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Congressional Elections: Why do they matter?
While the race for the White House has received outsized attention, developments such as the failure to reach a new coronavirus relief bill and the looming threat of a government shutdown have heightened the stakes in the battle for control of Congress.
The House of Representatives looks firmly in the hands of the Democrats after the inroads they made in the 2018 midterms. Control of the Senate is therefore crucial. It’s currently in Republican hands and the Democrats would need to win four seats of the twenty-three up for grabs in order to gain an overall majority.
With Biden ahead in the Presidential polls, can the Democrats feel confident about the Senate?
With party now trumping candidate, the general momentum towards the Democrats should give them some hope. 2016 was the first year on record where every single state holding Senate elections voted for the same party for Senate as for president.
It’s no longer the case that voters split their ticket when they go to the polls. For example in 1980, despite Republican Ronald Reagan winning the White House, 12 of 31 Senate seats went to the Democrats.
Now though, the electorate is so polarized that party dominates across elections. If you voted Trump, you vote Republican across your ballot paper.
This means state-wide elections have increasingly been nationalized: Senators struggle to separate themselves from their national parties. This has been exacerbated under President Trump, where almost every Republican Senator has embraced him of fear of losing his conservative base – this is especially the case for the Republican Senator in Arizona, Martha McSally, who has pivoted to the right and linked her fate inextricably to Trump’s.
Rare candidates, like Maine Senator Susan Collins, have been able to maintain an identity distinct to the national party’s and keep split-ticket voting alive – but even Collins’ long-time local reputation as an independent, in a centrist state with a history of electing moderate women, is under threat for her polarizing pro-Trump voting record. She backed Brett Kavanaugh for his confirmation to the Supreme Court, in support of her President – and saw her popularity with female voters plummet.
Replacement for Ruth Bader Ginsburg becomes key election issue
With any coronavirus relief unlikely to pass before the election, control of the Senate will be crucial to any alleviation of the recession. This has been exacerbated by the death of Supreme Court Justice Ruth Bader Ginsburg. Party politics will now be bogged down in finding her replacement, rather than finding a fiscal compromise.
While Trump has made this a key issue, going as far as releasing an unsurprisingly political list of possible appointees, Biden has in turn also made this a focus of his candidacy, promising to nominate a historic first: a black woman. Given the increasing frequency of constitutional hardball around Supreme Court confirmations, control of the Senate will be a prerequisite to a successful nominee.
Given that the states in the Senate up for re-election are very Republican, this development will energise the base, reducing the likelihood of a Democratic majority.
However, on the Presidential level, the blue wall which deserted Hillary Clinton in 2016 looks likely to be rebuilt, given the intensely partisan nature of the battle to come. Mitch McConnell should be pleased by this weekend’s news, Donald Trump should not.
With both sides becoming more entrenched the elections look set to deliver a split between the legislature and the executive. With a more polarized Congress, key platform items promised by both candidates will be tougher to achieve. Expect partisan investigations and tense hearings to persist no matter who wins.
Trump approval rating holds up as Republican convention draws to close, battlegrounds tighten
We know that the Presidential race will come down to a handful of key swing states. But national polls still tell us something about the direction of the campaigns.
As the Republican convention draws to a close this week, the latest polls indicate Donald Trump’s standing remains at least stable. NBC News|SurveyMonkey Weekly Tracking Poll shows that 45% of American adults strongly or somewhat approve Trump’s performance, 54% disapprove.
Meanwhile there has been evidence that the race is tightening. This should not come as a great surprise – national polls showing Biden with a double-digit lead were never going to hold once the campaign proper got underway.
What’s interesting is the direction of travel in Trump’s favour in some key battleground states.
According to a recent CNN poll, the national split was 50% for Biden-Harris and 46% for Trump-Pence. That is within margin-of-error territory.
But drill down to the most important states for the Electoral College and it’s even tighter. In 15 battleground states the poll showed Biden with just a single percentage point lead – with the Democrat on 49% and Trump on 48%. The latest poll for Wisconsin shows Trump edging it for the first time in months.
According to RealClearPolitics, which powers our Election Coverage, Trump trails on 42.4% to Biden’s 50% nationally. But in the battlegrounds the gap is narrowing, and Trump leads in some.
And as can be seen by the electoral map, it looks like a toss up as to who will win in November.
US Presidential Election: Not Red, Not Blue, but Green to win?
With a recent poll showing that 14% of registered voters see climate change as the most important challenge facing the country, victory in November may well hinge on the success or failure of the respective parties to own this issue. For context, such a figure implies that around 30 million voters could cast their ballots this Autumn with the environment at the forefront of their thinking – that’s two to three times as many as in 2016.
