Trump's inevitable downfall?

Presidential debates are often decisive moments, and in 2016, the Republican candidate showed that he was able to monetize them in his favor. In addition, Democrats advocate a greater tax burden in favor of a green agenda, which can alienate the electorate.

The year has been marked by the impact of the Covid-19 pandemic, which has shaken the foundations of socio-economic and geopolitical balance between nations, and has also become one of the factors that can tip the balance in this year's most important electoral event.

In fact, the US presidential elections in November may be the most relevant in recent memory, capable of influencing not only the US domestic agenda - such as the tax reform and the impact of a return to higher levels of taxation in the United States. economy - but also to spark international debate in some areas of enormous importance on the international geopolitical agenda, among which are greater regulation of the technological sector, concerns related to the health and research sector, and also the regulation of the pharmaceutical sector.

In addition to these issues are issues of a more societal nature, such as tensions related to racial discrimination or the management of trade and diplomatic relations with China, which have suffered a significant deterioration since the beginning of the pandemic, even resulting in the stagnation of the agreement trade between the two great powers of the world economy.

In the coming weeks, media attention will be focused on the US elections and the possibility of ending the line for the Trump administration. Democratic candidate Joe Biden leads the polls, and significantly. However, the advantage has been shortening and many observers put on the table the possibility of a scenario of impasse in the presidential elections, which may increase tensions in an environment that, politically speaking, is already quite polarized.

Trump runs after the loss again. Distance and context are more complex

About six weeks before the elections, the polls reflect what was a devastating year for the Republican administration. The initial position regarding the strategy to combat the Covid-19 pandemic and the respective containment management, added to the fragility and controversies surrounding the scarcity of both medical equipment and sanitary response, opened the first loopholes around the popularity of the North American president. American.

Then came the violent blow to the economy, especially in the job market, with the world's largest economy losing about 26 million jobs in five weeks, between late March and during April. And as if that were not enough, the awakening of social tensions related to police violence and racial discrimination - mediated by the direct murder of George Floyd following a police arrest - transformed the streets into a sea of ​​protests by the movement “ Black Lives Matter ”, with inevitable negative consequences for Trump, who failed to quickly heal the open wounds in this area in American society.

The Trump administration responded with massive fiscal support (equivalent to about 13,2% of GDP) is monetary, and launched a run on the Covid-19 vaccine, announced later this month, which may be available for distribution in October. With regard to the political narrative, the American president has been betting on the responsibility of the external front, in a first phase China (which he accuses of having hidden knowledge of the existence of the virus for several weeks), and in a second one the World Health Organization , of which he even disengaged the United States as a member, for alleged serious flaws in the management of the pandemic outbreak and support for the cover-up that Trump also accuses China of having carried out.

Current polls therefore reflect an extraordinary combination of factors that catapulted Democrats into leading polls for the November elections. At this moment, Democratic candidate Joe Biden remains outstanding in the leadership, with an advantage between 6 and 9 percentage points, according to several polls that are being released by several observers and that can be consulted through aggregating sites like the realclearpolitics.com. In addition, Donald Trump has not been ahead in any major national poll since April, when Bernie Sanders gave up the fight for the Democratic nomination.

It could be argued that Trump is used to chasing polls as in previous elections. But in 2016, Hillary never had that advantage - the candidate's advantage at the time compared to Trump was below two percentage points this same month of September. In addition, as incumbent president and with popularity in low levels, the current economic and social context will not fail to create additional difficulties in reelection.

However, presidential debates tend to be decisive moments, and in 2016, the Republican candidate proved to be able to monetize them in his favor. In addition, the Democrats' proposals, which advocate a greater immediate tax burden in favor of a green agenda, may have little reception and alienate the electorate due to the potential negative impact that they may cause in a still sensitive phase of the American economic recovery.

Biden's proposals: more regulation, more taxes and investment in infrastructure for a green energy agenda

In the event of a Democratic nomination win, Joe Biden has promised that he will promote a tax reform based on an upward revision of taxation for high-income individuals (above $ 400) and above all for companies - the maximum tax rate on employees. corporate income can increase from 21% to 28% and there is now a minimum tax rate of 15% on corporate profits. Additionally, taxes on the use of intellectual property (GILTI - global intangible low-taxed income) may see your rate doubled to 21%.

