Trump Fires Susie Wiles, Schumer Vows No ‘Right-winger’ Justices, and More Midterm Fallout

0:29This episode is brought to you by Charles Schwab. continues to send waves through the stock market and the political scene, with Senator Chuck Schumer all but ruling out Supreme Court confirmations, and Florida Governor Ron DeSantis offering his thoughts on the GOP's future. Welcome, I'm Kyle Peterson with The Wall Street Journal. We're joined today by my colleagues on the WSJ's opinion pages, columnist Joe Sternberg and Zach Kessel, assistant editor of Free Expression, the WSJ opinion newsletter. The Democratic victories continue to add up as more late ballots are counted and more races called.

1:05As we tape this on Friday afternoon, they're at a comfortable 253 seats in the House, plus 54 seats in the Senate, not including Alaska and Mississippi, would you believe it or not, where the Democratic candidates are currently the frontrunners. Today, let's walk through some of the reverberations of this astounding midterm. Here's a big one hot off the digital press this afternoon. And by that, I mean President Trump's true social account. He writes, I am pleased to announce that Mr. Stephen Miller, the current deputy chief of staff of the Trump administration and one of my most trusted advisors will become the chief of staff starting Monday.

1:44Susie Wiles, who has done an outstanding job, will be moving over to the Trump political operation. Joe, what do you make of this as the president's first concrete response to the election wipeout for Republicans on Tuesday? Well, Kyle, I mean, I think that a big part of this phenomenon is always after an election dropping as Republicans and President Trump have experienced this week. I mean, you have to find various sacrifices. So it's not unusual that you start seeing some staff turnover of this sort, particularly because Susie Wiles, the outgoing chief of staff, had had various health issues for a while.

2:18And so it might have been that even if Republicans had done well in the election, she would have been looking to transition into a new role anyway. I think that the bigger problem here is going to be that Stephen Miller is the replacement. And he has been the architect of some of the policies, particularly these very aggressive immigration roundups that turn out to have been very off-putting to a lot of voters. even voters who might have been sympathetic to the broader message that America needed more robust immigration enforcement. And, you know, I think that this was a became a big liability for Republicans.

2:57So I think that it's potentially not a good sign if Trump's instinct is going to be to double down on some of the least popular parts of his agenda from the first two years as a response to the midterm tsunami this week. Zach, while it's true that after a midterm election is a time when there is probably some staff churn, these are very high pressure jobs. And so some people spend two years and decide that now's a time to do something else. I tend to agree with Joe's assessment here. I mean, Trump went on to say that Susie Wiles has done a great job, exclamation point, but it seems like one of the implications of this change only days after this election in which Republicans were pretty clearly repudiated by the electorate, including in states like Texas, maybe Mississippi, is that Susie Wiles is at fault.

3:53And Miller was the architect of some of the Trump administration in the second term, its most sharp edged policy, some of the reporting that he pushed for a quota of detentions by the ICE agents, which is part of what led to them in places like Minneapolis doing really broad sweeps instead of the kind of targeted enforcement that borders our Tom Homan has said that he favors. It strikes me as the old SNL line. I mean, the Republican Party has a fever and the only prescription is more cowbell. Well, Kyle, I think there are two versions of Trump. There's the restrained version of Trump, which is best represented by Susie Wiles.

4:31And then there's the maximalist version of Trump, and that's what we're going to get. But I'll remind you that Trump said repeatedly that he didn't care about the midterms. I don't think he particularly cares about 2028 either. I think he's just going to do what he wants to do. Over the first two years of this term, he didn't really govern through the legislature. He got the Lake and Riley Act through and the big, beautiful bill. Everything else was through executive orders. And that, I think, is what bringing Stephen Miller on as chief of staff is going to set up over the next two years. So we can just buckle up and I guess enjoy the show.

5:05Joe, another of the implications after the election, the stock market kind of taking a tumble. Some suggestion in the press I've seen that maybe it relates to new policy uncertainty, Democrats taking over Congress potentially means more spending by the federal government ahead, possibly tax increases. How do you read the economic news. And after a pretty good jobs report, some of that loss seems to be regained. But what's your assessment of where things stand? Well, I think there are a couple things going on here. I mean, sort of if you take politics out of it, the bigger picture story is that over the past year or two, we've had this enormous boom in artificial intelligence investment in a wide range of companies that are involved in that, whether it's the development of the models or the construction of the data centers.