Of those who care about climate change, one-third describe themselves as ‘very progressive’, suggesting that it is the Democrats who have the most to gain from grasping the initiative on the environment.
Voters focus on green policies, but does Biden?
Despite this potential vote-grabber for Biden, the issue features only 25th on a list of policy proposals on the Biden 2020 website. His plan has three main avenues of execution:
- Reinstating Obama-era regulation through executive order
- Investing $1.7 trillion in green energy and jobs through an act of Congress
- Leading international treatymaking efforts on the world stage.
That’s a long way from the $16 trillion investment into the “Green New Deal” that Bernie Sanders was promising. Herein lies the dilemma which will ultimately decide Democratic fortunes this year – how can they appeal to the middle whilst also ensuring that their base turns up to vote? It looks like climate change isn’t a hill for them to die on.
Rebranding climate issues for rust belt voters
The electoral system also explains why the climate features so far down Biden’s list. The rust belt is a crucial cluster of states for both parties when it comes to grabbing electoral college votes, and many of these rely heavily on so-called ‘dirty industries’ for employment and prosperity. Pennsylvania is the main example of this, where Trump secured victory by less than 45,000 votes in 2016. As the third largest coal-exporting state in America, voters in this area may not react well to Biden’s green vision, allowing Trump to take home 20 crucial electoral college votes.
There is however an opportunity to re-brand green credentials as a wider vote winner. The climate issue is ripe for conversion into an anti-China policy, thanks to their role as global polluters in chief. With approval of China down to -40% in the wake of coronavirus, and Trump likely to leverage this sentiment in his own favour, the environment offers the Democrats a line of attack which can be employed without turning off their core base of support.
How will America’s Climate Policy shift after the US Presidential Election?
There are three main scenarios that could play out in the US Presidential Election.
Scenario One: Trump Wins a Second Term
With or without a Republican Congress, Pres Trump would likely continue to use executive orders to cut back the environmental regulations that were instituted by the Obama administration. So far, Trump’s repeals have included the moratorium on federal coal leasing and the extent to which federal agencies must take account of the environmental impact of their actions.
- This would benefit fossil fuel companies
Scenario Two: Biden beats Trump, and the Democrats gain Congress
In this instance, the Democrats would have carte blanche to deliver on all of Biden’s campaign pledges, including the $1.7 trillion of government spending. In the wake of coronavirus, huge government investment will be expected, providing the perfect cover for such a policy. However, with a majority only guaranteed for two years, and other objectives clearly taking priority, it is unclear whether a Pres Biden would deliver the entirety of his environmental agenda, even in the greenest of scenarios.
- This would benefit companies that can boost their green credentials
- It would harm “dirty energy” businesses
Scenario Three: Biden beats Trump, but the Democrats fail to capture the Congress
Here, Biden would have to rely on the power of executive orders and the office of the Presidency to implement parts of his climate proposal. As easily as Trump repealed them, Biden could reinstate Obama’s regulations. Also, he could use America’s status on the world stage to influence treatymaking and catalyse future climate accords. However, the $1.7 trillion investment in green energy and jobs is not possible without congressional approval, leaving the former VP with a half-delivered promise.
- This would be like half a heart transplant: the economic damage of regulation would be incurred, but without investment elsewhere to compensate
Despite any green rhetoric, the truth is that the environment simply isn’t a priority for the Biden campaign, and this is unlikely to change once in office. A New Deal might be in the offing to respond to the huge economic downturn, but it’s unlikely to be a very Green one.
US Election Risk: Corporate Tax Rates
The passage of the Tax Cut and Jobs Act (“TCJA”) in December 2017 lowered the US federal corporate income tax rate to 21% from 35%.
This recent decline in tax rate has been a major contributing factor to profit growth for US companies. For example, S&P Global found that, since the TCJA was enacted, the median effective tax rates for information technology companies in the S&P500 dropped from 21.1% in the first quarter of 2017 to 15.5% in the same period of 2019.
However, Democratic nominee and former Vice President Joe Biden has proposed a partial reversal of the TCJA. The Tax Foundation sees the plan as raising the corporate income tax rate to 28%, reversing half of the TCJA cut.
With the 2020 US Presidential Election just five months away and prediction markets starting to price in an increased likelihood of Democratic victories in the House, Senate and Presidential races, it may be worthwhile considering if the market is pricing in the risk of an increase in tax rates.
Data source: Predictit.org “Yes Price”
In a note earlier this week, Goldman Sachs strategists saw the plan put forward by Democratic nominee Biden as reducing S&P 500 EPS by as much 12% in 2021, while this week has also seen the index trading with a forward PE multiple above 23, levels last seen around the time of the dotcom bubble.
