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Trump Criticizes Congress; GOP Ends Bid to Gut Panel; Obamacare Repeal Tops Agenda for New Congress. Aired 12-12:30p ET

Aired January 3, 2017 - 12:00   ET


[12:00:00] JOHN KING, CNN HOST: As it may be, their number one act, their priority, focus on tax reform, health care and so many other things of far greater importance, #dts, drain the swamp." What the House Republicans were proposing yesterday, Dana, was essentially not to drain the swamp, but to put the fox in charge of the hen house.

DANA BASH, CNN CHIEF POLITICAL CORRESPONDENT: That's exactly right. And, you know, it looks in some ways like there's a split, certainly, if you have the Republican president-elect basically slapping the wrist of House Republicans. But if you look a little closer, it also could be, John, the Republican president-elect helping House Republican leaders to get this back on track because Republican leaders in the House, they didn't want this. They were, according to the great reporting of our team on The Hill, they were surprised that this even happened. They didn't want the very first story out of the gate to be the House Republicans gutting the very organization that is supposed to make sure that they are ethical.

So the fact that Donald Trump did this actually has sent -- our colleagues can report a little bit more on this - House Republicans back into a meeting as we speak to perhaps try to figure out a way to fix it so that this is not going to be the story out of the gate. So, at the end of the day, perhaps the Republican leaders in the House have help getting the rank-and-file who have been very unruly for the past eight years in order.

KING: Well, let's take it right up to Capitol Hill. And you see the House floor there as they start to get the sessions in the House and the Senate to order again. We'll take you there when they gavel them in live.

But, Manu Raju, to Dana's point, House Republicans meeting right now. Is this tweet from Donald Trump enough to get them to say, wait a minute, if we want to do this, this was certainly the wrong way to do it?

MANU RAJU, CNN SENIOR POLITICAL REPORTER: Potentially, John. Remember, it was about an hour, hour and a half ago House Majority Leader Kevin McCarthy told reporters that there would be no changes to this rules package, even though he opposed this change of the ethics body's investigatory powers because he was worried about the optics. He made that case along with House Speaker Paul Ryan privately in that closed door meeting last night. So this morning he said, look, the vote happened. It's going to happen this afternoon. I don't like this. I agree with what Donald Trump said.

But something happened in the last hour, hour and a half where the Republican leadership realized that this potentially cannot go forward because of how bad this looks and because of the fact that the president-elect is saying that he will not - the party should not focus on this. So this is the only way they could change this, have a meeting, adopt a new rules package that the full House could accept this afternoon.

So right now, behind closed doors, John, they are discussing what to do. And I would be surprised if the Republican leadership gets rolled again by the rank-and-file because that's what happened last night, and that's why they're in this difficult spot.

KING: Donald Trump, again, disrupting the day.

Phil Mattingly, you spent a lot of time on the campaign trail. Here's my question for you. You understand the changed environment out in the country from the campaign trail. Is this perhaps a bit of evidence that the rank and file Republicans don't understand, that the Donald Trump election tells us something different and protecting yourself like this, doing something that's an inside game is - oh, we're going to go into the Pledge of Allegiance from the House. Sorry, Phil, we'll get back to you in just a minute.

UNIDENTIFIED MALE: Thank you for the illumination of your presence. As we begin a new year and a new Congress, please be the guide that will lead us to fulfill your purposes.

KING: That was the prayer there to convene the United States Senate. Sorry, we were awaiting the Pledge of Allegiance. It will be coming up in the House as well.

Let's get back to Phil Mattingly.

You see the vice president, Joe Biden, there, standing over the shoulder. Seventeen days left in his vice presidency and in being the president of the Senate, a ceremonial role largely, but the vice president on hand today.

Phil, to the point it was trying to make there, out on the campaign, Donald Trump promised change. He ran as much sometimes against the Republican establishment as he did against the Obama administration. Was this decision yesterday in a closed meeting for House Republicans to gut this ethics agency maybe a reminder that they don't get the message of the election?

PHIL MATTINGLY, CNN CORRESPONDENT: I think the most interesting element, John, is that the House leadership, the members that often had so many problems, difficulties supporting now President-elect Donald Trump, they got it. They understood the problem that this was going to cause. They, behind closed doors, sources saying they warned their members. They've warned their conference.

