding the content of the transition agreements will be resolved. It's bad news for the ability of the incoming people to hit the ground running.
I'd like to hear your explanation of why they are locked out.
The outgoing administration is locking them out, and it claims that the reason is that it's essential for Trump to sign their version of a memorandum of agreement without reservation or modification, which includes legally binding provisions regarding duties of transparency and disclosure of personal information. Trump's lawyers, who are battle-hardened veterans of the campaign of constant unrestricted lawfare, say this requirement is not critical to anything, and included as a poison pill they know Trump will refuse to sign, because by doing so it will just open him up and provide a novel basis for further personalized lawfare harassment efforts of malicious prosecution against him and his people.
Apparently first time around GSA turned over all of Trump transition communications to Comey without consent of Trump campaign and without a court order. This time around an MOU has been signed so that the transition can proceed without any federal resources to protect transition team members from the obstructionist schemes and dirty tricks of
malevolent bureaucrats. https://x.com/laraseligman/status/1861509338025652391
"Neither Trump nor his appointees to head government agencies have demonstrated even the slightest curiosity about how those agencies actually function. After Trump’s election in November 2016, nobody from his soon-to-be-inaugurated administration visited federal agencies despite thorough preparation within those agencies to assist in a traditionally nonpartisan transition. Lewis primarily focuses on the Energy Department, the Agriculture Department, and the Commerce Department. To provide context, he contrasts the competent transition teams assembled after the previous elections of George W. Bush and Barack Obama."
-- Kirkus Reviews on The Fifth Risk, by Michael Lewis
How credulous should I be about this stuff?
You should be Incredulous. The bit about not visiting federal agencies is simply false, which I know from direct personal experience of meeting Trump transition team members at a major headquarters as early as the Thursday after the election. They were still astonished that they had won, which they had not expected to do, and they were very motivated to learn the ropes as quickly as possible. Making such a false claim and then reporting and publishing it with reckless disregard as to its falseness constitutes actual malice in defamation law and is just part of a dirty smear campaign.
https://oversightdemocrats.house.gov/news/press-releases/ranking-member-raskin-presses-donald-trump-and-jd-vance-stop-obstructing
Somehow I don't think that explains why he isn't doing what he did eight years ago.
"Once bitten, twice shy."
So what in the MOU bit him last time?
As usual, Arnold, I am nodding my head as I read your posts. I will offer that as one who worked for 10 years in contract research with the government operatives in USDA, EPA, and FDA, I loudly applauding the concept of DOGE, even though I will be stupefied if it succeeds. The Swamp is very deep.
I assume that the 3% target is real per capita GDP. This could in fact be raised by mass decorations.
Juicing gross nominal GDP at the expense of per capita real GDP is not good policy, which is exactly what bringing in low skill migrants does.
I believe GDP does in fact go up by quite a bit this time of year, due in part to mass decorations. 😄
"Not good."
Be careful with your stats. Liars, damn liars, and statisticians.
It is true that low skill, low wage illegal immigrants are almost certain to reduce per capital GDP, at least in the short term. That doesn't mean they lower the per capita GDP of everyone else.
Sure they do. They get government benefits they don't pay enough in taxes to fund, stealing from everyone else.
I'm strongly against illegals, and think they should all be deported.
But economically, they're probably a small net positive, because they're being underpaid for the value they produce, which is instead going a bit to the customers and more to the owners.
The news headlines of deadbeat illegals is also real, but if it is less than about 5%, 50k per million, my guess is that it's net positive, despite the 5% getting more govt benefits than they're worth economically.
US illegals are generally far more productive than EU Islamic immigrants mostly going for the benefits.
Cutting all benefits to illegal immigrants should be an early Trump move.
You are entitled to your opinion.
Lack of management experience. The argument would have more force if the recent and current crop of those in Governments with their alleged prior management experience hadn’t delivered our World into the dangerous, social and economical ruin that it now is. Politicians generally have no management experience, being in some form of government at some level is not management. None would last a week as managers in a company.
There isn't much else to focus on at this stage of the transition besides cabinet appointees, but it is hard to determine how much some of these picks matter in the long run, given how turbulent Trump's first cabinet was. He went through many political appointees, some lasting only a few weeks, even in critical positions.
