governing a divided nation - insights about the 2016 u.s. presidential election
TRANSCRIPT
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Governing a
K E Y H I G H L I G H T S
Divided Nation
How will the new U.S. President and Congress move forward after one of the most bitter campaigns in American history?
What issues are likely to be tackled?
Who are the winners and losers?
Insights about the 2016
U.S. Presidential Election
3-7 Governing a Divided Nation
8-10 Under Trump, the Future of Defense Remains Relatively Uncertain
11-14 Making a Case for American Trade Again
15-17 A Trump Foreign Policy: From Bluster to Reality
18-21From Deleted Emails to Cybersecurity – How President-elect Trump Will Shift Tech Focus
22-23 A Guide to the Trump Administration
24-26Election Results Point To Vast Changes In U.S. Economic Policies & Big Increase In The Deficit
27-30 Trump & Obamacare: What Does Repeal & Replace Really Mean?
31-33
34-37
38-42
Under Trump – Enviros Gear Up for a Fight
Would Bernie Have Won?
Infrastructure Spending: It’s Gonna Be Yuge… Maybe
TABLE OF CONTENTS
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Governing a Divided Nation
Michael Petruzzello is
managing director of the
Qorvis MSLGROUP
office and national
director of public affairs
for MSLGROUP North
America.
Michael PetruzzelloManaging Director Qorvis MSLGROUP
Washington D.C. based Qorvis MSLGROUP has always prided itself on a campaign-style approach to public affairs and advocacy. Our people are campaign people, having worked on dozens of campaigns, from small-town mayor to President of the United States. We deploy strategies that are nimble and opportunistic to get our clients heard in a competitive media environment and a crowded legislative arena. As we look back at one of the most unusual Presidential elections in American history, we are pleased to share some of our insights and offer some advice for our clients on how to apply the lessons of this unprecedented election.
Let’s Be Frank: No One Saw This Coming, Because No One Was Looking in the Right Place
It is a mistake to characterize Trump voters as exclusively working class, or rural, or non-college educated. Trump voters are culturally isolated
Governing a Divided NationMichael Petruzzello, Managing Director, Qorvis MSLGROUP
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and feel politically alienated. A September study of Trump voters by Jonathan T. Rothwell of Gallup discovered that those who view Trump favorably disproportionately live in racially and culturally isolated zip codes and neighborhoods.
It appears that Donald Trump won the election by motivating low-propensity white voters in traditionally blue states. These voters rarely voted in previous elections, because their votes were not large enough to effect the outcome, and were cancelled out by votes from major metropolitan centers. Whether these were rural voters in Wisconsin
and Michigan, small town voters in Pennsylvania, or exurban voters in Florida, these low-propensity voters shifted the outcome in enough states to decisively rewrite the political map and elect Donald Trump the next President of the United States.
Trump motivated these voters by focusing on issues that had previously been ignored — a political system rigged to benefit elites at the expense of working Americans, trade deals that failed to account for economic dislocation in American manufacturing, and crumbling infrastructure that is incompatible with America’s status as a world power. These issues can form the basis of a new political coalition — provided that Congress is able to address them.
Trump’s appeal was not limited to concerns about economic anxiety. Although Trump received more support from Latinos and African Americans than Romney did in 2012, many pollsters attribute this to growing demography rather than actual support. Trump appealed to anti-immigrant sentiment at a time
Governing a Divided NationMichael Petruzzello, Managing Director, Qorvis MSLGROUP
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when net migration from Mexico to the United States is near zero. He appealed to law and order and fears about crime, despite the fact that the violent crime rate is lower than it has been at any time since 1970. A substantial part of Trump’s support came from people who unfortunately equate the growing demographic diversity of the United States with national decline. Trump’s appeals to racial resentment will complicate a large variety of issues — from immigration to voting rights to criminal justice reform.
Advice for Governing a Divided Nation
When we counsel clients, we often remind them that “If you don’t know where you’re going, any train will take you there.” There is no off-the-shelf, one-size-fits-all solution. Furthermore, the needs of a changing electorate require a dynamic, evolving public affairs strategy. Begin the development of your strategy with rigorous research, so that your advocacy campaign is well-informed
and well-targeted. Here are some other takeaways from the 2016 presidential election:
Institutional Trust Needs to Be Rebuilt
From Iraq to Katrina to the Great Recession, key institutions have been under enormous strain over the past 15 years. The 2016 election has exposed vulnerabilities in still more institutions. From private servers to Wikileaks, our cybersecurity protections have been exposed as vulnerable. Both major political parties were seriously challenged by outsiders. Bernie Sanders pushed the Democratic Party to the left, while Donald Trump nearly broke the Republican Party in half. America’s media and electoral institutions seemed unprepared to handle the challenge Trump posed to our democracy.
Any institution – corporations, trade associations, NGOs – could find their own legitimacy and competency challenged next. Effectively managing reputation goes far beyond
Governing a Divided NationMichael Petruzzello, Managing Director, Qorvis MSLGROUP
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communications. In an always-on media environment, it is critical for organizations to invest time and resources in building reputation and trust. Managing an organization’s reputation requires much more than risk assessment. It requires true engagement of a large and diverse set of stakeholders. It requires listening. Only then can you effectively communicate, create advocates and drive change.
Connect emotionally – early and often and with simple, personable messages
Love him or hate him, Trump inspired emotional reactions from American voters. What’s more, Trump dominated the media cycle despite being outspent in paid media by Clinton by 63 percent. So not only were his messages driving significant reaction from voters, but those messages were everywhere, all the time. Sound bites like “Make America Great Again” and “Crooked Hillary” were shared across traditional and social media, and became rallying cries for his supporters.
