Getting the Big Ideas Right | September 30, 2020

Vice President Biden is leading the race with electoral college predictions, but President Trump is not far behind. The University of Virginia’s Larry Sabato tracks the road to 270 electoral college votes in order to secure the White House. Below are Sabato’s predictions as September 21, 2020:

Electoral Votes: The Race to 270

Biden: 269 | Trump: 203 | Toss-Up: 66

Battleground States

Florida (29 Electoral Votes) | North Carolina (15 Electoral Votes) | Arizona (11 Electoral Votes) | Wisconsin (10 Electoral Votes)

Competitive: Leans Blue

Pennsylvania (20 Electoral Votes) | Michigan (16 Electoral Votes) | Minnesota (10 Electoral Votes) | Nevada (6 Electoral Votes) | New Hampshire (4 Electoral Votes)

Competitive: Leans Red

Texas (38 Electoral Votes) | Ohio (18 Electoral Votes) | Georgia (16 Electoral Votes) | Iowa (6 Electoral Votes)

The Associated Press has published a report with the University of Chicago which demonstrates a return to economic confidences by Americans in the U.S. economy. The survey concluded that 40% feel the economy is in a good place, while 60% feel the economy is in a poor place. Noting that the numbers are negative overall on the economy, this AP and the University of Chicago survey found that this is “significantly better than low points in April and May” of this year.

The Wall Street Journal explores the reality that even amidst a recession, public companies are being funded at dot-com era levels.

On September 26, 2020, the President announced his intent to nominate Judge Amy Coney Barrett to the Supreme Court of the United States to serve as an Associate Justice. Judge Barrett has served as a judge on the United States Court of Appeals for the 7^th Circuit since 2017 and prior to that served as a professor at Notre Dame Law School.  Senate Judiciary Committee Chairman Lindsey Graham has announced the confirmation process to consider Judge Barrett’s nomination will begin on October 12, 2020.

The Senate is scheduled to vote on a House-passed funding measure to keep the government open through December 11, 2020. Key features of the bill include:

– Expanded guidance to the Small Business Administration to process SBA disaster loans, 7(a) business loans, and for the Small Business Investment Company Program

– Expanded authority for the Government National Mortgage Association

– Low-income household relief

– Expanded farm assistance

– Medicare, Medicaid, and Veterans Administration extensions

– Extends the Highway Trust Fund through October 1, 2021 with a transfer of $13.6 billion

– $14 billion to the Airport and Airway Trust Fund

– FEMA Disaster Relief Fund with an additional $17.4 billion

– National Flood Insurance Program funding through September 30, 2021

– FY2021 reforms to the Cybersecurity and Infrastructure Security Agency

– Pentagon funding at current levels and authorizes the Navy procurement of the first two Columbia class submarines

The Federal Reserve has signaled that a next-round of economic relief is needed to respond to downward pressures on the American economy.  Whether Congress and the White House can negotiate a Phase Four relief package before the election remains to be seen. The House Speaker has indicated she may put a bill on the floor in the coming days. The $2.4 trillion proposal has many provisions that will provide support to the travel industry, restaurants, airlines, and small businesses. On September 30th, the CARES Act support for airline payroll and other key provisions expire. House minority leadership has identified $138 billion in unused funds in the Paycheck Protection Program (PPP) that they would like to see rolled into an immediate extension of the program.  The House passed a $3.5 trillion package in May which was rejected by the Senate and the White House.

Hotel industry relief has been a focus for the White House this past week. Chip Rogers, CEO of the Hotel & Lodging Association, has had one-on-one talks with the White House Chief of Staff making the case for aid.  The Secretary of Commerce and Ivanka Trump then met with Rogers for a round of talks specifically focused on hotel and travel industry relief.  The bipartisan model for any specialized hotel relief might match this legislation proposed by Congressman Earl Blumenauer, which calls for $120 billion to stabilize the independent restaurant industry. 8.3 million workers held jobs in the hotel industry before the Coronavirus. Rogers has warned that most hotels have lost at least 50% of their workforce because of the economic impact of the Coronavirus and that 74% of those workers could permanently lose their job unless the federal government provides stabilization to the industry.

Although the hospitality and travel industry have been hit hard by the pandemic, alongside nearly all sectors of the economy, Hotel Equities’ management team has shown immense resiliency and agility in the face of a difficult challenge. The current state of the hospitality market also provides opportunities for acquisitions to fuel growth. Virtua Partners and Hotel Equities continue to seek out these opportunities while providing top-tier management and operations services to existing properties.

