CONSISTENTLY DELIVERS

Nov 11, 2016

2016 Post-Election Teleconference Summary

McGuireWoods Consulting’s federal public affairs team hosted a conference call on Thursday with special guest Professor Larry Sabato of the University of Virginia’s Center for Politics to discuss the results of the 2016 presidential election.  Following are some of the key points that were made on the call.

Overall Election Results

Professor Sabato began by acknowledging that virtually all of the public opinion polls on the 2016 presidential election were wrong.  He noted that none of the state polls showed Donald Trump ahead in either Wisconsin or Michigan prior to the election and that even the exit polls of individuals who had already voted were wrong.  His conclusion was that the industry needs to re-examine its methods and produce better results for the next presidential election.

As to the election itself, he noted that Hillary Clinton would win the national popular vote, but that Donald Trump won the Electoral College by running up huge margins in rural areas in the Midwest to counter Clinton’s strength in the cities.  This was true in Wisconsin, Michigan, Ohio and Pennsylvania, all Trump victories, albeit narrow victories.  Pro-Trump voting was especially strong among non-college-educated men and women.  However, he lost college-educated voters, the first time a Republican has lost that group in decades. 

On the Democratic side, Hillary Clinton was unable to turn out the “Obama coalition” of young voters and minorities.  Hispanic turnout was strong but participation rates of millennials and African-Americans were down. The result was an electorate more Republican, older, and whiter than in the elections of 2008 and 2012.

Sabato noted that it is impossible to predict what sort of president Trump will be.  Will he focus on the tasks at hand and work with Congress on his priorities, or will he be sidetracked by marginal concerns?   Will he work with all Republicans, or will he feud with those who did not support him?   Who will constitute his key advisors?  What are his major legislative priorities?  These are all questions that remain to be answered.

Finally, he noted that the future of both parties was clouded.  Who would step forward to lead the Democrats?  Would the Republican Party come to be defined by President Trump or by more traditional GOP leaders?  

So many questions are waiting to be answered.

Policy Updates

Energy
Brian Vanderbloemen

Energy and environmental issues under a Trump administration are expected to focus first on a broad review of pending Obama Environmental Protection Agency regulations that have been characterized as part of the “War on Coal,”  namely the Clean Power Plan, new restrictions on coal-fired power plants and lowering of the ozone standard.  In particular, a Trump administration is expected to abandon the Clean Power Plan as currently drafted, as well as regulations addressing methane releases from natural gas wells on public land, to name a few.  Trump is also expected to fulfill his campaign promise of withdrawing the United States from commitments to the Paris/United Nations Climate Change agreement negotiated by the Obama administration.

Congress will most likely consider legislation to curb excessive regulatory authority exercised under the Obama administration by giving the legislative branch the ability to veto proposed regulations costing in excess of $100 million and require cost-benefit analysis of pending regulations.  Legislation might also be considered to prohibit the regulation of carbon dioxide as well as limit prohibitions on fracking.  Under the umbrella of “infrastructure,” Congress could also consider a comprehensive energy bill that showcases our nation’s abundant supplies of coal, oil and gas, and the needed infrastructure investments and improvements to bring those products to market.

Healthcare
Stephanie Kennan

Throughout the campaign, President-elect Trump called for repealing the Affordable Care Act (ACA), and pledged to do so on his first day in office.  He has not, however, suggested doing away with the more popular parts of the ACA, including the protections against being denied healthcare coverage because of pre-existing conditions or allowing young people to stay on their parents’ health insurance plans until they reach age 26.  His broad ACA replacement plan has focused on the following:

  • Promoting tax-free health savings accounts to help individuals save money to pay for healthcare costs
  • Allowing people to deduct the cost of their insurance premiums from their federal income taxes
  • Implementing policies to permit the sale of health insurance policies across state lines
  • Giving states the chance to more directly manage Medicaid funds through block grants

Because Trump has not provided much detail for his ACA replacement plan, some have suggested that he might rely on House Speaker Ryan’s proposal, which is comprised of the same principles but includes more detail. The best way to accomplish most of his stated policy measures would be to propose them during the budget reconciliation process, as the budget resolution does not need the traditional 60 votes to pass in the Senate.  However, the regulatory process could be used to loosen some requirements, such as exempting more people from the individual insurance mandate.

