Hey, Readers.
I might say outrageous things in CrunchedCredit and sometimes I’m rather hoping for someone to tell me I’m wrong and full of …, well, you know. I do try to tease out thoughts not thunk and sometimes I’m intentionally daring you, my reader, to tell me that those things never have been thunk for a reason. Please drop me a note and tell me what you think when you are excited, or annoyed (or both). I’d love to hear from you. Perhaps in a follow-on piece I’ll include both my thoughts and your response (anonymous, if desired). Certainly, you can email or phone me at Jackstay Ventures or just give me a call on my personal cellphone (215-833-1024).
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Democrats have taken the House and the Senate. They didn’t just take it; they took it like Rome did Carthage. That’s a result that shouldn’t have shocked anyone, even if the Republican establishment was pretending otherwise. It’s tough to do so many things wrong that affect the folks’ pocketbooks and still get elected. (How about those polls though? They got it right this time. The only people happier than the leadership of the Democratic party are the pollsters whose business was on the ballot along with all these candidates. I guess we’ll have to keep listening to them in 2028.)
I’m no longer sure that the majoritarian wing of either party really likes business much as populism continues to creep (march?) into both parties. I try to not even think about the ideological righteous and cabalistic left and right wings of the parties who seem to have an atavistic loathing for business, perhaps hoping that they will be largely irrelevant for the next two years. I note in passing that the folks who are the most rabidly wing-ish, both left and right, are elected by districts that would have elected a three-day dead carp with the right ideological profile, so a Profile in Courage, this is not.
While those who, in a largely fact-free, way continue to call themselves Republicans, give lip service to things like free markets, small government, pro-growth agenda and individual achievement, they didn’t govern as if they really meant it. (Corporate cronyism and other legally-adjacent behavior which has been rampant of late does not count.) The Democrats, on the other hand, don’t even pretend, as soon-to-be-Speaker Jeffries said the other day, “Capitalism is broken.” So, on balance, I’m guessing that this sojourn with a Democrat majority in the House and Senate will be an even less amiable experience for business than the last two years under a Republican Congressional majority. At the very least, it’s hard to imagine that these new majorities will spend any time worrying about the concerns of the commercial real estate finance market.
But needs must. The Democrats are in charge and hug them we will. We will engage, we will attempt to educate, we will try to build relationships with the majority. (It’s not like we’ve been ignoring the Dems, I certainly know we haven’t, having some insight into the allocation of PAC dollars by industry participants, but now, we will double down.)
It’s often said business does well when government does little, so perhaps I should embrace with contentment, if not enthusiasm, two years of gridlock. An endless impeach-arama of Mr. Trump and his minions with a counter-reformation type orgy of retribution supplemented, on occasion, by the passage of performative-type legislation, designed not to become law but to gin up enthusiasm for the party’s most activist wings. How bad can it be? With the House and Senate comfortably in Democratic hands, we will get a double barrel blast of virtue signaling, Trump-thumping and investigations of all the Democrats’ popular shibboleths: bankers, hedge fund owners, private equity, entrepreneurs, big tech, etc., etc. (you know, the successful people).
This could absorb most of the free time and energy of the people’s House and Senate. If this is all they do, we will indeed find out whether a government that does less is actually good for our business.
Good for business? Well, that’s received wisdom, but I don’t think it’s true. Business does best when it has a government that is productively engaged in addressing the issues that are important to success of the economy and the country as a whole and while, “what’s good for business is good for the country” might be a bit past its sell-by date, it’s not without some instructive qualities. The dithering in retribution-land will mean that important issues for business and the country simply are not going to get the attention they deserve.
The Democrats have actually not said that much of what they plan to do, except for all the retribution stuff and a bit of performative bill passage for their increasingly large and noisy left wing, but, with a continued divided government (and even if we lose the filibuster, which I promise you both parties will sequentially regret over the next several decades) they really can’t do that much, at least in terms of actual legislation. But don’t dismiss the importance to business of continuous and aggressive hostile legislative oversight. Subpoenas everywhere, klieg lights, never-ending hearings, threats of indictment and endless stream of rhetorical questions designed to embarrass and only provide soundbites to the majority which will be amplified by their friends in the left-leaning press. The chilling impact of all this on business and on business animal spirits will be real, will be material and it will be a problem.