5:53And questions have been starting to develop about, you know, has that investment become frothy? Investors are starting to ask themselves, what kind of returns would we actually need to see over the medium or longer term in order to justify some of these valuations that we're pouring into these companies right now? So you have this backdrop where this investment boom that we've been seeing in Wall Street already was due for a bit of a reconsideration and people were starting to wonder when that might happen. And then all of a sudden you get this big political change and people were expecting the Democrats were going to do well at the federal level.

6:30I think that one of the big surprises here for investors has been how well Democrats performed at the state level, particularly in states like Texas, where you wouldn't have necessarily expected that. And I think that that is relevant to Wall Street because that is where a lot of AI relevant policy gets made. I mean, all of these regulations and potential restrictions on the construction of data centers is going to happen at the state level across the country. You can't rule out the possibility that you might see various state level efforts to regulate or otherwise litigate around artificial intelligence as this economic story continues to unfold.

7:10And so I think that what we saw particularly on Tuesday, a couple, you know, a day and a half after the election was really the time when you would start expecting people to internalize some of that message. And it has turned around a bit as we're speaking on Friday afternoon. You know, tech shares have made up some, although certainly nowhere near all of their losses from Thursday. Other shares seem to be flat, though. So, you know, this is signaling, you know, there is some concern about the future. Sure. Now, the good news for Democrats, Kyle, as you pointed out, the jobs report that has come out today is quite healthy, surprised economists much on the upside.

7:52And it's also notable because it's so broad based. We seem to be transitioning out of this period we were in where job growth only ever seemed to be concentrated in health care. You can see a lot of evidence that job creation is expanding into other parts of the economy now. But remember, that is a backward looking measure of what has been happening in the economy. And I think that what markets are telling us is that people are a little concerned about this broader AI investment story and how that's going to play out and are also becoming concerned about how some of these political and policy changes might interact with that AI story moving forward.

8:30Hang tight. We'll be right back in a moment. This episode is brought to you by Charles Schwab. Decisions made in Washington can affect your portfolio every day. But what policy changes should investors be watching? Washington Wise is an original podcast from Charles Schwab that unpacks the stories making news in Washington right now and how they may affect your finances and portfolio. Listen at schwab.com slash Washington Wise. This is Matthew Hennessey, the editor of Free Expression. I want to personally invite you to come check out what we're doing. Signing up for the newsletter couldn't be easier.

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9:48Welcome back. Another implication of the Democratic win of the Senate is a renewed focus on nominations by President Trump, particularly to federal courts. The GOP majority has a lame duck period in which they can do some final confirmations for judges that are now waiting. Some chatter about that on the right. This is obviously the last train leaving the station. So get on board any nominations that President Trump wants to send over. And then for the Supreme Court, Zach, interesting quote here from Senator Chuck Schumer, likely the next majority leader, though some of these candidates, including Abdul El-Sayed.

10:28have said that they will not vote for Schumer to be majority leader, but it seems like he is probably going to have the votes. He tells the Associated Press, the bottom line is we're not going to allow a right winger on the court, unquote. And since Chuck Schumer, I think, defines all of the conservatives on the current Supreme Court as right wingers, that's probably safe to say. It suggests to me that there is not going to be any sort of Supreme Court nomination if there's a vacancy that will be confirmed by this Democratic majority in the next two years. And notable because Justice Alito, 76, Justice Clarence Thomas, 78.

11:03A lot of talk on the right that let's hope they're in for the long haul. Yeah. Looking at the map, it seems like 2032 might be the next time Republicans win control of the Senate. So we do really have to hope that they can hold out. Even if they tried to, even if Republicans tried to push a nominee through in the lame duck, even if Schumer didn't block it. I just don't think it would work. Look at Republicans, right? Look at outgoing senators like Tom Tillis, like Susan Collins. What about people like Lisa Murkowski or Todd Young? Would they go for it? I'm not really sure. These are people who are more institutionalist types who wouldn't want to make the court any more of a political issue than it is.

11:43It's the only branch of government that still actually works, even if most Americans don't necessarily trust it. We really should not try to degrade its ability to do its job. It's important that at least one branch functions. Zach says that 2032 might be the next real opportunity for Republicans to retake the Senate. I'm not even sure it might be 2034. I mean, Joe, part of that depends on what the final count is, if Mississippi and if Alaska, if those races do end up ultimately in the Democratic column. But look at the map for 2028, for example, which seats are going to be up, which opportunities for each side.

