Washington’s ability to form effective policies around US immigration challenges have the potential reverberate throughout the economy. The likelihood that Congress will reach any bipartisan consensus on significant infrastructure legislation in the near term remains low. The Democrat-controlled House will maintain intense scrutiny on President Trump – with impeachment of the president remaining part of the Washington conversation as the election season heats up. I recently spoke about these issues with Bob Marsh, Principal with bipartisan lobbying firm OB-C Group based in Washington, DC.

Olson: We witnessed recently the resignation of Kirstjen Nielsen as Secretary of Homeland Security, the agency that oversees US Customs and border protection. Why did Nielsen resign?

Marsh: Well, I think she’d been there awhile, and I think it’s been a very, very trying job for her to have. I’m not sure she necessarily got along with the president. Plus the person who brought her to the table, General Kelly, who was Trump’s Chief of Staff – and Homeland Security Secretary before that – had left. So I think it was sort of time. And I do think that the issues going on in the border just seemed to be getting more and more difficult, and I think it was time for a change, and so it just seemed to work out that way.

Olson: You mentioned that it is very difficult and clearly the number of people crossing, the number of children crossing and getting put in various facilities, it’s a tragedy. Where did this start? What might the outcome be?

Marsh: It’s a great question. This has been going on for a long time. One of the hardest issues that Congress has to deal with all the time is immigration policy, because there is such divergent opinions and it’s such a tricky issue. It’s more difficult than people realize. And I remember when I worked in the Bush White House in the first three years of President 41’s presidency, we were ready to do a fairly extensive immigration piece of legislation and then 9/11 happened. After that, the issue became much more about security, and then the issue of drugs over the borders has always been a major problem.

The balance you have on immigration policy always is sort of the way our country was founded. We bring in everybody. We take care of people who need that kind of support. With this economy we have right now, we need workers who are doing jobs that a lot of people don’t want to do or haven’t been doing. I think the frustration is that the people waited in line and did this legally, and now are here, feel like there’s some unfairness if you just allow people over.

Olson: Trump has threatened to close the US-Mexico border. Is he serious about this? Do you think he could ever really close the US-Mexico border?

Marsh: Well, again, what we’ve talked about in the past is the definition of “close,” the definition of what he really is meaning to do. It would be very, very hard to close the border. There’s so much goods that are shipped back and forth to Canada, to Mexico, there’s so much industry that is beyond what you could really understand. The OB-C Group represents the American Trucking Association and they had a big concern initially when it was going down. And the amount of leverage that was going on when the president originally said, “look, I’m going to shut down the borders” most recently. The amount of leverage that was put on from the outside actually forced him to sort of change his mind even though he wouldn’t admit to that.

Olson: Can you talk about the similarities and differences between how Democrats and Republicans are handling the immigration leading up to the 2020 election?

Marsh: Well, I think they both would claim they’re for secure borders. I think they both would claim that they’re not trying to keep out people who have a right to be here either on asylum or whatever reasons they may need to come here who have not committed crimes. I think they both believe that we ought to get rid of those who have committed crimes in this country. I think the biggest issue is that language that’s involved and the sort of positioning on some of the things, and the left of the Democratic Party seems not against the idea of quote-on-quote some kind of allowing illegals in, asylum of some sort. They’re not as against that as the Republicans. But it’s tough to know. I mean the Republican Party is not unified on this at all, and it sort of depends on your political bend.

I don’t see them coming to some agreement on immigration policy as a whole. I do think at some point or another the issue will just keep going along. I don’t know when it hits its head. I don’t know when the peak of what the border control people feel is going on right now, when it’s going to peak and when the crisis is really going to be ultimately determined as a crisis that we’ve got to address right now. It’s getting close.

Olson: Let’s pivot to infrastructure. On the face of it, this seems to be an issue where legislators may be able to find some bipartisan consensus. It certainly is wanted and needed by Americans. We know that our infrastructure is deteriorating, but it seems like that’s just not the case and we’re in a stalemate. In late May, President Trump was scheduled to have a meeting with Speaker Pelosi and Minority Leader Chuck Schumer of the Senate, but it didn’t happen. What are your insights?

