Bill Owens: Confounding And Confusing Events 12/7/20
The Republican wall is beginning to crack with one of the biggest announcements to date, Mr. Barr admitted the Justice Department had found no widespread voter fraud and certainly not enough to overturn the election in any particular state. Mr. Giuliani continues to prattle on in a somewhat insane fashion. The idea of pardons have now erupted in public with Mr. Trump considering preemptive pardons for his three children, Jared Kushner and Mr. Giuliani. One of the great ironies of that conversation is that in order to be pardoned you have to have committed a crime or are believed to be guilty, so this effectively constitutes an admission that at least some of their actions were criminal in nature. There is also a question legally as to whether or not a pardon can be issued for someone not yet at least indicted if not convicted. This will provide years of litigation and likely create a scenario in which if some or all of them are indicted which they still can be under state law, and that they attempt to raise this pardon as a defense. The New York D.A. and NYS Attorney General should have some real fun come January 21, 2021.
The Supreme Court surprised many people given the comments offered concerning the census count, and who should be counted. It appears that the Justices are at least being consistent in their constitutional theories, by reading the literal words. In addition, they also seem to be being practical with Justice Roberts and several others effectively saying, “until we know whether or not the census bureau can produce the information, and what that information is, the case may not be ready for decision.” The concept is known as “ripeness” in the law and it is reasonable to argue that it is not ripe, but importantly the Justices seem to be focusing on what the law is rather than what Mr. Trump wants.
On the pandemic stimulus front, a bipartisan group got together to announce a $908 billion plan. Speaker Pelosi and leader McConnell were silent with the exception of Mr. McConnell’s statement that we likely will see something in early January. The trigger point, in my view, is whether or not what the outcome is in the Georgia Senate races on January 5th. If Democrats were to win both, which I think is unlikely, then Mr. McConnell’s string is up, so to speak and he may agree to a quick piece of stimulus legislation because he knows if he doesn’t, ultimately the bill could be even larger than anticipated.
The economy is in a perilous position with the fed chairman, Mr. Powell, and the Secretary of Treasury, Mr. Mnuchin, waging an ongoing battle regarding how the government should respond. Mr. Powell is pushing for more stimulus; Mr. Mnuchin seems to be going in the opposite direction. At the same time, we see claims for unemployment dropping after going up for several weeks while the unemployment rate is dropping, a somewhat inconsistent performance, but I think that is the impact of the regionalization of the economic recovery.
The next question, unfortunately, is how much does the COVID surge effect the recovery as it continues to grow. The number of cases is obviously increasing dramatically, the number of hospitalizations are as well, but deaths seem to be slowing at least on a statistical analysis basis versus the number of cases and hospitalizations. This could be attributed to the fact that hospitals are better at treating patients now, because they have learned over the last several months, but at the same time that only works as long as people can get into the hospital and be treated, and it appears that many Americans failed to recognize that there is a tipping point at which the ability to treat people will evaporate, and then the likelihood of a greater number of deaths becomes reality. As I have repeatedly noted, if you and your loved ones want to stay out of the hospital, wear a mask and social distance. It is not that tough.
Let me also raise again something that I hinted at a couple of weeks ago. If you have a constitutional right not to wear a mask and not to social distance, do you really have the right to be treated if you get sick. With the exercise of rights comes responsibility. It appears to me that those screaming loudest about their constitutional rights, at the same time refuse to take responsibility. Why should they clog the hospitals?
John Deere expects more machinery sales in 2021 as they believe sales will rise due to an increase in crop prices somewhat arising out of the COVID situation as well as the hope that Mr. Biden will be able to increase agricultural exports through new trade deals. It is interesting to me that a relatively conservative entity like John Deere came out of, if you will, AgCountry as well as the Ag business is prepared to take this position in public announcements. I think it is good news for everyone. The US and Canada have announced a task force to study how to reopen the US/Canada border with the members being two former governors, a former premier and a deputy prime minister. This is certainly a step in the right direction, although ultimately the decision will be made upon the number of COVID cases that exist in both countries and I suspect that the earliest we will see an opening or any material change in border crossing activity will be sometime in the March/April timeframe. These task forces always are of interest to me because they tend to enlist folks who are former and folks who are not involved in the day-to-day operations of the border or border communities. We will see what they do and what they come up with, not much I suspect as Mr. Trudeau says the border will be closed for quite some time, so maybe that’s the answer.
The President continues to lose in his attempts to overturn the election primarily because his claims are at best frivolous, if not fraudulent in of themselves. It appears to me he is getting to the point where signing affidavits, or having others sign affidavits, involve perjury. In a federal court case out of the 3rd circuit, Judge Stephanos Bibas, a Trump appointee, stated “The campaign’s claims have no merit”. The Pennsylvania Supreme Court addressing many of the same issues dismissed with prejudice the campaign’s claims in state court. All we can be thankful for is that Judges are doing the job of Judges, and not as Mr. Trump claimed that there were Obama Judges and there were Trump Judges.
The US dollar is weakening, and investors are betting it is going to get weaker. It has dropped to the lowest level in two years, and the sentiment of investors is based upon the fact that Covid-19 will be conquered in the months ahead as vaccines will become available which will allow the economy to turn around and begin the process of recovery, not only in the United States but around the world. This will allow investors to back out of the relatively safe investment in US currency and treasuries. As the dollar weakens it will increase the flow of both exports and imports, and will also present many opportunities. The UK signed a deal with Canada as it gets ready to a no deal Brexit. This was a very quick turnaround, and we will see how much needs to be corrected as we go forward. On the same front, the US has signed a mini agreement with Great Britain dealing with lobsters. Now if you are looking for a big hit on trade, and success for Mr. Trump’s trade policy, I wouldn’t look at this agreement. It is de minimis beyond de minimis.
Mr. Trump has given Mr. Biden something of a gift, as he imposed drug price controls as a reward to the drug companies who produced the COVID-19 vaccines. If this seems a little perverse, it is. This will, of course, allow Mr. Biden to also take further steps in that direction which he spoke about often during his campaign. The basic theme is that drug companies have to give Medicare the lowest price they charge to anyone else, and in particular, the health services in other developed countries. This will likely dampen the enthusiasm for innovation and research, although there are other ways this can be accomplished, and hopefully, the Biden administration will find a way to meet both goals.
Reports indicate that Black Friday was a tremendous success for on-line shopping, while foot traffic was down considerably, as shopping in general was altered by the Corona virus. Morgan Stanley analyst indicate that in-store sales declined 20% from last year, while on-line sales increased 21.6% from last year. This is not good news for in-store retailers, although many communities are pushing “buy local”, whether or not that is sufficient to save local merchants is difficult to say at this point in time. We hope that it is.
The CDC indicates that new research finds that patients are most infectious two days before symptoms begin and five days after. This is leading them to renew their analysis of how long an individual needs to be quarantined. It would appear that it is something less than 14 days, but is the number correct at seven or ten? A tough call all the way around, but worth reviewing as the quarantine certainly adds additional stress to people’s lives which none of us need that at this point.
Bill Owens is a former member of Congress representing the New York 21st, a partner in Stafford, Owens, Piller, Murnane, Kelleher and Trombley in Plattsburgh, NY and a Strategic Advisor at Dentons to Washington, DC.
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