Dan Clifton: Washington Is Wall Street's New Center
For most of my career, Wall Street and Washington operated like two cities that didn't quite speak the same language. Today, what happens in one increasingly decides what happens in the other—and almost no one translates between them as well as Dan Clifton. This week I finally caught him for a conversation I've wanted to have for as long as I've had the show.
Dan and I have been friends for more than twenty years, going back to New Jersey politics. He's a partner and head of policy research at Strategas, a job that has him up before dawn helping investors, executives, and even policymakers understand what Washington is about to do and what it will mean for the economy. He's a sought-after voice on CNBC, and every single time I spend time with him, I walk away smarter. This conversation was no exception.
From loading buses in New Jersey to the top of the governor's office
Dan's path started at Rutgers in the mid-1990s, working part-time at a housing finance agency in Trenton and getting pulled into Republican politics while Christie Whitman was governor. He organized Rutgers students for the governor's reelection, and he tells the origin story as a mix of preparation and luck. Worried there wouldn't be enough people at the buses on Election Day—the kind of empty-parking-lot image that becomes the story of the day—he pushed senior campaign officials hard. It turned out to be overflow capacity, and his team's county reported last and put the governor over the top.
From there he moved fast. "I went from loading up college students in 1997 to working for the governor's chief of staff by 2001," he said—"one cycle from bottom to the top." He worked across New Jersey government, including the Port Authority of New York and New Jersey and the Casino Reinvestment Development Authority, before moving to Washington in 2002 to work on tax policy during the Bush tax cuts. A friendship with Larry Kudlow eventually led to a startup research firm asking him to run its Washington office. That was nineteen years ago. The firm has grown from a small startup into a successful one with roughly 60 employees and clients in dozens of countries. "It's been a good ride."
"Washington as the new financial center"
What Dan's team does is deceptively simple to describe and enormously hard to do: figure out what Washington—the White House, Congress, the regulatory agencies, the Federal Reserve—is going to do, and how it will hit financial markets and the economy. "Partisan politics are out the door," he told me. "We don't have the luxury of choosing one side or one issue. We just got to know what's likely going to happen and what the impact of that's going to be."
When he got into the business, he was, in his words, the lowest guy on the totem pole in 2007. Then the financial crisis hit and Washington's grip on the markets tightened dramatically. "We used to joke, like, Washington as the new financial center," he said. "And that tends to be the case today." He backs it up with a striking data point: in 2008, about 25% of companies named Washington as their largest risk in SEC filings—mostly government-dependent healthcare, defense, and utility companies. A decade later, "more than half of the S&P 500 was saying that Washington is their greater risk," and roughly 75% put it in their top two. His job is to cut through the noise "and say this is what's important at the end of the day."
The team that punches above its weight
Dan is relentlessly generous about the people around him, and his Washington team—around sixteen people who, as I told him, punch above their weight every day—is the engine. He walked me through the three colleagues on the other side of his wall. Chris McGrath, an intern back in 2017, understands the Treasury and Federal Reserve "plumbing of the entire financial system probably better than most people in the government right now." (McGrath was also drafted into Major League Baseball; Dan likes to say he's "a better data analyst than he was a pitcher.") Courtney Gellman takes what's happening in Washington and figures out which companies will be affected, building the investment implication—because, as Dan puts it, simply reporting what's happening in Washington is "no different than what you could see on TV or read in the newspaper." Jeanette Lowe lives inside the legislation, where the quirks and nuances hide. "No one individual can do this all on their own," he said. After nineteen years, it's still a team effort—and it gets better every day.
The $150 billion tax-refund tsunami no one is pricing in
The most useful thing Dan does is spot the thing Washington and Wall Street are both underappreciating. Right now, that's the design of the major tax legislation passed last summer—the "one big, beautiful bill." There were two ways to deliver the relief, he explained. You could lower the income tax rate and adjust withholding so "every American would get a raise right away," almost immediately blunting the drag from tariffs. Instead, the relief is coming through refunds tied to the state-and-local deduction, the child credit, and no tax on tips. The result: "a tsunami of tax refunds that are going to come out in February, March and April." He puts the delta at about $150 billion—"about a half a percent of GDP"—potentially the largest tax-refund distribution as a share of the economy outside of COVID.
The political consequence is that voters aren't feeling any benefit yet. "Americans are worried about affordability. They're not getting any credit for one big, beautiful bill because nobody's felt it yet," he said. "And that was really a design issue." His team's value is laying out option one, two, and three, and then modeling exactly who gets those refunds and when—an effect he says is underappreciated on Wall Street and even less understood in Washington. As he put it: voters are relentless—"what have you done for me lately?"—and the refunds don't land until well before, but not right up against, the midterms.
The lobbying index: measuring who has a seat at the table
The heart of our conversation was a tool Dan built that more people in Washington should understand: the lobbying index. "It basically quantifies the impact of government affairs on companies' earnings," he explained—a way for a corporate lobbyist to go back to headquarters and show the value they create. But that's not why he built it. After Bear Stearns collapsed in March 2008, his team spent that summer testing whether political variables historically moved stocks. "Everything failed," he said—PAC funding, individual companies, none of it worked. "And then we hit gold." Lobbying, measured not in raw dollars but relative to a company's size, was statistically significant across the top 50 companies and clearly affecting stock performance. Companies dedicating resources to government affairs were earning an outsized return in the equity market.