Marsh: So I think there’s a little truth in both, as there usually is in Washington and on two sides of the argument. Usually the issue is funding, so do you do a cash tax? Do you do some kind of carbon tax? What is it that you can do to actually fund it? And I don’t think the White House is ready to bite that off, especially with the congressional sort of relationships that are going on right now where it’s going to be really hard to get this determined. I think everybody would agree if you’ve driven on any roads in the United States that we need infrastructure appearance. It’s actually sort of pitiful that the infrastructure situation that it does right now.

On the other hand, it’s like a lot of other issues. Frankly, it’s pitiful the situation we have in terms of our budget. We can’t seem to get the political will to do so. But back to the point about the timing of the meeting, and Pelosi’s comments, and when she had her meeting. I think she was forced to say what she wanted to because she was coming out of that meeting on impeachment, and she got her way in that meeting, but she still needed to sort of send a message. I think the White House properly-so – and having worked in White Houses, you need to be prepared for these circumstances to change. This White House in particular seems to change the game plan all the time. And so, in my view, it was a combination.

Olson: Can investors expect there to be any legislative progress on the issue of infrastructure in advance of the 2020 election?

Marsh: I think it’s hard to see that. Maybe there’ll be some minimal things. I mean, to be honest with you, every politician in Washington wants to claim that they’ve done something because they all have roads, and repairs, and infrastructure, and airports, and water, and whatever the case may be. They’ve got issues they’ve got to deal with in their districts that they’ve got to be perceived as being cooperative, they try to solve. So at some point yes, but I think it’s going to be minimal in terms of its real impact on its sort of addressing our problems. And it will be some kind of a hybrid thing. It might be done through a budgetary process, or appropriations, or whatever the case may be.

Olson: Let’s pivot to our last topic. The Mueller Report has been released; it’s been redacted; it’s been released again. But it never seems to be enough for either side. We know President Trump has declared his total vindication of any collusion with Russia in the 2016 election. However, some Democrats seem determined to undertake impeachment proceedings. How does congress and the administration get past the Mueller Report?

Marsh: I don’t know what they do. I don’t know if there’s an ending of this until perhaps the Southern District of New York court prosecutor comes back with, if anything. I do think it’s going to be hanging out there for a long, long time. And probably the ending would be whether Trump gets re-elected or not. Now that doesn’t mean that they’re going to tie everything to that, but they’re going to keep sort of chipping away. But again, I think Trump’s finances are probably the biggest issue going forward in terms of whether it really impacts him, both it impacts him in terms of his psyche, because I feel like he feels like was a bit vindicated by the Mueller report. I don’t see that going much beyond that. But I think his own finances, what happens with his taxes, what happens with the southern district of New York, what happens with how he got his money in the past. All those things will be coming forward. And whether it impacts the voting population or not, I don’t know. Maybe all of this determines – people may just be turning a deaf ear to it at some point.

The analysis and opinions referenced herein represent the subjective views of Bob Marsh and Susan Olson as of June 1, 2019. They are subject to change at any time based on market and other conditions. There can be no assurance that developments will transpire as forecasted.

Unless otherwise noted, the opinions of the authors provided are not necessarily those of Natixis Investment Managers. The experts are not employed by Natixis Investment Managers but may receive compensation for their services.

All investing involves risk, including the risk of loss. Investment risk exists with equity, fixed-income, and alternative investments. There is no assurance that any investment will meet its performance objectives or that losses will be avoided.

Natixis Investment Managers includes all of the investment management and distribution entities affiliated with Natixis Distribution, L.P. and Natixis Investment Managers S.A.

Natixis Distribution, L.P. is located at 888 Boylston Street, Suite 800, Boston, MA 02199. • 800-225-5478 • im.natixis.com