Despite President Trump’s wishes to the contrary, he was defeated by Democratic Party challenger Joe Biden in a 2020 election that saw record turnout and an increase in Republican seats in the House. Control of the Senate will come down to two runoff elections in Georgia. Early voting begins in December and will take place until the closing of polls on January 5.
Natixis Investment Managers Vice President of Government Relations Susan Olson spoke recently with Signum Global Advisors Chairman Charles Myers about the transition of power, the Georgia Senate races, and some of the top issues in Washington in the new year.
- The transition of power: President Trump believes that conceding defeat in the 2020 presidential election would be contrary to the ethos of his brand – and a disappointment to his supporters nationwide. What’s more, he has used his election dispute narrative to raise $170 million for his new political action committee “Save America.” These proceeds may well help to fund a subsequent run for the presidency by Trump in 2024. However, Attorney General William Barr has confirmed that the US Justice Department has uncovered no evidence of voter fraud related to the 2020 vote. Republican legislators are expected to accept that President-Elect Joe Biden will be inaugurated on January 20.
- The Senate majority remains in the balance: The Georgia runoff races remain extremely competitive. In the end, a record amount of money – hundreds of millions of dollars – will be spent by both parties in support of their candidates. As of early December, Republicans are expected to win both runoff votes and maintain their majority in the Senate, but a Democratic Party victory remains possible. Although turnout in Georgia runoff elections has been historically low, Georgia voters recognize that balance of power in Washington is at stake and turnout will likely be high. A Democratic Party victory in both Georgia Senate races could have significant market effects, as it would increase the likelihood of Congress moving to implement bigger tax increases. While the Biden team speaks confidently of winning control of the Senate in Georgia, the centrist nature of Biden’s cabinet picks thus far suggest he is preparing to operate within a divided government after his inauguration.
- Biden and progressive Democrats: In addition to facing challenges with his Republican cohorts, President-Elect Biden is expected to face challenges from within the Democratic Party. Democrats have an increasingly powerful and outspoken left wing, whose representatives include Senator Bernie Sanders of Vermont and Senator Elizabeth Warren of Massachusetts. This infighting dynamic is likely to contrast sharply with the unified Democratic front in the 2020 presidential election. Biden is not expected to make major concessions to progressives in terms of cabinet selections, but is expected to take more progressive stances on issues like energy policy and climate change.
- Biden’s “First 100 Days”: The issue of additional Covid-19 fiscal aid is likely to remain front and center, even if a deal is reached in advance of the December congressional recess. The early months of the Biden administration could also feature executive orders around immigration, ending the Trump administration’s travel ban, a US reengagement with the Paris Accord on climate change, and a reposition of certain energy sector regulations.
- Biden and the financial sector: Concerns about significant new regulations within the financial sector may be overblown. The banking sector has weathered the Covid-19 pandemic better than expected and made changes aimed at preventing a reoccurrence of the dynamics that helped to catalyze the 2008 Global Financial Crisis. However, increased regulation may occur in the area of consumer finance, in areas like payday lending.
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