Assessing the potential economic and business impact on Fairfield County of the impending Donald Trump presidency is a difficult undertaking for business leaders and experts alike … in no small part because of the conflicting signals the president-elect has sent between the campaign trail and his electoral victory.
“Is it a cause for hope, concern, or seeing opportunities? Probably all three,” said Joe McGee, vice president, public policy and programs at The Business Council of Fairfield County in Stamford.
Donald Trump in his Manhattan office. Photo by Bob Rozycki
“The word that first comes to mind is ‘uncertainty,’” said Pete Gioia, vice president and economist for the Connecticut Business & Industry Association, based in Hartford. “Trump made a lot of bold comments during the campaign, but has moderated a lot of that since being elected. How it all translates into affecting business is something we’ll have to wait and see.”
“In general, he’s offered very conflicting viewpoints on a number of issues,” said Khawaja Mamun, associate professor of economics and finance/business economics department chair at Sacred Heart University in Fairfield. “He’s been in favor of increasing government spending and in making spending cuts. He’s talked about tax cuts, but for whom hasn’t been entirely clear. On the spending side, he’s promised a bigger and more expensive defense. However, he’s also talked about cutting government spending by closing loopholes.”
One of the biggest bones of contention in the early going has been the future of the Affordable Care Act, aka Obamacare, which Trump repeatedly promised to “repeal and replace” during the campaign. Last week, however, the president-elect indicated that he may keep two of the law’s most popular provisions – allowing children of up to age 26 to remain on their parents’ plan and preventing insurance companies from denying coverage due to pre-existing conditions.
“There was not a great deal of specific policy during the campaign,” said Dr. John Murphy, president and CEO of Western Connecticut Health Network and president of Danbury and New Milford Hospitals. “But he does seem to have softened somewhat.”
While the Wallingford-based Connecticut Hospital Association was content to provide the Business Journal with a carefully worded statement – “In a time of change, Connecticut hospitals remain dedicated to achieving improved access to care, improved quality and safety, and reduced cost. We will work with the new administration to ensure we keep these promises to our patients and communities” – Murphy was willing to go into greater detail.
“If large sections of the ACA are repealed, we can probably expect increased pressure on state governments to figure it out,” he said. “The challenges will remain much the same – how to create an insurance product that is affordable but doesn’t break the insurance companies’ backs. And I think most employers will still feel a moral obligation to provide some health insurance to their employees.”
Also up in the air are the futures of Medicaid and Medicare. Republicans have for years sought to turn Medicaid into a program run almost entirely by the states – with less federal funding – while Medicare could be changed from a government-run insurance program into a voucher system – again with significantly fewer federal dollars.
In 2015 Trump declared, “I’m not going to cut Medicare or Medicaid,” but his president-elect website states that his administration plans to “modernize Medicare, so that it will be ready for the challenges with the coming retirement of the baby-boom generation – and beyond” and to “maximize flexibility for states in administering Medicaid, to enable states to experiment with innovative methods to deliver healthcare to our low-income citizens.”
“There’s no question that overhauling health care will be complicated and untidy,” Murphy said. “But whatever happens, consumers should be assured that we remain as committed as ever to providing care regardless of a patient’s ability to pay.”
Meanwhile, on the economic front, McGee said Trump’s promises of rebuilding and improving manufacturing and transportation should be good news for Connecticut. “Strengthening our manufacturing base would be very valuable,” he said, “and improving the whole tristate rail system – particularly the Metro North line, which needs dramatic improvement – is really critical to our economy.”
Gioia agreed about manufacturing and transit – “God knows Fairfield County is aware of how important that is” – and said the CBIA hopes that “we won’t see the continued rewriting of regulations every year that we had with President Obama. Whether some of those (business-related) regulations will truly be rolled back remains to be seen.”
He also warned that, while Republicans gained a majority in the U.S. Senate, “it’s not a filibuster-proof majority. For that you need 60 votes, and they’re a long way from that.” Beginning in January, the Senate will be composed of 51 Republicans, 47 Democrats, and two independents, both of whom caucus with the Democrats.
“During the first hundred days (of the Trump administration), he will be dealing with all kinds of issues,” Gioia said. “Some can be dealt with by executive order, but some regulatory efforts need to have the stamp of Congress on them.”
He warned, however, that the American electorate’s patience when it comes to instituting changes has been demonstrably thin over the past several years. “If the Republicans have not made definitive changes by the midterms (in 2018), and added significant net new jobs, they’re going to be in trouble – and I think they know that.”
