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But first, here’s Abby Livingston with the view from the Hill...

For the duration of Barack Obama’s two terms in office, Robert Wolf was perhaps the only Wall Street mover and shaker in the White House orbit whom Obama actually liked. In the run-up to the 2008 presidential primaries, Wolf, then serving as chairman and C.E.O. of UBS Americas, had been at the forefront of a generational shift in the allegiances of Democratic megadonors, enabling Obama to build the fundraising juggernaut that helped beat Hillary Clinton. When the general election arrived that fall, Wolf functioned as Obama’s eyes and ears on Wall Street as its leaders peered into the abyss of the oncoming financial crisis, helping the candidate to pass the real-time test of leadership that John McCain (whose immediate response to the collapse of Lehman Brothers was to declare, “The fundamentals of the economy are strong”) flunked with a vengeance. Once in office, Obama kept Wolf close, professionally and personally, handing him three federal appointments in succession, playing an ungodly number of rounds of golf with him, and staying just up the road from Wolf’s home on Martha’s Vineyard every summer. Wolf now sits on the board of the Obama Foundation, in addition to running the boutique financial firm 32 Advisors and serving as the chairman of the A.I.-driven messaging platform Community. He’s also a contributor to Fox News, where he preaches the Democratic gospel in those hostile climes multiple times a week.

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With Elon Musk’s woebegone adventure in Washington coming to its unceremonious end, I dialed up Wolf on my Impolitic podcast to get his thoughts on the past, present, and future of the Trump-Musk bromance; the TACO (Trump Always Chickens Out) trade on Wall Street; and the state of the economy writ large. As always, the excerpt below has been edited and condensed for clarity. You can listen to the whole thing here.

John Heilemann: The Trump-Musk bromance is unlike any relationship between a president and a business titan we’ve ever seen in this country. It began less than a year ago, was arguably the main event of the first phase of Trump’s second term, wreaked havoc in Washington… and now it appears to be over. How do you explain what happened here? Robert Wolf: The transformation of Elon Musk, in some ways, stuns me. A few years ago we called him the Thomas Edison of our lifetime—and I still think he is. I wasn’t a stalker, but I was a big fan. That obviously has changed quite dramatically. Going from Obama to Trump in 2016 was one of the most pivotal things. Trump is a transactional president; Obama was the antithesis of that. When you think about the two bookends of power, it’s money and politics. And I think what we’ve seen over the last year is that these mega-wealthy billionaires have the money, and they wanted to find a way to have the power. And voilà, there was President Trump. There’s no question it has helped them proliferate some of their money while gaining power, where their voices are, in some ways, changing policy. And if there’s one person in the business world intertwined with Washington, it’s Elon Musk, because of SpaceX. You could say he has a monopoly on satellites. Between SpaceX and Starlink, he’s front and center. When he took over DOGE was when I first thought Elon was disingenuous. The idea that he just really caused consistent chaos, and then all of a sudden got run out of town—I think it’s a lesson that these guys’ power only goes so far. And what we’re also seeing is that the power of the executive office only goes so far. Congress has been even more disgusting than Elon. They’ve given up the power they have, and they’ve given up legislative authority. If history is any guide, it won’t be too long before Trump is completely disassociating himself from Elon—“Barely met him, hardly know him,” yada, yada, yada—don’t you think? I’m gonna take the other side of that. I think they’re both going to try to thread the needle. The midterms for Trump may be more important for him as a president than [in] any other presidency we’ve experienced, because everything he’s done is in the grey area of executive decisions and legislation. If he loses the midterms, and he’s a lame duck, then there’s a 50-50 chance that we start seeing impeachment trials again. So therefore, I think he’s going to do everything he can to hold on to Musk. Because when you hold on to Musk, you hold on to X, and you hold on to the money. I have a feeling they’re going to have a tough midterm, because what they’re doing in this reconciliation bill is a disaster, whether it’s the huge deficits, the Medicaid [cuts], or the military spending. Do you think Musk’s exit will make him less of an opportune political target, or will Democrats keep him front and center all the way through the midterms? And then in the longer term, how do you think history will reckon with Elon’s time in government? He’s absolutely going to be front and center in the midterms, for good and bad. His money will be front and center, and [the image of him] with the chainsaw will also be front and center—so I think it’s more negative than positive [for Republicans]. With respect to his legacy, because deficits and the debt only keep going one way, the idea of DOGE is going to be central for years to come. And I think he’ll get credit for that. I’m a huge supporter of DOGE [in theory]—but to be done well, it has to be aligned with legislation. I’m just hopeful that businessmen [in the future] will take on that role without the transactional element and what may be the self-dealing.