Ignoring a Crisis Does Not Make It Go Away
Hillary Clinton never had a satisfactory answer for her use of a private email server. Moreover, no high-profile Clinton staffer was ever fired or disciplined for setting up the email server in the first place. The email scandal, as well as aftershocks from Benghazi and accusations of impropriety within the Clinton Foundation built up confusion at best and out-and-out resentment at worst among voters. Had Clinton addressed these questions outright, she may have clarified questions so as to convert undecideds.
Governing a Divided NationMichael Petruzzello, Managing Director, Qorvis MSLGROUP
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Focus on a Few Big Things and Do Them Well
The voters assume that everyone seeking help from Washington has a hidden agenda — that they are trying to play a rigged game at voters’ expense. To succeed in this environment, public affairs campaigns must prioritize consensus over conflict. It is ineffective to march up to Capitol Hill and point out how YOU have a problem. It will be far more persuasive to show demonstrate how “we the people” have a problem, and a solution. Appeals to the public interest will trump appeals to special interest.
Governing a Divided NationMichael Petruzzello, Managing Director, Qorvis MSLGROUP
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Under Trump, the Future of Defense Remains Relatively Uncertain
Keith Strubhar is a
senior vice president at
MSLGROUP, based in the
Washington, D.C. office,
with more than 20 years’
experience specializing
in aerospace, defense and
energy. Prior to joining
MSLGROUP, Strubhar
served as Director of
Communications at
Raytheon.
Keith StrubharSenior Vice President Qorvis MSLGROUP
What does the future hold in the defense sector with the Trump victory and a Republican Congress? As with all questions this soon after an election, it may take some time to get a definitive answer, but let’s take a quick look.
One thing is for sure, the Defense sector will be in shock for months to come as it tries to figure out what a Trump administration means and how to position for it.
Since Trump was never forced to offer specific details on issues of importance to defense during the campaign, voters and pundits were left guessing as to how his world view would translate into results in the many sectors that make up our complex military.
Under Trump, the Future of Defense Remains Relatively UncertainKeith Strubhar, Senior Vice President, Qorvis MSLGROUP
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We can be fairly certain that Trump’s win likely means future budget requests above sequestration spending caps for the Defense Department based on his campaign rhetoric of rebuilding our military. Now, whether Congress goes along with or fights Trump, with Democrats pushing for equal gains for domestic spending and many fiscal hawk Republicans wanting to lower spending overall, remains to be seen.
No doubt it will be a tough fight due to the reality of defense funding. Congress and the White House either have to comply with the existing caps on military spending ($609.9 million in fiscal 2017) or will need to raise the limit. If that doesn’t occur, a “sequester” – an automatic reduction
in the Pentagon budget –will need to be implemented that will keep DoD at the approved level.
Additionally, much of the DoD funds are already tied up in appropriations for large military platforms—think F-135 Joint Strike Fighter, Zumwalt Class Destroyers, and Ballistic Missile Defense to name a few. Will Trump be able to win over Congress and have them shift funds (or appropriate new funds) with only a single seat majority in the Senate and with each congressional member vying for their own projects? Who knows? However, if past is prologue as it generally is in D.C., I would not bet the ranch on it.
Under Trump, the Future of Defense Remains Relatively UncertainKeith Strubhar, Senior Vice President, Qorvis MSLGROUP
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So, does Trump have any other options? He does, because, as is typical in Washington, there is a potential back door. Congress and the president could agree to continue to use the Overseas Contingency Operations (OCO) fund to get around the caps and avoid a sequester. This fund is a separate pot of funding operated by the DoD and State Department that was originally used to finance the wars in Iraq and Afghanistan. It does not count against the caps, and has been used in the past to prevent a sequester. Trump campaigned on the “crushing of ISIS” and the OCO fund could allow him to propose growth by funding the technology, resources and material it would take to defeat ISIS.
So, who will be the winners in the defense sector with the new administration? Hard to tell for sure, but companies that can demonstrate they can employ commercial off the shelf (COTS) technology in the areas of cyber, communications, unmanned platforms, security and training could be big winners by helping to squeeze costs out of DoD programs and allowing for more growth. The big defense contractors will still be winners with any growth as they have the long-term contracts and are the ones that can manufacture the military hardware we need to project power globally. Finally, another group of winners will be military personnel, their families and veterans. Trump spoke directly to these groups in his campaign and was very clear in his promises to provide them more support.
Under Trump, the Future of Defense Remains Relatively UncertainKeith Strubhar, Senior Vice President, Qorvis MSLGROUP
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Making a Case for American Trade Again
Matt J. Lauer is an Executive Vice
President of MSLGROUP and leads
its international practice from the
Washington, D.C. office. He is the
former Executive Director of the U.S.
Advisory Commission on Public
Diplomacy at the Department of
State. He is an advisor to the board
of Mercuria Energy Trading, one
of the world’s largest commodities
trading corporations, and developed
the Swiss company’s public affairs
strategy in its acquisition of the
commodities trading unit of J.P.
Morgan Chase & Co. Connect with
him on Twitter: @MattJLauer
Matt LauerExecutive Vice President, Qorvis MSLGROUP
President-elect Donald J. Trump made throwing out America’s international and trade agreements a hallmark of his campaign. His election is a rebuke to the globalists who have been part of the American presidency for the past 70 years. Free traders are in for a rough ride over the next term.
In the first 100 days,
said Trump.
President Trump may be hostile to agreements that foster the flow of goods and services between nations,
I will announce my intention to renegotiate NAFTA or withdraw from the deal under Article 2205. I will announce our withdrawal from the Trans-Pacific Partnership, I will direct my Secretary of the Treasury to label China a currency manipulator,
Making a Case for American Trade AgainMatt Lauer, Executive Vice President, Qorvis MSLGROUP
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but this philosophy does not seem to apply to American energy.
Energy producers and traders will have an easier time in the Trump administration. The crude export ban that was lifted by President Obama will stay. And, many regulations of fossil fuels will be lifted. This could bode well for coal, crude, and gas exports. Theoretically, this will increase production of energy and create new jobs in energy-producing regions of the country. Under a Trump administration, America may become a leader in carbon-based energy exports, but a protectionist in the export of goods and services.
