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Do the Democrats have the blues?

A look at how the US presidential contest is shaping up, as Donald Trump’s opponent next year remains far from clear.

John Redwood

in Features


On 3 February 2020, the Democrat candidates seeking nomination as official party candidate for the presidential race will face their first electoral test in the state of Iowa. Since 2000 the winner in Iowa has gone on to secure the nomination.

The latest polling from the state shows Elizabeth Warren narrowly in the lead with more than 20% of the vote, with Pete Buttigieg, Bernie Sanders and Joe Biden all scrambling to catch her, all on around 16% to 17% each. This makes the outcome difficult to call, given the narrow margins and the weeks still to go before the votes are cast. The latest polls also include the potential entry of Michael Bloomberg into the overall presidential race, where he so far only attracts 4%-6% in the polling, leaving him well shy of the front runners.

All eyes on Iowa

In Iowa, something has changed from the run of national polls. Pete Buttigieg has emerged as a serious rival on a moderate ticket. He travels policy light, talking of healing wounds in the US after a Trump Presidency that Democrats perceive to be divisive. His success has pushed Joe Biden well down in the rankings. Last May, Biden was a clear front runner with national support of over 40%. Today in Iowa he struggles against a younger opponent to keep the moderate vote, whilst he worries about what Bloomberg might do to him if he does decide to run a vigorous national campaign and start spending heavily as he can afford to do.

It looks as if whoever wins in Iowa will win from a small base, with work to be done to consolidate their hold on whichever wing of the party wins. Warren and Sanders between them command around 40% of the national vote in the party but are fighting each other to see who can emerge as the radical candidate. Biden, who had a clear run as the more moderate candidate, now has a fight on his hands in Iowa.

Trump-pleasing, for now

The winner from all this is Donald Trump, who can watch as the Democrats scrap with each other over how radical their party should be and who could be its best champion. President Trump may be hoping Elizabeth Warren, the current front-runner in some polls, does go on to win. Her detailed platform of bigger government, higher taxes and more state control is just the kind of thing Trump would like to run against in the parts of the US where he hopes to pick up votes. Markets would be concerned about big tax hikes and too much regulatory intervention with business.

Meanwhile, all is not well on the Republican side of the contest. President Trump languishes around 40% in approval ratings of his presidency. Whilst he has good support from Republicans, he is finding it difficult to reach out beyond his base. His messages and campaigns mainly focus on staying true to his core supporters, with his actions and words on borders, illegal migration and the tariff war.

Polls show he is not getting much support outside the Republican family. He does seek wider support through his messages about more jobs and rising incomes, his war on opioids and his wish to see the troops home and the US disengaged from foreign wars. The president’s imposition of wide-ranging tariffs is not to the market’s liking though, so far, the Trump presidency has produced a strong bull market based on tax cuts and continuing economic expansion.

Ukraine woes

The public are more concerned about his alleged pressure on Ukraine for his own political purposes than they were over the allegations about Russia. The Democrats are pushing hard to impeach him. All the time he keeps his support from the Republicans, it means they cannot win a vote in the Senate. The Senate has the authority to protect him or impeach him before the election. The Democrats hope that worrying away at the issue will detach more floating voters from him, concerned about his conduct.

The likelihood is the future of President Trump will be determined by how strong the economy is next year, and by how acrimonious and long-winded the Democrat attempts to sort out a candidate prove to be. The economy has slowed a bit but may revive in time for the election. The latest rate cuts and supply of more money to the markets from the Federal Reserve should gradually turn around the growth rate. So far, markets have taken uncertainty over who may lead the US from 2021 in their stride. We are watching the contest to see if threats to markets emerge from either side.

Nothing on this website should be construed as personal advice based on your circumstances. No news or research item is a personal recommendation to deal.

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