2018 will make 2017 seem tame - mehlmancastagnetti.commehlmancastagnetti.com/wp-content/uploads/Why-2018-Will-Make-20… · Why 2018 Will Make 2017 Seem Tame . 2 . PEOPLE . 2018

Bruce Mehlman [email protected]

@bpmehlman January 5, 2017

Why 2018 Will Make 2017 Seem Tame

10 Reasons

Q1 18 Washington Update

Photo by Gage Skidmore, Wikimedia Commons Photo by Mark Dixon, Wikimedia Commons

mailto:[email protected]

Why 2018 Will Make 2017 Seem Tame

2

2018 PEOPLE Trump Team Will Turn Over Faster. More Congressional Departures &

Bipartisan Harassment Allegations. Another WH vs. Special Counsel War

Likely.

POLITICS House & Senate Majorities Up for Grabs. Intense State-Level Elections With Big

Redistricting Impact. DEM Civil War Growing, Temporary GOP

Cease-Fire Possible.

PERSPECTIVES Both Sides Think Theyre Winning &

Plan to Double Down. Trump-Media Feud Will Intensify.

Market Volatility Likely to Increase.

POLICY Intense Q1 Agenda Demands Deals.

Global Populism Will Spread, Challenging Trade & Tech.

Geopolitical Risks Will Grow.

2018

#1 Both Sides Think Theyre Winning &

Plan to Double-Down

3

Why 2018 Will Make 2017 Seem Tame: 10 Reasons

Trump Sees Significant First Year Accomplishments

Individual Mandate Penalty

22:1 deregulatory to regulatory actions

34.8% DJIA since 2016 election

70% drop in illegal border crossing (CBP)

Tomas Castelazo, www.tomascastelazo.com / Wikimedia Commons

98% territory taken back from ISIS

ANWR, Keystone & EPA reversing Obama climate policy

4

Gorsuch & 12 circuit ct judges appointed, most in U.S. history

WINNING

Gage Skidmore, wikicommons

5

Trump Remains Historically Unpopular Overall

41 41 40

39

42

49 48

46

35

37

39

41

43

45

47

49

12/7-11/16 3/1-5/17 7/5-9/17 11/2-8/17

GOP + Leaners DEM + Leaners

Source: Gallup, Nov. 2017

Voters More Eager to Identify as DEM, Not GOP

Winning Elections Trump Lost: ObamaCare, Border Wall Hyper-Energized Base

Source: VOX graphic showing Gallup data in December of Presidents 1st year

Opponents See Anti-Trump Tide Rising

http://news.gallup.com/poll/15370/party-affiliation.aspx

#2 Majorities in the U.S. House & Senate

Are Up For Grabs

6


The Case for the GOP Maintaining House Majority

7

177

24 22 17 1

Solid GOP Likely GOP Lean GOP Toss Up Lean Dem

10

15

20

25

30

35

40

45

50

55

1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

#2. DEMOGRAPHICS: Midterm Electorate Always Older, Whiter

18-29 year-olds

Non-White voters

Shar

e of t

he E

lecto

rate

# G

OP-H

eld S

eats

by C

ook r

atin

g

#3. DOLLARS: GOP Out-Fundraised Dems in 17

Significant Dem Lead in Early Generic Polls

#1. DISTRICTS: Most GOP House Seats Safe

Source: VEP; FEC ($$)

As of Dec. 2017 in GOP-held Congressional districts

Prefer GOP Control: +8 Trump Approval: 50%

GOP DEM

RNC DNC

DCCC NRCC

$215M

$160M

Source: Cook Political Report, Dec. 15, 2017 Source: NBC/WSJ, Dec. 2017

Source: FEC .per Open Secrets

http://www.electproject.org/home/voter-turnout/demographicshttps://www.cookpolitical.com/ratings/house-race-ratings

The Case for Democrats Winning the House

8

Most GOP House Seats Safe

Non-White voters

GOP Out-Fundraised Dems in 17

RNC

DNC

NRCC

DCCC

$215M

$160M

#1. POTUS Approval Predicts Midterm Outcomes

#3. Dems More Motivated to Vote in 2018

#2. Significant Dem Lead in Early Generic Polls

Source CNN, Dec. 2017

POTUS Approval

Under 50%

50%-60%

Over 60%

Avg. Seat Gain / Loss since 1962

-40 -12 +3

Sources: Cook Report in Natl Journal, 11/9/17; RCP avg. approval 1/1/18

7

5

2.5 1.3

-3.3

10

-2.4

1.7

12.2

-6-4-202468

101214

1986 1990 1994 1998 2002 2006 2010 2014 2018

Source 538, Dec. 2017

#4. Huge Dem Leads Among Key Sub-Groups

49% DEM

32% GOP

1/1/18 Trump approval: 40.0%

Generic Preference (NBC/WSJ)

