2016 Election Impacts: Major policy changes

Transcription

1 2016 Election Impacts: Major policy changes Jim Wiesemeyer Senior Vice President Informa Economics IEG

2 Election Shock... Trump wins electoral vote 2

3 Clinton Wins Popular Vote, But The Popular Vote 2016 Clinton: 61,877,622 Trump: 60,902,824 California: 2.9 million more votes for Clinton Massachusetts: 882,000 more votes for Clinton New York: 1.5 million more votes for Clinton Texas: 815,000 more votes for Trump 2012 Obama: 65,915,795 Romney: 60,933,504 3

4 How Did Trump Do It? Large gains across rural America Major support from counties in industrial Midwest where whites without a college education are majority Clinton made gains in big metropolitan areas, but soundly rejected in smaller cities, especially in industrial heartland Flipping several states Obama won in 2008 and 2012, including Iowa, Florida, Ohio, Pennsylvania and Wisconsin likely Michigan Clinton s coal position hurt: Trump won the top three states where coal is the biggest source of electricity -- Ohio, Michigan, Wisconsin 4

5 Trump Overperforms, Clinton Underperforms Comparison With Obama County Wins a Key Of the around 700 U.S. counties that voted for Obama twice Trump won 209 of them 5

6 Election Results by County 6

7 Election Results by County Red arrows show how much Trump surpassed Mitt Romney in counties across U.S. 7

8 Working-Class White Voters Trump: 67% Romney: 61% Clinton: 28% Obama: 36% 8

9 Presidential Race by Education Trump Clinton No Degree: 67% 28% College: 28% 45% 9

10 Turnout Down Among African- American Voters 10

11 What We Learned, What s Ahead Old electoral presidential election map strategy no longer works. Election pollsters need a new approach and some new people. Which Trump? Will we see Good Trump or Bad Trump? Trump is beholden to no one except voters he gave voice to. Trump will emphasize trade policy enforcement, not new trade pacts. Some investors betting on rising inflation. 11

12 GOP Holds Senate, House With Trump in White House, GOP rules Senate: Dems needed 5 to control chamber, only netted 2 seats House: Dems needed 30 seats to control, only got 8 One-third of all House Dems will come from just three states California, New York and Massachusetts 12

13 Senate Stays in GOP Hands Republicans will hold 52 seats in Senate next year, assuming Republican John Kennedy wins Louisiana runoff in December. Big GOP win in Wisconsin. Republicans lost Illinois seat where Democratic Rep. Tammy Duckworth defeated incumbent Sen. Mark Kirk. New Hampshire race: Dem. Gov. Maggie Hassan posed a stiff challenge to Republican incumbent Kelly Ayotte who lost in squeaker watch: GOP has mathematical and geographic advantage Only 8 seats for Republicans vs 25 for Democrats. 2018: Key Democrats in red states: Heidi Heitkamp of N.D., Joe Manchin of W. Va., Sherrod Brown of Ohio, Bill Nelson of Fla. 13

14 House GOP Majority Smaller No major GOP or Dem losses, but Democrats posted small gains House Speaker Paul Ryan (R-Wis.) GOP rules will shift some committee chairs. 14

15 GOP Big Clout in States State results clearly favored Republicans GOP controls record 69 of 99 legislative majorities Republicans picked up three governorships: Missouri, New Hampshire and Vermont, bringing tally to 33 GOP governors GOP now holds governorship & both chambers in 25 states only four for the Democrats Before Obama took office, Dems had majorities in House & Senate, and controlled more state legislatures than GOP. 15

16 Areas of Focus Funding government and raising the nation s debt limit. Overhauling nation s tax code Boosting US border security Immigration reform Rolling back ObamaCare Rolling back financial regulations (Dodd-Frank financial overhaul) Pulling back many of Obama s executive orders and directives Supreme Court: Proposing and approving conservative member(s) Boosting defense spending, military buildup Infrastructure spending. 16

17 Staffing an Administration People drive policy. Guessing key positions more uncertain with Trump Reince Priebus White House chief of staff Steve Bannon chief strategist and senior counselor Trump s business history. Put people in charge, let them do their jobs GOP Senate control will make it easier to get nominees approved 17

