Political and Policy Landscape in Washington Roger Bernard Policy Analyst Informa Economics IEG Roger.bernard@informaecon.com
Not in the mix 2
Tuesday Elections 3
2018 Elections Senate GOP control likely but House in play Wave election still possible if GOP can t deliver If we don't cut taxes and we don't eventually repeal and replace ObamaCare, then we're going to lose across the board in the House in 2018. And all of my colleagues running in primaries in 2018 will probably get beat. It will be the end of Mitch McConnell as we know it. - Sen. Lindsey Graham (R-S.C.) 4
Tuesday elections: GOP wakeup call New Jersey, Virginia governorships State legislative races, mayoral contests, ballot initiatives went largely in Dems favor Could spur GOP to focus on legislative action ahead 5
2018 Elections Numbers favor GOP in Senate; Off-year election, Tues. results put House in play 25 Democratic Senate seats up 10 in states Trump carried 5 in states Trump won by 19 points or more Only 8 GOP seats GOP should expand current 52-48 majority Steve Bannon vows to primary GOP senators House: In play Dems need net gain of 24 seats 6
Trump Administration Early top-level changes Defense, Jim Mattis * State, Rex Tillerson * White House Chief of Staff, John Kelly Senate has confirmed 142 political appointees 602 key jobs in gov't Lack of Ambassadors: 70+ countries, groups Result: Weakened diplomacy abroad 7
Congress Hasn t Delivered Health-care fiasco... intraparty GOP feuds Next battles: Budget, tax reform/cuts Other issues: Debt limit * Immigration (DACA) Farm bill: May be one of easier bills to pass, but 8
Regulations Like Obama, Trump does end-arounds, but Laws more durable than orders and regs Trump: 49 exec orders... more than recent presidents Coming: overhaul of welfare programs. Rural areas... task force to lift rural economy Legal challenges ahead 9
Trump vs Prior Presidents 10
NAFTA 2.0 Talks Aggressive US positions Big changes for auto/parts origin, dairy, produce, etc. Canada, Mexico reject many hardline U.S. positions Timeline: Most see going into 2018 elections ahead Does Trump really want to walk away? If NAFTA 2.0 succeeds, will Congress approve? If Trump bolts NAFTA, would Congress reject? Impacts if NAFTA collapses 11
If NAFTA Collapses... Negative implications for agriculture Would hurt overall U.S. economy Would cause a big squeeze to some sectors and states Could impact stock markets Some factory work would move north from Mexico, but... U.S. would lose a net 256,000 jobs over three to five years Among the losers: Auto, food, and apparel makers that have crafted efficient supply chains around duty-free passage of parts and goods across borders 12
If NAFTA Collapses... 13
Other Trade Issues Industries focusing on trade policy uncertainties Republicans in Congress impatient with trade policy Too simplistic to focus on trade deficits US ag industries suffering from standstill US meat sector may lose export market share ahead Where are the new US bilaterals that Trump favors? 14
Tax Reform House, Senate push for a victory Repeal of estate tax. Top GOP priority. Allowing equipment depreciation Write-offs for net interest expenses preserved for small businesses. Support for full expensing. 15
Tax Reform House, Senate push for a victory $1.5 trillion key House Ways & Means to shift plan to bring it back under Senate details ahead. Finish line into 2018 likely. 16
Other Key Issues Infrastructure Renewable Fuel Standard (RFS) program Biodiesel tax incentive Biodiesel sanctions: Argentina, Indonesia 17
North Korea Testing, Testing 18
19
Questions?