While they might agree with some of the reforms that they were targeting with this ethics entity, they did not agree with the timing. And that ends up lining up directly with the president-elect. The interesting thing is that the rank-and-file decided to go against them anyway despite the warnings, despite what they saw over the campaign season, despite what they expected to come from the president-elect.

Now, John, one of the most interesting elements of this morning, is I was talking to Republican aides, to House aides, who said, look, we think you guys are making this way too overblown. We think that people aren't really going to be paying to this unless - and the unless was the president-elect decides to tweet about it. Well, the president- elect decided to tweet about it. And I can tell you, over the course of the last hour or so, I've been talking to House aides who said pretty plainly, our phones are ringing. And when phones ring in the Capitol Hill offices, members start to react. Now you have an emergency meeting, John.

[12:05:17] KING: It is a reminder of how different, how unpredictable the new terrain here in Washington is. Seventeen days away from the Trump administration, but he could have called - the president-elect could have called the leadership. He could have called some of these rank-and-file members. He could have had his chief of staff do that. He could have had his vice president, who knows many of them, do that. Instead, he decided to tweet publicly, to embarrass them, to shame them in public. Again, welcome to the new world order. That's one of many different things.

As we wait for the House and Senate to come in - Dana, I may have to interrupt you, but speaking of different, you had a very - you had a conversation - a very interesting conversation this morning with the new face - the one new face in the congressional leadership, the man who will lead Senate Democrats, an interesting perspective on the president-elect.

BASH: That's right, they're fellow New Yorkers. He - Chuck Schumer, the new minority leader, has been the recipient of Donald Trump's money back when Donald Trump was a Democrat. And the two of them have spoken. And there was a report in "The New York Post" that Donald Trump, when they spoke, told Chuck Schumer that he likes him better than his fellow Republican leaders. I asked him about that. Listen to how it went.


BASH: The president-elect reportedly told you he likes you more than his fellow Republicans here in Congress. Did he tell you that?

SEN. CHARLES SCHUMER (D), INCOMING MINORITY LEADER: I don't want to get into what he told me. This was reported by a - someone, quote, from the transition team.

Look, I don't know Donald Trump very well. I never played golf with him. I never had a meal with him. I'd cross his path at things in New York. But that's going to have very little affect. My guiding light is going to be the principles of our party and what I think are the right principles of our country, helping the middle class, helping those trying to get there.

BASH: But you're not saying he didn't say that?

SCHUMER: He said something close to it.

BASH: Were you surprised to hear a Republican president tell a Democratic leader he likes you more than the Republicans?

SCHUMER: You know, when you get to be - when you get to be in my position, people do tend to want to flatter you, and you've got to take it with a grain of salt.


BASH: And, John, he talked about the nickname that George W. Bush had for him, and it didn't do Bush many favors when it come - when it came to Chuck Schumer. But we'll hear from him on the Senate floor when the Senate opens in just a bit. He's trying to really walk the line between not giving in too much, but giving in just enough.

KING: More later on that fascinating dynamic.

The Republicans are taking full charge of Washington, but whether (ph) the Democrats, it's also a big subject of conversation. We will get back to that.

Let's look up into the United States Senate now. Dip in for a little bit. Joe Biden swearing in members.

JOE BIDEN, VICE PRESIDENT OF THE UNITED STATES: Faith and allegiance to the same. That you take this oath, this obligation freely without any mental reservation or purpose of evasion and that you will well and faithfully discharge the duties of the office on which you're about to enter, so help you God.

CROWD: I do.

BIDEN: Congratulations.


KING: The current vice president, Joe Biden, the Democratic vice president, again, 17 more days in his job. He has been a fixture here in Washington, a creature of the United States Senate. A proud creature of the United States Senate for 30 something years before he became President Obama's vice president.

Let's bring the conversation here in the room for a minute. We may have to jump back to Capitol Hill at any moment.

But as you watch this play out, Mary Katharine Ham, you're very well plugged in among conservatives. Why? Why? If this agency needs to be fixed -


KING: And a lot of people say it needs to be fixed, then why not have public hearings? Why not signal to the American people you're going to do this? Why not get Democrats on board and do it in a bipartisan basis? Why, when you have a new president coming to town, have the first thing you do, pull the teeth out of a government watchdog agency?