With regard to a pharmaceutical policy, President-elect Trump has said he supports drug importation, which he believes gives Americans access to cheaper drugs, as well as new measures to allow the Food and Drug Administration (FDA) to negotiate drug prices in Medicare.  Finally, given the many political challenges regarding Obama administration attempts to finalize and implement the controversial Medicare Part B drug demonstration project by the beginning of 2017, it is easy to see a Trump administration shelving that demonstration in the early months of his presidency.

Tax Policy
Russ Sullivan

President-elect Trump will move quickly in concert with the Republican-controlled Congress to pass tax cuts.  Tax cuts are key to Trump’s economic policy efforts to spur economic growth.  And congressional Republicans have worked for months preparing for the possibility of tax reform.

Just how a Trump administration moves to promote tax cuts remains to be seen.  Several questions must be answered in the coming weeks before a strategy can be deployed:

  • Will the GOP emphasize individual tax cuts, business tax cuts or both?  The answer could influence whether the legislation can attract sufficient votes to pass.
  • Will tax legislation move alone or be attached to other proposals?  Trump has talked about using tax revenues collected on repatriated earnings to pay for infrastructure investment.  Because repealing the ACA impacts many significant tax provisions, an ACA-repeal plan and tax reform package could be combined.
  • Will Republicans include or exclude Democrats?  A grand deal with Democrats would be more sustainable over the long term, but may be difficult and time-consuming to achieve.  Going it alone won’t pass in the Senate, where 60 votes are required, unless Republicans use reconciliation procedures.  Reconciliation, however, is limited to one bill per year, and cannot occur until a budget resolution is passed.
  • Will Trump change the way a president uses the bully pulpit to push Congress, and particularly Democrats, to vote for his tax plan?  Can tweets be used to mobilize voters to press Democrats up for election in 2018 to support Trump initiatives?
  • How will Senator Schumer and Representative Pelosi respond to unify Democrats for purposes of negotiation with Republicans or thwarting their tax cut plans?

The legislative landscape for Trump’s tax cuts is similar in many respects to 2001.  A new Republican president who lost the popular vote enters office with a tenuous GOP majority in the Senate.  The new president promised robust tax cuts throughout the campaign.  The differences this time is that, unlike in 2001, the nation is mired in a significant deficit rather than a surplus, and congressional Republicans are well ahead of the President-elect in terms of preparation for broad-based tax reform.

Transportation
Jessica Monahan

A Trump administration is anticipated to be good for America’s infrastructure. With shares of construction-related stocks soaring in the days following the election, infrastructure industries are bracing for a surge in demand with President-elect Trump’s proposal to invest $1 trillion to repair and build the nation’s roads, bridges, airports, ports, pipelines and more. Rather than relying on direct federal spending to boost economic activity, the incoming administration is expected to utilize public-private partnerships, financing authorities and other financial tools to stimulate growth through transportation and infrastructure investments. Trump plans to leverage new revenues — likely provided through the repatriation of off-shore funds at a rate of 10 percent — to supplement private investment in public infrastructure. Additionally, Trump intends to build on the efforts of many Republicans in Congress to reduce regulatory burdens for infrastructure projects in order to reduce costs and expedite project delivery.

Trade
Lee Lilley

President-elect Trump’s campaign was rooted in populism, with its most-consistent support among white working-class Americans, many of whom are suspicious of international trade agreements. The President-elect has reflected this sentiment in his positions on trade, which are more protectionist. His campaign website supports a trade platform that aims to “negotiate fair trade deals that create American jobs, increase American wages, and reduce America's trade deficit.” His campaign statements on trade have been critical of past trade agreements, including the Trans-Pacific Partnership (TPP) and the North American Free Trade Agreement (NAFTA). He is also critical of Chinese currency manipulation and has promised corrective action as part of this program. During the campaign, he promoted these measures:

  • Withdrawing from TPP, which has not yet been ratified by the Senate
  • Appointing tough and smart trade negotiators to fight on behalf of American workers 
  • Directing the Secretary of Commerce to identify every violation of trade agreements, and ordering U.S. agencies to combat them using American and international law
  • Telling NAFTA partners that the U.S. intends to immediately renegotiate the terms of that agreement
  • Instructing the Treasury Secretary to label China a currency manipulator
  • Ordering the U.S. Trade Representative to bring trade cases against China, if warranted
  • Using every lawful presidential power to remedy trade disputes if China does not stop its “illegal” activities, including its theft of American trade secrets

For more information on any of the issues above, please contact the respective author.  For more information about McGuireWoods Consulting’s Federal Government Relations Practice, please contact Executive Vice President and Director Frank Donatelli.