The fight for the direction of Donald Trump’s presidency between the Goldman Sachs branch of the West Wing and hardcore conservatives is spilling into the Treasury Department, threatening Trump’s next agenda item of overhauling the tax code.

Conservatives inside and outside Treasury say the new secretary, former Goldman Sachs banker, movie producer and Democratic donor Steven Mnuchin, is assembling a team that is too liberal and too detached from the core of Trump’s “Make America Great Again” platform of ripping up trade deals, gutting the Dodd-Frank banking rules and generally rejecting “globalism” in all its forms.


The ideological divide has been brewing for weeks inside the White House as a result of appointing a raft of top advisers with radically different worldviews. The battle at Treasury is simply an extension of that brutal fight, according to interviews with over a dozen administration officials, donors, lobbyists and conservative policy experts.

On one side is a less ideological faction, mostly aligned with Mnuchin, that includes National Economic Council Director Gary Cohn and deputy national security adviser Dina Powell — three former Goldman executives — alongside first daughter Ivanka Trump and to some degree her husband, Jared Kushner. All are seen as having a more favorable view of international trade deals and existing relationships with foreign counterparts and a more measured approach to revamping financial regulations. On the other side are more populist and nationalist forces, led by senior adviser Steve Bannon and top policy adviser Stephen Miller.

Already, critics note that Mnuchin has selected another Democratic donor, Craig Phillips, for a top position within the department. He told senators at his confirmation hearing that he supports parts of the controversial Volcker Rule, which prohibits banks from making some bets with their own money — an anathema to conservatives who want to scrap stricter banking laws.

"If that is his position, it is not a conservative one and is not consistent with deregulation," said Norbert Michel, a senior research fellow in financial regulation and monetary policy at the Heritage Foundation and former member of the Trump transition team.

Right-leaning policy experts, Republican donors and some who worked on the presidential transition fear that Mnuchin has neither the policy chops nor the conservative credentials to lead Treasury, especially given pressure the agency will face after the health care battle to overhaul the tax code, eliminate Dodd-Frank or re-do housing finance rules. Republicans see major opportunities for policy shifts thanks to the business executive-turned-president, and they want Cabinet secretaries to take full advantage.

“I think Donald has a weakness for guys who made a lot of money,” said one Republican donor.

“For conservatives, Mnuchin is a missed opportunity because he is not conservative. He will not drive the kind of tax reform we want, nor will he be strong on fixing Dodd-Frank,” the donor added.

Tony Sayegh, Treasury’s assistant secretary for public affairs, dismissed complaints about Mnuchin and said the secretary and Trump are aligned on every issue including taxes, financial reform and trade.

“Secretary Mnuchin has consistently stated that sweeping tax reform is his number one priority, has worked closely with President Trump on the issue since the campaign, and is now leading the tax reform effort on behalf of the administration,” he said. “The secretary just returned from the G20 finance ministers meeting in Germany where he held two press conferences and 18 bilateral meetings during which he promoted President Trump’s belief in free, fair and balanced trade.

One lobbyist close to the administration and transition team defended Mnuchin, saying the Senate just confirmed him on Feb. 13. “It’s too early to start etching in stone what he is or isn’t going to do. He is new to the town,” the lobbyist said. “This town rolls on certainty. That is what makes this difficult for people.”

Allies of Cohn and Powell, both former Goldman Sachs executives like Mnuchin, say their opponents, led by Bannon, are attempting to plant stories about Cohn and those around him to discredit their standing with conservatives and with Trump himself.

Powell, for her part, received significant conservative support for her new national security role including from Sen. Tom Cotton (R-Ark.).

These include allegations that Cohn is pushing a carbon tax and for keeping the U.S. in the Paris climate accords and was behind a visit to the White House by Zeke Emanuel, an architect of Obamacare.

Cohn defenders say none of these stories are true. Out of courtesy, the NEC director took a meeting with a group of conservatives pushing a carbon tax, led by longtime GOP power broker Jim Baker, but that nothing came from the meeting. And they say he did not invite Emanuel and is not pushing for keeping the U.S. in the Paris agreement.