2006 Margin 2014 Margin Today

Ages 18-29 +22% +11% +48% Moderates +22% +8% +25% Independents +18% +12% +12% Midwest +5% +8% +12% Suburban +2% +12% +5% White Women +1% +14% +6%

Source: NBC / WSJ polling per Public Opinion Strategies, Dec. 2017

% voters extremely or very enthusiastic about voting for Congress next year

http://www.cnn.com/2017/12/20/politics/cnn-poll-democrats-advantage-grows-2018/index.htmlhttps://fivethirtyeight.com/features/the-democrats-wave-could-turn-into-a-flood/

From Current 51R-49D Margin, Senate Could Go Either Way

9

Since 1982, in Midterm Senate Elections

96.5% re-elected from the

opposite party from the President (110/114)

80.5% re-elected from the same party as the

President (103/128)

Source: 538 (Harry Enten)

While Democrats Are Defending 25 Seats Including 10 That Trump Won in 2018

(vs. GOP 8 Total, 1 Clinton)

SOLID D LIKELY D LEAN D TOSS-UP LEAN R LIKELY R SOLID R CA-Feinstein NY-Gillibrand CT-Murphy RI-Whitehouse DE-Carper VT-Sanders (I) HI-Hirono VA-Kaine MD-Cardin WA-Cantwell MA-Warren MN-Klobuchar NM-Heinrich

MT-Tester NJ-Menendez PA-Casey WI-Baldwin MI-Stabenow

FL-Nelson ME-King (I) ND-Heitkamp OH-Brown

IN-Donnelly MO-McCaskill WV-Manchin MN-Smith AZ-Open (Flake) NV-Heller TN-Open (Corker)

TX-Cruz MS-Wicker NE-Fisher UT-Open (Hatch) WY-Barasso

Source: Cook Political Report, Dec. 15, 2017 Ratings

#3 Intense Q1 Agenda Will Require

Bipartisan Compromises (None of Trumps 2017 wins needed 60 votes in the Senate)

10


115th Congress Unable to Compromise Much So Far

0

0.05

0.1

0.15

0.2

0.25

0.3

57 59 61 63 65 67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 101 103 105 107 109 111 113 115

House Senate

1900 2017

CONGRESS

FREQ

UEN

CY O

F PA

RTY-

LIN

E VO

TES

(As a

per

cent

age

of a

ll no

n-un

anim

ous

vote

s tak

en)

And bipartisan compromises now needed to: Avoid govt shutdown 1/19 Maintain NSA surveillance of global terrorists 1/19 Provide more disaster aid to TX, FL, PR, etc. Fund Childrens Health Insurance Program Subsidize cost-sharing for lower income individuals Avoid deporting Dreamers (DACA expires 3/5) Avoid default on US debt in March Avoid FAA shutdown 3/31

Party-Line Votes in the

Source: FiscalNote analysis 11

Meanwhile, in an Alternate Universe

12

WHY DEALS MAY HAPPEN BIGGEST OPPORTUNITIES FOR BIPARTISAN COOPERATION

WHY DEALS LESS LIKELY

Trump got highest ratings of 2017 for Sept. deal with Chuck & Nancy.

Primary filing deadline passes for most by Q2.

11 Dem Senators in red Trump states.

INFRASTRUCTURE

BUDGET & SPENDING (debt ceiling, sequester relief)

IMMIGRATION

(border security, Dreamers)

TECH / TELECOM (online sex trafficking, election cyber,

political ad disclosure, open Internet, data breach)

HEALTH CARE

(Opioid remediation, device tax, premium support for poor / high cost, expired

Medicare extenders)

OTHER ISSUES (CFIUS reform, GSPs, Dodd Frank reform,

higher ED, tax corrections, pensions)

Growing % of Dem base demands 100% opposition, No Deals!

No moderate Dems in the House to replace lost right wingers.

