Trump Presidency Resets the Playing Field
Despite negative predictions from the polls, media, and political pundits, Donald Trump secured what many observers are saying is the biggest U.S. Presidential vote upset in history. Interestingly, Clinton won the popular vote and Trump won the Electoral College, securing 306 votes compared to 228 for Clinton. The Senate will remain under Republican control (right now 51-48) and the Republicans will maintain their majority (238-193) in the House.
At this point it is hard to know how the political landscape will unfold, but we can expect to see a contentious environment. Certainly, there is no shortage of negative reaction to the election from a wide range of interested parties, and clearly a big split remains among voters in America.
Furthermore, the Republican Party has some internal mending to do and some Democrats are calling for changes to their platform. Hopefully, President-elect Trump will be able to work with both parties in Congress to secure positive changes for America.
Republicans, despite their trifecta control, will have to work with Democrats to get anything done. This reality is especially true in the Senate where unanimous consent rules and a 60-vote cloture threshold provides the minority party with some power. However, many insiders expect a technical procedure known as budget reconciliation to be used in the Senate, whereby a simple majority is needed to pass certain legislation.
In terms of Senate leadership, Senator McConnell (R-KY) will remain the Majority Leader and Senator Schumer (D-NY) will become the Minority Leader. Regarding Senator Schumer, who will be a key figure in all legislative battles, there is speculation that he will be a dealmaker and his shared common roots with President-elect Trump may produce a positive working relationship. In the House, Congressman Paul Ryan (R-WI) will remain Speaker, and on the Democratic side, Rep. Pelosi (D-CA) will remain the Minority Leader, although she faced several challenges.
The remainder of this year is still uncertain, but there should be no fireworks for the lame duck session of Congress. Congress returned on November 14 for a week before adjourning for Thanksgiving. They return the first week of December to attempt to finalize an omnibus spending package in order to avoid a government shutdown on December 9. It is likely Congress will do another short-term funding bill to punt big issues to the new administration next spring, including addressing the debt ceiling.
As we look to next year, the political environment will be favorable for NAFA! Our biggest issue will continue to be the DOL fiduciary rule. While we continue on our legal path, we have a new opportunity to open paths with President-elect Trump and Congress to rollback the onerous rule. We anticipate the Trump administration will make it clear in the coming months that it plans to repeal the rule. To accomplish this task, implementation of the rule will have to be delayed through executive action and followed by a proposal to rescind or modify the rule, which will be subject to a brief public comment and review period. Additionally, Congress could move legislation to overturn or modify the rule, but this option would take longer. Certainly, with the April deadline approaching fast, we are conveying a sense of urgency to the new administration and Congress.
In addition to the DOL fiduciary issue, next year will be big for tax reform. House leadership and the Ways and Means Committee Chairman Brady (R-TX) have released a tax reform blueprint that is generally supported by President-elect Trump. Together they have pledged to move forward on reform early next year, although the specific details of reform are still being crafted. Presumably anti-insurance policy will be off the table, but pay-fors are always a struggle, especially when President-elect Trump is calling for a $1 trillion infrastructure package and immigration enforcement, among other big policy items. We feel the insurance industry is taxed appropriately and any changes could have an adverse impact to product choice, benefits and costs. As always, we will work to ensure that inside build-up is not touched. Additionally, we are told that pro-retirement savings legislation will be advanced, including bipartisan legislation from Senate Committee on Finance Chairman Hatch (R-UT).
Also, we will monitor any Dodd-Frank Act reform legislation, which House Financial Services Committee Chairman Hensarling (R-TX) and President-elect Trump have stated is on the agenda, and we will watch the composition and actions of the SEC.
Lastly, with the start of a new Congress and administration, NAFA will continue to educate policymakers about the benefits of fixed annuities. Participating in our June annual Washington, D.C. fly-in is a great way to advance that cause, so please stay tuned for details.
Before long, eyes will turn to the 2018 midterm elections, where a large number of Senate seats are in play, and then the 2020 election cycle begins (Elizabeth Warren for President?). In the near term, hopefully there will be a brief honeymoon period where the log jam in D.C. breaks.