What We’re Hearing on Capitol Hill — Disputed Election is a Huge Concern

Insights and Market Perspectives

Author: Greg Valliere

August 5, 2020

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CONGRESS PROBABLY WON’T LEAVE TOWN on Friday as scheduled, as lawmakers aim for passage of a stimulus bill by next week. With most members not directly involved in the negotiations, they have plenty of time to worry about other issues.

AND WHAT A LIST IT IS, an extraordinary number of concerns on Capitol Hill, headed by anxiety over the presidential election. Here’s a summary of what we’re hearing:

A DISPUTED ELECTION: There’s widespread fear that results of the Nov. 3 election won’t be available for several days — or longer — after the voting. The Post Office may not be ready for a deluge of mail-in ballots, and actually counting them will be time-consuming; it took officials in New York state several weeks to finish counting votes from primaries early this summer.

A LITIGATED ELECTION? The U.S. had one that went to the Supreme Court in 2000, and members of both parties fear a repeat, with President Trump claiming fraud in states where the margin is razor-thin, amid anecdotes of irregularities in mail-in voting. A disputed outcome is a huge concern in Congress.

A TRUMP COMEBACK? No one we talk with is willing to rule out a Donald Trump re-election — partly because of his ability to demonize opponents, partly because of a sentiment in both parties that Joe Biden has two major flaws: he’s gaffe-prone, and his agenda has veered sharply to the left.

AN OCTOBER SURPRISE? It’s a given on Capitol Hill that there will be some type of October surprise: a scandal, a geopolitical event, or — most likely — a controversial claim by Trump that a Coronavirus vaccine will be ready for use before the end of the year. Trump needs to convince the public that he’s doing a good job on the virus — but virtually everyone on Capitol Hill agrees that he isn’t.

THE DEMOCRATS’ BLUE WAVE: Democrats don’t want to sound cocky, but they’re confident that Biden will win by a margin sufficient to capture the Senate (the liberal House isn’t in play, everyone agrees). While glum about Trump’s prospects, many Republicans think they still have a chance to keep the Senate by a seat, but it’s an uphill fight.

END OF THE FILIBUSTER RULE? This is a very, very big deal on Capitol Hill. Barack Obama endorsed this late last month, and Biden is willing to consider it. If Democrats take the Senate, they might have just enough votes to wipe out the rule that requires 60 votes to break a filibuster (moderate Democrats like Sen. Joe Manchin may resist). If the rule is abolished, Biden’s agenda could sail through Congress.

THE BIDEN AGENDA: He would move quickly to reverse Trump regulatory relief, but on Capitol Hill there’s apprehension about major new tax hikes — raising the top corporate rate, hiking top individual rates, increasing the capital gains rate, toughening estate tax rules, and imposing a 15% minimum corporate tax, which would be implicitly aimed at tech companies. Even Democrats worry that massive tax hikes could spook financial markets in 2021 or sooner.

SUPREME COURT INTRIGUE: There’s widespread speculation on Capitol Hill about the health of Justice Ruth Bader Ginsburg, 87, who is battling still another recurrence of cancer. If given the opportunity, Mitch McConnell would move to replace her weeks before the election.

SOARING BUDGET DEFICITS: Even before the pandemic, the deficit in this fiscal year was headed past $1 trillion. Now it’s headed toward $4 trillion, and fiscal hawks — mostly Republicans — are incensed. But there’s little enthusiasm on Capitol Hill for the prescriptions that would be required; neither Trump nor Biden cares much about deficits.

NO THAW IN CHINA RELATIONS: The mood on Capitol Hill is stridently anti-Beijing. This is not just a Trump issue; most Democrats favor a crackdown, largely because of Chinese hacking, its lack of transparency on the virus, and Beijing’s treatment of dissidents. Lawmakers are willing to attach a provision to a “must pass” bill in the next few weeks that would offer incentives to U.S. firms that end their reliance on Chinese goods.

CONGRESS ITSELF — STILL BROKEN: After moving quickly to pass stimulus bills this spring, Congress once again looks dysfunctional and bitterly partisan, and that mood probably will persist regardless of who wins the election. The great wild card is the Coronavirus — the public has virus fatigue, and so does the inept Congress, which is eager to leave town.