That will be one key difference between the Trump and Biden administrations, but there will also be more similarities this time. Trump seems to want to take a page out of Biden's book by overusing executive orders, which bypass cabinet secretaries. Trump is older than Biden was four years ago, and he has many people attempting to gain influence on policy and angling to be his successor. The role that Musk and Vance will play in particular will be interesting. Musk and Trump will probably fall out when their egos collide at some point, but if not, that could undermine Vance's role. If Vance does become more like a Dick Cheney type of VP because Trump doesn't have the energy or the stamina for tackling the bureaucracy, that could radically change the administration because Vance likely has a very different managerial style from Trump.
On the immigration and GDP issue, BLS only sees job growth of 6.7 million over 2023 - 2033. The largest increase predicted being 800,000 in home health care. Many other fast growing occupations do not require a degree either. https://www.bls.gov/emp/tables/fastest-growing-occupations.htm Legal immigration already brings in a million people per year and half of US college graduates are under employed with something like 12 percent of college graduates in the 25 to 27 age range not in school and earning less than $25,000 annually per the Boston Fed. Just not seeing an unmet demand for college graduates slowing economic growth. Interestingly, one recent employer survey found the largest projected hiring to be in the miscellaneous manufacturing industry. https://www.naceweb.org/job-market/trends-and-predictions/job-outlook-spring-update-overall-hiring-dips-but-most-employers-will-maintain-or-increase-hiring
Seems like a chicken and egg situation: would increased supply stimulate increased demand? Or should policy seek to increase demand first and see if supply responds?
In the war against bureaucracy, which is far tougher and as important as against current woke colleges, management experience is far less important than the internal power to fire subordinates who fail to perform. Firing the good performer is a far far smaller mistake, in practice today, than Not firing the poor performer.
This might be the single biggest driver of private orgs over govt orgs better performance, yet it seems understudied in management science. Similarly, as I was about to agree with Arnold about the importance of the management team, I’m wondering about case studies of govt agencies becoming rapidly better. Lots of changes for the worse indicate many pitfalls, but don’t give me confidence about how to rapidly change for the better.
Nor, alone, does Musk firing 80% of twitter. However, combined with Argentina’s excellent performance under Milei, cutting & cutting sounds better than any other strategy.
Trump’s picks supporting a wide coalition is important. Choosing a pro-union Rep for Labor might be lousy, against Big Business, but also great for pushing union member voters to vote & become Republicans, thus combining econ interest with culture.
#6 lesson of Senate independence is likely wrong, by Gabe. While it does show Senate power, Trump giving them what want, No Gaetz, makes it easier for Trump on other picks and harder for the Senate Reps to say no. The Art of The Deal author is sure to include such pressures in his calculations, whether consciously or thru his gut. (Probably more gut, more accurate And authentic than rationality.)
Don’t recall any real criticism of Biden picks by Arnold, tho he frequently complained about Trump’s. The current wimpy war supporters at Defense & State have been terrible—lousy results from Afghanistan to Ukraine to Iran to Israel to …
Iraq. Still a democracy, just voted in a law allowing 9 year old girls to be wed, making divorce tougher. (We need Human Rights for individuals more than just voting).
Real tests of confirmations yet to come in a 53-47 Rep Senate.
It's rather early to call Milei's cuts a success.
Lots of things going on at Twitter but to the extent that the loss of workers contributed to the HUGE revenue drop, it's not clear his staff cut was a net gain.
I agree dead wood can be bad for a company but every situation is different. Some places need bodies more than stars. Hiring and firing to find the right people takes time and is expensive. Few are always a great or always bad. Sometimes it is matter of matching them with the right boss or finding the right job position. I'd argue that more often than not if an organization se ms to have lots of bad employees the root problem is bad leadership and firing a bunch of people won't fix that.
When Chu got the Job for DOE I was around some of the under secrataries and lobbyists. They were joking they could run circles around him and do what they want because Chu had no idea how DC operates. Rumsfeld knew how back room Washington runs. That is the difference with figurehead VS power.
"Striking budget deals with them that reward efficiency and cost-cutting is an option that deserves a broad test." Capretta is backwards here.
