Trump's transition advisers back deregulation, privatized social security

WASHINGTON – During his triumphant presidential campaign, Donald Trump renounced Republican orthodoxy on Social Security reform.

"We're not going to hurt the people who have been paying into Social Security their whole life," Trump declared, calling the payment of promised benefits "honoring a deal."

But the man heading the Trump transition team's Social Security effort? Michael Korbey, a former lobbyist who has spent much of his career advocating for cutting and privatizing the program.

"It's a failed system, broken and bankrupt," Korbey said as a lobbyist in the mid-1990s. Korbey acknowledged that some of the reforms his group backed would hurt retirees, but "our constituents aren't just senior citizens," he told a newspaper in 1996. A decade later, as a senior adviser to the Social Security Administration, Korbey was a public advocate for the George W. Bush administration's failed attempt to privatize Social Security.

Korbey is just one example of apparent discord between Trump's populist economic platform and the people who have been put in charge of planning to carry it out. While there are some true Washington outsiders on the team - such as Dan DiMicco, a former steel industry executive who is Trump's transition head for the office of U.S. Trade Representative - many of the players are familiar from the Republican economic establishment. The mix indicates a strong leaning toward rolling back much of the Obama administration's post-financial collapse reforms, and a general posture toward deregulation.

“From tax increases to tax cuts, trade policy moving forward on TPP to withdrawing from TPP, military spending from cuts to increases in military spending, keystone pipeline was off, now it may be back on," director of the Public Policy Institute at Jacksonville University Rick Mullaney said. "Immigration policy and the president's executive orders, you can expect them to be repealed.”

The team will not necessarily carry over into the Trump administration - though members of past transition teams often have. Instead, they are in charge of putting together hiring recommendations, working with outgoing appointees and laying the groundwork for administration's opening months.

Bill Walton, one of the two people overseeing the economic transition effort, is the former chief executive for Allied Capital, a financial firm that was sold after nearly failing during the financial crisis. He is both a trustee for the Heritage Foundation and a senior fellow at another conservative organization, the Discovery Institute.

David Malpass, who is overseeing both the Treasury Department staffing and part of the broader economic issues portfolio, was Bear Stearns' chief economist in the years leading up to its collapse. In August of 2007, as U.S. economic growth ground to a halt and the debt markets shuddered, he wrote a Wall Street Journal op-ed titled "Don't Panic About the Credit Market."

"Housing and debt markets are not that big a part of the U.S. economy, or of job creation," the piece declared, predicting continued economic growth and dismissing concerns that recent economic growth had been dependent on the housing bubble.

Eight months later, Bear Stearns collapsed, unable to withstand the toxic combination of overheated home prices and shoddily assembled debt that Malpass dismissed. But Malpass landed on his feet, founding a consulting firm called Encima Partners.

Since then, he's faulted both the Federal Reserve's monetary response to the financial crisis and regulations intended to prevent future such calamities.

In a 2010 National Review article titled "Chris Dodd's Big, Misguided Bill" Malpass argued against the value of creating the consumer financial protection bureau, writing that the Obama administration should "streamline and concentrate" existing consumer protection regulators, a step that he said "would result in a reduction of government jobs."

In Paul Atkins, Trump has found a leading proponent of the theory that the government should get out of the financial industry's way.

Appointed to the Securities and Exchange commission in July 2002 at the height of the era's corporate accounting scandals, he was considered the most conservative member of the SEC during his tenure. Atkins objected to stiff penalties imposed on companies for allegedly fraudulent conduct, contending that they don't effectively deter crime. In 2005, he defended the practice of backdating stock options - a practice in which executives paid themselves for fictitious out-performance in their companies' stocks. Numerous executives went to jail for those activities - but Atkins caused a stir by saying he found nothing objectionable about it.

In the years that led up to the financial crisis, Atkins warned of dangers posed by "enacting regulations that supplant the market's judgment." Among the initiatives he successfully backed at the SEC was a loosening of leverage restrictions on investment banks, a step that allowed firms like Bear Stearns and Lehman brothers to borrow more money and invest it in mortgage-backed securities.

Atkins resigned in August of 2008, and now runs a financial services industry consulting firm. But he has maintained his vigorously pro-market stance.

"We all know that over-regulation can 'kill the goose that laid the golden egg,"' he said in a 2012 speech opposing the regulation of money market funds.

Mullaney said some of the names that will eventually end up in Trump's cabinet will be different than those on his transition team.

“Governing is a different animal, and I think you're going to see that he will reach out to some people that weren't necessarily part of his campaign," Mullaney said. "I hope that's the case actually, and (they) help him in governing.”


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