Many claimed it was unthinkable. The odds were heavily stacked against it; both those given by experts and those advertised by bookies. Yet now, with just a few days to go until the US election, Americans and markets are facing up to the fact that Donald Trump could become President of the United States of America.
His campaign has been a controversial one, but Trump has garnered incredible loyalty from his supporters. Commentators claim that there is not the same fanaticism surrounding Hillary Clinton. A string of scandals have severely complicated his path to the White House, with leading the polls by even a single point an enormous achievement considering his faring just a few days ago.
So, to ask the question on many people’s lips; could Donald Trump win the 2016 US election?
Hillary Clinton’s economic policies are similar enough to current President Barack Obama’s that her tenure at the White House is unlikely to upset the status quo. This is appealing to investors, who want to put their money in countries with stable economies.
Donald Trump, on the other hand, is considered to be a threat to the US economy due to the economic policies he holds. In fact, 370 economists (including eight winners of the Nobel Prize) recently co-signed a letter published in the Wall Street Journal that warns;
‘Donald Trump is a dangerous, destructive choice for the country. He misinforms the electorate, degrades trust in public institutions with conspiracy theories, and promotes willful delusion over engagement with reality.’
Trump’s policies include drastic reform of the tax system, slicing the number of tax brackets to three, down from seven. The top bracket, made up of married joint filers earning more than $225,000 per annum would pay 33% in tax, which is -6.6% less than the current top bracket. Meanwhile, the lowest bracket, comprising those earning below $75,000, will pay 12% tax compared to the current 15%. This will significantly reduce government tax revenues, but Trump also plans to cut corporation tax from 39% to 15%. While this could encourage more businesses to headquarter themselves in the US, it could again cut the government’s income. In fact, the Tax Policy Center recently wrote in a report that;
‘The plan would reduce federal revenues by $9.5 trillion over its first decade before accounting for added interest costs or considering macroeconomic feedback effects. The plan would improve incentives to work, save, and invest. However, unless it is accompanied by very large spending cuts, it could increase the national debt by nearly 80 percent of gross domestic product by 2036, offsetting some or all of the incentive effects of the tax cuts.’
Another example, among many, of policies causing consternation amongst investors and economists is Trump’s apparent intention to increase tariffs on Chinese imports. Harvard Political Review claims that;
‘High tariffs would also be counterproductive to the American economy. A sudden tariff on goods created in China would trigger a trade global war between the US, China, and many other trading partners. In fact, the Wall Street Journal estimated that the tariff would invite retaliatory tariffs on American goods, creating massive burdens for American businesses and potentially triggering another recession.’
All this is without mentioning his plan to build a wall between the US and Mexico, which research estimates would cost $25 billion, although Trump claims that Mexico would be made to foot the bill.
Throughout her campaign, Hillary Clinton has been dogged by one key issue; an FBI investigation into her past email practices. After being sworn into power in 2009, the then Secretary of State set up a private email server at her home, using a single email address for all personal and official correspondence.
It is unclear whether or not the practice was illegal; Clinton argues that her responsibility to ensure federal records were ‘preserved in the appropriate agency recordkeeping system’ was met as her emails were largely forwarded or sent to government email address, meaning they would be automatically archived. She also turned over all requested emails to the State Department in October 2014.
The FBI opened an investigation into the matter in 2015, concluding that, while Clinton was ‘extremely careless’, no ‘reasonable prosecutor’ would attempt to take her to court over the matter. The issue seemed resolved and the email scandal was somewhat forgotten.
Clinton was able to race ahead in the polls against Trump after an accidental recording in 2005 of Trump discussing women in vulgar terms was released by the Washington Post. The video, in which Trump discusses being able to grope and kiss women because ‘when you’re a star, they let you do it’ caused a severe backlash against the Republican candidate, with many of his own supporters deserting him. The tapes also prompted a number of women to come forward with allegations regarding sexual assaults committed against them by Trump.
This, combined with Trump’s apparently lacklustre performance in the televised presidential election debates, allowed Clinton to extend an 11-point lead over her rival.
But then, just eleven days before the vote, the FBI announced it was reopening the investigation into Clinton’s emails, claiming it had uncovered new evidence. The move sparked intense criticism of the Bureau’s timing, with even noted Republicans accusing FBI head James Comey of interfering with the election. Comey was accused of bias, having apparently held off releasing damaging information that people working for Russia had been hacking Democrats, as this would have harmed Donald Trump’s campaign.
CNBC reported that;
‘According to the former [FBI] official, Comey agreed with the conclusion the intelligence community came to: “A foreign power was trying to undermine the election. He believed it to be true, but was against putting it out before the election.” Comey’s position, this official said, was “if it is said, it shouldn’t come from the FBI, which as you’ll recall it did not.’
Clinton’s lead has collapsed in the polls, with one recent poll putting Trump in the lead and a poll tracker averaging the results of five regular polls showing the Republican candidate is now just one point behind, which is within the margin of error for political polls.
Whoever is going to win the election needs 270 seats in the Electoral College. Of the 13 swing states, Florida and Ohio are key. Trump needs to win both of these in order to clinch victory; they previously voted for Obama – Florida by a majority of just 6 votes per precinct – but are currently equally in favour of both candidates. Florida has just 300,000 more Democrat than Republican supporters, while 3 million residents are independent voters without a particular party allegiance.
According to the latest estimates, Trump has 100 safe seats, compared to Clinton’s 168, but he has 21 more ‘leaning’ seats than Clinton at 80. Ohio and Florida are the most important swing states because they yield the most Electoral College votes, with 18 and 29 respectively.
Winning both of these would give Trump 47 additional seats; this alone is not enough to secure him a majority, but he still needs to win them both, as victories for Clinton in these two would automatically give her the required majority, according to the latest figures. Winning Florida and Ohio would still leave Trump 43 seats away from a majority before other swing states that voted in his favour were taken into account.
This is assuming those states recorded as supporting Clinton remain that way until the election. The latest moves by the Democratic campaign suggests that they aren’t so convinced, however. Her donors are pouring money into what are considered to be ‘safe’ states like Wisconsin and Michigan. It seems the campaign is less focussed on trying to steal Republican states such as Texas, Arizona and Georgia.
Which is why, as impossible as it may have seemed a few months ago, many political commentators are surprised to find themselves stating that, in fact, Donald Trump could indeed win the 2016 US election.
All will be revealed next week.
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