Biden intends to balance this fiscal rupture - which has been met with some skepticism, especially given the fragile environment in which the economic recovery is still in place, and the impact that the fiscal aggravation could have on corporate profits - with an incentive program in favor of a huge infrastructure plan (two trillion dollars) that it intends to use in clean energy in the transport, energy and construction sectors over the next term, with the aim of pursuing zero carbon targets in the next few years. 15 years and to generate enough jobs in the clean energy sectors to counter the harmful impacts created on the economy by the pandemic.

Another area where North American candidates may make changes is in increasing regulation in sectors such as technology and healthcare. The North American technological sector is currently the most profitable in the North American economy and has increasingly evidenced this hegemony during the pandemic, the result of its ability to generate revenues and liquidity even with strict containment rules. In addition to the enormous capacity for innovation, the truth is that the giant operators in the technological sector have also benefited from the fact that they are currently the least regulated sector of listed industries in the United States, which has given them enormous advantages in terms of competition. However, this could change with Biden as president.

First, the candidate has already specifically referred to the dominant position risks of large technology companies, and the imposition of a minimum 15% corporate tax payable would have a visible impact on the accounts of companies like Alphabet or Amazon.

Second, Biden has also referred to the need for the United States to establish data privacy standards in line with the structure of Western European countries, in addition to other potentially influential figures in a Democratic administration, such as Elizabeth Warren having already put on top of the the need to segregate activities and entities from technology giants like Amazon, Google and Facebook.

In fact, regulation in the sector is something that could gain traction after the elections, whoever is the winner. It is recalled that it is one of the themes on which the Trump administration has also been active, especially with regard to social network operators, in the scope of which it has been legislating in favor of greater data protection requirements.

The pharmaceutical industry and the healthcare sector may also be subject to greater regulation. This has clearly been one of the most relevant political issues in 2020, due to the pandemic and the visibility it has achieved, and today it is one of the priorities, alongside the economy - according to an analysis of the PEW Research, about 70% of Americans consider it to be a priority.

Here, Joe Biden's candidacy has been arguing that, if elected, his administration will seek to reduce the power to impose prices on the part of pharmaceutical companies, which may involve giving greater powers to the structures of the medicare (government health care program) to negotiate drugs for a broader base of the public and private network, or for setting maximum price caps, as well as mechanisms to fix rising drug prices to inflation.

China as a common denominator between Trump and Biden?

The tensions between China and the United States represent a crucial point in the Donald Trump campaign, which has increasingly polarized the discourse towards holding the Asian power responsible for the escalation of the spread of Covid-19 and, subsequently, and the data protection and intellectual property protection of the United States industry.

The North American narrative has been contemplating measures in fields other than traditional commercial transactions, and include greater restrictions on operators such as Huawei, limitations on access to American technology and restrictions on visas granted to Chinese students. Although it is an argument that the Republican campaign will continue to exploit in its favor to regain ground, there is a growing consensus between the two major parties regarding greater control over economic relations between the two countries, and the influence of China on the economy North-American. The rhetoric may be less aggressive with Biden, but the path of greater protectionism may continue, even with Trump's eventual departure.

'Bottoms up': the race has started. Debates, economics and vaccines will be central. Social pacification will also be relevant

Regarding the agenda, the presidential race has already started, with the first early votes to take place in some states. Attention, however, will focus on the television debates that will take place on September 29 (Fox), October 15 (C-SPAN) and October 22 (NBC). However, in addition to the success of the debates, other factors will be crucial to determine whether Donald Trump will be able to remain in the presidential race: i) the disclosure of relevant indicators for the American economy, especially the employment figures for the month of September ; and ii) progress on the development of treatments and, above all, vaccines for Covid-19.

An anticipated announcement of more fiscal stimulus, given the uncertainty surrounding a second wave, may also have an influence on undecided voters. Just as the rekindling or social pacification related to the themes of inequality and discrimination will play an equally important role during the coming weeks of the campaign.

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