Political Risk In the United States: Two Factors To Consider Over The Next Three Months

2020, what a long and strange trip it has been! The United States is less than a week away from a general election, the coronavirus pandemic is once again aggressively rearing its ugly head both here and in Europe, the economy is in a place where we don’t know which way it will go, and political leadership has abrogated its responsibility to promote the general welfare by not passing a second economic package to help individuals and the small and medium sized businesses that have struggled to survive because of the economic impact of the pandemic.

As we move into the fall and winter and move past the election, I believe that there are two factors that will significantly impact political stability and political risk with respect to the United States. These two factors are political instability resulting from the outcome of the election and economic instability caused by the pandemic.

Political Instability Caused By The Election

If one believes the current national and swing state polling, Democrat Joe Biden is going to defeat President Trump on November 3rd. What goes down on election day concerns me, but it isn’t my primary concern. What I am much more concerned about is what happens starting November 4th and how that might impact political stability as we move forward.

The election process itself is pretty straight forward. Election Day is November 3rd and people who cast their ballots in person at the polls will vote that day. Absentee and early in person voting has been going on for some weeks.

There have been isolated efforts by supporters of Mr. Trump to disrupt early in person voting, most notably in suburban Virginia outside of Washington, DC, but by and large, early in person voting has gone well. For the most part, the same can be said for mail in voting. While some states are nervous about uncertified and/or armed poll watchers, there should be little concern about violence on Election Day.

My concern is what happens after November 3rd, especially if the election is close and/or hinges on the counting of mail in ballots. There have already been legal challenges to state laws that outline the parameters for counting mail in ballots, specifically with respect to the validity of ballots that are received after November 3rd even if they were postmarked before that date. The Supreme Court has already ruled on cases from Pennsylvania, Wisconsin, and North Carolina, but more challenges are expected. As we saw in 2000, the litigation could bounce from court to court for weeks before there is a final resolution of disputes.

How will the candidates and their supporters react to controversies involving counting results? How many states will face legal challenges over the results or the ballot counting methodologies? Will ballots be invalidated over technicalities (illegible signatures, lack of notarization, post mark, etc.)? How long will the legal process take? What will be the impact of social media on the legal and political process? These are all variables that could impact the potential for political instability.

Disputes over vote counts could also disrupt the process over the recognition of electors, the allocation of electoral votes based on election results, and the actual counting of electoral votes and certification of the results of the Electoral College.

This year, the Electoral College will meet on December 12th. This means all of the legal challenges concerning vote counts must be resolved by that date. Certification by Congress takes place in January.

If that doesn’t happen, a constitutional crisis could ensue as bound electors may no longer feel obligated to vote for the popular vote winner or state legislators may appoint new electors who pledge to vote contrary to the results of the popular vote. In many ways, these are uncharted waters, especially if the candidate and/or supporters on the losing end of court decisions refuse to accept the legitimacy of those decisions.

Economic Uncertainty

Economy uncertainty due to the response to the coronavirus could also cause political risk in the U.S. to escalate.

Unemployment, while falling, is still at a level that is unacceptable. Despite increases in jobs, millions are still out of work. Small businesses such as restaurants, salons, retail, and small manufacturing and service sector businesses are barely surviving, this despite the government stimulus package that was passed early in the pandemic. The stock market, despite the infusion of Federal Reserve assets, is volatile because of the continued uncertainty over future stimulus legislation and uncertainty over the government response to the pandemic.

Because of the election and the institutional paralysis of Congress due to hyperpartisanship and unwillingness to compromise, there is little hope for additional significant stimulus in the near future.

This will put additional pressure on individuals and businesses as they attempt to weather the storm of the winter months. The potential for economic stagnation, increased unemployment due to permanent layoffs, decreased spending and saving, and other economic and further societal hardships is looming just over the horizon.

Escalating levels of Covid-19 cases, hospitalizations and deaths will place considerable pressure on the political leadership. It is highly unlikely that people will have a stomach for more school closings, lockdowns, mask mandates and other mitigation strategies, having been through so much already.

Government intrusion that infringes on individual freedom is a big factor in the success of collective mitigation strategies. In American society, there is always a tension between between individual freedom and collective good. This tension has increased as the country deals with the virus itself and the economic hardship that it has caused. Because of the dysfunction caused by the response of the pandemic, social media, outside actors, or domestic groups may feel inclined to take advantage of the situation by fomenting protests and violence.

Outlook

Because of the factors outlined in this essay, it is difficult to predict the level of political risk that will be present in the United States. Much will ride on the outcome of the election and the reaction to the events that brought about those results. In the end, the results will either reinforce the status quo in terms of approach toward the economy and the virus (Trump) or a change in the approach that the government takes (Biden). While the presidential election is important, the down ballot results for the House and Senate loom large as they will impact the ability to legislate and problem solve.

Moving forward, I would recommend caution with respect to political risk in the United States and act accordingly.

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