Let’s talk vetoes. Mr. Trump is now pledging to be the King of Vetoes (he really does like that “king” thing, doesn’t he?) but hang on here, this President is not actually a Republican. We should think about what he might do while chasing his legacy, which seems to be very much on his mind these days. Might he make common cause with an activist Democratic majority on populist issues that have caught his attention as well as theirs? Often, there is precious little distance between a progressive on the right and a progressive on the left. Might Mr. Trump become enamored of some of the Democrats’ ideas and decide that he wants to own and support them? Expanded healthcare comes to mind as does caps on credit card interest rates, an end of carried interest, an end to accelerated depreciation for at least some disfavored industries like AI, higher taxes on those annoying billionaires (except he and his family, of course) and God knows what else.
Don’t rely on the fact that Mr. Trump holds a veto pen as a brake on the Democratics’ majority agenda this time around.
On the bright side, is it possible that these two august political parties will actually get together for a bit of bipartisanship and do at least some things that are good for the country? Perhaps unlikely, but not impossible. While bipartisanship is a dirty word amongst the rabidly left and right, the majoritarian centers are not entirely closed to the possibility. As the Democrats’ majority is extremely large, leadership might be able to essentially roll that minority and try to build bridges with the center of the Republican party and create majorities for doing things of consequence. Certainly, because they have to, they’ll get budgets and appropriations done, but the question of whether they’ll do anything beyond that that would be viewed by the country at large as good governance is an open question. Could they lock arms together, take mutual responsibility for things that are really hard, like Social Security and welfare entitlement and the like? Unlikely, but then again, an optimistic could hope.
Finally, what about the next 50+ days? Is it possible that the Republicans might try to do something during the lame duck session to upset the Democrats’ apple cart? They surely would love to do so, but all the choices carry a significant amount of risk. What happens if the Republicans decide to kick the filibuster to the side of the road in expectation that the Democrats will do it early next year? What might they do with control of the House and Senate for the better part of the last two months of the year (during which there are very few real legislative days unless Speaker Johnson and Leader Thume decide to drag their pouty and largely turfed-out caucuses back into Washington for a serious session of legislation)? Might we see a Supreme Court Justice resign and a new, younger and more robust appointee from the right in his place? Possible, but difficult. The Republicans would like to see a bunch of judicial appointments, but that process eats legislative days by itself is problematic if they want to do anything else. How about a real Hail Mary? Would it be possible for the Republicans to create a legislative filibuster to take the place of Senate rules and procedures? (I know it’s a silly idea, but it’s interesting, isn’t it?) All is possible as the reality of a looming and overwhelming Democratic majority might focus the mind most wonderfully and cause the Republicans to do…something.
For the political junky with the right mindset and strong mental health (or good drugs), this will be entertaining. But seriously, we need to embrace that hug thing. We need to press engagement. We need to educate. We need to work hard to build bridges with a new Democratic majorities and their leadership and try to find consensus around things that are good for business and good for the country. We should at least consider that most of what we might see early on will be performative and not really intended to make radical changes in the legal environment. Take a breath and take comfort that it’s probably more noise than a real threat.
Don’t lose your mojo (even if you’re forced to testify…it won’t seem all that bad in a couple of days to reflect, medicate and to heal). There will be opportunities to do good business. There will be opportunities to make money and to grow your franchises. The good news for commercial real estate is, like Michael Jordan said about his sneakers, there’s as many Democrats invested in commercial real estate as Republicans. They won’t defenestrate the golden goose at the end of the day. Net/net therefore, I don’t think it’s going to be a terrible two years for business. That’s my story and I’m sticking with it… at least for a while.