Coming Political Attractions: Business NOT as Usual

    As those in the punditocracy scratch their collective heads trying to find deeper meaning in the 2016 elections, they might do well to stop looking for the magic bullet that explains what happened in America, in Missouri and in Kansas on Nov. 8, and think instead in terms of a shotgun blast.

    A great many smaller projectiles, not all of them on identical trajectories, produced outcomes that were favorable to outsiders in some high-profile races like the presidency and Missouri governor’s race. But in far more instances, entrenched incumbents coasted to re-election in congressional and state races across Missouri and Kansas, as with Roy Blunt’s victory that helped Republicans retain control of the U.S. Senate.

    Federal, statewide or local, voting patterns across the nation made up an electoral quilt that is likely to cover the nation with a more business-friendly set of policies. The outcomes pushed Missouri toward more solidified conservative governance and re-aligned the brand of conservatism that has defined Kansas politics in recent years.

    What does all of that spell for regional business? Depends on the race in question.

The Presidential Race

    In a way, it was a sequel to 2000: A heavily-favored Democratic presidential candidate winning the nationwide vote total, but the underdog Republican securing the Electoral College vote to win the White House. Unlike 2000, though, this outcome won’t drag out for 36 days with court challenges.

    Hillary Clinton conceded defeat early Nov. 9 because Donald Trump’s victories in states like Michigan, Pennsylvania and Wisconsin were considerably larger than George W. Bush’s 537-vote edge in Florida in 2000, and appeared to have more than sufficient strength to withstand any calls for recounts in each. Among the key voting patterns that propelled Trump to victory:

    The gender gap failed to materialize as projected; while Clinton won among women, it was by 12 percentage points—about the same as the split in 2012. Men, however, were breaking for Trump by considerably larger margins.

    In one sense, the minority vote helped nudge Trump to victory: He picked up roughly 2.5 points each among black and Hispanic voters compared to Romney’s 2012 performance. That’s not a lot, but in close races like those in Michigan and Pennsylvania, similar shifts would have been critical to Trump’s success.

    And lower voter turnout among Democrats played a hand. While Trump summoned roughly as many voters as John McCain and Mitt Romney in the previous two elections, Clinton was nearly 10 million Democratic votes behind Barack Obama’s 2008 total, and 6 million behind his 2012 performance.

    Trump had campaigned on a series of job-growth policies that included lower individual income taxes, a lower corporate tax rate as an incentive for U.S.-based companies to repatriate capital from operations abroad, reducing regulation, and rolling back some of the ad-
ministrative actions and executive orders that have placed disproportionate burdens on smaller businesses. That
last point is key, since small and mid-size businesses have long accounted for the majority of net new job growth
in the nation.

    The power of incumbency came shining through in the nation’s upper chamber, where Democrats picked up a single seat. This, despite expectations earlier this year of an electoral map that favored Democrats and suggested they’d flip the Senate’s Republican control. That didn’t happen in part because Roy Blunt was able to secure a second term, turning back the charge of Jason Kander, the Democratic Secretary of State.

    But it was close—far closer than the presidential vote in the state. Kander, highly regarded as a model for Democratic success based on his military service and moderate credentials, was in part swamped by the presidential tide—Trump thundered past Clinton in the state by a margin of nearly 20 points. But the final split of 49.4-46.2 percent split suggested that Kander’s attacks on Blunt’s long history in Washington resonated with the anti-establishment sentiments of Trump supporters.

    On the Kansas side, Sen. Jerry Moran obliterated Patrick Weisner to secure a second term by a margin of nearly 2-1.

    Incumbency also helped 11 of the 12 U.S. House members in the two-state region punch their return-trip tickets to Washington—the lone exception was the primary-season defeat of Tim Huelskamp in Kansas 1st District, a seat that nonetheless remained in Republican hands because Roger Marshall faced no Democratic opposition in the general election.

    Overall, Democrats picked up a Senate seat and at least five House seats, but with a 51-47 margin in the Senate and a House majority of at least 38 seats, the Republicans are poised to give Donald Trump the means to enact his job-growth agenda. Since the 2010 elections put the Capitol under Republican control, Democrats have clamored for the end to an obstructionist Congress. Given this month’s outcome, they might soon be pining for legislative logjams, after all.

    Perhaps most significantly, GOP control of the Senate and the presidential outcome create an opportunity for Trump to re-align the Supreme Court, locked in a 4-4 partisan divide since the death of Antonin Scalia. Two reliably liberal justices, Ruth Bader Ginsberg (age 83) and Stephen Breyer (78) are well past retirement age, as is swing-voting Anthony Kennedy (80).

    And looking ahead, 2018 could be a train wreck for Democrats, who face the challenge of defending 25 seats to eight for the GOP. If Trump is able to drive the nation toward higher GDP growth, the task for Democrats would become even more formidable.