Trump's picks start firing first, 10%? 5%? 1%?, getting rid of some future Trump haters, gaining fearful respect (dominance, not prestige), and THEN, maybe, makes some deals with those left.
With part of the deal being that those who fail to perform get fired.
The firing of some has to come first, because if it doesn't happen until after deal failure, all the deals will fail.
My preference remains 80% fired and accept some office chaos, but if the checks go out to the SS & Medicaid recipients, most Rep voters & middle America won't mind too much. Don't own the Libs - fire'em.
Maybe easier if they're locked out till after inauguration.
Besset: He should be aiming for much less than a 3% deficit. The objective should be deficits = Σ(expenditures with NPV>0). I do not think the Σ(expenditures with NPV>0) is 3% of GDP.
The 3 million petroleum production may be an exaggeration of the benefit of lifting the of the Biden restrictions
I also doubt that the Administration can find and be willing to eliminate much growth inhibiting inefficacy. Especially with Trump creating new infancies with tariffs and deportations
The objectives are good, but it's interesting that of the three objectives the only one that fall in his bailiwick is deficits reduction through tax increases. Will he be wiling to take on the Boss over that?
It's worth noting that:
1 GDP growth >3%, inflation, and spending/income deficit under 3% would shrink the real debt/GDP ratio significantly.
2 The FY24 deficit was 37%.
True but the objective should be deficits = Σ(expenditures with NPV>0).
To be honest, I'm hoping I don't understand what that means because my best guess makes little or no sense.
It means to borrow only to finance productive investments.
Yeah. I would argue that doesn't make much sense, not that there's anything wrong with borrowing for TRULY productive investments. The problem is that means everything funded by taxes can be crap.
"producing an additional 3 million barrels of oil or its equivalent a day" is a stretch, and not necessarily going to make economic sense for the producers...
This is a ~7% increase assuming he means nat gas + crude oil (a charitable interpretation, that counts nat gas as barrels of oil by conversion factor of 115 BCF current production to ~19 million barrels of oil equivalent). The word "equivalent" could be doing a lot of work there since you could go broader and include things like NGL (nat gas liquids) for an even lower actual rate of production increase. Perhaps most of the production increase he is thinking about is nat-gas, primarily for LNG export, but on the crude oil production side most energy people (in the business) are shaking their heads at increasing production given current & anticipated incentives.
If this was just oil, 3mbbl would be ~15% increase in production.
"cutting the budget deficit to 3% of gross domestic product by 2028, spurring GDP growth of 3% through deregulation and producing an additional 3 million barrels of oil or its equivalent a day."
"These seem like smart, achievable goals."
How? 25% tariffs on our biggest trading partners? Seriously, I don't see them cutting enough spending to get to 3%. Are they going to cut defense, social security, or Medicare? The 3% GDP growth goal is good but rather modest. And it is far more likely to be met via the business cycle than anything the government does, though the tariffs would ensure we didn't meet it.
Let's get creative. How can we use technology to protect ourselves from our so-called protectors? Our protectors being the employees and representatives in government empowered to protect our rights. I would feel better about these appointments if we had access to video camera feeds transmitting the contents of their work conversations. Even better yet, can we place body cams on our representatives and government employees that only turn off when they enter the restroom or leave the office?
Would that really be better?
I think having Arnold Kling listen in on their conversations and blog about their conversations would be better. Agreed?
No, I doubt it.
Improvements?
Looking at the Senate DOGE caucus membership (https://www.ernst.senate.gov/news/press-releases/ernst-creates-senate-doge-caucus-to-eliminate-government-waste ) DOD reform will be, as it always has been, a lost cause. Nobody there with real Armed Services clout. The best one might hope for is revival of the old practice of discretionary non-defense cuts being matched dollar for dollar with defense cuts. DOD is incapable of spending effectively so an ineffectual Hegseth might not be the worst possible outcome.
"If we gain college graduates while losing unskilled labor, the gain in productivity growth might help reach the GDP growth target."
I would think for the numbers to be remotely comparable they would have to be too small to make any difference in the short term. I don't see there being a huge number of college grad immigrants in the next four years.
Much of the favorable commentary I see about Trump's nominations seems driven more by partisan and ideological thinking than by any substantive knowledge of political appointments or managerial execution.