Cook Political Report's David Wasserman Sizes Up 2020 Elections

Posted on 07/12/2019 5:41 AM

U.S./China trade issues | U.S. Census | Medicare | USMCA | Tropical Storm Barry

An early look at 2020 elections was provided by noted Cook Political Report House editor David Wasserman. Subject to updates as election battles unfold, Wasserman predicts a very close presidential race, with the odds of Trump being re-elected at 50% to 55%. He sees the GOP keeping control of the Senate and the Democrats keeping control of the House, but says House Ag Chairman Collin Peterson (D-Minn.) “is in trouble” in his re-election drive, “if the Republicans field a competitive candidate.”
     China's GDP report on Monday could give Trump and his trade team some leverage if it shows the decline many expect from the prior quarter. But major hurdles remain in reaching a final trade agreement. The most important factor favoring an eventual end zone is that both President Trump and Chinese leader Xi Jinping want an accord.
     Trump retreats from asking for citizenship status on U.S. Census, ordering the collection of all existing citizenship information in U.S. government databases after being frustrated in his efforts to ask about American residents' citizenship status in the Census — he is ordering government agencies to help the Commerce Department count the number of noncitizens in the country. "… We are not backing down on our effort to determine the citizenship status of the United States population," the president said during remarks in the Rose Garden. The decision is a reversal for the White House, whose efforts to add the citizenship question was thwarted by the Supreme Court last month.
     Trump withdrew a plan to cut prescription drug rebates under Medicare, the second setback this week in his bid to lower pharmaceutical prices. On Monday, a federal judge threw out a rule that would have required pharmaceutical companies to list the price of their drugs in television advertisements.
     Sen. Chuck Grassley (R-Iowa) also retreated, but the topic is the timeline for getting the USMCA through Congress. Grassley now expects an “early fall” vote on the U.S.-Mexico-Canada Agreement (USMCA), an extended timeframe from his prior forecast of before the August congressional recess.
     What may happen before the August recess is finalizing a deal to raise the debt ceiling and resolve a budget impasse, according to House Speaker Nancy Pelosi (D-Calif.). Meanwhile, Fed Chairman Jerome Powell said Thursday that the global economy could suffer "unthinkable" damage if the White House and Congress fail to raise the federal debt limit. Testifying before the Senate Banking Committee, the Fed chairman said it was "essential" for Congress to raise the legal limit on the federal debt before the U.S. government defaults on its loans. "We've always paid our bills, and it simply must happen that Congress raises the debt ceiling in time to allow that to happen," Powell said. The consequences of inaction "would be highly unpredictable," Powell added, warning that "no one should assume that the Fed or any other agency can be relied upon to shield our economy from the short-, medium- and long-term negative consequences of such an act."
     Tropical Storm Barry is heading toward the Louisiana coast. Parts of New Orleans have already flooded, and a lot more rain is in the forecast. The slow-moving storm is expected make landfall early Saturday, possibly as a hurricane. The Mississippi River is expected to crest close to 20 feet, and evacuations are beginning. About 10 to 15 inches of rain was predicted to fall starting late Thursday night through the weekend.
Link for updates.

 

U.S./China trade policy update:

  • President Trump complained China hasn't boosted purchases of U.S. farm products, a promise he said he secured from Xi Jinping at the G20 summit in June. Beijing has never confirmed the pledge, and neither side has documented the discussion. Reports that the U.S. is working on a list of commodities for China to purchase is tentative at best. Earlier, China said trade talks will resume “on a basis of equality and mutual respect,” and that its core concerns must be addressed.

  • Are U.S./China talks stuck on issues that seem almost impossible to resolve? Some observers think so. But China watchers say the biggest positive about the topic is that both President Donald Trump and Chinese leader Xi Jinping want an agreement, despite trade policy hawks in both countries making it so difficult to reach a final accord.

  • The U.S. must lift existing sanctions against China for Xi and his trade policy hawks to approve any trade deal with the U.S., sources concur. But key Trump trade negotiators, if not Trump himself, want to keep the sanctions in place until they are sure China is living up to any final agreements reached. But China watchers say the enforcement language of any agreement should be enough for Trump and his top negotiators to lift current sanctions because if China reneges on a final agreement provisions, sanctions could return. Some China watchers say if there is a final accord, the U.S. lifting of sanctions will come at the very end of talks, to squeeze whatever concessions China is willing to make, along with provisions the U.S. will give to China.

  • Monday will bring a key update on China's economy. That is when China releases GDP data for the second quarter. Economists are expecting growth to have slowed to 6.2% from 6.4% in the previous quarter. If the U.S. and China do not reach a final trade agreement, U.S. tariffs on another $300 billion of Chinese imports could be on their way, giving Trump and his trade team potential leverage in talks ahead.

