Capital Markets Corporate Public Policy

February 13, 2019

The 2020 US presidential election: Forget the Wall, it’s going to be about Wall Street

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By Andrea Borberly, Junior Account Executive, Financial Services

Ever since politicians started announcing their candidacies for the 2020 US presidential election, the spotlight has followed them around relentlessly. In the midst of the media furore, however, one has to wonder, what will the 2020 election really be about?

If you listen to potential candidates – and the customary remarks made against them – then you can get an idea as to what the answer is. Kirstin Gillibrand wants us to embrace the miracles of postal banking. Elizabeth Warren is running on a wealth tax. Cory Booker’s first stumbling block is that he is ‘too close to Wall Street’. Mueller and Mexico notwithstanding, this election is about the economy, and crucially, how bold-stroke economic policy makes Americans feel. And PRs should be worried.

Ever since Elizabeth Warren announced her long-anticipated bid for the Democratic nomination, the media has been buzzing with speculation, analysis, and debate over her controversial “wealth tax” – a proposal which, if implemented, would see a 2% levy imposed on assets for households worth more than $50 million. While journalists, the public, and other politicians have been quick to have an opinion, what many appear to have missed is that Elizabeth Warren has successfully positioned herself at the centre of a debate about economic policy, and economic policy at the centre of 2020.

It would be foolish to suggest that the tone of the entire election is set at this point. But, the tone for the economic debate is solidifying, and, in the broadest possible sense, this election is going to place access to capital at the core of the political showdown. Donald Trump’s single legislative accomplishment is his much touted ‘tax cut for billionaires’. Between them, Warren and Gillibrand want to increase taxes on the rich, and, through postal banking, make sending remittances to other countries easier. This is the battle of Trump’s trickle-down vs. the Democratic cascade.

While media outlets are out there debating the various virtues and vices of Warren’s proposed tax (it has been noted many times in the past that taxing financial assets is often difficult, with a recent report by the OECD showing the unpopularity of wealth taxes in recent years), it is important to look beyond the practicalities of the tax itself.

After all, as recent elections have shown, policy is a reflection of the public mindset, not the other way around. From a PR perspective, we have to realise that politics is downstream of culture, and that the culture is ready to talk about economic policy in detail again. It is no coincidence that Warren’s own introduction to the political scene took place in the midst of the 2008 financial crisis. Her whole image is built around her supposed mastery of economic policy, and her advisers will no doubt spin her experience as unparalleled by that of any of her direct rivals. But, this focus on her economic acumen points towards a sense of deep uncertainty: is it a coincidence that Warren chooses to adeptly echo then language of 2008 eleven years later?

What this means for corporates looking to position themselves in the run up to 2020 is profound. The last election where the economy, and its commanding heights, were under such scrutiny was 2008, and then there was a consensus around the need for the sort of reform Obama championed in the Dodd-Frank package of legislation. Now, the challenge is all the greater. In uncertain times, companies, and their PR representation, need to keep their options open: to be flexible to the uncertain waves of populist economics, ready to capitalise on tax windfalls if the Republicans win a second term, and prepared for the sort of vilification they may face under the Democrats. In the aftermath of whoever wins, companies need to be able to engage with government. That means before that, every remark will have to be weighed, every foray into the media risk-assessed, and the question asked: ‘will this alienate us from whoever walks into 1600 Pennsylvania Avenue come 2021?’. For that, companies need their PRs, and, perhaps, taking some of my earlier advice, they need to be watching, closely, what their CEO says in public!

Unrest in the culture appears to be the key driver of Warren’s policy: the sort of outrage that made Lehman and the other banks the bogey-men of the 2008 election. PR professionals will have to be on-guard for their sectors, ensuring that this animus doesn’t centre in on them. A real sign of the times is that this debate transcends the party political, and perhaps even the constitutional: much of Warren’s wealth tax is only dubiously legal. When anger against high-net-worth individuals has reached the point where Americans are willing to abandon the constitution, we should all be worried: when the rule-book is being thrown out, clients need their PR professionals more than ever to navigate uncertain times.

Wherever your internal monologue on the merits of supply-side economics lands you in this debate, one thing we should all agree on is that Warren has masterfully set the tone for the 2020 presidential race, a tone that the other candidates will have to imitate, and corporates adapt to.

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