Reflections on a Trump Presidency

Like many others, I was surprised by the results of the election. I guess I was persuaded by the polls that indicated that Hillary Clinton would win, even though the spread had shrunk to something within the margin for error. She also had a significant advantage in the Electoral College going into the race. On election night, I attended two parties given by major donors to the Democratic Party. When I arrived at each the mood was upbeat (one was black tie–preferred in anticipation of a celebratory occasion). By nine o’clock the crowd was becoming despondent and by eleven most had left. I thought I would try to get some sleep around midnight and called a Washington contact whom I knew was staying up all night. I asked him to call me when the outcome was certain. He didn't call, but sent me an email at 1:42 am saying that Pennsylvania had gone for Donald Trump and it was over. Pennsylvania! She had campaigned so hard in that state. What had happened? I thought about the irony: before the election the popular view was that the Republican Party would have to be restructured away from extremism. After the election, it was the Democratic Party that might require restructuring. In the latter case, more toward the left and the ideas of Elizabeth Warren and Bernie Sanders. But in my view, the loss was candidate-specific and not related to party philosophy. The Democrats should remain in the center.

In retrospect, figuring out that two flawed candidates were running against each other isn’t so hard. Trump had extreme positions on a number of issues (e.g., immigration) and his personal statements and behavior conflicted with the values of many potential voters. Clinton was more mainstream and sympathetic as a person, but in August 59% of potential voters thought she was untrustworthy. Moreover, that number was probably higher on election day because of the revelation by the FBI of additional e-mails. What was different about the two candidates was the clarity of their central messages. Donald Trump recognized that the country was yearning for change. According to Census Bureau figures for 60% of U.S. households, real income in 2015 was lower than in 2000. They had been losing ground in the new millennium. People often vote with their pocketbooks. Donald Trump was going to make America great again which, to many, meant they would have better jobs and more disposable income. He had a pro-growth agenda with lower taxes, less regulation and fiscal spending on infrastructure.

Hillary Clinton’s message was less clear. She was going to continue the Obama agenda, spend money on infrastructure but raise some taxes to pay for it, and maintain liberal policies on social issues. Voters saw her platform as more of the same at a time when they thought the country needed change. Clinton was hurt by her reluctance to be interviewed frequently, while Trump was always available. She also did not visit some key states like Wisconsin during the campaign. Donald Trump may have had personal traits voters had trouble accepting, but they were willing to put that aside in favor of his program to restore growth in the economy. Hillary Clinton may have been the most experienced person ever to have run for president, her personal values and compassion may have resonated with the majority of the electorate (she won the popular vote), but she didn’t have a convincing plan for improving the health of the economy and he did.

There may be serious weaknesses in the Trump plan and it may swell the budget deficit to an unmanageable size, but at least it was a set of ideas to put the country on a growth course and that’s why he won. Populism dominated the economic landscape in the presidential election. Voters who were dissatisfied with their leadership chose someone who promised a radical approach to existing policies. They knew it was a risky decision but they couldn’t accept a continuation of what they believed was a do-nothing establishment. Populism was also clearly apparent in the Brexit referendum on June 23 and it will play a role in the political process in Holland, France and Germany. The result will be above-average volatility in the financial markets.

During the campaign Trump talked about a wide array of initiatives and, when he takes office, he will have to set priorities. He will put the more controversial parts of his agenda further down the list and try to build support across the broad electorate and Congress for programs where there is bi-partisan agreement. I believe he will fill the vacancy in the Supreme Court early in his first term and while his choice will be more conservative than many would like, he will probably pick someone with unquestioned judicial qualifications. The great fear that many have is that the Court will try to overturn the Roe v. Wade decision giving women the right to choose reproductive alternatives. This highly contentious area will not, however, be addressed early by the newly constituted Court if at all. He will try to deliver on his promise to fix some of the weaknesses in the Affordable Care Act, giving insurers the ability to sell policies nationally and providing incentives for younger healthy people who are currently uninsured to sign up. This will broaden the pool and make the whole program more viable economically. When the Affordable Health Care Act was initiated, 18% of the population was not covered by health insurance; now that number is only 11%. Simply scrapping the existing program and starting all over again with a totally new plan is impractical. Changes in the current plan can be made and approved by a Republican Congress. I think that will be the approach taken by the new president.