Presidential impeachment proceedings, geopolitical turmoil and economic uncertainty all in an election year are creating dynamics complex enough to confound even the most seasoned political observers, much less executives who lead publicly traded and privately held companies, non-profit organizations, and other institutions.
While everyone in Washington seems to have ready opinions on how this all will play out, the truth is that no one really knows, particularly with the potential for a national security crisis (e.g., Iran), economic challenge (i.e., a downturn) or a new development (such as an unexpected vacancy on the Supreme Court) to scramble the dynamics even further.
Here’s what we do know, and what’s important for corporate decision makers to keep in mind: This year, every move or countermove made by the Trump administration, Republicans or Democrats boils down to positioning for the November general election, when power in the White House, Congress and statehouses is up for grabs across the country in campaigns.
The coming months will be filled with a lot of activity – some that may actually go beyond just talk – as both parties seek the upper hand with voters in a remarkably divided nation. For businesses, it’s important to pay attention to major developments without fixating on every twist and turn in the various storylines playing out. Here is a brief primer on the current landscape, followed by our thoughts on how executives should think about it:
- It was assured in the Democratic-controlled House and now is dominating the Republican-led Senate even though senators are unlikely to convict Trump during their made-for-TV trial. The political gamesmanship is overshadowing just about everything else on Capitol Hill, pushing other issues to the backburner and deepening already significant partisan divisions.
- On the campaign trail, both Republicans and Democrats are using impeachment to curry favor with and raise money from their core party voters in hopes of keeping them energized through the fall when they’ll need to turn out at polls in droves. Trump is looking to turn out enough of his followers and win over enough independent voters to overcome impeachment and a job-approval rating that’s hovering in the low 40s, making him the most unpopular president to run for re-election since Gerald Ford. Democrats, meanwhile, are trying to make the election a referendum on Trump – and using impeachment as their best case for booting him from office.
- The irony: impeachment may yield literal and figurative dividends for both ends of the political spectrum but leave the middle of the electorate, which decides elections, frustrated and very much up for grabs come November.
Democratic presidential primary
- Democrats start voting in their months-long primary season in early February to select a challenger to take on Trump. It’s unclear whether they will end up nominating a candidate who has the appeal to beat Trump and, if so, whether that nominee will be able to unite the fractured party in a way that can benefit Democrats up and down the ticket.
- Over the next several months until the nomination fight is over, anti-business rhetoric will be at an all-time high as candidates appeal to the liberal base that turns out in presidential primaries. But have no fear: the eventual Democratic nominee is likely to pivot to the center and cool the rhetoric in the general election to attract the center of the electorate against Trump.
- Congress recently passed the United States-Mexico-Canada Agreement with strong bipartisan majorities and Trump signed the deal. Both Republicans and Democrats are taking credit and are all but certain to campaign on the achievement; the business implications are wide given that it rewrites trade rules across North America, affecting a range of industries including dairy, pharmaceutical and automotive.
- The rhetoric over other trade disputes has cooled a bit, particularly with China where a “phase one” deal was signed this month. Even so, Trump’s standoffs – or threats of tariffs — with various countries will continue to cause uncertainty for American businesses as Trump seeks to deliver for his base while his international rivals seek to punish him where it hurts – by targeting working-class industrial and agricultural regions that vote heavily for him.
Health care and other policy fights
- Polls show health care is the top issue for most voters this year, and both parties are offering a wide array of solutions from single-payer proposals to more modest changes all to seek credit with the electorate come November. This causes more angst for an industry that has faced constant turmoil in the decade since President Barack Obama’s Affordable Care Act was enacted. The upside for the health care industry: passing legislation that Trump will sign will be incredibly difficult, given other priorities and the Capitol Hill power split.
- Immigration, the environment, income inequality and other policy fights are reemerging as both Republicans and Democrats stake out positions to curry favor with different parts of their electorates. They are making pronouncements, introducing legislation and offering up proposals that can cause whiplash for businesses that don’t keep in mind that politics are at play – more so than actual policy that will be enacted.
- We’ll have to wait and see how the election outcomes this November – and the policies that politicians are promising to enact on everything from health care to taxes to climate change — affect the ability to do business in the U.S.
Congress, the economy and advocacy
- It’s doubtful that Congress can really get much more done than what’s already on its plate in what will be a short legislative year. Impeachment and USMCA ratification – as well as oversight over Iran and the rest of the Middle East – are expected to take up the bulk of the first few months of the year. Memorial Day won’t be far away, ushering in a free-for-all summer and fall of posturing and pronouncements – rather than substance — until the November elections.
- The U.S. economy has grown over the past decade in what observers say is the longest economic expansion in the nation’s history. But surveys show that many voters don’t think that they have benefitted, and companies are bracing for an end to the streak, with 97 percent of 150 CFOs saying in a recent Deloitte survey that they believe a slowdown or recession will occur this year.
- Political and cultural activists frustrated by an inability to advance their agendas through legislative processes and failing to enact policy in Washington increasingly are turning to the court system to influence issues and using the shareholder proxy processes to directly force companies to change. All of this is policy making through a different means.
Taken together, this activity could create chaos and unnecessary distractions for businesses if they let it. They shouldn’t. Instead, they should:
- Plan for a range of electoral outcomes and scenarios while seeking to avoid the mistakes of 2016 when many assumed that Hillary Rodham Clinton would win the presidency — and planned only for that outcome only to have to scramble at the last minute.
- Focus on what can be controlled; execute communications and engagement plans in Washington and the states, while staying abreast of political developments enough to pivot to mitigate risks or take advantage of opportunities that arise.
- Avoid as much as possible being mentioned by politicians in an election year; positive mentions by one side can quickly turn into negative mentions by the other side and all of a sudden what may seem like an asset has become a liability.
- View every move through a political lens, not just a commercial lens, staying mindful that even what may seem like mundane announcements or routine business decisions can quickly become hot-button political issues.
- Tell the company’s own story, stay on message and deliver the pitch through channels providing the best return on investment; control and consistency are the keys to cutting through the crush of information and reaching your target audiences effectively and efficiently in an election year.
- Consider turning to the states, where the bulk of the consequential policy fights are poised to play out this year, as Washington’s distractions and preoccupations prevent progress on key issues and pressing matters.
- Stay aware of employees’ political agendas and how corporate political action committee donations to candidates will be perceived. Anger among employees can quickly turn into activism, creating reputational problems as well as talent retention and recruitment challenges.
Most of all, given the state of play, companies would be wise to be balanced in their advocacy, modest in their expectations and thoughtful in their consideration of how to position themselves in Washington and determine whether this is the year to “trial balloon” issues in the nation’s capital rather than engage in full-throated advocacy.