Knowing American citizens will be highly engaged in the next election, is it possible to predict what the impact could be on policy issues?

As we turn the page on 2019 and look forward to the start of the second decade in the 21st century, the country's focus will turn to politics, specifically the always-heated presidential election.

It appears that every four years as the country "ramps up" its energy, rhetoric, and attacks on one another as one of the parties asserts its claim of its candidate's right to be president, there is consistently a message that this is "the most important election in our lifetime."

Related: Who's doing better, who isn't ahead of 2020 election

Hyperbole aside for a moment, the forethought of the framers of the constitution is quite impressive. They really thought through all scenarios and created a system of checks and balances so that the federal government would neither be a tyrannical or monarchist government nor would it become a government of representatives of ideological clones moving in choreographed synchronicity to an ideological goal without consideration of the local constituents' needs.

With these checks and balances in mind, the ability to radically change the direction of the country and its citizens is a challenge for lawmakers. Further, citizens are very well informed and, in many respects, more and more engaged in the process. Activists are another cause that is often cited to describe the current state of the engaged citizenship. Politicians often lapse into thinking that their viewpoint is most important when in reality they would do well to remember Michael Douglas' movie, "The American President" which states, "the American people have a funny way of deciding on their own what is and what is not their business."

Knowing American citizens will be highly engaged in the next election–and throughout 2020–is it possible to forecast or predict what the impact could be on policy issues, both foreign and domestic, monetary policy, interest rate policy, national security, and the labor market including wages and unemployment?

Possible scenarios resulting from the federal election

With that back story, here are various scenarios that may happen depending upon the outcome of the election with the focus on businesses and advisors.

One scenario is that the current configuration remains in place. Republicans remain in place in both the White House and Senate while Democrats continue to hold the majority in the House of Representatives. Business investment, which is on hold at the present and through much of the early part of 2020, will return with the confidence that policies will remain as they are today. Advisors will still see that "chaos" is still the new norm as the consolidation of advisors and carriers creates larger, scalable, and very competitive entities.

A second scenario is the Senate flipping to Democrat and the White House remains Republican. Policies that impact business and advisors would be stagnant as the division of government will turn into a legalistic environment with impeachment and obstructionist behavior exhibited by all in government.

Another scenario could be that Republicans retain the White House and Senate and flip the House of Representatives. The business community would see this as a shift to pro-business environment except is areas where their business is tied to foreign countries where trade policy would be the focus – specifically looking to achieve greater fairness and equity in trade. Advisors would be focused on bringing Human Capital Management solutions to their clients faster as well as investments in technology that streamlines information their clients need to run their businesses.

Another outcome could be Democrats claim a sweep of the Senate and White House to go along with the House of Representatives. The business community would pull back their investment and adopt for a wait-and-see attitude. In this scenario, the policies would not roll back as far as the current Administration rolled back the Obama Administration policies given current reports that unemployment, wages and other key economic indicators appear to be trending in a positive direction.

Democrats would be careful not to disrupt the momentum, since elections are historically won or loss based on the economy's performance and whether the voter better off today than four years ago. Advisors would remain in a state of chaos waiting to see how Federal Policies affect their business. In this outcome, advisors should prepare for an increase in audits and penalties that have – for the most part – been suspended with the current administration.

The last possible scenario is the White House flips to Democrat, joining the House of Representatives while the Senate remains Republican. Domestic policy making and budget and spending will most likely shift to infrastructure and social programs while judicial appointments, trade policy, and foreign affairs will be challenged by the ideological divide. Advisors should prepare themselves and their clients for more audits, penalties, and fines. Again, chaos will continue to be their normal.

While the focus of this article is on the impact at the federal level, with the growing confidence of states to implement policies that go beyond federal guidelines, the information advisors will need to know at both a federal and state level will make their job much more challenging. Advisors will need to know labor and wage laws as well as unique benefit laws in every state where their client has employees. To effectively do their jobs, advisors will need additional resources, or be at a competitive disadvantage.

Which scenario is most likely?

There are four "big" factors that will influence the outcome.

First, and most obvious, is focused on evaluating the current president's performance, the polarizing rhetoric, and the policies coming out of the Administration. Interestingly, this draws eerily similar parallels to Winston Churchill's time as Prime Minister in the early 1940's.

As World War II was nearing its conclusion between 1944 and 1945, the citizens of the United Kingdom grew tired of war and associated rhetoric and voted Churchill out of office in 1945 in favor of a moderate who was significantly less bombastic and more quiet, thoughtful, and intellectual.

Given history, our current president is vulnerable to lose the election.

Secondly, if the Democrats put forth a moderate centrist candidate, who has the economic credentials to continue to steer the economy in a positive direction, it is likely they will win the election, providing no other significant world event occurs, such as war, recession, or trade policy that severely damages the U.S. economy. These events have a chance to change the calculus for predicting an event or outcome.

If the Democratic party puts forth a candidate that is polarizing, and their platform is built around raising taxes without a clear argument as to where the dollars are being invested and how it will impact the citizens then the election will be the Republicans to lose–-assuming the economy and current tax policy performance remains unchanged.

The fourth factor that can influence the election is the deficit. If something is not done to correct its direction, the country will be forced to address it within the next five to 10 years, or face making very hard choices that other countries like Greece and Italy are making. The current Administration has not changed the direction of the deficit and in fact, is compounding its growth with its tax and trade policies.

What to conclude?

With the president's disapproval rating hovering near 70 percent at the time of writing, the general public has a very unfavorable opinion of the current president. This is a real challenge to any in this position.

It seems the citizens of the United States prefer a moderate approach to policy making with long term views driving the outcomes so there is predictability and stability in their lives. Wild swings in policymaking may last one term but, then citizens seem to find a way to course-correct to the middle so there is a return to "normalcy."

Citizens also want greater civility and discourse in the discussion around policy development and policy making. The representatives from the extreme edges of both parties may last short term but they tend to be voted out in favor of more moderates who are interested in getting things done.

What does this all mean? Without question, we are in for a very wild rhetorical ride over the next 12 months, and cutting through all of the white noise and promises, the basic question that the majority of the voters will land on is–is the economy in a position that allows me to prosper? Whichever candidate can address this question wins.

A very wise person once said to win or lose an election is based "on the economy, stupid." Now where did we hear that before?

Perry Braun ([email protected]) is the executive director of Benefit Advisors Network (BAN) – an exclusive, national network of independent employee benefit brokerage and consulting companies. 

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