Statewide Races

    In Trumpian fashion, Eric Greitens stormed from out of nowhere to defeat primary opponents with deeper political resumes back in August. And, much like the presidential race, the dynamic in November pitted the self-proclaimed outsider against a career politician in Chris Koster.

    Koster’s steady rise through Missouri politics began with allegiance to Republicans when he moved from Cass County prosecutor to Missouri Senate in 2004, but after one term there, he switched parties to run for attorney general in 2008, secured a second term in 2012, and set his sights on the governor’s mansion. After a costly and bitter fall campaign, Greitens comfortably edged Koster by a margin of six points, 51-45.

    The 42-year-old Greitens is a former Navy SEAL who has vowed to shrink state government with a success-metrics approach to department and agency funding. He also has promised to crack down on the revolving door between legislative service and lobbying careers in Jefferson City. He’s a pro-life, 2nd-Amendment supporter who believes that “people of faith are under attack.”

    His policies would yield more school choice, he opposes Common Core education standards, he’s a right-to-work supporter and he wants to simplify the state’s tax code and reform welfare to end generational dependency.

    Now, with the Missouri General Assembly solidly in Republican control and Democrat Jay Nixon leaving office after two terms, the state could see  a more business-friendly set of initiatives emerge from Jefferson City. With an unprecedented sweep of statewide offices, it is, effectively, put-up-or-shut-up time for Republican governance: The party has the unprecedented means to enact a pro-business agenda for the state.

    On the Kansas side, little has changed: Some hard-line conservatives were ousted in the August primary, so a slightly more centrist Republican caucus will be sworn in. The GOP lost a bit of its grip on each chamber, with Democrats picking up an estimated 10 seats in the House and one in the Senate. That still leaves the GOP with a 31-9 Senate advantage, and 85-40 dominance in the House.

    While the latter technically represents a veto-proof  Republican majority, as a practical matter the House is nearly evenly divided between Democrats, moderate Republicans and staunch conservatives, making those in the middle power players for upcoming legislative initiatives with their ability to align with either faction to the right or left.

    As those in the punditocracy scratch their collective heads trying to find deeper meaning in the 2016 elections, they might do well to stop looking for the magic bullet that explains what happened in America, in Missouri and in Kansas on Nov. 8, and think instead in terms of a shotgun blast.

    A great many smaller projectiles, not all of them on identical trajectories, produced outcomes that were favorable to outsiders in some high-profile races like the presidency and Missouri governor’s race. But in far more instances, entrenched incumbents coasted to re-election in congressional and state races across Missouri and Kansas, as with Roy Blunt’s victory that helped Republicans retain control of the U.S. Senate.

    Federal, statewide or local, voting patterns across the nation made up an electoral quilt that is likely to cover the nation with a more business-friendly set of policies. The outcomes pushed Missouri toward more solidified conservative governance and re-aligned the brand of conservatism that has defined Kansas politics in recent years.

What does all of that spell for regional business? Depends on the race in question.

The Presidential Race

    In a way, it was a sequel to 2000: A heavily-favored Democratic presidential candidate winning the nationwide vote total, but the underdog Republican securing the Electoral College vote to win the White House. Unlike 2000, though, this outcome won’t drag out for 36 days with court challenges.

    Hillary Clinton conceded defeat early Nov. 9 because Donald Trump’s victories in states like Michigan, Pennsylvania and Wisconsin were considerably larger than George W. Bush’s 537-vote edge in Florida in 2000, and appeared to have more than sufficient strength to withstand any calls for recounts in each. Among the key voting patterns that propelled Trump to victory:

    The gender gap failed to materialize as projected; while Clinton won among women, it was by 12 percentage points—about the same as the split in 2012. Men, however, were breaking for Trump by considerably larger margins.

    In one sense, the minority vote helped nudge Trump to victory: He picked up roughly 2.5 points each among black and Hispanic voters compared to Romney’s 2012 performance. That’s not a lot, but in close races like those in Michigan and Pennsylvania, similar shifts would have been critical to Trump’s success.

    And lower voter turnout among Democrats played a hand. While Trump summoned roughly as many voters as John McCain and Mitt Romney in the previous two elections, Clinton was nearly 10 million Democratic votes behind Barack Obama’s 2008 total, and 6 million behind his 2012 performance.

    Trump had campaigned on a series of job-growth policies that included lower individual income taxes, a lower corporate tax rate as an incentive for U.S.-based companies to repatriate capital from operations abroad, reducing regulation, and rolling back some of the administrative actions and executive orders that have placed disproportionate burdens on smaller businesses. That last point is key, since small and mid-size businesses have long accounted for the majority of net new job growth in the nation.

Federal Races

    The power of incumbency came shining through in the nation’s upper chamber, where Democrats picked up a single seat. This, despite expectations earlier this year of an electoral map that favored Democrats and suggested they’d flip the Senate’s Republican control. That didn’t happen in part because Roy Blunt was able to secure a second term, turning back the charge of Jason Kander, the Democratic Secretary of State.