12:23Republicans will be defending seats in North Carolina, in Wisconsin, in Iowa and in Alaska. And with the exception of Alaska, those are all states in which on Tuesday they got pretty much wiped out. Democrats, on the other hand, have a few pickup opportunities. But if you go by the last election, I'm not sure how confident Republicans can be in them. Sherrod Brown in Ohio, who won this week, is going to be up on the ballot again for a full term. Then there's Arizona and Georgia and Pennsylvania. And John Fetterman in Pennsylvania is a big question mark because some Democrats, Joe, are trying to run him out of the party.

13:00Who knows if he runs again, if he declares he's an independent. that might be an open Senate race. Mark Kelly in Arizona, he could run for president potentially. That one could be open as well. Georgia, do Republicans really feel confident after losing to John Ossoff on Tuesday that they're going to beat Raphael Warnock? And so, Joe, if Clarence Thomas, if Justice Alito, if what they thought in not retiring was that they were making a bet that they could stay there for maybe two or four years, it might end up being 10 years. It might be a 10-year sentence instead. Well, yeah, look, I get it. I completely understand all of the concerns, Kyle, that you have just articulated about the likely problems that Republicans can run into in the next few cycles and the difficulty that they would face clawing back from the defeat that they've suffered this week.

13:53I guess my thought, though, is that it's worth resisting despair because one observation that you can make is, remember, this was supposed to be a good year for Republicans and it wasn't. So we seem to be in a period and have been for a while where the electorate is very volatile. And both parties have developed this bad habit of winning elections and then badly overreaching in one direction or another in a way that voters find very off-putting. So incumbency has a real power. So we should not underestimate the advantages Democrats will have over the next few cycles, because now they are going to be in the position where they will be the incumbents in a bunch of, you know, in all of these House seats that they've just won.

14:39They're going to have a favorable map in terms of incumbency in states that they have just won again, you know, in terms of the Senate map in the next cycle in two years. But voters are in some ways becoming a bit more mercenary sometimes. And so I think that we should not assume that that pendulum is going to swing, but we also shouldn't assume that it won't. It's a fair point. If a week is a long time in politics, then two years is an eternity. And President Trump is term limited. So we don't know who is going to be a potential standard bearer for the Republican Party. It could be somebody very different.

15:16It could be somebody trying to fuse MAGA-ism with traditional conservatism, maybe like Marco Rubio. And ditto on the Democratic side. How far left will Democrats go over the next two years remains an open question. Zach, we mentioned John Ossoff, the senator in Georgia, a moment ago, and he's already getting some chatter as a potential Democratic nominee in 2028. You wrote about that in the newsletter this week under the headline, and John Ossoff, come on down. So how do you size up him as a political figure going into a Democratic nominating contest? That's right. Ossoff stands out to me in a very good year for Democrats because of the margin with which he won, which was almost 20 points.

15:59Compared with his margins first time around in 2020, he won a runoff in 2020 that he probably would have lost had Donald Trump not dampened turnout. And this time he won by almost 20 points, right? It's similar to me to the DeSantis victory in 2022 that propelled him to the top tier presidential candidates. But you also might say, wait a second, isn't John Ossoff Jewish? Would the Democratic Party nominate a Jewish candidate for president? Maybe, maybe not. Ossoff is helped out here by his record on Israel, right? He has talked about how he likes, he supports the U.S.-Israel relationship, but he was one of the first senators to vote against aid to Israel after October 7th, arms packages.

16:42So he sits in a good position to thread that needle. It's unfortunate it's a needle that needs threading, but he's positioned to do it. Hang tight. We'll be right back after one more break. Why can't we get AI to production? Our competitors are all ready. How do we keep data secure? When do we actually see ROI? All this talk about AI, but talk doesn't transform businesses. AWS AI cuts through the noise. making AI easier to securely deploy and scale. With ready-to-use agents and the broadest set of AI tools and services, you can build, buy, or partner your way. Stop overthinking. Start building.

17:22AWS AI is how. Don't forget, you can reach the latest episode of Potomac Watch anytime. Just ask your smart speaker. Play the Opinion Potomac Watch podcast.

17:35From the opinion pages of The Wall Street Journal, this is Potomac Watch. Welcome back. Similar question on the Republican side, Joe. Ron DeSantis, we've now mentioned, he has popped his head up in the wake of these midterms, offering some thoughts about where the Republican Party might go in the wake of President Trump. Here he is on CNN. Well, I think President Trump is a unique figure in American political history because he had a unique brand. He has a persona that has attracted a lot of support across really the political spectrum. I mean, there are people who consider themselves Trump Republicans who aren't on the same page as other Trump Republicans.