  • China’s exports and imports both fell in June, as higher U.S. trade war tariffs are impacting the Chinese economy. Exports fell by 1.3% year-on-year after tariffs on $200 billion of Chinese goods were raised from 10% to 25% by Washington in May. Over the first half of the year, China’s exports to the U.S. fell by 8.1% to $199.4 billion, while imports dropped by 29.9% to $58.9 billion. China’s overall trade surplus was $50.98 billion in June, up from $41.65 billion. This was ahead of the median poll by Bloomberg, which had predicted a balance of $45 billion.

How David Wasserman of Cook Political Report sizes up 2020 elections for president, Senate and House. The well respected House editor for the Cook Political Report participated in Farm Journal Media's Signal to Noise podcast late Thursday with Chip Flory and Jim Wiesemeyer. A lot can change in election dynamics before voters go to the polls, and of course the Democrats must still pick their presidential nominee and a running mate. But the following is Wasserman's best forecasts at this time for key elections ahead (Note: a link to the podcast will be available later today):

  • Despite remarks from others, Rep. Nancy Pelosi (D-Calif.) “is still the speaker of the House.” Wasserman said Pelosi has squarely confronted what he dubbed the “squad” of Democratic freshmen that have garnered so much media coverage: Reps. Alexandria Ocasio-Cortez (D-N.Y.), Ilhan Omar (D-Minn.), Rashida Tlaib (D-Mich.) and Ayanna Pressley (D-Mass.). “They represent only 6% of the House freshmen, but get 94% of the coverage,” but Pelosi has the upper hand, Wasserman concluded.

  • Key election issues. The aggressive Democratic House lawmakers and some Democratic Senate presidential nominees have pushed for open borders and abolishing private health insurance, but Wasserman signaled that if that continues, “it would be a mistake.” Instead, he said, voters want a president or presidential candidate to be authentic and have empathy. Those qualities elevated Trump to his first term, Wasserman noted, adding “cultural issues” are more important than ideological issues. “The Democratic presidential candidates must weave voters' personal stories” into why they should be elected,” Wasserman said. He said rising Democratic candidate Sen. Kamala Harris (D-Calif.) has not yet accomplished that goal but could still do so if she grows as a candidate. One issue that could bolster Democrats is if Roe v Wade is a major campaign issue pressed by Republicans. “That could get even more pro-choice voters to the polls,” Wasserman said.

  • The three top-tier Democratic presidential candidates Wasserman listed were former Vice President Joe Biden and Sens. Elizabeth Warren (D-Mass.) and Harris. But he said to watch dark-horse candidates Sen. Amy Klobuchar (D-Minn.) and former lawmaker Beto O'Rourke (D-Texas) because those candidates could better capture needed votes in key states of Wisconsin, Michigan and Pennsylvania. The other three states Wasserman listed as the most important to decide who remains or gets into the White House: Arizona, Florida and North Carolina. “If I had to narrow it down to the two states I think will be most decisive, I would say Arizona and Wisconsin,” Wasserman detailed.

  • In five of the six states Wasserman listed as key to the White House election, five have significant African-American populations and the key will be how many of them under 40 will vote. The key for Democrats, he signaled, would be to garner the young and nonwhite demographics that did not show up for failed 2016 Democratic candidate Hillary Clinton. Wasserman listed someone like Stacy Abrams as a potential running mate who could help balance any ticket because she is younger and nonwhite and not from an area regarded as elite and liberal. She thus would have a better chance of turning those voters out.

  • Another key to the six states Wasserman listed: Can a Democratic candidate from a coastal state perform well enough in the middle of the country?

  • When will the crowded Democratic presidential field be winnowed down? Later than most think, according to Wasserman, adding several candidates have shown an ability to garner enough funding to continue their campaigns. It will also enable them to have the opportunity to have a “breakout moment” in the debates ahead. But so far, Wasserman said, it's been a “flavor of the month” for Democratic candidates, with Biden first showing strength, then South Bend, Indiana mayor Pete Buttigieg, followed by Warren and then Harris.

  • Will President Trump be re-elected? While a lot remains to unfold, Wasserman answered that query by saying the odds are “50% to 55%.” And a Trump re-election could come despite the Democrats possibly winning five million more votes than Trump, but losing the Electoral College. Trends are aiding Democrats in states that are not decisive in the Electoral College, as the party continues to gain millions of voters in California and they could cut into Trump's margin in Texas by 800,000 and “not be rewarded by a single electoral vote.” Wasserman said this is why Trump can win, like he did in 2016, with 46% of the popular vote, while Democrats could not with that same percentage. He added that Trump needs 46% or 47% of the vote to be re-elected. In one scenario Wasserman talked about, Trump could win re-election by one electoral vote.

