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Election+Business
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Good afternoon! Welcome to our second weekly dive into what’s at stake for American business as the campaign season moves into high gear.
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This week: We look at the near arrival of Michael Bloomberg in the Democratic primary field. We check in on how unemployment has changed in counties that voted for President Trump or Hillary Clinton. And we chat with WSJ congressional reporter Natalie Andrews, who explains why the public impeachment hearings beginning Wednesday are no sideshow for business.
We’d love to hear your feedback or ideas. Just reply to this email. And if someone forwarded you this email, you can sign up here.
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2020 Countdown
51 weeks to Election Day, Nov. 3, 2020.
1 week to the November Democratic debate.
12 weeks to the Iowa caucuses.
13 weeks to the New Hampshire primaries.
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ENTER BLOOMBERG. Former New York Mayor Michael Bloomberg, who is laying the groundwork for entering the Democratic presidential primary in the spring, takes the stage during the third day of the Democratic National Convention in Philadelphia in July 2016. Photo: Justin Lane/European Pressphoto Agency
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With Bloomberg in the Wings, Here’s Where He Stands
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🛎️ The Takeaway: Michael Bloomberg is poised to become the pro-business candidate for the Democrats — but can he win, and what would his candidacy mean for business?
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Here comes Michael Bloomberg, easily the most anticipated business leader to (nearly) throw his hat into the Democratic field. The question is whether the billionaire businessman-turned-politician arrives too late, and whether the party’s primary voters are interested in the positions he brings with him.
The three-term mayor of New York — running twice as a Republican, once as an independent — who previously built the financial data and news empire that bears his name, said in May that he wasn’t running. He still hasn’t formally declared his candidacy beyond filing to run in a few states with early registration deadlines.
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"Too many Republicans wrongly blame immigrants for our problems, and they stand in the way of action on climate change and gun violence. Meanwhile, many Democrats wrongly blame the private sector for our problems, and they stand in the way of action on education reform and deficit reduction."
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— Michael Bloomberg, 2016 Democratic National Convention
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But a Bloomberg campaign arguably offers Democratic voters a splashy business-friendly vision to compete with what many business leaders see as demonization by Sens. Elizabeth Warren and Bernie Sanders and the more liberal wing of the Democratic party.
At the same time, Mr. Bloomberg has staked out positions over the years that may fit less comfortably with the Democratic faithful or with the business community that otherwise could be his natural ally. Here’s where Mr. Bloomberg stands on high-profile issues that matter to business, based on prior statements:
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TRADE
Mr. Bloomberg favors trade and has called on executives to push for global coordination. “While chief executives are not diplomats, they can be voices for cooperation,” he wrote in a September 2017 column. He has also urged automakers to voluntarily improve vehicle safety in developing markets — and governments there to mandate it. Asked about competition with China in 2017, he told CBS News: “There’s no reason we have to fall behind unless we stop reaching out to the world."
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TAXES
He dubbed the 2017 tax overhaul a “Trillion-Dollar Blunder” backed by “reality-defying economic projections.” He predicted limits on deductions for state and local tax payments will hurt education and infrastructure funding, as would rising federal deficits. “The tax bill is an economically indefensible blunder that will harm our future,” he added.
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"It’s pure fantasy to think that the tax bill will lead to significantly higher wages and growth."
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— Michael Bloomberg, December 2017
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He has, however, also slammed Ms. Warren’s so-called wealth tax as likely unconstitutional because it technically isn’t an income tax and he compared it to socialism and wealth destruction in Venezuela. MarketWatch estimates Mr. Bloomberg would pay $3 billion next year in wealth taxes under Ms. Warren’s plan.
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CLIMATE
Mr. Bloomberg supports moving the U.S. to 100% clean energy, including an effort to phase out coal plants, which he calls outdated. But in a March column he ripped Rep. Alexandria Ocasio-Cortez's Green New Deal as having no chance of success on Capitol Hill because the Senate won't pass it. Urging compromise, he wrote, “Mother Nature does not wait on our political calendar, and neither can we.”