Before this election, many American leaders believed that the opening of foreign markets would benefit U.S. businesses that are already doing
business globally, such as Apple, Microsoft, Nike, Lockheed Martin, PricewaterhouseCoopers, and Caterpillar, to name a few. In turn, American business would advance U.S. soft power and influence around the world.
Since the enactment of the North American Free Trade Agreement (NAFTA) 25 years ago, trade has powered the growth of businesses, jobs, and the economy—not to mention strategic relationships with America’s trading partners. Between 1993 and 2015, trade between the U.S., Canada and Mexico soared from $297 billion to $1.14 trillion. This boosted corporate profits, increased job growth, and expanded the economies of all three countries. It also lowered prices for consumers.
For the past eight years, President Obama has been one of the strongest defenders of trade with the passage of the Colombia, Panama, and Korea Free Trade Agreements; the conclusion of the Trans-Pacific Partnership (TPP); and the start
Making a Case for American Trade AgainMatt Lauer, Executive Vice President, Qorvis MSLGROUP
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of the Transatlantic Trade and Investment Partnership (TTIP) negotiations with the European Union.
Despite these successes, the word “trade” became a bad one. The populist campaigns of Trump and Senator Bernie Sanders attacked the bipartisan consensus on free trade. These candidates and their supporters persuaded many Middle Americans that protectionism is the key to jobs and a stronger economy.
A survey by the Chicago Council on Global Affairs found that Trump’s attacks on trade have changed Republican attitudes far more than Senator Bernie Sanders’ rhetoric influenced Democrats. The survey found that 55 percent of Democrats and 59 percent of Republicans agreed with the statement that “Trade is good for the U.S. economy” in 2004. By 2016, those numbers reversed – 68 percent of Democrats think trade is good for the economy (a 13-point
increase), compared to just 51 percent of Republicans (an 8-point decline).
With respect to specific trade deals, the gap between Republicans and Democrats are equally pronounced. Trade has always had supporters among Democrats and Republicans, but now trade seems to be a pariah among base voters regardless of party identity.
Making a Case for American Trade AgainMatt Lauer, Executive Vice President, Qorvis MSLGROUP
Trump’s win in the election leaves the future of the Transatlantic Trade and Investment Partnership (TTIP) up in the air as the president-elect has given few details on his position on the ongoing negotiations with the European Union, while his broader anti-trade rhetoric has simmered expectations that the deal will come to fruition.
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Trans-Pacific Partnership (TPP) detractors and supporter alike see the Pacific trade deal as effectively dead — citing the president-elect’s opposition to it and the unwillingness of Republican congressional leaders to bring up the controversial deal for a vote in a lame-duck session.
The burden is now on American corporations and free traders to explain to the American public and the Trump Administration how trade creates jobs, reduces international conflicts, and advances American global interests — including stability and peace with our trading partners
It is time for those who benefit from trade to make the case for trade — because we know everyone benefits from it. This election may have set the case for trade back a few years, but if we can talk about the benefits of global trade, we can continue to move our nation forward.
Making a Case for American Trade AgainMatt Lauer, Executive Vice President, Qorvis MSLGROUP
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A Trump Foreign Policy: From Bluster to Reality
Gregory Lagana is an
Executive Vice President at
Qorvis MSLGROUP based
in Washington, DC.
Gregory LaganaExecutive Vice President, Qorvis MSLGROUP
What will American foreign policy will look like in a Donald Trump administration? There is anxiety in the U.S. and abroad because Mr. Trump did not lay out a comprehensive vision during the campaign. Instead, he gave us unconnected pieces of his mind on subjects ranging from ISIS, Putin and trade agreements to our obligations to our allies. And some of those pieces of mind threatened to unravel years of established thinking and institution-building.
So everyone is wondering, and for good reason: How will the Trump administration approach the modern world, with its many complex and interconnected challenges? Will a President Trump respect longstanding alliances and structures? Will he act rashly? Will he be prone to isolation, confrontation
A Trump Foreign Policy: From Bluster to RealityGregory Lagana, Executive Vice President, Qorvis MSLGROUP
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or cooperation? Allies will look for reassurance, and adversaries can be expected to probe for the limits of cooperation and confrontation.
American foreign policy may change from one administration to another, but our interests remain the same, and that keeps shifts in foreign policy within a narrow band—more emphasis on military strength in one administration or morality in another, for example, but no seismic shifts. And that won’t change. We still have an interest in working with other nations to combat radical Islamic terrorism. We still have an interest in the security of Europe. And we still have an interest in building and maintaining a robust global economy.
Those interests and others will drive policies and test assumptions and pieces of anyone’s mind. Trump has said he thinks our allies should share more of the burden of our mutual defense, but he hasn’t questioned the alliances or the reasons for them.
That means we will still work with Japan and South Korea—and China—to contain North Korean threats. It means we will keep our commitment to Europe, including the Baltic States and the nations that once formed the Warsaw Pact. Trump will want to try to develop a more cooperative relationship with Russia, as the Obama administration did, but that effort will have to confront Putin’s desire to reclaim Russian greatness, which he does not believe he can do as a junior partner to the U.S. What we can’t know is how far Putin will go in testing Trump.
In Syria, Trump has said that he wants to defeat ISIS first, then worry about the Assad regime—basically, kill the wolf that’s on the sled first. That fits nicely with Russian policy,
A Trump Foreign Policy: From Bluster to RealityGregory Lagana, Executive Vice President, Qorvis MSLGROUP
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except that the Russians don’t seem to be interested in removing Assad. It sheds light on the complicated nature of these relationships: We may conflict with Russia or China in some areas, but we need their cooperation in others. The Middle East is a tangle of conflicting interests involving Saudi Arabia, Turkey, Israel, Iran, Iraq and others, and there are no easy answers.
navigate them. I don’t expect Donald Trump to say “never mind” about anything, but we should expect him to temper, alter or even reverse some of the positions he has taken even while he goes full-steam ahead with others. The facts on the ground, the actions of our adversaries, and the enduring nature of our national interests will require the conviction to be reinforced by an open mind and pragmatism.
