by Greg Valliere, AGF Management Ltd.
Insights and Market Perspectives
Author: Greg Valliere
April 24, 2020
WE’RE FREQUENTLY ASKED whether the Nov. 3 presidential election might get postponed, and our answer has always been “we don’t think so.” But the issue is now on the table, and it’s not 100 percent certain that the election will be held as scheduled because the virus — and Donald Trump — may get a say.
OUT IN THE OPEN: Joe Biden said yesterday: “Mark my words, I think Trump is gonna try to kick back the election somehow, come up with some rationale why it can’t be held.” The Democrats’ presumptive nominee added: “That’s the only way Trump thinks he can possibly win.”
WE HAVE A HUNCH THAT TRUMP will be asked about Biden’s comments at one of the president’s press conferences this weekend. Trump likes to manufacture headlines, and he might welcome a diversion from criticism of his confusing coronavirus performance. We think Trump might not flatly rule out a postponement, and what a firestorm that would create!
THE SCENARIO: Let’s assume the virus makes a comeback in the fall (God forbid), and let’s assume that the mail-in voting option becomes even more controversial. Most evidence shows that mail-in voting works well — without any significant fraud — but Trump adamantly opposes this option, calling it corrupt.
BUT THE PUBLIC MAY OPPOSE standing in huge lines to vote, under social distancing restrictions, so there could be a sense that a traditional voting booth option is un-workable. Trump surely must know that he has solid support among older Americans, who would be reluctant to expose themselves to infection on election day.
SO COULD TRUMP BLOCK MAIL-IN VOTING AND POSTPONE THE ELECTION? We think he has thought about it, but we don’t think he has the legal authority to do so; the House has jurisdiction over this, and the House is in no mood to do Trump any favors.
BUT TRUMP COULD SELL A NARRATIVE that mail-in balloting is fraudulent, or he could instruct Attorney General Barr to take this to the courts, seeking a delay. For now, let’s say there’s only a 20% probability that Trump could postpone the voting; the far safer bet is that the election will be held as scheduled, with many states opting for mail-in ballots.
BUT THAT LEAVES OUR 20% CHANCE of a postponement — with one other long-shot: Trump might contest the outcome, if he loses narrowly, claiming the election was tainted by fraudulent mail-in voting (he claimed fraud in 2016 even though he won). Bottom line: Biden smells something fishy, and he wants to put this issue on the table now.
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ANOTHER FAR-FETCHED IDEA is the suggestion by Senate Majority Leader Mitch McConnell that states and cities might have to file for bankruptcy rather than get more federal aid. This provoked a furious pushback yesterday from all Democrats and many Republicans, who are expected to pass another huge aid bill this summer.
McCONNELL WILL LOSE THE SPIN BATTLE, but he has a point to this extent — there should be no aid to prop up state pension funds, which for years have been a mess in Illinois and several other states. These pension plans are are overly generous, poorly funded, and based on flawed economic assumptions.
THE STATES CANNOT LEGALLY DECLARE BANKRUPTCY (cities can), but we think they will get a huge chunk of money this summer for police, firefighters, medical personnel, etc. But they probably won’t get a dime for their pension plans; McConnell will prevail on that.
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This post was first published at the AGF Perspectives Blog.