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TECHNOLOGY
Mr. Bloomberg has criticized big tech companies for their unwillingness to cooperate with government in a variety of instances, a position at odds with that of many civil-liberties-oriented Democrats. In a June 2018 opinion piece calling Google’s decision — after employee protests — to drop a federal Defense Department contract “a Grave Error,” Mr. Bloomberg also criticized Apple Inc. for refusing to help federal investigators unlock the iPhone of mass-shooting suspects in San Bernardino, Calif.
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EDUCATION
As mayor, Mr. Bloomberg clashed publicly with New York’s teachers’ union, something that could haunt him in union-friendly areas. He has advocated for charter schools, more personnel freedom for principals and better tools to remove failing teachers. But in April 2018 he wrote an opinion piece with Randi Weingarten, who led teachers in those bargaining battles and now heads the American Federation of Teachers. In addition to hiring reforms, they touted doubling the city’s education budget and increasing teacher pay 43%. “Teachers play an essential role, and their wages and benefits must reflect that,” they wrote.
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HEALTH CARE
Mr. Bloomberg has called on Democrats to revamp the Affordable Care Act without worrying about calling it a replacement, and on Republicans to work with Democrats. He also called it a mistake for the 2017 GOP tax bill to eliminate a rule requiring individuals to buy health insurance, saying costs for others would rise as young, healthy people dropped coverage. “This is nothing more than a backdoor tax increase on health care for millions of middle-class families,” he said in December 2017.
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Can He Win in the Democratic Primary?
Political analysts at Raymond James write that Mr. Bloomberg “does not have a clear path” to the nomination. He has also staked positions on non-business issues that could pose problems: He oversaw New York’s controversial stop-and-frisk police policy, for example, and his high-profile support for gun control could hurt him in Midwestern and Southern states.
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"We do not sense that Democratic voters are yearning for a moderate candidate."
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— Brian Gardner and Michael Michaud, political analysts, Keefe, Bruyette & Woods.
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The risk for business-focused Democrats is that Mr. Bloomberg, rather than siphoning votes from Ms. Warren and Mr. Sanders, splits the moderate Democratic vote otherwise leaning toward former Vice President Joe Biden and South Bend, Ind., Mayor Pete Buttigieg.
Moreover, past “white knights” for business interests have stumbled after late entries, including retired general Wesley Clark in the Democratic contest in 2004 and both Fred Thomson and Rick Perry on the Republican side in 2008. “All did so earlier than Mr. Bloomberg would do,” Keefe Bruyette & Woods analysts Brian Gardner and Michael Michaud wrote last week, “and none of them fared well.”
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Chart of the Week: Gains and Losses
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The national unemployment rate fell to a 50-year low this year, but joblessness has risen in some places. That could be a concern for the president: Over the last year, unemployment rates rose in 44% of the counties that supported President Trump in 2016, Labor Department data show. By contrast, unemployment rose in 32% of counties that supported Hillary Clinton. Because county unemployment rates aren’t seasonally adjusted, this analysis averages rates over the three months of the quarter in each year.
— Soo Oh, WSJ data reporter, and Eric Morath, WSJ labor reporter.
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Leading the pack. The Democratic field has clear favorites — it’s just someone different for different demographic groups. Full story.
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The mayors’ moment. Persistent federal gridlock means experience running a city may prove a valuable quality for presidential candidates. Full story.
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Familiar territory. Even as Pete Buttigieg has distanced himself from former employer McKinsey & Co., his campaign has been the biggest beneficiary of its employees’ contributions. Full story.
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Sen. Elizabeth Warren’s Medicare for All plan assumes it could raise $1.8 trillion over a decade by cutting administrative costs to Medicare’s 2.3% of total premiums from private industry’s 12.2%. But that, along with other proposed cost savings, risks such potential unintended consequences as unnecessary medical treatment and a reduction in the drugs or doctors available to patients.
