Navigating Choppy Waters Transportation Legislative Outlook Jim Wiesemeyer, Senior VP Informa Economics, Inc.
LEGISLATIVE OUTLOOK: Mostly On Hold Elections: Very few bills will get passed Impact of Supreme Court justice death: A game-changer Transp. Security Admin.: Reauthorization Annual transportation funding bill: Politics, end of year? Watch floor amendments: End-of-year spending bill Tax reform: Just hints this year, action in 2017, 2018 Investment tax credit
Regulations & Barriers: Not on Hold Executive orders: More ahead Environment: EPA PTC implementation Rulemaking: Rates, Practices and Safety Surface Trans. Board: Investigations, etc. 3
The Great Paradox of 2016
PRESIDENTIAL ELECTION The List: Is this a reality show or what? GOP: Anti-Washington Cruz Establishment Dems: Liberal to Socialist Dem What ifs: Clinton falters Biden Bloomberg What ifs: No GOP has enough delegates at convention Terrorism incident: Game changer Economy continues to falter: Trump VP candidates: Wide choices
PRIMARY RESULTS Democrats. Nevada: Clinton, blow to Sanders GOP. S.C.: Trump Rubio/Cruz Feb. 23: Nevada GOP: Trump Feb. 27: S.C. for Dems March 1: Super Tuesday March 15: Ohio, Illinois, Florida, Mo., N.C.
Nation s Pro-Change Mood Argues for a Republican President
But Today s GOP is Flirting With Self Destruction
Donald Trump Focus 9
Donald Trump Focus 10
OUTLOOK: ELECTIONS Democrats: Sanders making Clinton alter campaign GOP: Take your pick: Trump, Rubio or Cruz How would candidate act as president? Who is going to actually vote?
OUTLOOK: ELECTIONS Senate elections: 2016 2018 Supreme Court: Other possible openings House: Not many competitive seats
Really Hard to Win a Third Term Time for Change Beats Stay the Course Historical odds are against Hillary: No Democrat has succeeded a two-term Democratic president since 1836. For Republicans, 1988 was the first three-term run since 1904.
Dems Socialist Prediction: Bernie Sanders will NOT be the Democratic nominee But, he s already forced Hillary Clinton further left than she d like to be on TPP, etc.
Republicans in Blue States Hold Surprising Sway Over GOP Nominations Just 20% of GOP Senators & 11% of GOP House members come from blue states/districts because of general elections But, a majority of the 2,472 delegates are in Blue States
Calendar: GOP Race Will Be Decided in March SEC Primary, March 1 st : AL, AR, GA, OK, TN, TX, VA March 15 th : Florida, Ohio, Illinois, North Carolina, Missouri
Contested Cleveland Convention? What the experts say After March 15 th, 64% of delegates already decided in primaries/caucuses and it s likely all but 2 of the candidates will be mathematically eliminated from contention
Three Most Critical States of 2016 1) Florida Huge winner-take-all GOP primary on March 15 th, competitive presidential & Senate races in November 2) Ohio Winner take all GOP primary March 15 th, must-win state for GOP in November & Rob Portman (R) up for reelection
3: Keystone of the Electoral College? Western PA shifting more Republican Competitive Senate race: Sen. Pat Toomey (R)
Economy GDP growth rate, recession, deflation U.S. China Japan EU Emerging markets Currency issues Deficits and debt 20
U.S. Dollar Remains Strong Against Broad Range of Currencies Currency to Indexes of maj or currencies/us$ (M arch 1973=100) US dollar: 150 China Increased by 4% Euro 140 Dollar declined Japan by over 25% from Oct. 2015 to Brazil 130 after floating in Jan. 2016, but Australia 1973 now may have Canada 120 peaked Russia Mexico 110 U.S. Index Volcker slide Change 2013-8.5 % -26 % -14 % -69 % -25 % -29 % -120 % -33 % +23 % from 2014-5.5 % -7 % 0 % -53 % -14 % -16 % -15 % -20 % +9 % 100 90 80 70 From 2002 to 2011.... -38 % From Aug. 2011 to Jan. 2016... +38 % 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 * Currencies weighted by relative market importance to total U.S. trade.
OUTLOOK: DOLLAR Up 17% since mid-july 2014 Recent dollar decline signals dollar may have topped Central banks in Europe, Japan, China lowering rates Stronger dollar impacting U.S. trade, GDP Eventual pressure from federal budget, trade deficit
Dollars per barrel $140 $130 $120 $110 $100 $90 $80 $70 $60 $50 $40 $30 $20 $10 $0 Energy Sector Negative for Investment But Stimulus for Consumption in 2016 Good news for consumers in importing countries.. U.S. China, EU, etc. Bad news for oil exporters.. Mexico, Venezuela, Russia, Middle East; Iran & Saudi Arabia are wildcards!! Energy Information Administration forecasts 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Data source: U.S. Energy Information Administration Henry Hub (right scale) 2005 2006 2007 2008 2009 Dollars per million Btu West Texas Intermediate (left scale) 2010 2011 2012 2013 2014 2015 2016 2017 2018 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0
OUTLOOK: ENERGY Oil prices around $30 Iranian oil back on market Supply cuts will eventually ease downward pressure Geopolitics: Watch Saudi Arabia Natural gas: No big rise if weather forecasts tepid Ethanol/RFS: No major changes, but lots of attempts
Washington Accomplishments Package: Debt limit hike, 2-year spending package agreed Spending bill and tax extender details agreed
Growing Trade Deficit Will Partially Offset Stimulus From Oil Price Declines Billions of chained (2009) dollars (seasonally adj usted annual rates) 0-100 -200-300 -400-500 -600-700 -800-900 Creates momentum for Trans-Pacific Partnership (TPP) and Transatlantic Trade and Investment Partnership (TTIP) 1999 2001 2003 2005 2007 2009 2011 2013 2015
U.S. Deficit, Debt Woes Ahead
Short Term Deficit Relief Means Long Term Revenue and Spending Changes Are Post-2016 Deficit in billion dollars Percent of GDP 200 Reagan G. H. Bush Clinton G.W. Bush Obama????? 2 0 0-200 -2-400 -4-600 -800-1000 -1200-1400 -1600-6% 83 85 87 Deficit as percent of GDP Over 11,500 people per day could qualify for Medicare over the next 14 years 89 91 93 95 97 99 01 03-10% 05 07 09 11 13 Source: Congressional Budget Office (February 2015), BEA and Treasury Department 15 First budget of next President 17 19 21 23 25-6 -8-10 -12-14 -16
24 22 20 18 Roosevelt National Debt Will Be Increasing Rapidly in the Years Ahead Unless Action is Taken Trillions of dollars Truman Eisenhower Kennedy Johnson Nixon / Ford Carter Reagan H.W. Bush Clinton G.W. Bush Obama Percent of GDP 144 132 120 108 16 14 12 10 8 6 4 Debt held by public as % of GDP 96 84 72 60 48 36 24 2 0 40 45 50 55 60 65 70 75 80 85 90 95 00 05 10 15 20 Fiscal year Data source: CBO January 2016 Debt held by public in dollars 12 0
Social Security, Medicare, Medicaid and Net Interest Consuming Larger Share of Budget FY 2015 FY 2020 16% 28% 13% Defense 25% 6% Net Interest Defense Discretionary and other mandatory 11% Net Interest Discretionary and other mandatory Medicare / Medicaid Social Security Medicare / Medicaid Social Security 27% 24% 28% 24% 50% of Spending 63% of Spending Data source: CBO January 2016
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