Instead, four administration sources said, the attacks on Cohn appear aimed at heading off any possibility that the NEC director could take on an even more prominent role, including potentially as White House chief of staff, should a major staff shake-up occur.

Cohn has proven himself among the few West Wing advisers able and willing to contradict the president. One person close to the matter said the NEC director regularly pushes back in meetings with the Trump. “It’s always done in a respectful, ‘Can I just make my point?’ kind of way. He’s not interrupting him,” this person said.

Behind closed doors, Cohn has also been positioning himself as the leader of any upcoming tax reform process. This month, he met with Ways and Means Republicans and his top tax policy adviser, Shahira Knight, to give a broad overview of how the White House views tax reform, according to another lobbyist. He’s also met three times with Republicans on Senate Finance, according to a congressional aide, with Mnuchin accompanying him at one session.

Like at Treasury, these developments carry important ramifications for the Trump presidency’s policy direction.

Republicans hoping for a more traditional Trump presidency continue to pin their hopes on the Cohn and Mnuchin factions for policies less focused on nationalistic trade protectionism and harsh treatment of immigrants and more on reduced taxes and regulations along with better relations with corporate America.

At Mnuchin’s first meeting with G20 officials of major international economic players, he attempted to thread the needle on policy between Trump hardliners and a more Wall Street-friendly view. "We believe in free trade. We are in one of the largest markets in the world. ...Trade has been good for us. It has been good for other people," he said. "Having said that, we want to re-examine certain agreements."

Wall Street executives are counting on Mnuchin and Cohn to temper some of the president’s instincts on trade, immigration and other policies.

“I think Gary and Steve view most of these things the same way and are pretty well aligned against some of the crazier ideas coming from Bannon and the rest,” one top Wall Street executive who knows both men well said this week. “And once the health care fight is over they should be able to take center stage.” The executive did not want to be identified by name for fear of angering senior White House officials.

Advocates of the Bannon wing, which also includes senior adviser Stephen Miller, argue that pursuing this kind of centrist approach, either at Treasury or inside the White House, would be a rejection of Trump’s voters who elected him on a clear platform of changing trade policy to benefit Americans, building a wall with Mexico, cracking down on illegal immigration and preventing travel to the United States from nations associated with terrorism.

At Treasury, senior officials dismiss much of the pushback against Mnuchin as mostly griping from junior staffers associated with the Trump campaign who don’t know anything about running such a large organization that covers everything from fighting terrorist financial networks to running the IRS to communicating with global markets.

Morning Money Political intelligence on Washington and Wall Street — weekday mornings, in your inbox. Email Sign Up By signing up you agree to receive email newsletters or alerts from POLITICO. You can unsubscribe at any time. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Others acknowledged legitimate concerns with Phillips over his close ties to Democrats and the large role he is playing inside Treasury at the moment. “That was an odd choice,” said one senior Republican close to Treasury.

Now, conservatives are closely tracking who Mnuchin picks for top jobs in domestic finance and tax policy for a sense of where Treasury is headed, policy-wise, in this new era.

Conservatives have applauded a few of Mnuchin recent picks for top Treasury jobs, including David Malpass, a former Bear Stearns economist, for the undersecretary of international affairs and Drew Maloney, Rep. Tom DeLay’s former legislative director, for the assistant secretary for legislative affairs. Among others, Treasury also added Dan Kowalski, Stephen Miller’s deputy on the Trump campaign, as a counselor.

The complaints about Mnuchin come after conservatives, including some inside the White House, slowed down several of the Treasury secretary’s picks for top jobs requiring Senate confirmation. Those who saw their selections linger for longer than expected include Jim Donovan, a Goldman Sachs banker recently announced as Trump’s pick to serve as Mnuchin’s deputy.

Donovan, a major fund-raiser for Mitt Romney and then Jeb Bush during the 2016 campaign, has had several prominent conservatives vouch for his credentials and resistance to his nomination eventually withered away. He is expected to play a prominent role in helping run the department should he win Senate confirmation.