Base muckrakers attack Trump for deals w/ Dems.

#4 Agencies Will Staff Up While WH & Congressional Turnover Accelerates

13


White House Turnover & Agency Staffing

14

STAFFING UP (as of the end of

the first year)

% Top Jobs Confirmed

Data not available 74% 77% 70% 47%

% Top Jobs Nominated

Data not available 97% 96% 100% 75%

Sources: Washington Post citing Partnership for Public Service data thru 12/23/17; K.D.Tenpas, Brookings

AT THE AGENCIES: Still Arriving

TURNING OVER

WH Top Staff Turnover Yr 1

17% 11% 6% 9% 34% WH Top Staff Turnover Yr 2

40% 27% 27% 15%

tbd

AT THE WHITE HOUSE: Increasingly Departing

https://www.washingtonpost.com/graphics/politics/trump-administration-appointee-tracker/database/?utm_term=.1faded3d202bhttps://www.brookings.edu/research/president-obamas-second-term-staffing-challenges-and-opportunities/

Expect More Harassment Accusations & Departures

Allegations No Longer Survivable, Especially for

Democrats

15

More Accusations of Improper Behavior Are

Expected in 2018

What Did Leaders Know & When Did

They Know It? Franks

Farenthold

Conyers

Franken

Kihuen

#5 State-Level Elections Will Be Intense

With Big Redistricting & Litigation Impacts

16


2018 Election Will Have Major Impact on Redistricting

17

In 34 states, the Governor wholl be in office for the next redistricting will be elected this year

Sources: Map (Daily Kos); 34 states (Vox)

https://www.vox.com/policy-and-politics/2018/1/2/16795804/elections-2018-midterms-consequences?utm_medium=email&utm_campaign=Vox%20Sentences%20010218&utm_content=Vox%20Sentences%20010218+CID_53b7daa274d4ed1cf073c753c32009bf&utm_source=cm_email&utm_term=ways%20the%202018%20midterms%20could%20change%20American%20politics

History Suggests Dems Will Gain Down Ballot

18

President & Year of 1st Midterm

Net POTUS Job Approval

Governor-ships

Seats in State Legislatures

TRUMAN (1946) -19 -2 -456 IKE (1954) +35 -8 +483 JFK (1962) +36 0 -76 LBJ (1966) +3 -8 -762

NIXON (1970) +31 -11 -288 CARTER (1978) +13 -5 -357 REAGAN (1982) -6 -7 -201

GHW BUSH (1990) +26 -1 +32 CLINTON (1994) 0 -10 -514 GW BUSH (2002) +33 -1 +127 OBAMA (2010) -3 -6 -708 TRUMP (2017) -15.6 -1

(in 2017) -34

(thru 1/17/18)

Sources: Sabato; NCSL; W.Post

GOP DEFENDING 26 Governorships

15 open seats 6 Toss-Up /worse

DEM DEFENDING 10 Governorships

4 open seats 3 Toss-Ups

2018

Party In Power (WH) Usually Loses Seats in 1st Midterm

https://www.washingtonpost.com/news/powerpost/wp/2017/09/27/democrats-add-to-gains-in-state-legislative-races/?undefined=&utm_term=.cb524c0f0478&wpisrc=nl_politics&wpmm=1

State AG Lawsuit Tsunami Will Grow, Esp. if More Dems Win

19

0

5

10

15

20

25

30

35

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Multistate Lawsuits Against the Administration

MA 27 NY 26 CA 24 MD 24 WA 22 IL 20

OR 20 DC 18 IA 17 VT 17

State AG Lawsuit

Leaderboard

Source: Prof Paul Nolette Marquette U https://paulnolette com/

AGs Challenging Trump on Immigration, Net Neutrality, Tax, Energy, etc.

Obama 60 Bush 44 Trump 34

https://urldefense.proofpoint.com/v2/url?u=https-3A__paulnolette.com_&d=DwMFAg&c=S1d2Gs1Y1NQV8Lx35_Qi5FnTH2uYWyh_OhOS94IqYCo&r=xveZVtUgZTSc-MExiyI4Gy3WcUfhqN1mBC04PUJnV5c&m=14O3DKnntZGnbojbRg0HJtgMG71kUKVfepGYwiaN8co&s=maT9J7B8M-zlgl-W7tdN7EJkqtrf_NIYyJ9_VURLl3o&e=

#6 The Trump-Media Feud Will Intensify

20


Trump vs Media Feud Will Intensify Why Its Working for Trump

21

Why Its Working for the Media

1. The Base Loves It (politically-incorrect & anti-elite)

2. Neutralizes Dangerous Foe

3. Commands Center Stage Trump was the #1 story every

week for every audience.