Rhetorical bombs and harsh generalities spoken in the heat of a campaign are one thing, but there are nearly 200 national governments in the world, each taking actions in their own interests, and dangerous non-state actors like ISIS and other terror groups. From now on, every word out of Trump’s mouth, and even what he doesn’t say at times, will matter—to friends, to adversaries, and to global markets. And we can expect them to act accordingly, for better or for worse.
So the new president will put his instincts to the test with his foreign-policy team, as other presidents have, and the names mentioned so far include people who understand these complexities and the institutions, alliances and priorities that help us
A Trump Foreign Policy: From Bluster to RealityGregory Lagana, Executive Vice President, Qorvis MSLGROUP
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From Deleted Emails to Cybersecurity – How President-elect Trump Will Shift Tech Focus
Cara specializes in tech
and government IT.
Served as vice president
and general manager
at Market Access
International. Proud
Virginia Tech Hokie.
Cara LombardiExecutive Vice President, Qorvis MSLGROUP
Technology and its role in the presidential campaign seemed to be everywhere you looked this election season. Unfortunately, it wasn’t the conversation we were hoping for. Instead of substantive IT policy discussions, coverage fixated on WikiLeaks, private servers, hacked emails and early morning Tweetstorms. While pages and pages could be (and have been) written about each of those topics, I want to focus more on technology policy and what the next four years under a Donald Trump presidency may look like.
There is no doubt that one of the biggest technology priorities during a Trump presidency will be cybersecurity. If 2016 has taught us anything, it’s that cyberattacks can be so much more than just consumer data and credit card information – there is the threat of state actors using technology to attack America.
From Deleted Emails to Cybersecurity – How President-elect Trump Will Shift Tech FocusCara Lombardi, Executive Vice President, Qorvis MSLGROUP
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Trump focused much of his technology talk during the campaign trail on cybersecurity, and outlined a plan for what he intends to do about it when he takes office in January.
According to his campaign platform, one of his first actions will be to establish a Cyber Review Team comprised of military, law enforcement officials and individuals from the private sector. This team will conduct audits of the county’s current cyber landscape and provide recommendations on how to address vulnerabilities. He has advocated for cyber awareness training for all government employees, and increased coordination between federal, state, and local law enforcement in their responses to cyber threats.
Trump has also called for more of a focus on cybersecurity when it comes to national defense. He will look to the Secretary of Defense and Chairman of the Joint Chiefs of Staff for recommendations on how to improve U.S. Cyber Command, focusing on both offensive and defensive cyber strategies. Advanced cyber capabilities will play an important role in how the DoD, DHS and IC realize Trump’s vision to rebuild our military and promote regional stability.
But what about the rest of tech?
What does a Trump administration mean for other technology issues such as high-tech exports, patent reform, IT modernization and the Internet of Things? Today, it is fuzzy. Take IT modernization for example. The Modernizing Government Technology (MGT) Act, which was co-authored by Rep. Will Hurd (R-TX) and Rep. Gerry Connolly (D-VA), passed in the House earlier this fall. The Senate did not act on it before the election recess and is not
From Deleted Emails to Cybersecurity – How President-elect Trump Will Shift Tech FocusCara Lombardi, Executive Vice President, Qorvis MSLGROUP
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likely to in a lame-duck session since it will be focused on passing a continuing resolution. Essentially the bill calls for funds for government agencies to use to replace or update their outdated IT systems to deliver smarter, more user-friendly services to the American people. However, there is some disagreement in terms of where the funding will come from, and with a Trump administration focused on cutting costs and creating a leaner, more efficient federal government, the bill could face some opposition.
But let’s be clear: the foundation for good cybersecurity practices lie in an up-to-date IT infrastructure, so one would presume that Trump would favor federal IT modernization to support his cybersecurity policies. Trump, similar to most newly elected presidents, will look for some easy legislative wins during his first 100 days in office – legislation that has bipartisan support, such as MGT, is a great place to start.
One area of uncertainty is around technology as it relates to the economy and education. Generally speaking, technology – cybersecurity in particular – is a growing field with many employment opportunities. In fact, more than 200,000 cybersecurity jobs in the U.S. are unfilled and postings have been up 74 percent over the past five years (Source). Filling these jobs requires candidates to have the proper education. Trump has spoken at length about the America economy and its need for growth, as well as the need to create more jobs for the American people.
Because of that, there is a good chance that Trump would support legislation designed to grow employment in the technology and cybersecurity sectors or provide education and training to adequately equip people for these jobs. However, it likely won’t be a major priority given that it is not currently a point of discussion in his plan for job creation as opposed to infrastructure and traditional manufacturing.
In conclusion, what we know for sure about technology policy under President Trump is that there will be an increased
From Deleted Emails to Cybersecurity – How President-elect Trump Will Shift Tech FocusCara Lombardi, Executive Vice President, Qorvis MSLGROUP
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focus on cybersecurity, particularly when it comes to national defense. There is a good chance he will support federal IT modernization, even if only to provide an adequate foundation for his cybersecurity policies. And, implementing policies that encourage technology jobs and education appears to be consistent with Trump’s desire to grow the American economy. Unfortunately, for many other technology issues, including the growing concern that the FCC’s net-neutrality regulation
will be in jeopardy, the future is unclear. We can only hope that Trump will view technology and innovation as ways to advance America’s place in today’s competitive global market.
From Deleted Emails to Cybersecurity – How President-elect Trump Will Shift Tech FocusCara Lombardi, Executive Vice President, Qorvis MSLGROUP
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Qorvis MSLGROUP provides a first look at the people and players behind the most unlikely presidential campaign in American history. For each person mentioned here, we have included a bio, a photo, and representative institutions and organizations affiliated with that person, so that the reader may better understand the relationships that influence the people who in turn are influencing President Trump.