What’s the overriding vibe on Wall Street regarding Trump? I’d say 40 percent of Wall Street is always Democrat, 40 percent is always Republican, and 20 percent go back and forth. I think it’s hard for public-sector C.E.O.s to give a personal viewpoint anymore. And I think that’s sad, because these should be thought leaders. And especially with someone like Trump, they’re just mum on it. My view is that they’re kind of now wallflowers. I’m not sure where those leaders of tomorrow from the private sector are going to come from. It’s just hard to understand. There was a time when finance and real estate were always front and center in politics, and then it got passed to the media folks. Because of Trump, now everyone is kind of hands-off. You either play his game, or you don’t want to be involved.

This TACO meme is a Wall Street creation, and my sense is that it’s at the heart of how the market sees the tariffs and the trade war: It’s all going to be fine because Trump always chickens out. On Fox on Liberation Day, I called it the Game of Thrones Red Wedding. So my view was that what he announced at the White House was insane. No one thinks it actually can be done legally. And the idea that Trump was going to see the market go down and [stay the course] when he’s actually the president who watches the market more than anyone—it just felt like this was not gonna be long-lived. And the guy’s been buying mulligans on this trade issue ever since Liberation Day. Hence the TACO thing. The TACO thing is interesting. Trump has changed his position on every one [of the tariffs]. But I don’t think they realize the impact [their inconstancy on trade] is having on the economy. The economy is going through an incredibly volatile phase, where no one knows how to bring in inventory or what the supply chains are going to be, which is why the Fed is just standing still until they can actually understand the balance between possible inflation with tariffs or possible economic slowdown due to the trade war. If Wall Street thinks Trump is volatile and capable of inflicting a lot of damage, isn’t it dangerous to mock him? If the TACO thing is true and he does, in fact, always chicken out—pointing it out risks goading him into sticking with the tariffs for longer. The only thing I will say to that is that it doesn’t always last with Trump. When someone is transactional like he is, everything’s a trade. And traders wake up the next morning with a clean slate. I’ve traded my whole life; you wake up the next morning, day one starts again. But I’ve never seen anyone forget the prior day as if facts don’t matter, and as if what he says doesn’t matter. So, poking the bear with him is just getting his goat. Then the next day, he’s on to the next.

In a recent interview, Scott Bessent said that U.S. trade negotiations with China are stalled. Trump has backed off the most extreme tariffs, but they’re still really high. How do you see that situation playing out? The Treasury secretary is supposed to be the voice of reason. I always thought capitalism should be apolitical, and unfortunately, we’re not seeing that in Bessent. I think he does his best [to rein in Trump], but when he does his best, it becomes word salad, because he knows he’s not being true to himself. As for the others [on Trump’s economic team], it’s the land of misfit toys. Whatever Trump says, they repeat. Trump is a tweener—a master marketer or a carnival barker. But either way, when he says something from his bully pulpit, even if it’s reversed the next day, 90 percent of the people believe it. So when he says he’s meeting with Putin, or there’s a China deal, most people aren’t listening to what Bessent says; they [already heard and believe] what Trump said. We wake up to him and we go to sleep to him. He’s living in our head rent-free, and he likes that, and he’s just going to keep doing it. And as long as his people around him continue to espouse the nonsense, then it’s a slippery slope we’re all going down, though I think Wall Street actually does a pretty good job getting through the nonsense. Bonds and the bond vigilantes are always more powerful than stocks. And we’re underestimating the impact of this reconciliation bill and the debt ceiling. President Trump and President Biden would have added somewhere around $16 trillion in debt. That is 45 percent of all debt ever within the last five years. And we’re acting like that’s normal. But I’ll tell you who’s not acting like it’s normal: the sovereign wealth funds who own it, and the U.S. bond guys who own it. The whole idea of, When there’s geopolitical risk out there, buy America, that’s reversing itself now. And I think the stock market is not taking that seriously enough. Certainly no one advising Trump is taking it seriously at all. Howard Lutnick was on TV the other night saying that Trump has $10 trillion worth of new factories in line to be built in short order—a ludicrous claim if you’re remotely aware that America’s G.D.P. is $28 trillion. When you’re a cabinet member or advisor, your job is to be like a truth serum when you’re talking to the president; you have to constructively challenge him. Then when you go out to the public, you have to read from Trump’s script, but you have to make it somewhat realistic with some facts behind it. This administration does not do that. They don’t constructively challenge him. And then when they go out and talk to the public, they’re spewing misstatements. With Lutnick, that’s the carnival barking side coming out. Bessent hopefully isn’t doing the same thing [privately with Trump]. But all of them have one viewer, and if they make that one viewer happy, then they get to keep their seat. In my role with President Obama, I tried to be truth serum with him in private, and then when I’d leave the office, I’d try to figure out how to square the circle on things I disagreed with. But I think these guys are told to never disagree. And I think that is scary in itself.

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