AGF Management : Biden Cabinet Picks Stir Controversy

Insights and Market Perspectives

Author: 8

December 10, 2020

THE UPBEAT POST-ELECTION VIBE in Joe Biden's camp has faded, as critics find plenty of reasons to criticize his Cabinet picks. Everyone loves Janet Yellen - she's a lock to win confirmation as Treasury Secretary - but then the controversy starts.

THE BIG PICTURE: There have been two major complaints: First, some of the nominees have worked for Washington consulting firms or have been - horrors !! - lobbyists, which apparently is verboten among leftists. Second, there's grumbling from African Americans, Hispanics, Asians, etc. that they are under-represented.

AND NOW COMES ANOTHER COMPLAINT: In picking two House members to join the new administration - Cedric Richmond (La.) as a top White House aide and Marcia Fudge (Ohio) to head HUD - Biden is eroding the Democrats' thin House majority.

SINCE THERE WAS NO 'BLUE WAVE' in the House, the Democrats' majority is only about 10 seats, depending on recounts and special elections. Majority Whip James Clyburn, worried that New Mexico Rep. Deb Haaland could be tapped as Interior Secretary, said yesterday that 'I can handle' losing two votes, but 'I don't think I can handle losing three.'

CONTROVERSY OVER MANY OF THE NOMINATIONS: The high-profile pick of retired Army Gen. Lloyd Austin as Defense Secretary has generated a major dispute. By law, military officers cannot become Defense Secretary for seven years after they retire; Austin stepped down in 2016.

A WAIVER WAS EASILY APPROVED FOR JAMES MATTIS four years ago, and for the legendary George Marshall in 1950. But a waiver now could be a close vote, since some Democrats - including liberal Sen. Tammy Duckworth, a military veteran - will vote against it, arguing that the Pentagon should be headed by a long-time civilian.

OTHER CONTROVERSIES involve nominees like Anthony Blinken at State because he worked for a consulting firm, as did Neera Tanden, whose nomination to head the Office of Management and Budget is on thin ice. She's been a ferociously partisan critic of the Trump administration and has numerous detractors in the Bernie Sanders camp because of her alleged work on behalf of Hillary Clinton to sink Sanders' candidacy in 2016.

IN ADDITION TO TANDEN, another GOP target will be liberal Xavier Baccara, nominated to head HHS. He has been a fierce critic of Trump health care policy and is a lightning rod for anti-abortion activists.

A FEW OTHER POSTS REMAIN TO BE FILLED, most notably at the Justice Department. African-Americans are pushing hard for Deval Patrick, the former Massachusetts governor who began his career at Justice. Black activists and reformers were bitterly disappointed when they didn't get Agriculture, which went to Tom Vilsack, a safe but uninspiring choice.

OTHER PICKS, IN ADDITION TO YELLEN, have generated a positive reaction, including Katherine Tai as U.S. Trade Representative. Fluent in Mandarin and critical of Chinese policies, she will easily win confirmation. So will most of Biden's picks, although a sacrificial lamb - most likely Tanden - may be required.

ONE THING SEEMS CERTAIN: The final picks are bound to generate more controversy because there aren't enough positions left to satisfy key constituents. And now there's the Hunter Biden tax probe to distract the campaign.

IT MAY BE MORE THAN JUST TAXES: Politico reports this morning that the Hunter Biden probe could focus on money laundering. And the president-elect's brother James reportedly is under investigation over his role in a Pennsylvania hospital business. These probes 'could complicate' Biden's presidency, Politico deadpanned.

The views expressed in this blog are those of the author and do not necessarily represent the opinions of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies.

The views expressed in this blog are provided as a general source of information based on information available as of the date of publication and should not be considered as personal investment advice or an offer or solicitation to buy and/or sell securities. Speculation or stated believes about future events, such as market or economic conditions, company or security performance, or other projections represent the beliefs of the author and do not necessarily represent the view of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies. Every effort has been made to ensure accuracy in these commentaries at the time of publication; however, accuracy cannot be guaranteed. Market conditions may change and AGF accepts no responsibility for individual investment decisions arising from the use of or reliance on the information contained herein. Any financial projections are based on the opinions of the author and should not be considered as a forecast. The forward looking statements and opinions may be affected by changing economic circumstances and are subject to a number of uncertainties that may cause actual results to differ materially from those contemplated in the forward looking statements. The information contained in this commentary is designed to provide you with general information related to the political and economic environment in the United States. It is not intended to be comprehensive investment advice applicable to the circumstances of the individual.

AGF Investments is a group of wholly owned subsidiaries of AGF Management Limited, a Canadian reporting issuer. The subsidiaries included in AGF Investments are AGF Investments Inc. (AGFI), AGF Investments America Inc. (AGFA), AGF Investments LLC (AGFUS) and AGF International Advisors Company Limited (AGFIA). AGFA and AGFUS are registered advisors in the U.S. AGFI is a registered as a portfolio manager across Canadian securities commissions. AGFIA is regulated by the Central Bank of Ireland and registered with the Australian Securities & Investments Commission. The subsidiaries that form AGF Investments manage a variety of mandates comprised of equity, fixed income and balanced assets.

Founded in 1957, AGF Management Limited (AGF) is an independent and globally diverse asset management firm. AGF brings a disciplined approach to delivering excellence in investment management through its fundamental, quantitative, alternative and high-net-worth businesses focused on providing an exceptional client experience. AGF's suite of investment solutions extends globally to a wide range of clients, from financial advisors and individual investors to institutional investors including pension plans, corporate plans, sovereign wealth funds and endowments and foundations.

For further information, please visit AGF.com.

©2020 AGF Management Limited. All rights reserved.