Like the Trump business organization, the Trump campaign is an opaque web of interlocking relationships. While we have endeavored to make as a thorough a search as possible, with material available in the public record, any such record is bound to be incomplete.
A Guide to the Trump Administration
A Guide to the Trump AdministrationQorvis MSLGROUP
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The information gives an overview of the following:
• The Trump Family
• Power Players: Persons of Accomplishment Who Joined the Trump Inner Circle Early, and Will No Doubt Have Considerable Influence Over His Administration
• The Trump for President Finance Committee: From Which President Trump is expected to draw his Ambassadors and Economic Advisors
• Domestic and Foreign Policy Advisors
• Global Business Relationships: Publicly Disclosed Business Ties Donald Trump has to hotels, real estate and other investments in Europe, Asia and the Middle East
• Members of the Trump Transition Team
A Guide to the Trump AdministrationQorvis MSLGROUP
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Election Results Point To Vast Changes In U.S. Economic Policies & Big Increase In The Deficit
Stan is an Executive
Vice president in
Qorvis MSLGROUP’s
Washington, D.C. office
and Director of Financial
Sector Communications
in the United States.
He can be reached at stan.
collender@qorvismsl.
com and 202-683-3131.
Follow him on Twitter at
@thebudgetguy
Stan CollenderExecutive Vice President, Qorvis MSLGROUP
The combination of a Donald Trump presidency and a Republican House and Senate means that many, and perhaps all, of the brakes that have limited economic policymaking in Washington the past 8 years will be removed in the next Congress.
GOP control of the White House and Congress means that the congressional budget process that had been abandoned on Capitol Hill will be the vehicle for major tax reductions and spending increase the next few years.
Although there may be some resistance from the House Freedom Caucus over the spending that isn’t offset, the Trump budget policies could increase the federal deficit to between $900 billion and $1 trillion a year by fiscal 2018. Federal national debt held by the public could quickly rise to 90% or more of GDP.
Election Results Point To Vast Changes In U.S. Economic Policies & Big Increase In The DeficitStan Collender, Executive Vice President, Qorvis MSLGROUP
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In fact, the congressional budget process is the ideal legislative vehicle to enact much of the Trump economic program. By law, a congressional budget resolution cannot be filibustered in the Senate, so the Republican majority there should be able to pass a fiscal blueprint and then compromise it with the one that will likely be adopted by the smaller but still substantial GOP House majority.
Passing a budget resolution will then enable Congress to use the long moribund reconciliation process to do everything from tax reform, to major tax cuts, to repealing a substantial part of the Affordable Care Act, to significant increases in military and infrastructure spending. President-elect Trump supported all of these during his campaign.
Any combination of these policies or even moderated versions of these policies would put U.S. fiscal policy directly at odds with the Federal Reserve. The higher deficit would be stimulative at the same time the Fed is expected to continue to implement a mildly restrictive monetary policy by slowly but steadily raising interest rates.
The Fed could decide to raise interest rates faster and higher in response to the Trump fiscal policy, and that would raise federal spending on interest on the national debt (and increase the deficit) even further as previously low-cost short-term Treasuries are re-borrowed at the
Election Results Point To Vast Changes In U.S. Economic Policies & Big Increase In The DeficitStan Collender, Executive Vice President, Qorvis MSLGROUP
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suddenly much higher rates. Indeed, interest on the national debt may well be the fastest rising part of the federal budget during the Trump administration.
As it has in the past, a large external economic, military or foreign policy shock could change this outlook. For example, as it did during the Clinton administration in 1993, the bond market could threaten to push interest rates to politically unacceptable levels in response to Washington’s much-greater borrowing needs.
But given the crisis fatigue that has set in over the past decade and a half in the United States, the intensity of the just-completed election campaign and the Trump administration’s probable desire to implement its plans quickly, the shock will have to be quite substantial to derail the economic policy changes that now seem almost certain to move forward.
Election Results Point To Vast Changes In U.S. Economic Policies & Big Increase In The DeficitStan Collender, Executive Vice President, Qorvis MSLGROUP
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Trump & Obamacare: What Does Repeal & Replace Really Mean?
Chuck is an expert in
healthcare policy and
has worked as executive
director of the Democratic
Leadership Council. He
was a Nieman Fellow in
Journalism at Harvard.
chuck.alston@mslgroup.
com
Chuck AlstonSVP, Director of Health Policy and Public Affairs, Qorvis MSLGROUP
A pledge to “repeal and replace” Obamacare was the Trump campaign’s central message on health care. While the catchphrase captures the discontent many feel about the U.S. health care system, what a slogan can’t capture is the hard road that lies ahead for the new president and Congress as they seek to make good on Trump’s promise.
The “repeal” part alone is hard enough, for Obamacare is far more than an insurance scheme. Rather, the Affordable Care Act (ACA) was 2,000 pages of legislation that touched on every aspect of health care access, delivery and payment, not just the insurance exchanges and subsequent premium increases that have become its flash point.
Moreover, the ACA is now six years in the making, touching millions of lives with its expansion of access to insurance through the exchanges and Medicaid, and influencing how
Trump & Obamacare: What Does Repeal & Replace Really Mean?Chuck Alston, SVP, Director of Health Policy and Public Affairs, Qorvis MSLGROUP
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billions of dollars are spent with doctors and health care systems, so it will require more scalpel than sledgehammer to repeal it. More importantly, repeal would not address the underlying fundamentals that spurred the ACA in the first place: high cost health care delivered through a broken delivery system.
But if repeal is hard enough, “replace” is even harder. Trump promised during the campaign only that “something terrific” would take Obamacare’s place.