18:15They see in him, you know, different things. I think the reality is, is there's nobody in our party, you know, that has that outsized persona and brand. And so how do you then go going forward? I think it's got to be ideas based. Joe, what do you make of that? Imagine that a political party that is based around ideas and not personalities. I mean, that has been a real challenge, I think, for Republicans in the Trump era, because MAGA-ism seems often to be whatever Donald Trump thinks at any given moment, which might be different from his position a month ago. Yeah, I think the problem Republicans have had all along is that people tend to like the idea of Trump more than they like the actuality of it.

18:55So DeSantis is absolutely right that you're going to struggle to find another personality like Trump that will have that kind of unique charisma. And it might actually be good for the Republican Party if they don't find someone else like that, because we've discovered that building your politics around that kind of personal branding or personal charisma can actually be very volatile and is not necessarily good for the party. Democrats got their own taste of that in the Obama years when Obama was a very charismatic president who was not necessarily very good for Democrats' down palate. So I think that in some ways, if you can orient your party around ideas and fight that way in election seasons, it can be pretty good for you.

19:42DeSantis is right. Republicans might find that they don't have that option because you're not going to find anyone who could capture that lightning in the bottle again in the way that Trump did. I mean, I think people will be looking for candidates who might have particular elements of the Trump method. People will be looking for that pugnacity, sort of that devil may care approach to the media and other cultural figures that Republicans don't necessarily like very much anyway and who've not always been very fair to Republicans in the political arena. But I think that the benefit of ideas is that then you can cut down on the kind of day-to-day chaos that we so often have seen from the Trump White House, which I think was a big aspect that voters found so off-putting over the past two years and contributed to this Republican defeat this week.

20:37One last thought for me on the Democrats and particularly how far left they might go. Abdul El-Sayed, the senator-elect from Michigan, is now out on a media victory tour. One of the things he is saying is, I ran on Medicare for All, not really explaining the footnote, which is that Bernie Sanders' Medicare for All bill would make private health insurance plans illegal. Something like 160 million Americans have insurance coverage through their employer. And so what Chuck Schumer, what Hakeem Jeffries are going to do with that is unclear to me, but it does seem like there are some warnings for them in these election results, too.

21:12I would point to some of the ballot measures in states that they flipped. So Iowa, for example, has a new Democratic governor, a new Democratic senator, but voters also passed an amendment requiring a two-thirds majority in the state legislature to raise income taxes on individuals or businesses. North Carolina, another state Democrats flipped, had a ballot measure that passed to cap the income tax at three and a half percent. Ohio passed a constitutional amendment requiring voter ID. And so Democrats are feeling flush right now that they have flipped those states. But there are some suggestions that voters in those states have not changed their underlying views on some of these policy questions, are not eager to be taxed more and maybe have their health plans made illegal.

21:57And then I think you can also, Zach, look at the gap between these Democrats who succeeded with sort of a centrist branding in states like Texas, James Tallarico, and the Bernie Sanders favorite. So this is a write-up from a group called Third Way. It says Abdul El-Sayed in Michigan, Peggy Flanagan in Minnesota, and Troy Jackson in Maine ran on average five points behind their party's statewide House vote, and they ran just five points ahead of Kamala Harris in a blue environment. And so some suggestion there that while those candidates did succeed at the ballot box, the real path to the majority here for the Democrats is more centrist, moderate branded candidates who can win purple states and red states.

22:42And it's very unlikely that the activist wing of the party learns that lesson. You know, I think Chuck Schumer, I'll have to give him credit, which is something I'm not generally likely to do. He did a good job picking candidates in many of these states. But I think that, as is always the case, the activist base of the party, and this happens on both sides, will over-interpret the results of the election. And you'll have a lot of Democrats start thinking that in 2028, in particular, the best move is to nominate a progressive candidate, or Democratic candidates will start moving to the left the way that they did in 2020.

23:17A lot of DSA types and DSA adjacent types said before the Michigan election that if Abdul El-Sayed can win in Michigan, we can win anywhere. And I think that might be the lesson that they take home. Thank you, Zach, and thank you, Joe. Thank you all for listening. You can email us at pwpodcast at wsj.com. If you like the show, please hit that subscribe button, and we'll be back next week with another edition of Potomac Watch. You're either all in on this model, or maybe you're building with another. You're either speed, or is it security? Or, you're AWS AI. Don't pick a side. Pick them all. AWS AI is how.