The Mood in Washington on the Virus, the Economy, the Election

May 7, 2020

5 minute read

OVERVIEW: We had the opportunity yesterday to pick the brains of two veteran political strategists — one from each party — who analyzed the top issues, under the cover of anonymity. They agreed on several issues, but — not surprisingly — when it comes to the election, they disagreed. We offer their views below:

The Coronavirus: It’s the seminal issue of our lifetimes, likely to persist well into 2021 and beyond. Our Republican friend thinks President Trump will get credit for opening up the country; the Democrat says we’ve moved too soon — and “we have Trump on tape dismissing the virus for the entire month of February, and we will use those tapes extensively.”

The economy: Massive monetary and fiscal stimulus will avoid a Depression, they both agreed. The Republican thinks there will be positive GDP growth by late this year, while the Democrat warns that unemployment will remain above 10% well into 2021. They both give Fed Chairman Jerome Powell high grades; Powell is a very big star in Washington.

The next stimulus: A flashing warning signal — both of our friends think Congress could bog down, as the White House seeks all sorts of tax goodies (such as a cut in the capital gains rate), Nancy Pelosi demands a $2 trillion package, and the issue of tort reform clouds the debate.

Deficits: The Republicans are getting nervous about staggering red ink — probably $4 trillion this year — while Democrats worry about a collapse of state and local finances. The differences are so great that next stimulus bill could take months to resolve, both of our friends agree.

The Fauci factor: Both agree that Dr. Anthony Fauci is untouchable. Our Republican friend thinks Fauci has irritated Trump, but the president can’t fire him. The Democrats are hoping to get Fauci to blast Trump, but the wily doctor is too shrewd to fall into that trap.

China, the villain: No disagreement here. China has concealed the extent of the virus and — as we asserted last week — has become a global pariah. Both of our friends think there will be legislation this fall that will address America’s over-reliance on Chinese supply lines. A Cold War looms with Beijing.

One view of the election: Our Democratic friend concedes that Joe Biden is a weak candidate, bogged down in Delaware with virtually no visibility. And a sexual assault allegation has further weakened him. But our friend thinks Biden can afford to lie low as Trump attracts criticism for his inconsistent handling for the virus; the Electoral College may provide a path for a Biden victory.

The other view of the election: Our Republican friend thinks Trump will win because the economy will be improving by fall, but more importantly, Trump will rip into Biden for his ties to China and his alleged lack of mental acuity. “It won’t be pretty,” our GOP friend says, “but do you really want to bet against Trump in a
debate with Biden?”

The Senate election: Our friends agree that the Senate is the firewall, blocking activist legislation from the House. Our Republican friend thinks the GOP’s 53-47 majority could shrink by a seat or two, while our Democratic friend expects something close to a tie, broken by the party that wins the White House. Both expressed surprise that the Iowa seat, held by Joni Ernst (R), suddenly looks competitive.

The wild cards: Both of our friends agreed that there are some very big ones — a second wave of infections; a health issue for some key officials; a geopolitical crisis, perhaps with North Korea; the emergence of a credible vaccine; or a sudden vacancy on the Supreme Court.

NO SHORTAGE OF WILD CARDS, but we’ll end with another area of agreement — we’ll get though this, and maybe we’re turning a corner; but there’s also great uneasiness in this city about opening up too soon. New infections and fatalities could surge, both of our friends fear; this crisis could get worse before it gets better.

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This post was first published at the AGF Perspectives Blog.