Here’s what we know so far:
A Trump transition team statement outlines a thin plan, proffering solutions such as special insurance pools for high-risk, high-cost patients and cross-state sales of insurance policies that, depending on which analyst is talking, are at best unproven and at worst have demonstrably failed. It calls for:
• expanding the states’ role in running the Medicaid health-insurance programs for the poor
• eliminating the mandate that individuals buy health insurance or pay a penalty
• allowing individuals to “fully deduct health insurance premium payments from their tax returns” and use tax-free Health Savings Accounts (HSAs) that would be allowed to accumulate and pass on to heirs
Trump & Obamacare: What Does Repeal & Replace Really Mean?Chuck Alston, SVP, Director of Health Policy and Public Affairs, Qorvis MSLGROUP
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The president-elect told The Wall Street Journal he will maintain popular features such as preventing insurers from denying coverage because of patients’ existing conditions and permitting parents to provide coverage for their children up to age 26.
The plan doesn’t address the rising cost of prescription drugs, leaving out suggestions Trump made during the campaign trail, such as allowing the importation of drugs or permitting Medicare to negotiate drug prices.
What the plan doesn’t address is far more important, including the central question of what to do about the 20 million people who get their coverage through Obamacare, as well as the plethora of changes in the underlying structure of how the country pays for and delivers care.
When it comes to coverage, Trump and the Republican Congress are unlikely to toss 20 million people overboard without replacing their coverage – and what they try to replace it with will be subject to an intense political fight on Capitol Hill, where Democrats still have a say in the Senate.
As for delivery and payment reform, Medicare has been at the forefront of efforts to reward hospitals and doctors based on the value of the services they provide instead of the traditional volume-based system, an initiative called “value-based purchasing” that is designed to improve outcomes, improve the overall health of the population and reduce costs.
Trump & Obamacare: What Does Repeal & Replace Really Mean?Chuck Alston, SVP, Director of Health Policy and Public Affairs, Qorvis MSLGROUP
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Trump could eliminate or tinker with the thousands of pages of regulations the Center for Medicare & Medicaid Services has issued to implement this change. Nonetheless, payers such as large employers, labor unions and states were fed up with the payment and delivery system before Obamacare came along, and they are likely to continue pushing for change no matter what happens in Washington.
While the bottom line won’t come into view until at spring, there are two things to keep in mind for the time being. First, the stakes could not be higher. At 17.5 percent of GDP, health care is now a $3 billion slice of the economy, guaranteeing
a mad scramble as insurers, hospitals, doctors, device makers, pharmaceutical companies, and other stakeholders fight to protect or increase margins, and employers and consumer advocates seek to manage their costs. Second, add the word “revenue” after the words “repeal” and “replace,” and you get a clear picture of how self-interest that will govern the fight ahead. In other words, repeal his revenue, and don’t replace it with mine.
Trump & Obamacare: What Does Repeal & Replace Really Mean?Chuck Alston, SVP, Director of Health Policy and Public Affairs, Qorvis MSLGROUP
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Under Trump – Enviros Gear Up for a Fight
Sheila leads Corporate
and Brand Citizenship
practice for MSLGROUP
North America. She has
delivers award-winning
integrated programs that
inspire action. She was
former director of safety
and environmental affairs
at DaimlerChrysler,
Communications Officer at
the Mott Foundation, state
policy advisor and reporter.
@sgmclean8 | sheila.
Sheila McLeanSVP/Director U.S. Citizenship & Sustainability, MSLGROUP
Environmental leaders from around the world gathered this week in Morocco to flush out details of the Paris climate change accord despite fears that the work will be undone by President-Elect Donald Trump and a Republican-led Congress. Trump is expected to move quickly to reverse the Obama/Clinton climate agenda, including pulling out of the global climate agreement.
Under Trump – Enviros Gear Up for a FightSheila McLean, SVP/Director U.S. Citizenship & Sustainability, MSLGROUP
32
Trump has put Myron Ebell, a well-known climate skeptic, in charge of the Environmental Protection Agency (EPA) transition working group, a move that has drawn the ire of environmentalists.
The Trump plan calls for lifting restrictions on the production of shale oil, natural gas, and coal, approving controversial pipeline construction projects and opening federal lands to oil and gas exploration and coal mining. He has also promised to block implementation of the Clean Power Plan requiring utilities to lower carbon emissions.
The EPA is likely to be “starved” of funding and power as Trump rolls back federal regulations. Funding of basic research and development at the Department of Energy (DOE), meanwhile, will be reduced, raising fears of a “brain drain” of scientists.
While environmentalists and progressives are anxious and disheartened by all this, the news is not all bad. Investments in renewable energy – especially solar and wind
– are expected to continue. Both solar and wind have seen significant price drops, making them cost competitive with dirtier forms of energy and therefore very attractive. Utilities and corporations who have bet big on renewables and other environmentally-friendly innovations are unlikely to walk away from their commitments.
Companies are unlikely to back away from their carbon commitments given the risks associated with climate change, growing competition and regulatory requirements elsewhere in the world. That means investments in green product innovations like electric vehicles, energy efficiency tools and water treatment and conservation technologies will continue to be made by the private sector.
And donations to leading advocacy groups have risen dramatically over the last week. The Sierra Club said it had registered 9,000 new monthly donors over the last week — more new donors than the organization
Under Trump – Enviros Gear Up for a FightSheila McLean, SVP/Director U.S. Citizenship & Sustainability, MSLGROUP
33
added in the previous 10 months. Advocacy groups including the Sierra Club, Greenpeace, the Climate Reality Project and the Natural Resources Defense council have vowed to fight.
David Doniger, director of the climate program at NRDC told Reuters: “We are going to fight these rollbacks, if that is what they do, each step of the way. It’s going to be a legal battle but it’s also going to be a battle in the court of public opinion. Whatever people voted for, they did not vote against climate action, clean air, clean water, and environmental protection.”
