Business and the 2020 Election: Are you Prepared?
To most political observers, President Trump represents the most significant disruption in memory to US politics, domestic policy, and foreign policy. His surprise election and governing record are viewed as the ultimate “black swan” on the political landscape, alarming to established policymakers, political practitioners and pundits. His rhetoric, policy proposals, and governing approach have reshaped the view of the presidency for many and possibly has accelerated the prospects of a major political realignment in the United States. Throughout his term, the President has rarely received more than a 42% approval rating and the historic gains by the Democratic party during the 2018 midterms seemed to send a message of widespread voter discontent. Furthermore, the country is experiencing a significant economic contraction and enduring a global pandemic, where US cases and casualties exceed other developed countries.
Now, facing re-election, will American voters return President Trump to the White House for four more years?
Maybe. Incumbency has its advantages. The President has been able to consolidate his base – his approval among registered Republicans is extremely strong and they are highly enthusiastic. He avoided the kinds of primary challenges and third-party candidacies that doomed Presidents Carter and George H.W. Bush. Regarding the two biggest crises in the country today – the economy and the pandemic – voters still give President Trump high marks on the economy and while he gets low marks for managing the pandemic, voters do not blame him for Covid-19 itself. Further, in a recent Pew poll, voters identified “economic recovery” as the nation’s priority by double digits over any other issue, including the national Covid-19 response.
Remember: President Trump does not need to win the popular vote to prevail. In fact, there are scenarios where he could lose the national vote by five million and still retain the presidency. The Electoral College map tells us that it most likely will be the voters along the northern belt (Pennsylvania, Michigan, Wisconsin, and Minnesota) and the southern belt (North Carolina, Georgia, Florida, and Arizona) that will decide the determinative electoral votes. Those states are currently much closer than the “national polls” suggest where Vice President Biden has led consistently since early summer.
Vice President Biden remains in a formidable position for a challenger. His party is united behind him; his campaign has converted national anxiety and angst over President Trump’s policies into an effective rallying cry; his fundraising is on pace to match the President’s campaign, and he remains ahead in most of the swing states in the northern and southern belts. In fact, most observers believe he will win. Of course, they thought the same about Hillary Clinton.
Political pundits weren’t the only ones surprised by the 2016 outcome. Businesses, too, found themselves scrambling to better understand what a Trump Administration would mean for its growth strategies and risk mitigation. In the post-election mayhem, opportunities were missed and unanticipated risk materialized. Our advice to clients borrows from the Scout’s motto: Be prepared. Be prepared for either outcome; review the policy proposals from each campaign, and understand the legislative and regulatory processes and outcomes that changes to current policy would necessitate. Pay attention to the likely federal appointments in the next term: who are the advisors that will likely find themselves in the White House and the agencies that shape policy? And always be aware of the politics: what are the important alliances and what constraints will the Administration face politically? These are volatile times. Preparation, even for what many believe is unlikely, is a prudent and responsible path to managing political risk.