During a recent Natixis Access Series event, I spoke about Election 2020 and its ramifications with Charles Myers, Chairman of Signum Global Advisors, and Signum Global Advisors Senior Partner Lew Lukens. Signum is an independent research provider that specializes in policy forecasts and global markets. The following is a summary of information discussed, reviewing expected election results and how they could affect each political party and government policy over the near term. Where are the current expectations around the outcome of the presidential election?
As of November 5, the counting of votes is ongoing. Former Vice President Joe Biden has the lead in the Electoral College. Should he prove victorious in Arizona and Nevada, he will reach the 270 electoral votes needed to win the presidency. Trump currently leads the voting tally in Pennsylvania, but it is thought that Biden’s numbers will increase as a remaining one million mail-in ballots are tabulated. This is because data suggests that mail-in ballots tend to skew Democratic. What’s more, remaining votes in Pennsylvania are from mostly urban areas, which also historically favor Democratic candidates.
A win in Pennsylvania for Biden – although not a certainty – would deliver him that state’s 20 electoral votes. The Biden campaign is hoping it can establish an Electoral College “cushion” in the event that any of President Trump’s recount challenges (in Michigan and Wisconsin, for example) are successful.
Although the outcome could change, Biden is currently expected to win the Electoral College and the presidency, with Republicans maintaining their Senate majority and Democrats maintaining their House majority. This can be viewed as market positive, as Biden will not be able to enact his proposed tax increase in light of a GOP-controlled Senate. Where do we stand on additional Covid-19 stimulus?
It is possible that an additional stimulus package is approved during the “lame duck session” – the period after the election is called and before the inauguration in January 2021. Because Republicans maintained their Senate majority in the election, Senate Majority Leader Mitch McConnell is aware that it behooves his constituency to pass much-needed aid. He has also indicated that he is open to considering some state and local fiscal aid, although details are as yet unknown. A new round of Covid-19 fiscal stimulus is expected to include $1200 stimulus checks for those making less than $100,000 annually, in addition to more unemployment supplements and increased Covid-19 testing. If negotiations become fraught, it could take until late January for legislators from both parties to agree to a deal.
While a Biden administration isn’t expected to take any drastic new measures in the nation’s fight against Covid-19, it is likely that Dr. Anthony Fauci takes a more prominent role in the federal response, which will embrace current consensus scientific data in a way that the Trump administration has not. What does Election 2020 mean for the future of the Republican Party?
The Republican Party – and President Trump – surprised everyone. Even if they lose the White House, Republicans defied expectations and held on to Senate control. They also won seats in the House. Trump’s positive messaging – even if based occasionally on false or misleading statements – resonated with some 68 million voters. This is as good an indication as any that America is a center-right country and that many voters are sensitive to calls for sweeping progressive initiatives that would rapidly alter traditional approaches to big issues. Should Trump lose the White House, expect party leaders to return to an orthodoxy of limited government spending and low taxes. What does Election 2020 mean for the future of the Democratic Party?
It’s counterintuitive – particularly if Biden wins the Electoral College and the White House – but the Democratic Party can be seen as the biggest loser of this election. Despite winning the popular vote, their messaging was not widely accepted enough to flip the Senate, and the party saw its House majority decrease. While the party’s progressive faction is a small component of its representation in Washington, it is very loud and garners a lot of attention. It seems that the Republican Party was successful in equating Biden in the minds of many voters with negative ideas like a lack of law and order and socialist government intervention. A challenge to House Leader Nancy Pelosi is likely, and a challenge to Senate Minority Leader Charles Schumer is possible in the weeks and months ahead.
This material is provided for informational purposes only and should not be construed as investment advice.
There can be no assurance that developments will transpire as forecasted. Actual results may vary.
The views and opinions expressed may change based on market and other conditions. Unless otherwise noted, the opinions of the speakers provided are not necessarily those of Natixis Investment Managers or any of its affiliates.