Hillary Clinton vs. Donald Trump.
Democrat vs. Republican.
Insider vs. outsider.
One of these two will be the next president of the United States, barring anything crazy. Not that crazy hasn’t been a feature of this election.
The candidates’ differences are fairly significant, especially in areas of taxes, regulation and the economy.
Obviously, this is a particularly unusual and historic presidential election. Not only is Clinton the first female nominee of a major political party, Trump is perhaps the most surprising and politically unknown outsider candidate in the history of presidential politics.
As such, observers can’t rely on the usual party-line thinking. Is Trump serious about defying the entire GOP by supporting a return of Glass-Steagall? What is a truer indicator: Clinton’s deep ties to Wall Street or her professed commitment to strengthen Dodd-Frank?
The answers are elusive, and the candidates are leaving enough doubt for experts such as Michael Lewan and Frank Donatelli to question how true to liberal and conservative principles each will be.
Lewan is a longtime Democratic strategist who once served as chief of staff to Sen. Joseph Lieberman, D-Conn. Donatelli got his start as an assistant to President Ronald Reagan and later served as a senior advisor on Sen. Bob Dole’s 1996 presidential campaign.
Lewan and Donatelli co-host a radio show called Talking Politics, and they had a question-and-answer session on stage at this year’s Insured Retirement Institute Government, Legal and Regulatory Conference. The pair recently joined the InsuranceNewsNet editorial team on a conference call to update the issues in the Trump/Clinton race.
What follows is part of their spirited discussion of issues important to the financial services industry. We cover taxes, regulation, the economy and the Affordable Care Act.
We also talked with Mike and Frank about what kind of a president Clinton or Trump will be. Which president would either most resemble?
We think some of their insights might surprise you. Hopefully, they will give you a better sense of where the candidates stand on issues of importance to your business.
Q: What presidential model would Clinton and Trump most resemble?
Donatelli: I don’t think Clinton would in any way be the same as her husband. I mean, her husband’s more freewheeling. He’s more like Trump. I mean, Bill Clinton never really had a chief of staff. He had somebody with the title of chief of staff, but he was always much more freewheeling. So I see Bill Clinton’s White House as similar to Trump’s, at least in terms of style.
Hillary would be more buttoned-down, like some Republican administrations.
Lewan: I think Clinton would model the first President Bush in terms of the way the White House is structured: buttoned-down; thoughtful; a bunch of serious advisors that she listens closely to; slow, but not too slow, to make decisions.
She would approach this much more like a Republican than perhaps Barack Obama’s administration, or certainly her husband, who was impulsive and from time to time, sort of made decisions on a whim.
Frank, is there anything about Clinton or Trump that would remind you of the Reagan White House?
Donatelli: I do think so. Now, Bush 43 and Reagan were very disciplined in the sense that they had a definite structure. The White House set about to marshal the formidable array of weapons to get those initiatives enacted. So you had a legislative play; you had public liaison by getting all major groups to support the initiative.
And then you had the president traveling around, trying to gin up support. You had a press strategy. So everything was geared toward getting those initiatives enacted. I would see Clinton moving in that direction.
I just wouldn’t see Trump doing that. I think Trump would try to do a lot of things administratively, the way Obama has tried to govern for the last couple of years. And his advisors would have to rein him in and remind him to be more focused and disciplined.
Q: The tax proposals of both Clinton and Trump are well-known. Trump wants to reduce the number of federal tax brackets and reduce the corporate tax rate to 15 percent max. Clinton favors surcharges on the wealthy and increasing capital gains rates along with limiting itemized deductions. Whoever is elected will be working with Speaker of the House Paul Ryan, a policy wonk who is energetic about tax reform. What are the chances of substantial tax changes?
Lewan: There’s a lot of common ground on fixing the tax code, starting with international taxes — this whole area of repatriation and American companies moving overseas. This is a way of bringing some money back and starting to build some confidence between the leaders of both parties that more broad-scale tax reform at the corporate level, and ultimately the personal level, can be done.
I think, come January, either of these people elected president will start moving on international taxes as probably the only thing that can get done in the short run to fix the tax code.
Donatelli: The last major overhaul of the tax code happened 30 years ago under Reagan in 1986. But there does seem to be a glimmer of possibility this time.
There has to be something in it for both parties. And as Mike says, for Democrats, it’s the chance to eliminate a lot of tax preferences; for Republicans, it’s the chance to lower rates. I personally think that there’s a chance for a deal here if both parties — if the leadership will approach this in an open way. It’s a brand-new administration.
Q: As for specific taxes of interest to the insurance industry, how safe is the tax status of insurance products?
Lewan: I don’t believe that either a Democratic president or a Republican president will go after inside buildup. It just doesn’t make sense. It doesn’t really hold political water. It’s too easy to knock down on Capitol Hill.
The tax-free nature of insurance products, being outside one’s estate, will continue. It’s sort of baked in the cake now as part of the American economic system, and people have come to expect that.
Donatelli: I think to change these would be very difficult. Maybe something on the corporate-owned life insurance. I mean, there are some abuses there. But generally speaking, these are very important products.
Q: Regulation of the financial services industry is yet another area where the new president could have a significant impact. For example, Trump supports repealing the Dodd-Frank Wall Street Reform and Consumer Protection Act signed by President Barack Obama in 2010.
Clinton has said she would strengthen Dodd-Frank. Likewise, Clinton voiced support for the controversial Department of Labor fiduciary rule. Trump has not addressed the DOL rule, but is presumed to oppose it. How will Clinton or Trump approach regulation?
Lewan: If Clinton was elected president, and even if the Democrats were to take the Senate as part of her victory, I don’t think there’d be great changes in the fiduciary rule or Dodd-Frank. The fiduciary rule has happened at this point. Notwithstanding what might be happening in federal court, I think it’ll continue to move forward and be implemented.