HAM: Well, it's very rare that Trump tweets something and I think to myself, I could have tweeted that. So, in this case, I'm with him and the leadership on this. And I think part of it is just regular old GOP stupidity, which is something that they're quite adept at and in the past -

KING: That's a bipartisan (INAUDIBLE), right?

HAM: Yes, this is just - but just strategic stupidity.

But, number two, I think it might be a little bit of just, we're unleashed. Donald Trump is president. We shall do what we shall do. But they have forgotten that they don't have the magical power that Donald Trump does to tweet and change the entire media cycle. So when this caught on and when it became such a symbol of what might look terrible for them and Trump decided to tweet as well, I wonder if it also means that there is communication between the leadership in the Republican Congress and Trump on this matter and whether that means something.

KING: All right.

REID WILSON, "THE HILL": This underscores a little bit the fact that there are sort of three factions of the Republican Party in Washington, D.C., at the moment.

KING: Right.

WILSON: There is the House leadership, who we mostly consider the sort of Republicans of what we know, Paul Ryan, Kevin McCarthy, Mitch McConnell, not terribly different. There is the incoming president- elect, who has signaled that he's going to do things a lot differently by tweeting his agenda. And then there's this third faction, the Republican freshmen and, I should say, the rank-and-file Republican members in the House who have really bucked leadership for the last six, eight, ten years and essentially since George W. Bush became a lame-duck, there have been a group of Republicans who are opposed to leadership as much as they are opposed to Democrats. They are going to be a factor in sort of putting together the coalitions necessary to pass whatever is on the Republican agenda.

[12:10:27] KING: This - the committee chairman here though is a senior Republican, Bob Goodlatte, from the state of Virginia. This is not a Tea Party rebel who wants to just poke the speaker, or we wouldn't think so.

JEFF ZELENY, CNN SENIOR WASHINGTON CORRESPONDENT: Right. Exactly. And Reid is pointing out something that's fascinating, because a lot of these members, I think two-thirds of them or so, have never worked under an entirely Republican controlled Congress. So they are going to have a president-elect who will poke at them and see how they react for a time. But I think for matters of accuracy or in history, Democrats also hate

this panel (ph).


KING: Right.

ZELENY: And there were many Democrats back in the day not that long ago, actually, who also wanted to get rid of it. So we're going to hear a lot of screaming and complaining on the floor from House Democrats, but in reality all of them would like to get rid of it. But the optics are terrible and Republicans are in control, so they own this problem today on day one. We'll see how it's resolved. We don't know. We started the morning thinking it would pass. We are not sure now.

KING: But you do not have to have much of a brain to know that this was going to look terrible.

ZELENY: Right.

JULIE PACE, ASSOCIATED PRESS: It's really hard to imagine why this was the opening move of this Congress -

KING: Right. Right.

PACE: This Republican, you know, House that has been talking a lot about actual policies that they want to move forward on. Obamacare, for example. That is such a major issue for Republicans. Why not focus on that? It reminds me of, slightly to a different degree, but it reminds me a little bit of when you had the Obamacare troubles and House - the House and Senate decided to shut down the government instead of focusing on that.

KING: Right.

PACE: They kind of can't get out of their own way sometimes.

KING: They need to stop and think before they act.

Let's go right back to Capitol Hill for some breaking news. And whether you're a Democrat, Republican, or an Independent, it sounds like, Manu Raju, that we should all say "thank you, Mr. President- elect."

RAJU: Well, in a major about-face, House Republicans have just dropped that ethics change, that change to the ethics rules and how the ethics committee would investigate members going forward. They have decided to strip that very controversial provision that got all that backlash in this emergency meeting that just happened right now on Capitol Hill.

I mean this happened lightning fast, John, after, in the last hour, the House Republican leaders were saying this package was still going to be voted on because a majority of their members had voted for it, and they're going to do what the majority of their members want. But after Donald Trump's tweet criticizing this change on how ethics controversies are being investigated here in the House, they've decided no longer to move forward with that change.

In this closed door meeting, I am told, along with our colleague Deirdre Walsh, that they voted by unanimous consent, that means unanimously as a Republican conference, to take this provision out. So recognizing the significant backlash they've been getting and how bad of optics this is on day one of the new Congress, House Republicans moved forward with this package without any changes to that ethics investigation. So a major about-face for Republicans after all that backlash and a hope that they could be on the same page as they move forward with their agenda going forward.