18 Policy Impacts: Agriculture Fewer new proposed regulations and eliminating many Obama-proposed regulations made via executive order or directives. Significantly modifying if not eliminating the controversial Waters of the US (WOTUS) rule either via White House action or via congressional legislation. Farm bill debate: Republicans will head both of the agriculture panels and the bill will likely have some changes versus the one if Sen. Debbie Stabenow (D- Mich.) had returned as chairwoman of the Senate Ag Committee. Food stamp reform is now more likely in a White House and Congress controlled by Republicans. Food activists will turn attention away from Washington and toward states. 18

19 Policy Impacts: Energy Renewable Fuel Standard (RFS): Trump made favorable comments about cornbased ethanol during the Iowa primary and election stops. Issue will see oil & rural interests jockey for position ahead of Energy: Support for crude oil & natural gas exports and overall energy prod. Biodiesel tax incentive: May take until new Congress to extend and could be rolled into tax reform debate. Climate change regulations. Republicans in new Congress will continue their fight to repeal legacy regulations from the Obama administration, be it through repeal language in legislation or Congressional Review Act resolutions to nullify regulations before they go into effect. 19

20 Geopolitical risks 20

21 Trade Policy Issues 21

22 Will Trump s Strong Words on Trade Soften? Voters liked Trump s aggressive trade stance, but Trump is not anti-trade, just the way policy has been handled Trump will focus on trade policy enforcement NAFTA: Canada, Mexico agree to modernize TPP: No vote likely in Congress until after 2018 elections, unless China, Mexico. Trump has threatened double-digit tariffs, but... Unilateral violations of international trade agreements Result: Talks ahead with both countries, perhaps MOUs 22

23 Supreme Court 23

24 Tilting Supreme Court Back to the Right Key Factors Coming soon: More conservative nominee than Merrick Garland Justice Anthony Kennedy: conservative in many areas... But Liberal on social issues Biggest tilt would come if Trump gets to pick more nominees Ruth Bader Ginsburg 84 in early 2017 Kennedy is 80; Stephen Breyer, 78 24

25 Economy 25

26 GDP, Inflation & Interest Rates Rise Under Trump 26

27 Trump Impact on U.S. Economy Trump promise to lift GDP to 4% a challenge Most see just over 2% growth in 2017 fiscal changes are slow Trump s agenda: tax cuts, military growth, will boost federal debt $3.5 trillion over four years $3.5 trillion jump in entitlement spending over four years Could push deficit to 10% of GDP Dollar will jump by 5% in 2017 pressure on exporters Interest on 10-year Treasuries will hit 2.5% 27

28 Transportation and Infrastructure 28

29 Transportation & Infrastructure Likely Major Policy Developments Trump: $1 trillion, ten-year revenue-neutral proposal Public-Private Partnerships (P3s) for investments How to fund routine improvements, and to upgrade Likely link to tax code changes for some funding 29

30 Transportation & Infrastructure WRDA funding in lame duck, more WRDA in New Congress WRDA: Senate & House differences to be reconciled Senate: $16.2 bil. $70 mil. direct spending for loans under WIFIA House: $17.4 bil. Mandates return to two-year cycle of WRDA bills WIFIA Water Inf. Finance & Innovation Act: EPA to issue interim final rule, separate rulemakijng on loan applications and servicing fees Work may begin on 2018 WRDA by end of

31 Transportation & Infrastructure Committees House Transp. & Infrastructure: Bill Shuster (R-Pa.) will continue as chairman, Peter DeFazio ranking member Bob Gibbs (R-Ohio) facing term limits as chairman of Water Resources & Environment Subcommittee unclear who will replace Senate EPW: John Barasso (R-Wyo.) to succeed James Inhofe (R-Okla.) as chairman. With Boxer (D-Calif.) retiring, Thomas Carper (D-Del.) likely ranking member if he does not retain position on Homeland Security and Governmental Affairs panel. If so, Cardin (D-Md.) or Sanders (I-Vt.) to be ranking member. 31

32 Tax Code Changes 32

33 Predictions: Tax Code Changes Both parties want tax reform, but different ways Timing: Will be approved by August recess 2017 If Dems balk, GOP will use budget reconciliation simple majority Top corporate rate: Trump wants cut from 35% to 15%... Won t fly 20% to 25% likely Should cuts go to all, including upper incomers? Individuals: Trump plan top rate from 43.4% to 33% Other rates of 12% and 25% End alternative minimum tax, estate tax Cost: Over $6 trillion 10 years. Offset totally or partially? 33

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35 Questions?