On a national scale, John Traynor, executive vice president of People’s United Wealth Management in Bridgeport, said his firm has been expecting the country to experience 2.1 percent growth in 2017; should Trump and Congress spend significant money on improving the nation’s infrastructure, as was promised, “we could see even more momentum.”
He too expressed doubts, however, in the face of Trump’s apparent compromising on some of his campaign promises, such as those surrounding Obamacare. “He’s very good with the broad strokes, but when it’s time to talk details he tends to step back from the rhetoric. He’s good at getting headlines, but it seems he’s not as wedded to a lot of the policies he expressed during the campaign.”
On the negative side, Traynor said that Trump’s talk of renegotiating or “terminating” NAFTA is problematic. “The U.S. has been a leader in increasing global trade since the end of World War II,” he said, “and we should never shrink from that role. Maintaining and increasing fair trade is important, but getting rid of something like NAFTA would certainly be a step backward.”
Imposing tariffs on Mexico and China would also hurt the U.S. in the long run, he said, “That would serve to increase our debt and hurt our fiscal situation.”
Not all in the financial sector view a Trump administration with uncertainty. “The Trump presidency will clearly benefit the financial services industry,” said Michael Rave, a partner with law firm Day Pitney, whose offices include Stamford and Greenwich. “Say what you will about him, but he understands the industry and the dangers of overregulation. I am optimistic that Trump will focus on the needs of the banking community, and the Trump administration will become a partner, instead of an adversary, of the industry. I believe that his appointees will have the necessary expertise to have a positive effect.”
Meanwhile, Mamun took a cautious view about the new administration tampering with anything that could affect the economy. “The current state of the economy is good,” he said. “Unemployment is down. Our GDP is doing well, and the Fed is keeping a close eye on inflation. Raising the interest rate would cause a rise in prices, which would slow the economy down.”
Trade-wise, Mamun said, “it would be a disaster if he really takes the protectionist stand he talked about during the campaign. Renegotiating NAFTA is not a good idea. Mexico was a low-income economy when it went into effect (in 1994), but they’re in a much stronger position now.”
Mamun also expressed concern over the reported rise in racist incidents since the election. “Racism doesn’t pay – it’s not good for society as a whole,” he said. “Naming someone like Steve Bannon as chief strategist does not send good signals. And Trump’s stance on immigration isn’t encouraging. I hope he calls for harmony, ultimately.”
Those concerns are shared by Muzzafar Chishti, director of the nonpartisan Migration Policy Institute’s office in New York. “It’s always hard to say what (Trump) really means,” he said. “He started his campaign by saying that all 11.2 million illegal immigrants would be deported on day one, then recently said it would be only those with criminal records, which he put at about 3 million. We do not know where he got that 3 million figure from … it doesn’t mean it’s not true, just that it’s not supported by any facts we’re familiar with.”
Chishti said the institute estimates the illegal population with criminal records to be about 1.9 million, “which includes people with green cards.”
He added that such deportations would be in violation of due process and require hearings before an immigration judge. “This is a system that’s already clogged,” he said. “There are half a million people waiting for hearings right now. In order to remove all of them, you have to go through that process and appeals, which takes a long time. The resources simply aren’t there. To believe we have the capacity to remove that many people in a very short time doesn’t seem very likely.”
Meanwhile, the University of Connecticut has said it will continue its practice of admitting academically qualified students regardless of their residency status.
Other Connecticut business groups said they would continue to maintain their efforts at establishing a level playing field, regardless of Trump’s rhetoric.
“President-elect Trump has a lot of work ahead of him to help women entrepreneurs,” said Fran Pastore, CEO of The Women’s Business Development Council in Stamford. “In fact, women businessowners are the fastest-growing segment of the economy and need help to grow and thrive. They need policies that will help them succeed, such as more access to capital, increased federal contracting opportunities, and relief from high health care costs.”
Fairfield County’s Community Foundation in Norwalk has created an initiative, Thrive by 25, with the goal of offering all Fairfield County youth the opportunity to achieve self-sufficiency by age 25, regardless of family makeup, school district or ZIP code.
“When reflecting on the recent election we see the hope of our community through the eyes of the future, our youth,” said the nonprofit’s CEO and President Juanita James. “When young people can secure meaningful jobs that pay a living wage, our whole community thrives. We need our youth to become civically engaged, be aware of the policies that create barriers for their success.
“Thrive by 25 encourages our young people to find constructive ways to get involved with our legislators to influence policy issues that will affect their future. They need to learn how to become civic and community leaders. The response to this election has heightened our sensitivity to the potential impact of Thrive By 25,” she said.