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The richest 400 people would own about 1.5% of U.S wealth if Sen. Elizabeth Warren’s wealth tax had been in effect since 1982, instead of more than 3%, University of California at Berkeley researchers concluded. Jeff Bezos would be worth about $49 billion instead of $160 billion.
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As tariffs rose, furniture imports from China fell 30% while shipments to the U.S. from Vietnam rose by half in the year ended Sept. 30. Furniture prices rose 2.3% after declining for several years, as retailers passed tariff costs along to customers.
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Q&A: The Business Angle on Impeachment
Congressional reporter Natalie Andrews talks about key business legislation in conversation with Theo Francis.
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Q:
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How much does impeachment really matter for business?
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A:
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While impeachment is front-and-center for the House and the White House, there's more going on. Congress has just two weeks to avoid another partial government shutdown. We don’t often see big legislation when lawmakers are focused on appropriations, but some minor pieces of legislation with bipartisan support could get racked onto it.
Impeachment proceedings are only likely to cause more gridlock as they continue, especially if the House votes to impeach and a Senate trial ties up Congress for weeks.
Some business-focused legislation is still getting passed. On Oct. 22, when the top news was the testimony of Bill Taylor, the acting ambassador to Ukraine, the House passed a bill requiring shell companies to disclose their true owners — an effort to crack down on money-laundering and other crimes. It passed with bipartisan support, but its fate is unknown in the Senate.
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Q:
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What legislation is at stake?
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A:
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The U.S. Chamber of Commerce and several other business groups want Congress to take up the Trump administration's trade agreement with Mexico and Canada, the USMCA. Negotiations between Democrats and Robert Lighthizer, the U.S. Trade Representative, are underway, and we could hear soon whether they've negotiated a deal House Democrats can support.
The deal was made when Republicans controlled the House. Democrats want some key changes before bringing it to a vote. If they announce a deal, watch for AFL-CIO President Richard Trumka and other labor leaders to take a position. His position may determine on whether it can get enough Democratic votes to pass the House.
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Q:
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Government contractors have their own concerns. What are they?
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A:
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Congress could miss the deadline for the National Defense Authorization Act, which often authorizes military projects and policies for the next year. It's a key bill for contractors and defense companies. Last year Congress used it to ban the federal purchases of telecommunications equipment from five Chinese companies, including Huawei.
The House and Senate are deadlocked over some key issues, including funding for a wall along the southern border, and have just three legislative weeks left in the year to strike a deal. Congress has missed the deadline before and still passed the measure, but the gridlock is creating uncertainty for contractors.
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Q:
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Are there things we're unlikely to see because of impeachment?
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A:
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Between impeachment and the election, lawmakers seem less concerned that Mr. Trump will pull out of Nafta without a replacement on the books, or impose tariffs on European cars, as he has suggested. Republican lawmakers worry either action would hurt the economy — not something the president wants as he runs for re-election and tries to marshal GOP support for any impeachment trial.
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Wealth taxes such as those proposed by Sens. Bernie Sanders and Elizabeth Warren would reshape wealth, not just raise revenue from it. (New York Times)
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Spending at Trump Organization properties by Republican campaigns and organizations soared to more than $18 million since President Trump's 2016 campaign, from almost nothing before then. (Politico)
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New York boomed under former Mayor Michael Bloomberg, but it also came to be seen as a "playground for the rich" as income inequality soared. (New York Times)
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We'd love to hear from you. This week's question: How does Michael Bloomberg’s entry into the Democratic field affect your preferences for the candidates?
Share your story by emailing us at voices@wsj.com. We'll feature select responses in a future newsletter.
We're delivering our Election+Business newsletter weekly through the 2020 election. Let us know what you think by replying to this email.
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