    But it was close—far closer than the presidential vote in the state. Kander, highly regarded as a model for Democratic success based on his military service and moderate credentials, was in part swamped by the presidential tide—Trump thundered past Clinton in the state by a margin of nearly 20 points. But the final split of 49.4-46.2 percent split suggested that Kander’s attacks on Blunt’s long history in Washington resonated with the anti-establishment sentiments of Trump supporters.

    On the Kansas side, Sen. Jerry Moran obliterated Patrick Weisner to secure a second term by a margin of nearly 2-1.

    Incumbency also helped 11 of the 12 U.S. House members in the two-state region punch their return-trip tickets to Washington—the lone exception was the primary-season defeat of Tim Huelskamp in Kansas 1st District, a seat that nonetheless remained in Republican hands because Roger Marshall faced no Democratic opposition in the general election.

    Overall, Democrats picked up a Senate seat and at least five House seats, but with a 51-47 margin in the Senate and a House majority of at least 38 seats, the Republicans are poised to give Donald Trump the means to enact his job-growth agenda. Since the 2010 elections put the Capitol under Republican control, Democrats have clamored for the end to an obstructionist Congress. Given this month’s outcome, they might soon be pining for legislative logjams, after all.

    Perhaps most significantly, GOP control of the Senate and the presidential outcome create an opportunity for Trump to re-align the Supreme Court, locked in a 4-4 partisan divide since the death of Antonin Scalia. Two reliably liberal justices, Ruth Bader Ginsberg (age 83) and Stephen Breyer (78) are well past retirement age, as is swing-voting Anthony Kennedy (80).

    And looking ahead, 2018 could be a train wreck for Democrats, who face the challenge of defending 25 seats to eight for the GOP. If Trump is able to drive the nation toward higher GDP growth, the task for Democrats would become even more formidable.

Statewide Races

    In Trumpian fashion, Eric Greitens stormed from out of nowhere to defeat primary opponents with deeper political resumes back in August. And, much like the presidential race, the dynamic in November pitted the self-proclaimed outsider against a career politician in Chris Koster.

    Koster’s steady rise through Missouri politics began with allegiance to Republicans when he moved from Cass County prosecutor to Missouri Senate in 2004, but after one term there, he switched parties to run for attorney general in 2008, secured a second term in 2012, and set his sights on the governor’s mansion. After a costly and bitter fall campaign, Greitens comfortably edged Koster by a margin of six points, 51-45.

    The 42-year-old Greitens is a former Navy SEAL who has vowed to shrink state government with a success-metrics approach to department and agency funding. He also has promised to crack down on the revolving door between legislative service and lobbying careers in Jefferson City.
He’s a pro-life, 2nd-Amendment supporter who believes that “people of faith are under attack.”

    His policies would yield more school choice, he opposes Common Core education standards, he’s a right-to-work supporter and he wants to simplify the state’s tax code and reform welfare to end generational dependency.

    Now, with the Missouri General Assembly solidly in Republican control and Democrat Jay Nixon leaving office after two terms, the state could see  a more business-friendly set of initiatives emerge from Jefferson City. With an unprecedented sweep of statewide offices, it is, effectively, put-up-or-shut-up time for Republican governance: The party has the unprecedented means to enact a pro-business agenda for the state.

    On the Kansas side, little has changed: Some hard-line conservatives were ousted in the August primary, so a slightly more centrist Republican caucus will be sworn in. The GOP lost a bit of its grip on each chamber, with Democrats picking up an estimated 10 seats in the House and one in the Senate. That still leaves the GOP with a 31-9 Senate advantage, and 85-40 dominance in the House.

    While the latter technically represents a veto-proof  Republican majority, as a practical matter the House is nearly evenly divided between Democrats, moderate Republicans and staunch conservatives, making those in the middle power players for upcoming legislative initiatives with their ability to align with either faction to the right or left.

Trump’s Business Trifecta

    Among his stated campaign goals, Donald Trump had three that are directly tied to business and the economy:

    Taxes: He has vowed to cut the business rate, now 35 percent, down to 15 percent, and to trim individual rates to three brackets—12, 25, and 33 percent.
Many Americans would continue to pay no income tax, and child-care costs, including those for stay-at-home parents, would move above the adjusted gross income line, rather than count
as a typical deduction.

    Trade: Trump is calling for trade policies that he says would bolster hiring, promote growth and encourage production, especially with manufacturing. He wants to address the loss of jobs overseas, particularly to China, renegotiate NAFTA and cut regulations.

    Energy: The production boom that dropped oil prices to a fraction of their 2014 peak would continue, with federal policies aimed at increasing extraction of coal, shale gas, and other carbon sources. That would be done, in part, with more drilling offshore and on public lands and by building the Keystone Pipeline.