76

11

YES NO

Does Media Fabricate Trump Stories? (% GOP voters)

1. Total Viewership Up in 2017

2. Total Readership Growth in 2017

3. Compelling Story Line

[N]ewspapers, television, all forms of media will tank if Im not there because without me, their ratings are going down the tubes... -- President Trump to NYT, Dec. 29, 2017

Source: Morning Consult, Oct. 2017

Source: Nielsen, per Variety, Dec. 2017

+8% +47% +4%

1.161 1.216 1.338

1.608

1.916 2.027

2.132

Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17 Q3 '17

New York Times paid digital subscribers (M)

Source: Statista

http://variety.com/2017/tv/news/cable-news-ratings-msnbc-fox-news-cnn-1202637968/https://www.statista.com/statistics/315041/new-york-times-company-digital-subscribers/

Disruptor-in-Chief Speaks Directly to the People

President Trump averaged 5.84 Tweets/day before Gen. Kelly became Chief of Staff & 8.28 Tweets/day after

22

0

50

100

150

200

250

300

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

http://trumptwitterarchive.com/archive

http://trumptwitterarchive.com/archive

#7 Democrats Civil War Will Grow, While the GOP May Temporarily Cease Fire

23


Dem Sens Fight to Out-Liberal One Another Ahead of 2020 (Politico)

De-Clintonification of the Democratic Party Accelerating

24

1994

2017

ON THE ISSUES

43% Liberal / Mostly Liberal Views 73% 32% Immigration is Good for the US 84% 28% Racial discrimination is main reason

black people cannot get ahead 64%

GOP More Likely to Close Ranks & Cease Fire

Establishment-Wing Delivered Policy Wins, Bannon-Wing Delivered Political Losses

25

Voters For Trump Rather than Against Clinton Still Approve Strongly

95% 96% 96% 94% 94% 97% 96% 97%

87%

82%

76% 79%

81%

85%

78%

82%

70%

75%

80%

85%

90%

95%

100%

Feb. 17 Apr. 17 May. 17 Jun. 17 Aug. 17 Sep. 17 Oct. 17 Dec. 17

Voted for Trump / Liked Him Voted for Trump / Not Clinton

TRUM

P AP

PROV

AL A

MONG

TRUM

P VO

TERS

15 point gap 8 point gap

Source: NBC/WSJ, Dec. 2017

#8 Another White House vs. Special

Counsel War Seems Inevitable

26


24

66

0

20

40

60

80

100

JAN. 1998 MAR. 1999

Ken Starr Unfavorability

11 21

0

20

40

60

80

100

JUN. 2017 DEC. 2017

Robert Mueller Somewhat / Very Negative

WH Allies Will Attempt to Run the Ken Starr Playbook

Vilifying the Special Counsel Worked for Clinton But Failed Nixon

27

#9 Market Volatility Will Surely Increase

From Record Lows

28


How Will Investors React When Markets Get More Erratic?

Where the Next Market Panic Might Come From?

29

2017 Volatility Was Historically-Low

FED Too Aggressive Geopolitics Bursting Bubbles Political Shocks

#10 Geopolitical Risks Are Growing

30


Global Populism Marches On Whats Next?

USA: Anti-Trade

31

EU: Anti-U.S. Tech

Significant Elections in 2018: Will Anti-Establishment Forces Keep Winning?

Tax / Antitrust / Liability for Hosted Content, Fake News

Impose / Terminate / Bring Tariffs Deals Complaints

ITALY March

MEXICO July

BRAZIL October

USA November

Riskiest Global Challenges in 2018

IMAGE: Via Wikimedia Commons by Andersson18824

32

IMAGE: Via Wikimedia Commons

IMAGE: Via Wikimedia Commons

Whither the ISIS Diaspora?

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2018 will make 2017 seem tame - mehlmancastagnetti.commehlmancastagnetti.com/wp-content/uploads/Why-2018-Will-Make-20… · Why 2018 Will Make 2017 Seem Tame . 2 . PEOPLE . 2018