August 2020 Volume 2

COVER STORIES

How the Outcome of the November Elections Could Impact the Road to Economic Recovery By Steve Haro, Mehlman Castagnetti Rosen & Thomas

COVID-19 has brought the world to its knees and dealt an economic blow that modern history has not seen since the Great Depression. The U.S. has been hit particularly hard and had to make the dramatic move of shutting down the economy in mid-March to slow the spread of the pandemic. In those opening days, the government moved quickly to enact policies to help both flatten the virus’s curve and minimize the economic pain brought on by the shutdown. As readers will recall, we went into greater detail in the last issue of the FIA Magazine on the massive legislative response to the pandemic. All told, the U.S. Congress passed three bills totaling $3 trillion. Those bills included policies like enhanced and extended unemployment benefits, a substantial small business loan/ grant program, a loan program for medium and large enterprises, money for vaccine research, and a large investment to help expand the country’s testing capacity, among others. Months later, it would seem that this robust investment has not been enough. As of this writing, the U.S. stands at an unemployment rate of 14%, though economists believe the real rate is much higher. 20 million folks are out of work, tens of thousands of small business have shut their doors, trillions in capital has been lost, borders are closed, schools don’t know how to reopen in the fall, and no one knows when we will be back to normal – or even what a new normal will look like. What is clear, though, is that any hope that the pandemic would pass quickly and we would then see a so-called “V” shaped economic recovery is not in the cards. What is also clear is that more will have to be done to prevent further economic collapse and put us on a path to recovery. But what does that entail? It is a tough and expensive question to answer. Further complicating this is the fact that all of this is happening in the midst of a heated election year, and politics has a way of impeding progress. “This is the most important election in our lifetime” is a phrase overused by many pundits, prognosticators, and other media types every four years when the United States elects a president. Honestly, it’s a tired, dramatic line that rarely matches the actual moment in which the country finds itself. Yes, any election involving the White House is one of historical importance, but that does not mean that every presidential election rises to the level of the “most important in our lifetime.”

That said, there have been very few presidential election years in our history to match the tumult and turmoil of 2020. As such, one can argue that the overused phrase is wholly appropriate this year given the state of the world, its underlying health – physically and economically – and the policy prescriptions that will be required to get us all back on the road to economic recovery. But the solutions to guiding us on that road depend on the outcomes of more than just who gets elected president. The make-up of Congress combined with the White House resident will shape the possible and probable policies. Is an infrastructure bill possible? Maybe under the scenario of a fully Democratic Congress, but more unlikely if Congress has a partisan split like it does now. Will trade policy – a major macroeconomic driver and a critical factor to the forging industry – lookmore isolationist or expansionist in 2021 and beyond? It is hard to see us changing from our current isolationist course if Donald Trump retains the White House and the Congress stays the way it currently is. These policy questions and many others are what we hope to explore in this article. But to properly paint that picture, we have to investigate how each question will fit under different electoral outcomes. So, let’s first provide a snapshot of the current political breakdown of the government and then discuss what the likely electoral outcomes could be come November 3rd. Once we’ve done that, we can dive into what an economic recovery policy roadmap could look like depending on who occupies the White House combined with who controls each chamber of Congress. The Current Political Makeup and Electoral Outlook Republican Donald Trump currently occupies the White House. At the time of this writing (mid-July), the national polling numbers show the president trailing former Vice President Joe Biden 51-40. State by state, which is what really matters since we elect a president by way of the Electoral College and not by popular vote, the polls are very close. When you go state by state, polling indicates that Biden would win enough states to garner 268 electoral votes, Trump would take 204, and four states are pure toss-ups (Arizona, Florida, North Carolina and Wisconsin – Trump, it should be noted, won all four of these states in 2016). It takes 270 electoral votes to win. Though one could deduce that Biden is headed to victory, there is plenty of time for these numbers to move; let’s not forget that in the summer of 2016, most folks predicted a comfortable win for Hillary Clinton. As such, though a Biden win is looking pretty likely, it should not be

FIA MAGAZINE | AUGUST 2020 14