Hinting at a substantial clampdown on government spending over the next four years, this morning President-elect Trump announced the selection of South Carolina Rep. Mick Mulvaney to be his first budget director, a nomination which would put a "fiscal conservative hawk" in charge of managing the federal budget and the logistics of government affairs.
As director of the Office of the Management and Budget, replacing Obama appointee Shaun Donovan, Mulvaney would have broad responsibility for government operations, and for avoiding the government shutdowns that the Freedom Caucus countenanced several times.
The move, which will raise eyebrows among those who expect an unprecedented fiscal expansion under Trump, pits Mulvaney, a true fiscal conservative, in charge of government spending, following repeated alarms about the long-term trajectory of the debt, even as annual deficits have fallen in recent years despite a recent sharp spike during the final months of the Obama administration. He has criticized the use of special war funds to get around caps on defense spending and in past years has suggested that tax increases might be necessary to stabilize the debt, a stance anathema to many conservatives.
Mulvaney's selection points to a strategy by Trump to cut government where he can. The president-elect in recent days has, for example, railed against what he has labeled a far too expensive new version of the Air Force One aircraft he will fly that Boeing is supposed to build. In a statement announcing his selection, Trump called Mulvaney a strong voice in Congress for "reining in out-of-control spending, fighting government waste and enacting tax policies that will allow working Americans to thrive."
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A graduate of Georgetown University with a law degree from the University of North Carolina, Mulvaney served in the state legislature after a brief legal career and a stint in his family's homebuilding business. Mulvaney is of Irish descent, and once caused a minor stir in Ireland when Irish Prime Minister Enda Kenny attended a fundraiser of his held at an Irish pub in D.C. just before St. Patrick's Day.
The announcement of the nomination, which will require Senate confirmation, was made as Trump began his holiday vacation at Mar-a-Lago, his oceanfront club in Florida, around the same time that president Obama arrived in Hawaii for his final vacation as president.
Mulvaney, 49, was an outspoken critic of John Boehner, and was one of the conservatives credited with forcing the former House Speaker to resign in fall 2015 rather than bow to the party's Freedom Caucus flank and lead the House into another government shutdown. Mulvaney, who came to office as part of the 2010 Tea Party wave, has frequently allied himself with the most conservative members of the House and co-founded the House Freedom Caucus that has frequently bucked Republican leadership on spending bills, the Washington Examiner reports.
"He’s a tremendous talent, especially when it comes to numbers and budgets," Trump said in a statement Friday night, adding on Saturday morning that "we are going to do great things for the American people with Mick Mulvaney leading the Office of Management and Budget. Right now we are nearly $20 trillion in debt, but Mick is a very high-energy leader with deep convictions for how to responsibly manage our nation's finances and save our country from drowning in red ink. With Mick at the head of OMB, my administration is going to make smart choices about America's budget, bring new accountability to our federal government, and renew the American taxpayer's trust in how their money is spent."
Mulvaney responded that "it is a great honor to be appointed Director of the Office of Management and Budget. The Trump administration will restore budgetary and fiscal sanity back in Washington after eight years of an out-of-control, tax and spend financial agenda, and will work with Congress to create policies that will be friendly to American workers and businesses. Each day, families across our nation make disciplined choices about how to spend their hard earned money, and the federal government should exercise the same discretion that hardworking Americans do every day."
In a move that could prove portentous under the Trump administration, Mulvaney last year introduced legislation that would allow nationalized mortgage giants Fannie Mae and Freddie Mac to be recapitalized and eventually leave the government's control. The conservative head of the House Financial Services Committee that Mulvaney served on, Texas Rep. Jeb Hensarling, instead has advanced legislation that would reform the housing finance system and shutter Fannie and Freddie. Yet Mulvaney's approach may be favored in the Trump administration: Trump's selection for treasury secretary, Steven Mnuchin, endorsed re-privatizing the two mortgage businesses in some of his first comments as Trump's appointment.
Perhaps more notable is that in 2011, Mick Mulvaney was pushing for "Cut, Cap and Balance" in return for a debt limit hike, and voted "no" on the deal, while dismissing warnings of a US default.
Absent a significant change to Mulvaney's outlook on US spending, it is difficult to reconcile this appointment, with the market's increasingly conventional view of Trump as an "out of control" spender, and furthermore may undermine the perception that $1 trillion in debt-funded fiscal stimulus is imminent. It will also put Trump's decision to slash corporate taxes without a revenue offset under the microscope of one of the most frugal fiscal conservatives in government. However, like with most things the market has taken for granted under Trump, details of the president-elect's spending plans have yet to be formalized.