Of course, much uncertainty remains about the specifics of any potential tax reform, as well as five more months of uncertainty before the election race is completed, which could ultimately remove the likelihood of any tax reform.
US Presidential Election 2020: The Coronavirus Election
The outcome of the US Election depends on who swing state voters perceive to be the candidate best placed to fight the twin health and economic crises. President Donald Trump has the advantage of incumbency and healthy campaign coffers, but Democrat Joe Biden polls well in swing states. This is Donald’s to lose, and Joe will be hoping to pick up the pieces.
President Trump’s management of the coronavirus crisis has highlighted the advantages of incumbency: he is the one that can actually do something. A recent poll showed that 44% of respondents thought Trump was the best person to manage the coronavirus, and only 36% responded Joe Biden. The latter has been kept out of the spotlight leading to a recent pitiful poll result that 42% of respondents were either “unaware” or “did not have an opinion” of his proposals for the pandemic.
Will Covid-19 damage Trump’s chances of re-election?
Trump’s approval rating is back to the highs of his Presidency, even as polling over his handling of the crisis remains in net negative “disapprove” territory. The way that voters weigh up their concerns over the health crisis versus the economic crisis will be of critical importance in swing states.
Here the polling looks less positive for Trump. 59% of respondents in Michigan qualified his pandemic response as “too slow”, as did 55% in Florida. As a result, general election polls have given Biden a decisive advantage, with 8-point advantages in Michigan and Pennsylvania, and a slimmer 3-point lead in Florida. This swing-state edge has consequently been reflected in national polls, in which he leads on average by 6 points.
However, these numbers must be read with caution: Biden’s lead is half what Hillary Clinton’s was in 2016 at this point, and his own shaky numbers over the handling of coronavirus will be put under strain once he goes through the scrutiny of an election campaign.
Despite these key swing-state leads, Biden has been unable to build the momentum necessary to make that lead more convincing. A credible sexual assault allegation has gained a lot of attention, and he has thus far failed to fully lock up the progressive left of the party, despite receiving endorsements from Sanders and Warren, which has translated in weak polling numbers with young voters.
Biden presidential bid faces pitfalls over running mate and campaign financing
Biden has the opportunity to boost his campaign by choice of running mate, but even that is laced with potholes. Klobuchar and Harris are too centrist for the Sanders voters and they blame brother Bernie’s woes on Warren staying in the race too long.
Biden already does well with minorities and the Midwest so the impact of Klobuchar/Harris would be minimal among those groups whilst confirming to the left that Biden will run a centrist campaign. In short, the process of selecting the VP will only re-open the deep divisions that exist within the Democratic Party.
Biden faces an uphill struggle given the financial constraints his campaign faces. As of the start of April, the Biden campaign had a cash deficit of $187m on the Trump campaign, which will be even more difficult to make up virtually and in the context of an impending recession.
This hasn’t stopped the Biden campaign from investing heavily in swing states: they have spent more than the Trump campaign in digital advertising in Wisconsin, Michigan, and Pennsylvania; despite this, they are being outspent in North Carolina and Arizona. These weaknesses could potentially be major roadblocks should they not be resolved, with virtual eyeballs ever more important now that so many people are just kicking their heels at home.
Will vote-by-mail expansion swing US Presidential Election for Biden?
In addition to the role the economy and Joe Biden’s momentum will play in the election, the conditions of the election itself will be incredibly important. Firstly, Justin Amash’s Libertarian bid for President, amidst questions of how third-parties can collect the signatures necessary to appear on the ballot, will likely play in Biden’s favour, especially in the key state of Michigan, which Amash, a former Republican, represents in Congress.
How voters will be able to vote in the context of the pandemic will play a crucial role too: some blue states have made vote-by-mail universal, while the measure has received resistance from Republicans.
This is likely because recent electoral results have indicated that expanding vote-by-mail favours Democrats, as the easy access to the ballot has increased turnout in their favour. This will be important amidst the many ongoing legal and political (both in statehouses and in Congress) battles over how to secure the vote in November.
Will Trump win over voters with renewed attacks on China?
The coronavirus has also brought new issues to the fore. Now that Trump is unable to run on the strength of the economy, he has pivoted to the issue of China. He is painting Biden as complacent with China, who he has repeatedly blamed for the coronavirus pandemic.
The heightened tensions between China and the USA will likely endanger their relationship, and push Joe Biden to adopt more aggressive rhetoric towards China. The diplomatic consequences could endanger their cooperation in the future, and push them into a neo-Cold War-esque rivalry.