The Big Picture: November 8 and All That

Its time to think seriously about President Hillary Clinton.

Last Friday I wrote that it was “plausible” that Donald Trump would win the presidency. Then Trump began the worst week of his campaign; now, his candidacy looks…barely plausible. Trump’s problems in key demographics (particularly college-educated women) look insurmountable. He’s already lost the support of about one quarter of the Republican Party’s governors, congressmen and Senators. And his response to recent setbacks has been self-defeating. 

Looking at the electoral college map, states that are “likely” or “leaning” for Clinton according to polling aggregator RealClearPolitics give her 260 of the 270 electoral votes she needs to win. That means that she has to win just one of the five largest “toss-up” states -- Florida, Ohio, North Carolina, Arizona and Minnesota -- while Trump has to win them all. Are there large numbers of “shy” Trump voters, who hide their intention to vote for him? Even if there are, they will be offset by the Clinton/Democratic get-out-the-vote effort as against the disorganized Trump effort.

So what would a Clinton presidency look like?

Assuming Republicans hold the House and the Senate is closely divided, there may be an opportunity for corporate tax reform. The impetus for this will be to repatriate the roughly $2 trillion of earnings held overseas by US companies, and to address business complaints about the high headline US tax rate. But an overhaul could also address issues like carried interest, tax inversions and loopholes.

Clinton will also push an ambitious infrastructure spending plan, with an estimated price tag of $250-$300 billion. Republicans will be reluctant to agree, but with Trump defeated and their party and agenda in crisis, they might be open to comprimise. On healthcare, the campaign has highlighted problems with Obamacare and prescription drug prices, and reforms there are possible. There is probably less room for compromise around legislation on energy or financial services, but these issues will at least get an airing. Finally, immigration policy is the wildcard. The issue has stoked powerful emotions on all sides of the debate. No one is happy with the status quo but the various proposals tabled during the election season are wildly incongruent. Clinton has promised to make comprehensive immigration reform a priority; if she wins a commanding election victory, his more extreme immigration policies may lose traction, providing an opening.

Foreign affairs are not aligned in Clinton’s favor. The Middle East is a mess; she’ll have to engage, but it’ll be in defensive terms. She’ll also have to deal with Russia, but her ‘reset’ history adds to her challenge there. But she has an opportunity to build on Obama’s ‘pivot to Asia’ -- a solid idea on the merits that has bipartisan support. In fact, we expect Clinton to take a tougher strategic stance in Asia. And the big pivot issue on the agenda is the Trans-Pacific Partnership (TPP) trade deal.

 So here is the TPP scenario: establishment Democrats (with Clinton’s quiet support) and Republicans want to re-establish themselves over the Sanders/Trump wings of their respective parties. And they know that if the anti-traders kill TPP, it will not stop there. They may go after NAFTA and other trade deals (the relevant analogy being that trade liberalization is like riding a bicycle; if you lose momentum you fall off the bike). That needs to be stopped. Washington will have two years until anyone has to face angry Sanders or Trump voters. So they do a gut check and pass TPP in the lame duck before Clinton assumes the presidency.

Where are we headed?

It is useful to put US politics in comparative perspective. In yesterday’s Europe Brief, my colleague Jelena Vukotic discussed UK Prime Minister Theresa May’s new policy agenda, which Jelena argues may bring “the biggest changes to British society since the Thatcher era.” US and UK politics have often progressed in tandem (Thatcher-Reagan; Blair-Clinton).

Today, both countries seem to be move away from an era of central bank- driven growth and austerity. And both countries also appear to be reconsidering free markets. In the UK, May has vowed to reform capitalism, and “get tough on irresponsible behaviour in big business,” which sounds similar to some of Clinton’s criticisms of the banking and pharmaceutical industries.

Clinton will likely have a Republican House with which she must negotiate, so partisan gridlock may limit her ambitions. And of course, the US is not embarking on anything as momentous as Brexit. But in looking to the UK, we may find clues to the next four years of US policymaking.