Citigroup’s head of global government affairs expects aid to state and local governments to be among the top priorities of the next administration if former Vice President Joe Biden wins the presidential election.
Candida Wolff, who worked in the White House from 2005 to 2007 as President George W. Bush's assistant for legislative affairs, told members of the National Association of State Auditors, Comptrollers, and Treasurers that President Trump is currently the underdog in nine out of 11 battleground states.
The race, however, is expected to tighten after Labor Day and it’s unclear whether Trump will benefit from a post-convention bounce or his performance in his debates against Biden.
“I think for President Trump, he really needs the economy to show a more significant improvement,” Wolff said, describing it as a “really strong predictor” of who will win in November.
“Unless the economy shows significant improvement here in the third quarter the voters’ frames of mind tend to really get set here in the summer months,” she said.
If Biden wins the election, Wolff said there's a 60% chance the Senate will flip to a Democratic majority, including the possibility of a 50-50 split in which a Democratic vice president provides tie-breaking votes.
In that case, the former Bush administration staffer said she expects the primary focus in the first 120 days will be coronavirus and ensuring the economy is strong followed by climate change, immigration reform, infrastructure, and criminal justice reform.
Wolff listed aid to state and local government as one of the priorities a Biden administration would have for bolstering the economy.
She also expects a Biden administration would address the $10,000 limit on the federal deduction for state and local taxes in any tax legislation.
Wolff noted the Biden campaign has advocated raising the corporate tax rate to 28% from the current 21%.
“I think the question there is, you know, in an economy that's already sluggish, how quickly do you do that,” Wolff said. “You could phase them in. You could pass them but you don't have to make them effective immediately.”
Regardless of the timing, Wolff said a Biden administration would be expected to lobby Congress for an increase in corporate tax rates at some point.
“You have sort of a two-year window to get things done,” she said. “So the second of the two years is seemingly where some of this may happen but, you know, we didn't expect to have a pandemic. So, you don't really know what's going to sort of come your way.”
If Trump is re-elected, Wolff predicts “a divided Congress, making it harder as we've seen, to reach bipartisan legislative agreements.”
She thinks infrastructure and tax cuts will be priorities, including “a real push on payroll tax cuts, as well as capital gains.”
Trump would continue his focus on regulatory relief, particularly with respect to the energy sector, Wolff said.
Trump also would focus on trade deals with China, the United Kingdom, the European Union and other countries such as Brazil, she said.
“I think you'll still see a challenge to get legislation enacted in such a polarized Congress,” she said.