The fight is certain to heat up in the 2018 mid-terms when a number of Democratic incumbents in energy-rich states that Trump won will face challenges. These include Sen. Heidi Heitkamp in North Dakota (wind, shale oil), Sen. Joe Manchin in West Virginia (coal), Sen. Bob Casey in Pennsylvania (fracking) and Sen. Bill Nelson in Florida (offshore drilling).
Under Trump – Enviros Gear Up for a FightSheila McLean, SVP/Director U.S. Citizenship & Sustainability, MSLGROUP
34
Would Bernie Have Won?
Joshua Gardner is a
Vice President Qorvis
MSLGROUP, focusing on CSR
and corporate communications.
Gardner joined MSLGROUP
from Luntz Global Partners,
where he managed all aspects
of client engagement, including
research, strategy, and message
development. Whether working
with Fortune 500s, professional
sports teams, or candidates
seeking elected office, Gardner
helped them build their brands
and shape their reputations with
the language that wins.
Joshua B. GardnerVice President, Qorvis MSLGROUP
That was my intro to a piece I co-wrote with several former colleagues for a major magazine this past May, just a month before I joined MSLGROUP.
We were a rag-tag group of market researchers led by an even more rag-tag founder and CEO. The five of us – our founder/CEO included – crisscrossed the country listening to and talking with American voters.
What we heard then should have prepared us for what happened this November. But all we could come up with was that opening line. To be fair, it was the election from hell.
Would Bernie Have Won?Joshua B. Gardner, Vice President, Qorvis MSLGROUP
Welcome to the election from hell.
35
But we didn’t need to visit Cleveland or Los Angeles to see how bad things had become. There was ample proof that our politics now reside in an intellectual cul-de-sac. People only want to hear themselves pontificate, or listen to those who confirm, affirm, and validate.
Still unsure? Ask yourself:
• How many Democrats regularly listen to Fox News?
• How many Republicans frequently tune into MSNBC?
Thirty years ago, voters rewarded politicians who spoke with vision and compassion about a “shining city on a hill,” “a thousand points of light,” or, “I feel your pain.” As recently as four years ago, we sought presidential candidates who were ultimately respectful, presidential, and statesmanlike.
Today? Both candidates in this year’s general election were so equally distrusted and despised by polarized sections of the electorate that their most effective message was, “Well, at least I’m not [insert other candidate].”
That was my conclusion then – back when I was part of that rag-tag group trying to put American voters’ beliefs into words. And sadly, it remains my conclusion today. Since Donald Trump blithely rode down an escalator, voters have demanded that politicians give voice and volume to their outrage. Anything less is politics or pandering.
As I said, I got it wrong. My job was to listen to them, and I didn’t hear a single word. But I’m not alone. Never has the political class/industry/elite so misread the electorate and so misunderstood American priorities. The echo chamber of journalists, politicians, corporate leaders and the international community kept reassuring itself that there was no way “a man like him” could win, even in times like these.
Would Bernie Have Won?Joshua B. Gardner, Vice President, Qorvis MSLGROUP
36
But for decades, millions upon millions of Americans have felt looked down upon and left behind. They are mad as hell, and Donald Trump got it.
Bernie Sanders got it, too.
Bernie echoed Americans’ fears of a rigged system and spoke to their frustrations about a government that doesn’t have the courage to take on “Wall Street and the billionaire class.” But what Bernie got even better was how to communicate those shared fears and frustrations.
Here are the four ways Bernie did that:
He talked about ACTION, not INTENTIONS.
When your language centers around what you believe, intend to do, or even “can” do, many will assume they’re just hearing more empty promises. Make them trust you through directness and decisiveness. It sets you apart from just about everyone else – in Washington, on Wall Street, and on Main Street.
He talked about their daily struggles.
The most effective way to connect with voters – especially when they are so angry – is to present your argument through their eyes. Take the debate out of the distant and discouraging halls of Congress and into the homes of real Americans. Simply put: your language must humanize, personalize, and individualize.
He told them he “got it.”
It’s a simple phrase. Three words, in fact: “I get it.” And yet such a simple phrase can be the most powerful opening. Any speaker can disarm a skeptical audience or calm an angry crowd by leading with empathy – showing that you have compassion.
He focused on “what YOU deserve.”
Bernie didn’t forget that people are scared and angry. But he also knew that negative attacks would only get him so far. Instead, he offered solutions. Americans want to know
Would Bernie Have Won?Joshua B. Gardner, Vice President, Qorvis MSLGROUP
37
that the problems they see can be fixed, and our job is to not merely tell them what is wrong; we must tell them ways to make it RIGHT.
There’s so much more Bernie Sanders did, and so much more that he didn’t do. He lost the Democratic primary, after all. But along the way, he proved how the right words at the right time can have an impact. Just like Donald Trump.
And just like Donald Trump, Bernie Sanders’s supporters came to his rallies in force – full-throated and ready to let him know just how much they cared. In fact, turnout in the 2016 Democratic primary rebounded from 2012 lows.
Whether that rebound was a result of voters’ enthusiasm for Sanders is hard to say. But what’s clear is that Hillary Clinton wasn’t able to get out the vote herself and that she lost both Democrats and independents to Trump, while Sanders had notorious luck with independent voters.
I’ll chalk that up to Bernie Sanders’s language. But then I’ve been wrong before.
Would Bernie Have Won?Joshua B. Gardner, Vice President, Qorvis MSLGROUP
38
Infrastructure Spending: It’s Gonna Be Yuge… Maybe
Elissa leads corporate
reputation and public
affairs clients, as well as
StreetBuzz, MSLGROUP’s
national grassroots network.
She received Women in
Government Relations highest
honor- Distinguished Member
Award 2012; has worked at
the U.S. Supreme Court, and
has the secret-keeping skills
to prove it.
