Decisions rendered by the US Supreme Court always have the potential to influence the work of financial professionals and investors, and the 2018–19 term is no different. In forthcoming sessions, the court will hear cases on issues ranging from taxation, government benefits, and copyright claims to debt collection, anti-trust statutes, and the legal immunity of international organizations.

A New Face on the Bench?
Less than two weeks after Justice Anthony Kennedy’s decision to retire from the court, President Donald Trump nominated Washington, DC circuit judge Brett Kavanaugh to take his place. While Justice Kennedy demonstrated centrist tendencies during his tenure on the bench, his potential replacement – and former law clerk – is a staunch conservative. Republican legislators and their supporters have welcomed Kavanaugh’s nomination, which would solidify a conservative majority on the court for decades to come.

Near and Long-Term Considerations
Senate confirmation hearings for Kavanaugh will begin in early September. Given that Republicans hold the majority of seats in the Senate, it is likely that a newly minted Justice Kavanaugh will see the start of the 2018–19 term in early October and be seated in advance of the 2018 mid-term elections in November.

I recently spoke about the Kavanaugh nomination and its potential implications with Larry O’Brien, Bob Stevenson, and Daniel Kidera of the OB-C Group, a bipartisan lobbying firm in Washington, DC. Below are highlights of that conversation.

Larry, let’s start with you. Why, in your view, did President Trump choose Brett Kavanaugh?

O’Brien: Well, he’s got a nice-looking family and is distinguished-looking himself. This makes for good photo optics, which are critical to Trump when he “follows his gut” in making personnel picks. It also makes it harder for Kavanaugh’s opponents to try to portray him in a negative light.

He’s got the approval of the Federalist Society – an influential conservative non-profit organization – and his right-leaning inclinations are evidenced by his pattern of decisions as a judge.

If the Supreme Court again hears arguments on the Affordable Care Act, what might we expect from a Justice Kavanaugh?

O’Brien: His case history on aspects of the Affordable Care Act is mixed. I expect the Democrats to make healthcare a major point of discussion and conversation during the nomination hearings. Because they are in the minority in the Senate, they likely can’t forestall the nomination from happening. However, Democrats will likely question Kavanaugh aggressively on things like pre-existing coverage protection and Medicaid coverage extension to try and inflict some political damage on his Republican supporters.

The healthcare theme – including Roe v. Wade and abortion rights – may give some red state Democratic legislators doubts and reservations about supporting Kavanaugh’s nomination. But this of course only comes into play if there’s questionable solidarity within the Republican caucus. The GOP needs only to lose the support of one of their own for this to become a real factor – but I’m betting that Republican Senators [Susan] Collins [of Maine] and [Lisa] Murkowski [of Alaska] fall into line with the party and support Kavanaugh. Meanwhile, the Democrats are trying to achieve solidarity, while balancing the pre-election political realities of some races – including some in which they need to garner votes in more conservative districts.

Earlier in his career, Kavanaugh played an important role in Ken Starr’s special counsel investigation of President Bill Clinton, which led to impeachment proceedings. In the years after, he has suggested in some of his writings that the office of the president should not be burdened with such legal challenges. Do you think this affected President Trump’s choice to nominate him?

Kidera: There’s very little evidence to suggest Kavanaugh’s views on executive authority were a factor in his appointment. Most of the decision making was driven by White House Counsel Don McGahn.

What happens in the event that the Supreme Court is asked to weigh in on a legal question pertaining to special counsel Mueller’s investigation into Russian interference in the 2016 presidential election? Would Kavanaugh recuse himself?

Kidera: Supreme Court justices have no requirement to ever recuse themselves. It’s entirely at their own discretion, so I see it as unlikely. As for the Russia investigation, the only outstanding legal question is whether a president must respond to a subpoena.

The Supreme Court set precedent during the Nixon years in this area, and it seems unlikely we’ll have a challenge that threatens that precedent. If Mueller subpoenas Trump – and that’s a big “if” – and if Trump challenges the subpoena or ignores it, this would trigger a legal battle. It would start in a district court before winding through to the Supreme Court. That could take a couple years, and if we get to that point, it’s likely a lot of other things will have happened in the meantime.
The views and opinions expressed may change based on market and other conditions. Unless otherwise noted, the opinions of the speakers provided are not necessarily those of Natixis Investment Managers, or any of its affiliates. Larry O’Brien, Bob Stevenson, and Daniel Kidera are not employees or associated persons of Natixis Investment Managers and they are independently responsible for the information they provide and for their expressed views and opinions on all topics. This material is provided for informational purposes only and should not be construed as investment advice.