  • Wasserman said he was not surprised at the continued farm sector support for Trump because many farmers and ranchers see him as authentic, an agent for change and someone who has empathy. He is more culturally in sync with the sector, despite his wealth and multiple marriages, Wasserman said.

  • In 2018 elections, Democrats turned up in large numbers while GOP voters decreased significantly, but Wasserman said “2018 was as much about subtraction as it was about addition. The number of young and nonwhite voters that cast ballots in 2018 was significantly ahead of 2014. But a lot of that had to do with Trump voters' failure to turn out, which was similar to Obama voters' failure to turn out in 2010... and look how 2012 turned out for him.” Wasserman said nearly every Democrat who cast a ballot in 2018 also voted in 2016. “Many Trump voters, particularly white men without college degrees, did not turn out in 2018 because Trump was not on the ballot and they are not as enthused about congressional contests.”

  • Based on Wasserman's comments on the presidential election, he was asked if Michelle Obama could beat Trump. “After reading Michelle Obama's book, she made clear her distaste for the bloodsport of politics and elections, but if she were to run, she would have a better chance to win than just about anyone in the Democratic field. But after reading her book, it seems about as likely as me winning the Tour de France next year that she would run.”

  • Will Republicans keep control of the Senate after 2020 elections? “Yes,” Wasserman predicts at this time. While Democrats could pick up Arizona and Colorado, the GOP will likely recapture Alabama. Asked if Senate Majority Leader Mitch McConnell (R-Ky.) could be upset in his drive for re-election in 2020, Wasserman made clear that will not occur. Sen. Thom Tillis (R-N.C.) is one race to watch, Wasserman said. Democrats are still scrambling for a top-tier challenger in a state that could help them tip control of the Senate. Tillis holds one of 22 Republican seats up for grabs in 2020. Democrats have to net three seats to win control of the Senate with a Democratic vice president to break ties, or four seats without.

  • Will Democrats keep control of the House? “Yes,” was Wasserman's response, after saying it will be a narrower Democratic House majority. He gave the Republicans a 35% chance of taking the House, “but that is higher than the odds for Democratic takeover of the Senate.”

  • Asked how House Ag Chairman Collin Peterson (D-Minn.) will do in his re-election drive, Wasserman said, “I think Peterson is in trouble, if the Republicans field a competitive candidate.”

Other items of note:

  • DMC now pays for at least five months. USDA has announced farmers who enroll in the new Dairy Margin Coverage (DMC) program will receive a payment for May, the fifth of the year. Link for details. To date, nearly 10,000 operations have signed up for the new program, and FSA has begun paying approximately $100 million to producers for January through May.

  • Chief liaison between President Trump’s White House and federal government agencies will leave his job next week after more than two years on the job, “depriving Trump of one of his last remaining senior staff members from the start of his presidency,” The Hill reports. William McGinley, who has served as the White House Cabinet secretary since Trump’s inauguration, has old friends he will return to the private sector, the publication reported.

  • USTR will hold an Aug. 19 hearing on its decision to launch a Section 301 probe of France’s new tax measure that would hit major U.S. firms like Facebook and Google. France’s Senate gave final approval of the digital services tax on Thursday. In a draft Federal Register notice, USTR said its investigation will focus on how the tax is amount to de facto discrimination against U.S. companies, is unfairly applied retroactively to the beginning of the year, and is unreasonable due to its extraterritoriality.

  • Cotton AWP moves lower. The cotton Adjusted World Price (AWP) moved down to 58.05 cents per pound, effective today (July 12). The AWP was 59.32 cents per pound the prior week.

Markets. The Dow on Thursday gained 227.88 points, 0.85%, at 27,088.08, finishing atop the 27,000 mark for the first time. The S&P 500 rose 6.84 points, 0.23%, at 2,999.91. The Nasdaq, however, fell 6.49 points, 0.08%, at 8,196.04.

Treasuries retreated on Thursday after the latest U.S. inflation reading came in more robust than anticipated.

Banks remain in good shape to continue lending to farmers and ranchers despite deteriorating conditions in the agricultural economy, Federal Reserve Chairman Jerome Powell told senators on Thursday. “Our farm belt banks have had a lot of experience in dealing with the issues that farmers are confronting right now,” Powell said at a Banking Committee hearing. “As a whole, the agricultural sector is in a difficult place. It’s a tough time. I know that banks are trying to work through those difficulties with farmers.”

OPEC is producing about 560,000 barrels a day more than will be needed next year as the surge in U.S. shale threatens to deliver another surplus. Supplies from its rivals will grow by 2.4 million, more than twice as much as global oil demand, which is expected to be around 1.1 million.

President Trump late on Thursday slammed cryptocurrencies, saying they should be "subject to all banking regulations." The president added: "Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity."


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