KING: Manu Raju with the breaking news on Capitol Hill. And, again, many of you at home have probably never heard of this government watchdog agency. It is about that, Congress should have independent eyes watching it for ethics reasons. But it's also about something else. We are learning today on the first day of the 115th Congress that, brace yourself, these will be unpredictable times. We have a president-elect who will be, in 17 days, be president who communicates very differently, who is not beholden to the Republican Party. He was nobody's favorite for the nomination among the Republican leadership, and he is now about to be the president-elect, and he is proving on day one of this Congress, even before he moves to Washington, that he can change things with a tweet.

PACE: And, you know, you don't want to read too much into the dynamics of the Republican Party based on one action here, but if we are going to try to do that, it shows that when Paul Ryan and Kevin McCarthy were saying basically the same thing to their members yesterday, their members decided to act on their own. When Donald Trump says this, they act. It kind of shows us who's got the juice here.

KING: Right.

ZELENY: We saw a tweet last week from the president-elect talking about the economy, and he signed it, "thanks, Donald." I think this is actually a "thanks, Donald" moment -

KING: Right.

ZELENY: Because this wouldn't have happened -

PACE: Yes.

ZELENY: Without his action. But as Mary Katharine said earlier, we don't know yet if there was back channel communication at the time -

KING: Right.

ZELENY: Between the president-elect in Trump Tower in New York and on Capitol Hill.

KING: But the process - the process was business as usual, and the process was, frankly, a joke. So good for the president-elect for stopping it.

ZELENY: Right.

KING: And may - if they're going to do this, do it in the light of day.

HAM: Well, and I talk - I often talk facetiously about Trump's magical powers, but this was undoubtedly a fumble. It was an obvious fumble. And now, on day one, after two tweets, you have the Republican leadership and Trump unified. The rank-and-file in line, which they aren't often as - over the past years, and the media is going, hey, Trump was right. I mean this is - this is what I'm talking about. It's strange times.

[12:15:10] KING: Well, the honeymoon - honeymoons can end quickly. Honeymoons can end quickly. And, again, we're watching. You see in the top right of your screen there, that's the house coming into session a few minutes late because they were in this meeting to now strip this controversial rules proposal.

On the bottom you see Vice President Biden swearing in more members of the United States Senate. The 115th Congress getting about its business. Seventeen days before a new Republican president comes to Washington.

Tomorrow the current president will be on Capitol Hill urging House Democrats to fight as hard as they can when the Republicans move to repeal his signature health care act, the Affordable Care Act, Obamacare. Vice President-elect Mike Pence will also be there meeting with congressional Republicans trying to chart a course for repealing it. Again, unpredictability. We're seeing it today with President- elect Trump changing the ethics debate. Listen here as the number two House Republican and one of the president-elect's top advisors explain what is going to happen when the House moves very quickly - the Congress, the entire Congress, moves very quickly to repeal Obamacare.


REP. KEVIN MCCARTHY (R), MAJORITY LEADER: In the repeal process, we can do that pretty soon. If you watch, we'll start taking up the budget, first in the Senate for 2017.

KELLYANNE CONWAY, TRUMP TRANSITION SENIOR ADVISER: Let's see what happens practically. Some people - some experts say that it could take years to actually complete the process, but there's no question that there will be different health insurance coverage in this country under President Trump.


KING: I'm going to go to my "Hamilton" friend here first, winning is easy, governing is harder.

HAM: Yes.

KING: And so Kevin McCarthy says we can do this in the budget this year. Kellyanne Conway says it could take years. That - what she means is, President-elect Trump boxed in congressional Republicans by saying preexisting condition coverage should stay. If you're 26, you should be able to stay on your parents' coverage a little bit longer. He - he named several specific proposals that the Democrats love and that cost money that he wants to keep. How do they do that?

HAM: Right. Well as Democrats learned, it's very tricky to revamp the entire health care system of the United States of America, and now the Republicans will be faced with the same thing. They are still very real problems with Obamacare and they are going to be talking about the a lot. Repeal can happen quickly, technically, but they will probably put in several years of timelines, or as the Obamacare implementation did itself, so that people don't get stuck by losing coverage that they had.