Elissa DodgeExecutive Vice President Qorvis MSLGROUP
Additional federal spending on infrastructure shouldn’t be an issue in the next Congress. After all, there is widespread, bipartisan agreement that there is a tremendous need for infrastructure improvements and President-elect Trump has said improving our nation’s crumbling roads, bridges and “third world” airports is a top priority for him. But those hoping for a significant boost in federal spending for infrastructure shouldn’t celebrate just yet.
The most recent “report card” from the American Society of Civil Engineers gave America an overall D+ on infrastructure and said a $3.6 trillion investment would be needed by 2020 (i.e. by the next presidential election). That’s most certainly not going to happen. But we do have a president-elect who has a penchant for construction and has made
Infrastructure Spending: It’s Gonna Be Yuge… MaybeElissa Dodge, Executive Vice President, Qorvis MSLGROUP
39
a commitment to increasing job opportunities in America. In fact, infrastructure was the only major policy issue discussed in any depth during Trump’s victory speech on the night of the election:
During the campaign, President-elect Trump first said he would “at least double” Clinton’s $275 billion
We are going to fix our inner cities and rebuild our highways, bridges, tunnels, airports, schools, hospitals. We’re going to rebuild our infrastructure, which will become, by the way, second to none. And we will put millions of our people to work as we rebuild it.,
infrastructure plan, but offered little more in the way of details. Then, in his “Contract with the American Voter,” he announced his intentions to “leverage public-private partnerships, and private investments through tax incentives to spur $1 trillion in infrastructure investment over ten years.” At one point, Trump promised to “cancel billions in global warming payments to the United Nations, and use that money to support America’s vital environmental infrastructure.” Most recently, his transition website says his administration will “seek to invest $550 billion to ensure we can export our goods and move our people faster and safer.”
Even if the details on the final amount are murky, the investment commitment is there.
The fact that America desperately needs infrastructure improvements, and that we have a President-elect who campaigned on the issue and that we have traditionally had bipartisan support for investment clearly aren’t reasons for concern.
Infrastructure Spending: It’s Gonna Be Yuge… MaybeElissa Dodge, Executive Vice President, Qorvis MSLGROUP
40
The concern is over the same issue that stymied action in previous years: how to pay for the additional infrastructure spending that nearly everyone would like to do.
Long-term infrastructure planning has been held up in recent years as Congress passed short-term extensions for transportation authorizations. Congress has not raised the gas tax in more than two decades, as promoting user fees are a good way to get yourself voted out of office. And the Republican-controlled Congress under President Obama said they would not pass any plan that increased the deficit, requiring offsets instead.
After years of stop gap bills, the 2015 highway bill – the Fixing America’s Surface Transportation Act that eventually added $305 billion, was delayed for months as Congress struggled to come up with offsets which were ultimately a hodgepodge including changes to custom fees and passport rules for applicants who have delinquent taxes, contracting out some tax collection services
to private companies and using dividends paid to the Treasury by the Federal Reserve Bank.
Let’s assume for a moment that the Republican-controlled Congress under a Republican president loosens the reigns and allows for some deficit spending without offsets – which is entirely possible. Possible doesn’t mean easy, including (especially!) with Republican members of Congress, and it doesn’t mean Trump will get to the significant spending amounts he wants. Take what newly re-elected House Speaker Paul Ryan said just before the election when asked whether he would help Trump pass “a $550 billion, or more, infrastructure program.” Ryan laughed loudly and slapped his hand on the arm rest of his chair. “Just so you know, we just passed the biggest highway bill since the 1990s.”
While Trump’s infrastructure plans are still somewhat vague, two of his economic advisors created a blueprint to explain how the President-elect could finance the
Infrastructure Spending: It’s Gonna Be Yuge… MaybeElissa Dodge, Executive Vice President, Qorvis MSLGROUP
41
infrastructure spending with private investor money backed by tax credits that theoretically would add nothing to the deficit.
Under the plan, private firms would put up about 20% of the cost and borrow the rest. The government would provide tax credits to cover 82% of their investment. To offset the cost of credits, U.S. corporations who have parked profits overseas in order to avoid taxes would be encouraged to invest those profits in infrastructure in exchange for a lower tax rate.
But is this plan really viable? The outlook is hazy.
Even with tax credits, private investors will only take on major infrastructure projects if they have a guaranteed revenue stream (i.e. a “user fee” like a toll) to make them profitable. So, if you live in a major urban area, you may see a new bridge or highway. But if you live in a less populated area that actually needs real infrastructure investment, it’s less likely a private investor will want to get involved without access to permanent user fees.
And by the way, if by “infrastructure” you are thinking beyond roads and waterways to our aging electrical grid, insufficient broadband access and cyber security, those are also projects that don’t lend themselves to tolls or other fees.
If public-private partnerships and the idea of corporate repatriation sound familiar – that’s because they should. These ideas have been suggested by both Democrats and Republicans at various times before. And yet here we are.Democrats, Republicans,
Infrastructure Spending: It’s Gonna Be Yuge… MaybeElissa Dodge, Executive Vice President, Qorvis MSLGROUP
42
Independents and everyone in between know that building new infrastructure is a critical part of America’s growth strategy. Every $200 billion in additional infrastructure expenditures creates $88 billion more in wages for average
Americans and increases real GDP growth by more than a percentage point. And each GDP point creates 1.2 million additional jobs.
The need for infrastructure improvements in the U.S. is crystal clear, and the case can certainly be made to encourage repatriation, create an infrastructure bank/fund that support public projects with private investing, and/or increase the deficit to get us there. But for President-elect Trump, much like landing on a runway at LaGuardia, it is unlikely to be a smooth ride.
Infrastructure Spending: It’s Gonna Be Yuge… MaybeElissa Dodge, Executive Vice President, Qorvis MSLGROUP
For more information, reach out to [email protected]
Qorvis MSLGROUP1201 Connecticut Avenue NWSuite 500Washington, DC 20036
Michael Petruzzello, President, Qorvis MSLGROUPT: +1 202-496-1000