He was cautious—in investing, backtests always work until real life proves them wrong—but the results held. In 2008 the equity market fell 40%; his lobbying index fell 28%. "To get a 12% spread is really an enormous difference." When he went public with it in early 2009, as the pitchforks came out over who caused the crisis, his pitch was blunt: "These are the companies that have a seat at the table. If the pitchforks come out, maybe they'll have some level of protection." The basket outperformed year after year from 2009 through 2017. He's since broadened it to small and mid-size companies, to non-U.S. firms that lobby in Washington ("that's where we get the most outperformance"), and to specific themes like defense technology.
The point isn't cynical, he insists. "Companies are making an investment in Washington like they would for research and development, with the idea that they're going to get some sort of return," and the market doesn't know how to price it. He pointed to Vertex Pharmaceuticals, whose cystic-fibrosis work he calls revolutionary, and to Hyundai Electric—one of the fund's largest holdings—whose power-generation business sits at the center of Washington's scramble to power AI. For anyone who wants to look deeper, the strategy runs through the firm's asset-management business in the Strategas Global Policy Opportunities Fund (SAGP). "Lobbying gets a bad name," he said, "but the good that it does is much greater than any of the negative."
Why policy uncertainty is the new normal—and what he's watching
Even companies that don't lobby, Dan argues, need "an ear to the ground." He cited economists who measure policy uncertainty and hit the highest level ever recorded this past April, when tariffs affected every company's supply chain. The firms paying attention understood what was coming and how to work around it—no special treatment, just awareness. And counterintuitively, he doesn't see uncertainty as all bad: "It creates this environment where it gets fixed if it's too bad."
The bigger frame is that we're at the end of an era. "We've just gone through a 30-, 35-year period where the Berlin Wall went down, the world globalized, inflation was low, interest rates were low, political volatility was low. And that period is basically coming to an end." What replaces it, he expects, is deglobalization, slightly higher inflation and interest rates, and more geopolitical volatility—no matter which party is setting the speed. "It's not bearish. It just requires an adjustment. And those who figure out that we're adjusting are going to be the winners." (He's also holding out hope the '80s comeback delivers another Rocky IV or Top Gun.)
As for what he's watching next: a rare, deep split at the Federal Reserve over whether tariffs are stoking inflation or slowing growth; the implementation of the tax bill, including roughly $135 billion for companies to write down factories and R&D to encourage onshoring; electricity costs, which he saw drive recent elections and may push Congress to act before the midterms; housing and mortgage rates locking young people out; and a looming Supreme Court ruling on tariffs. On that last one, "we think that Trump has a full replacement plan that's legal" and would move quickly—but the ruling itself "will be a big news story." And then there's keeping the government open at the end of January. "No shortage of topics."
What keeps him going
For all the intensity, Dan is grounded by family—a wife and two kids, nine and five—and by baseball. His investment themes even track it: he sees a younger, larger family cohort moving into youth sports and, eventually, driving demand for professional sports. But the deeper reason is bigger than markets. Sports, he told me, is "the one thing that unifies our country at a time when we're being divided almost more so almost every single day." He went off X for six months and came back convinced: "There's a lot more that unifies us than divides us." I'll take that—and, as fellow fans, we agreed on the sign-off: let's go Yankees.
Before we wrapped, I asked Dan who I should talk to next. He nominated two people who play the government-affairs game well: Scott LaGanga from the pharmaceutical world, and Nadia Paps, an energy lobbyist—especially given how much electricity and affordability will shape 2026. They're both on the list, and I told him he gets the credit.
Key Takeaways
- Washington has become "the new financial center" — more than half of S&P 500 companies now name it as their top business risk, up from about a quarter in 2008.
- Clifton's lobbying index shows companies that invest in government affairs, relative to their size, have historically outperformed the broader market.
- A roughly $150 billion wave of tax refunds tied to this summer's tax bill is set to hit taxpayers in February through April — one of the largest refund distributions as a share of GDP outside of COVID.
- He frames current policy uncertainty as self-correcting rather than purely negative: "it creates this environment where it gets fixed if it's too bad."
- Key items on his watch list heading into 2026: a Federal Reserve split over tariffs and inflation, a pending Supreme Court tariff ruling, and electricity costs shaping congressional action before the midterms.
Find Dan Clifton
Dan Clifton is a partner and head of policy research at Strategas, where for nineteen years he has helped investors, executives, and policymakers understand how Washington's decisions move markets and the economy. He's a regular voice on CNBC. To learn more about his team's work and the lobbying index, look up Strategas asset management and the Strategas Global Policy Opportunities Fund (SAGP)—or reach out to Dan directly.
The Friday Reporter is hosted by Lisa Camooso Miller. Listen wherever you get your podcasts — and subscribe so you never miss a conversation.