The thing that worries me, as we've seen today, not terribly smart about strategy. And this has to be a really delicate process if you're not going to tick off many people who do have some coverage that they like better. There are also many people who don't like their coverage better.

ZELENY: Right, but now it is about taking things away from people -

KING: Right.

ZELENY: And that may not be popular among some people, but watch confirmation hearings. That's why these are also so important. Tom Price, of course, has been nominated to be the Health and Human Services secretary. He has actual ideas how to repeal and replace Obamacare. We'll see if the president-elect agrees with him or if Congress agrees with him. But this is a tough road. So Kellyanne Conway lowering expectations for the speediness of this process.

KING: Right.

WILSON: We talked about the different factions within the Republican Party. There are other factions too, including more ideological factions. The president-elect is not - does - is not terrible ideologically moored to standard, traditional, conservative views.

KING: Right.

WILSON: There are a lot of groups out there around D.C. who are moored to traditional, conservative views and who want to see Obamacare repealed and replaced. One of the things that a handful of Republican governors did, including Mike Pence in Indiana, was they passed something similar to Medicaid expansion. In fact, it was pretty much the same thing, they just called it something different. I think it was Hoosier Cares in Indiana.

KING: Right.

WILSON: So if this Republican Congress, if the answer to repealing and replacing the ACA is something that looks 97 or 98 percent like the ACA, is that going to be enough for the conservative ideological groups who are still involved in primaries, who still play a huge role in setting the agenda for the Republican Party going forward. That's something they're going to want.

KING: It - it has been, the Affordable Care Act or Obamacare, call it what you will, it has been a political weapon for the Republicans for years now. The House Democratic leader, Nancy Pelosi, noting yesterday, you break it, you own it. This will become the Republicans' issue now, and potentially their problem. We'll see how it goes.

We're going to take a quick break. As you can see there, live coverage of the 115th Congress getting about its business. A dramatic day here in Washington. The president-elect already putting his stamp on this big day.

When we come back, what will Congress do about trade? And as Jeff Zeleny just noted, a lot of the president's appointees to the cabinet get confirmation hearings pretty soon. We may answer then a lot of the very many questions everyone in Washington has about the policy priorities of the new administration. Stay with us. Our special live breaking news coverage continues in just a moment.


[12:23:02] KING: Welcome back to INSIDE POLITICS.

You see there live this hour at the top right of your screen, the United States House of Representatives coming into session, the 115th Congress beginning. The bottom right of your screen, the United States Senate. Again, the new Republican controlled Congress taking charge here in Washington, 17 days before the Donald Trump inaugural.

The president-elect already making his presence felt on this day normally for celebration and ceremony. Tweets from Donald Trump forcing House Republicans to go into a private meeting and strip from a new rules package a plan to gut an agency that oversees congressional ethics. So one impact of the president-elect already.

Another big issue when the Congress gets about its business, gets past this ceremony, is, how will Republicans deal with their new president on one of the big issues where there are significant disagreements? That is trade.

Back to our conversation in the room here. We'll keep the Congress scenes up as well so you can watch it play out.

Donald Trump, in the campaign, and he can do this part by executive action, he can serve notice, he is withdrawing from NAFTA, the North American Free Trade Agreement. He can serve notice that he's going to withdraw from the Trans-Pacific Partnership. Easier said than done, but you can serve notice. It starts a process that takes some time.

Just this morning, Ford Motor Company announced it is cancelling plans to build a plant in Mexico and keeping 700 jobs here in the United States. And it said it's doing that in part as a - essentially a gesture, an olive branch, a vote of confidence in President-elect Trump. Good for President Trump.

President-elect Trump tweeting this morning, "General Motors is sending Mexican-made model of Chevy Cruise to the United States. Car dealers tax-free across border. Made in USA or pay big border tax." This is one of the most controversial proposals. Democrats don't mind it so much. Some Democrats don't mind it so much. But this is against free market Republican trade policies. Again, listen to the number two House Republican this morning saying, sure, we want to work with our new president, but we're not sure about all his trade ideas.


REP. KEVIN MCCARTHY (R), MAJORITY LEADER: When we talk tax reform, what are ways that we can go about creating more jobs in America, but not having a trade war? I think in a tax reform that we're working on right now and we started before we even left in the last Congress, to actually level the playing field and give America the ability to compete around the world.


