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Post elections USA and economic trends

    • Meeting in digital format
    • 12 November 2020

          Joe Biden is not going to have an easy launch into the White House. Not only because of the way Donald Trump’s behaving but, essentially, because the Democrats have lost several seats in the House of Representatives and the Senate run-off elections in Georgia on January 5th could award the two missing seats to the Republicans, creating a “divided government” that would make it very difficult for Biden to stick to his agenda – especially in terms of the economy. 

          Fighting the pandemic and economic support are the President-elect’s priorities. On the first front, Biden has already appointed a task force of top-level scientists, and reinforced his message about keeping to the rules of social distancing and wearing masks, not as a political statement but as a health imperative. On the second, if the Grand Old Party wins the Georgia runoffs, Biden is going to have to agree with Mitch McConnell – the Senate Republican Majority Leader whom Biden knows very well – regarding the economic stimulus package, not only on “if” (Donald Trump himself was unsuccessful in his attempts) but on “how much”.

          Although he’s been defeated, Donald Trump is not going to disappear from the political stage, and the Republican Party is going to have to deal with an outgoing president  already in search of a new media conduit to express his populist, right-wing views after being “abandoned” by Fox News, and who is not ruling another run in 2024. The Grand Old Party will have to review its strategy, probably veering toward defining itself as the “party of the working class”, a vision that Donald Trump seems to embrace, as has Marco Rubio, one of those aspiring to Republican leadership.

          Because, in any case, in one of the highest electoral turnouts of the last 120 years, Donald Trump won over 70 million votes. With an aggressive electoral campaign carried out mainly “in person” – a counterintuitive choice in times of pandemic – with an essentially economic focus; a choice that allowed him to offset many of the errors of his recent months as president. The Joe Biden campaign managed to collect 865 million dollars against Trump’s 387 million. Both relied on the old, but ever effective televised ad, with a full 75% of investments there, and which contained a good 49% of messages. Both left only slightly more than 20% of investments for the popular Facebook and Google.

          The heart of both campaigns consisted mostly of domestic concerns. Joe Biden will probably change tone and method when it comes to foreign policy, but not substance. Technological security and the need to contain the growth of China as a world leader will remain issues, with Biden seeking a broad coalition with Europeans. He will certainly not fail to wave high the banner of US national trade and security (i.e. technological) interests. And Europe is going to have to do its part; not only when it comes to NATO, where, moreover, Donald Trump made repeated demands, but also as a more effective geopolitical actor.    

          There could be something new in Biden’s international trade policy agenda, a framework that includes Italy/US economic relations and that accounts for nearly 100 million dollars in trade, concentrated mainly in Italian exports to the US. Trump’s tariffs having damaged some sectors, a new approach is anticipated from the Biden administration, despite the fact that, whoever occupies the White House, Washington is not pleased with Italy’s involvement in the “Belt and Road Initiative”; and there is no shortage of diffidence toward the Italian government’s extension of Golden Share powers, understood as a barrier to US investments in Italy. 

          Examination of the American economic picture included the presentation of some interesting data: the US will close out 2020 with a 4% loss in GDP, compared with Europe’s -8% and China’s +2%. The forecast is better for 2021, not least thanks to announcements of the discovery of a Covid-19 vaccine: +7.6% for Cina, +3.8% for the US and +5% for the Eurozone; and a 2.4 trillion-dollar investment in public works is expected for 2021-2030. There was broad agreement that Biden’s fiscal agenda will bring increases: a return to the 28% corporate tax, up from the current 21%, and different taxation on offshore earnings. Antitrust regulation will also increase, especially in the case of Big Tech.

          It won’t be until at least 2022, if not 2023, that US GDP will return to pre-Covid levels, as should be true for other fundamental data: unemployment should drop back down to 3.5% from the current 6.9% and consumer confidence should rise accordingly. The fact remains that if the Georgia Senate runoffs end up giving the Senate Republicans a majority, with the resulting “divided government”, Joe Biden is going to need all the mediation experience he has accumulated over his long political career to get right to the heart of the problems that accompany his conquest of the White House.