Donatelli: As far as a Trump administration is concerned, I think the mere fact that Obama proposed the fiduciary rule means that Trump would move pretty quickly to try to get rid of it. I don’t know that he understands all the implications of Dodd-Frank. I think he could be swayed on regulatory issues that affect maybe community banks and smaller banks.
Lewan: Does Hillary Clinton throw her lot in with the Bernie Sanders people and Elizabeth Warren on questions like the fiduciary rule, but not cut back but actually expand Dodd-Frank? And I am concerned that even as she approaches her own inauguration day, she’s already going to have one eye on the Iowa caucuses in four years.
Donatelli: What exactly does Hillary Clinton believe when it comes to regulatory issues like this? American business, for what it’s worth, is placing a big bet that she is going to come down a more moderate path than Obama, let alone Bernie Sanders and the rest of the left wing of the Democratic party.
Lewan: We don’t really know enough about Donald Trump to know if he’s really a conservative in economic terms or a populist of some sort, where he could take positions much closer to Elizabeth Warren and Bernie Sanders.
Q: The Obama administration timed the fiduciary rule rollout to insulate it from a new administration. If Trump won the election, would he have some options to derail the rule?
Lewan: Certainly a president has the authority to sort of pull an old executive order. President George Bush the second did that on several of Bill Clinton’s initiatives. But I think it would be way down on Donald Trump’s list to do it in the first hundred or even thousand days of his administration.
Donatelli: Lack of enforcement or degree of regulatory zeal is always a weapon in the hands of the executive. But I’m sure advisors, if only to keep the plaintiff’s lawyers away from them, would want some clarification and legal certainty. So I’m sure they would at least move to try to clarify the rule a little more.
Q: Some studies have come out that indicate the economy does better under Democratic presidents. But of course, there has been some argument about whether that is the president or his times and circumstances. What is your take on that debate?
Donatelli: I think far more important than the party of the president is what policies are being followed. Both Barack Obama and Bill Clinton were Democrats, but they followed very different policies. And so the result is that the economy boomed under Clinton … but under Obama, who’s probably the most pro-big-government, regulatory president we’ve had since Lyndon Johnson, we’ve had terrible economic growth his entire presidency.
A bigger pie just helps everyone. And that means getting a handle on tax reform. Hopefully it means cutting back on useless regulations a little bit. It means giving a little more sway to the private sector.
Lewan: Frank, I think you’re absolutely right: we need a president who focuses on growth, not redistribution. Hillary Clinton, at least if you look at what her husband did and the kind of advisors that she is likely to bring aboard, there will be a change from President Obama’s view of the economy toward, if you will, a more pro-growth, pro-business approach.
Donatelli: Whoever the president is that will give those kinds of goals a higher priority, whether they be Democrat or Republican, is going to bring a greater growth to our economy and more jobs.
Q: The Trump movement is based on a take-back-America concept — a feeling that the same old economic policies pushed by both parties for decades have led to a stagnant economy, stagnant wages and a deteriorating middle class. But a recent survey from the National Association for Business Economics of more than 400 experts found that 55 percent support Clinton’s economic policies, while Trump finished third with 14 percent. Libertarian Party nominee Gary Johnson received 15 percent support. What do you make of this?
Donatelli: I do like the idea of taking a fresh look at things. It is true that insiders, however you define that term, become comfortable with a certain way of speaking, and most importantly with kind of eliminating things and focusing only on a narrow set of policies that they think are possible.
Lewan: The outsiders, Sanders and Trump, have done us a bit of a favor, at least on trade, and perhaps on some other issues as well. Because they make us question what we had thought was sort of accepted policy.
Donatelli: On the other hand, you have to be able to accomplish these things too. And so you also need people with a pragmatic streak who not only have big visions but have some idea how they want to accomplish it.
Q: Trump’s stated position is to repeal the ACA and replace it with a plan based on free-market principles that allows insurance to be purchased across state lines. Clinton, meanwhile, vowed to strengthen the ACA and introduce an affordable health care and prescription drug plan. Is the Affordable Care Act headed for major changes regardless of who wins?
Lewan: I’d be shocked, given what happened to Hillary Clinton back in 1993 and 1994, if she would try in her first term even — and certainly not in the first year or two — to make significant changes to the Affordable Care Act.
Donatelli: I would disagree a little bit, because I think circumstances are going to require her and the Congress to do something because the exchanges are imploding. If you don’t have insurance companies participating and you have these huge premium increases going on, something is going to have to be done to stabilize the exchanges.
Lewan: There’s a fairly thoughtful Republican plan that Speaker Ryan and others have worked on. Obviously it’s a starting point, because you can’t just repeal this. You have to repeal and replace.
Donatelli: The most popular option would be some sort of a tax credit or a deduction to allow people to purchase private plans. So it’s sort of an indirect subsidy in that way. But you would eliminate the whole bureaucracy that governs the exchanges now.
Q: What can the new president do to avoid the gridlock that plagued Obama?
Donatelli: Obama reaps what he sows. I mean, he’s an executive order guy because that’s what he wants to do. He has never wanted to work with Congress. Never. He thinks it’s beneath him to actually lobby members of Congress.
Lewan: Words of great wisdom, Frank. I actually do believe Hillary Clinton and Speaker Ryan, both as sort of policy wonks and both having an ideology but also a bedrock desire to get things done, can find ways to work together, be it on tax reform or regulatory policy, that will make some sense.
Donatelli: I really believe that the new president, whoever that is, has a chance to break that. They owe it to the country, whoever is elected, to make every effort to work in conjunction with the Congress. And I believe that if they do that, you might be able to get some things done next year.