[12:25:07] KING: I'm not trying to leave the impression that the Republican - the new Republican president will not agree with the Republican Congress on a lot of things. He will. He's talked about stripping regulations. He's talked about working on repealing and replacing Obamacare. There's a lot that they will agree on.

But there are some pretty big fundamental issues where he is at odds with not only the overarching philosophy of the Republican Party, but with the leaders, with Paul Ryan, the speaker, with Mitch McConnell, the Senate majority leader. They are free traders. They do not believe that a president of the United States or that the federal government should be picking winners and losers, singling out General Motors and slapping them publicly.

WILSON: So we talked earlier about the difference between the Republican leaders getting it on this ethics reform package and the House rank-and-file members not necessarily understanding the message that the election sent. I think the situation is reversed here. We've got House Republican leaders backing trade deals that the majority of Americans support and that is good for the majority of the American economy. However, the people who oppose these trade deals are the people who have been hurting the most and, frankly, the people who put Donald Trump in the White House in Michigan and Pennsylvania, in Ohio, in these swing states where trade deals have hurt manufacturing jobs and the notion that this is going to be a big schism between the president-elect and the Republican majority in Congress is probably good for the president-elect who is going to be on the side of those working class white voters who, one, sent him to the White House this time and, two, who he is going to need to keep him in the White House in four years.

KING: And yet the flipside of this is, there are a lot of Republicans on Capitol Hill - you alluded to a bit of this at the top of the program - but a lot of Republicans on Capitol Hill think Donald Trump really doesn't care about the minutia of policy. He set out these broad goals. But if we pass a tax reform plan that has some trade sticks in these but not exactly what he wants, if we pass an immigration plan that doesn't build a wall but that has more money for some border enforcements, maybe it's cameras, maybe it's drones, maybe it's several miles of wall, that he will sign it. Are they right, are they wrong, or is that one of the, we not knows?

HAM: I'm a bit more skeptical on the issue of trade because he has been very consistent about this for many, many years and there aren't that many things he's been consistent about for many, many years. But I do think voters see that their - they see a lot of room between free trade and, like, tariffs and trade wars. And so I think there's room to work there. The question is, how well they work together, of course. But I think also free traders, and I'm one of them, get very concerned about tariffs and trade wars and the impact that has on the middle class, which actually does affect those exact same voters. The message is harder to sell, as we have seen with the election of Donald Trump.

PACE: And that - and the tariffs is an area where Congress will have more power than Trump will. He can't do that unilaterally. I mean he talks about it a lot. He's continued to do it through the transition, tariffs on goods from China. That is going to be something that's going to be very hard for Republicans to swallow. You know, to the point you were making, though, the bet that Paul Ryan essentially made in the general election, and that he continues to make, is that Donald Trump wants to win and it matters less to him what he's winning on and more that idea that he can claim victory.

I'm not sure that that is the smartest bet. It's basically all Paul Ryan has to hang on right now. But I don't think we know how Trump is going to react if Republicans send him something that he does disagree with. Just because it's his own party, I think he's proven that there's no guarantees he's going to support them.

ZELENY: He also wants to be strong. More than anything else, he wants to project strength. That's what he's doing this morning in the GM/Ford thing. He is running the show here. But once the Congress is fully formed and once he's in office, the challenge for him here isn't that he - in the details of that. But Democrats will also play a key role here, particularly in the Senate, on trade and other things here. So that's why the dynamic that Reid talked about earlier is so fascinating because the Democrats, a key point of that triangle, particularly in the Senate where you need them to have 60 votes.

KING: And I'm not saying the president-elect does not have influence over these companies. Without a doubt, he had. But they are also making a bet that they are going to get tax reform, that they are going to get lower corporate taxes, that they are going to get more incentives for keeping jobs here in the United States. So they're sort of essentially putting their chips on the table now, expecting the Republican Congress and the new president will give them a more pro- business environment. Something they wanted throughout the Obama administration -

ZELENY: Right.

KING: Throughout the Bush administration for that matter. They - competing parties couldn't get together on a big tax reform plan. We will see if it happens. A quick break here. When we come back, Congress about to elect a new speaker of the House. Looks like Paul Ryan will survive. Remember a few months ago people thought he would go.

Plus, much more as the 115th Congress gets down to business here in the new Republican controlled Washington. Stay with us.