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Examining a vast world of post-election scenarios

GREGORY RUSOVICH
Guest Writer
Rusovich@lbknews.com

Now that the elections are mostly over, there are several key takeaways and scenarios likely to play out during the next 24 months. It appears that Joe Biden will be president, the Republicans will control the Senate, and the Democrats will retain a decreased majority in the House. Divided government. A goal apparently desired by the American people. And even as several states impose mandatory, excessive lockdowns — some even limiting at-home Thanksgiving dinners to 10 family members —there is hope for normalcy on the horizon. The COVID-19 pandemic is a global and human tragedy which has taken an enormous toll, but as vaccines and improved therapeutics become broadly available, and the media no longer have President Trump as a target for their daily vitriol, we will return to debating crucial policy and philosophical differences. As a backdrop, it should be noted that the vaccines were developed at record speed due to a highly effective public-private partnership which relied on innovation, speed and diminishing bureaucratic hurdles. A President Biden would be well advised to keep this effective approach in place for the public’s health — his stated priority.

In a post-pandemic era, substantial policy differences and governing philosophies will engage significant attention. Historically, major policy issues including economic policy, foreign policy, energy policy, education, crime and health care would be the most salient topics of debate and public discussion.

In the coming year, the economy will be the central issue. Presidents Kennedy, Reagan and Trump all faced various degrees of economic sluggishness following their respective elections, and each enacted significant tax cuts for businesses and individuals. (In Kennedy’s case, after his assassination, President Johnson ultimately enacted the Revenue Act of 1964 with Congressional approval.) Without exception, lower taxes resulted in significant GDP growth and job gains. The most recent Trump tax cuts, combined with substantial deregulation of federal rules and regulations, led to significant, positive economic impact. As “animal spirits” were reinvigorated through pro-growth policies, the economy expanded. The Wall Street Journal asserts, “During Trump’s first three years in office, median incomes grew, inequality diminished, and the poverty rate among Black people fell below 20 percent for the first time in post-World War II records.” President-elect Biden has proposed to increase business and personal income taxes for higher incomes. Bidenomics would raise business tax rates from 21 to 28 percent, but pass-through entities — which employ over 40 million people —would mainly pay at the significantly higher individual tax rate. According to an extensive study recently released by the Hoover Institute, “Biden’s plan to raise personal income and payroll tax rates would push these federal rates from below 40 percent to, often, above 50 percent, and these are on top of state income taxes.” He also plans to phase down bonus depreciation, tax-qualified dividends and long-term capital gains as ordinary income for taxpayers with income exceeding $1 million, and to impose a 12.4 percent Social Security payroll tax on income above $400,000. So much for enticing those entrepreneurial “animal spirits.”

Foreign policy decisions by a new Biden Administration will also be intriguing to watch. The previous Obama-Biden Middle East strategy centered around negotiating a nuclear deal with Iran at a substantial cost to the U.S. and our historic Arab allies. President Trump’s policy was completely contrary to the Obama-Biden Iran-centric focus as emphasis shifted to strongly supporting the Emirates, Saudi Arabia, Egypt and Jordan, while isolating Iran. And of course, President Trump vociferously supported Israel and forged deals between Israel, the Emirates and Bahrain, further threatening Iran. Will a President Biden return to the Iranian orbit and once again drive a wedge between our nation and our longstanding Arab and Israeli allies? Our current primary nemesis, China, also awaits with hegemonistic ambitions. North Korea will almost certainly test the resolve of the new administration. And President Putin will pounce on any sign of weakness.

As recently as the 2000 presidential race, education was the most important issue. Failure to effectively educate our children remains an urgent problem facing our country, and deep partisan divides exist over school choice, charter schools and vouchers. President-elect Biden has signaled hostility toward charter schools and vouchers. At a public education forum held by MSNBC last year, he stated, “And so if I’m president, [Education Secretary] Betsy DeVos’ whole notion from charter schools to this are gone.” The Biden-Sanders Unity Document calls for an end to federal funding of for-profit charters and school vouchers. Dr. Thomas Sowell has done extensive research contrasting New York’s charter performance with traditional public school performance and reports in his recent book, “Charter Schools and Their Enemies,” that New York charters outperform traditional schools in math, English and language arts, with some indexes showing a stunning 30-1 differential in scoring. President-elect Biden may want to prioritize children and their parents over national teacher unions.

Other major challenges which await us include the possible expansion of Obamacare, the proposed “transitioning” from the oil and gas industry, and a significant loosening of immigration restrictions. So, relax and take a deep breath. We will soon return to fiercely debating pocketbook and quality-of-life issues. Divided government never looked so fun!

Gregory Rusovich is CEO, Transoceanic Development. He has chaired numerous Boards dedicated to economic development, international trade and criminal justice. He is a graduate of Tulane University and lives with his wife Suzanne in New Orleans and Longboat Key.

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