August 2020 Volume 2

COVER STORIES

out new trade agreements, and it pulled out of the 11-country Trans Pacific Partnership (TPP) shortly after taking office in 2017, before Congress had a chance to vote on its ratification. Since then, there has been little to no activity on proactively seeking new bi- or multi lateral trade agreements with other counties (folks might say that the United States-Mexico-Canada Agreement is an exception, but that simply replaced the 25-year-old North American Free Trade Agreement; it was not a brand new deal that opened newmarkets). The one outlier here is the post-Brexit United Kingdom. It is conceivable that either a second Trump administration or a Biden administration would negotiate a free trade agreement with our English ally no matter the make-up of Congress. But any hope of a Biden administration joining the TPP or immediately entering into bi- or multi-lateral trade negotiations with new countries shortly after taking office will have to be set aside for the time being. Given the importance of international trade to the forging industry and how fair-trade policies in general could serve as viable long-term economic stimulus, it is unfortunate that we find ourselves in this place. The MinimumWage A Biden presidency would look to increase the current minimum wage of $7.25 to $15 per hour—the economic stimulative effect of course being to put more purchasing power into the hands of more Americans, which would then prop up retailers, producers, restaurants, and the like. This would require legislation to pass both chambers. Congressional Republicans have been reticent to increase it. The last increase to the current $7.25 level was in July 2009 – passed by an all Democratic Congress and signed into law by former president George W. Bush in 2007. As such, it is likely that an all Democratic Congress combined with a Biden presidency would make a serious effort to increase the minimum wage to $15 an hour. A second Trump term would likely deprioritize this. However, there could be a very real scenario where an all Democratic Congress and a TrumpWhiteHouse compromise on an increase of the minimum wage as part of a larger compromise bill, just like President Bush did. However, should Congress remain split in its current form, it is hard to see how an increase would be possible – at least in 2021 or 2022. State and Local Government Investment A Biden presidency combined with an all Democratic Congress would likely see government-to-government spending take on an outsized role in our economic recovery plans for 2021 and beyond. Local governments (state, county, municipal) derive their budgets from tax sources other than individual income (sales taxes, property taxes, lodging taxes, usage fees, etc.). They are also dependent on grants from the federal government. The economic shutdown has dealt a massive blow to all of those avenues of revenue – people are travelling less; they could not eat out at restaurants or do other things by which local governments derive income. This has led to a massive shortfall in local tax collections. The end result has been a dramatic scaling back in services as well as massive layoffs of local

government employees all across the country. Now, there are many who might philosophically believe that this is a good thing and that less government employees mean smaller government in general. However, one cannot escape the fact that in a period of economic recession and possible depression, every job matters – not to mention the many government employees who are essential to the proper functioning of society: teachers, firefighters, police officers, sanitation workers, and many others all play critical and necessary roles for all of us. Ours is an economy dependent on the purchasing of goods and services – if consumers do not have a job and thus the income to make those purchases, our road to recovery will be slow and arduous. On top of which, and more specific to the forging industry, so many of our nation’s infrastructure projects are dependent on state and local revenues (and government employees) to fund and build those projects. Should the political make-up of Congress and the White House remain status quo (Republican White House, Republican Senate, Democratic House), it would be hard to see these types of investments being made. However, if President Trump wins reelection and Democrats retain the House and take over the Senate, state and local dollars could be on the table as part of a larger bargain that potentially includes regulation rollbacks and liability protections for employers. Infrastructure There exists little partisan policy disagreement over the long-term economic benefits of public works projects to improve our nation’s infrastructure. This was done during the Great Depression and continued throughout much of the 20th century as our nation’s highway system was built out. That great system, and the roads, bridges, airports, railways, waterways, andmany other critical access points connected to it, has aged, and it could use some upgrades. This too is not a point of contention; it’s necessary. It creates a safer intermodal transportation system and, most importantly, for the times we find ourselves in, it puts people to work. What is difficult to agree on, however, is how to pay for it. For many years leading up to the pandemic, Congress and the White House have grappled with the need to invest in infrastructure and the high cost associated with it. But now, in the midst of the pandemic, there may be a thawing, for as this wears on, there is a growing acknowledgement that the policies implemented to keep the economy afloat have not been enough. And as of this writing, there is no clear end to the COVID-19 pandemic. Enter infrastructure as a potential key element on our road to long-term economic recovery. Both Trump and Biden have spoken publicly and enthusiastically about the need for a robust infrastructure package. But honestly, the possibility of getting one rests on the outcome of the congressional election. The likeliest possibility rests with Democrats taking back both chambers of Congress, with the Senate then successfully eliminating the filibuster. A split Congress or an all Republican Congress does not

FIA MAGAZINE | AUGUST 2020 16