In remarks to the United Nations this past week, the President announced that 3 vaccines are in the final stages of clinical trials. Each vaccine is being mass produced now to ensure that they can be distributed with availability and reliability to the public market. The New York Times has a good piece on understanding the multi-year timing, protocols, processes of how a vaccine gets approved and where each efforts to reach a vaccine has progressed.

The BBC has produced a thought piece on the lessons of 1976, when the world administered mass vaccines for the Swine Flu.

Arizona’s economy added 80,000 jobs in August bringing unemployment down to 5.9% from 10.7% in July. Arizona’s economy is the 6th in the nation with the 4th highest 5-year-straight growth trend. Earlier this year, Taiwan Semiconductor Manufacturing Co. (TSMC) announced that it would be building a $12 billion semiconductor factory in Arizona beginning in 2021. The semiconductor investment announced in Arizona has made the economy a hot market for technology and manufacturing.

On September 22, the IRS published guidance to lenders that Paycheck Protection Program (PPP) on how to report the forgiveness.

The IRS has produced a qualifying guidance portal on home office  tax deductions. The guidance indicates that a taxpayer must use part of their home for one of the below:

– Exclusively and regularly as a principal place of business for a trade or business

– Exclusively and regularly as a place where patients, clients or customers are met in the normal course of a trade or business

– As a separate structure that’s not attached to a home that is used exclusively and regularly in connection with a trade or business

– On a regular basis for storage of inventory or product samples used in a trade or business of selling products at retail or wholesale

– For rental use

– As a daycare facility

For taxpayers who depreciated qualified property acquired and placed in service after September 2, 2017, the IRS has published final bonus depreciation regulations.

For an interesting heat map on where wealth moves in the United States, here is a state-by-state resource using IRS data to determine “wealth gained” and “wealth lost” attributing the transfers to pro-economic growth state policies on a 50 state competitive basis.   Harvard economist Raj Chetty, the man who the American Economic Association says is “arguably the best microeconomist of his generation” examines a widening wealth gap, how the Coronavirus has disproportionately impacted low-wage earners, and where wealth has transferred state-to-state.

The Congressional Budget Office published its budget outlook to 2050 for American federal deficits, debt, spending, and revenues.

As of June 2020, China’s banking system held $44 trillion in assets, representing 1/3 of global GDP.  As U.S. financial services firms open new trading relations with Chinese capital markets, the following report from the Center for Strategic and International Studies examines stability and risk in this new era of capital integration and leverage. Here is a video of the authors answering questions on their research.

The United States Navy has passed through the Taiwan Strait at least 10 times since January 2020. The United States and Taiwan are reaching towards a bilateral trade deal.  Earlier this month, Undersecretary of State Keith Krach became the highest American diplomat to engage a delegation in modern times. The visit was met with incursions of air space and shows of Naval force by China through military exercises off Taiwan’s coast.  Taiwan matters as a foreign policy issue in large part of its territorial proximity to China and as a symbol of governance and freedom. The United States has authorized the sale of $7 billion in coastal defense capabilities to Taiwan in the near future. (source material)

The American-led peace plan for economic normalization in the Balkans can be seen in a great power context when examining Huawei’s digital infrastructure and surveillance cameras across Serbia’s capital and largest city, Belgrade—and what that means for the future of the region’s political and economic interests. Over 900 Chinese state owned enterprises are poised to gain access to Serbian markets, as part of China’s broader Belt Road Initiative.

The MIT Technology Review discusses the difficulties facing tech companies in the conflict between of western free markets and the “outsized influence” of Chinese technology platforms.

At the height of the Cold War in 1960, the Dartmouth Conference held its first conference between citizens of the United States and Soviet Union. Philip Stewart, senior associate at the Kettering Foundation, has participated in nearly all of the 148 sessions that have taken place to date.  He is out with a new book: Breaking Barriers in United States-Russian Relations: The Power and Promise of Citizen Diplomacy.

This week in history—in 1789, the First Federal Congress of the United States introduced the first 12 amendments to the Constitution. On December 15, 1791 these 12 amendments were ratified by three-fourths of the state legislatures. The first ten amendments constitute the Bill of Rights.

Historian Jon Meacham once said that the most important sentence written in the English language was that “all men are created equal.”  In that, every generation redefines the ideal of what freedom and equality means.  In 1996, historian Joseph Ellis wrote American Sphinx: The Character of Thomas Jefferson redefining the scholarship on how we think about and “hold these truths.”  Up to that point, the major scholarship on Jefferson had been Dumas Malone’s six volume work paired with Merrill Peterson’s biography which found Jefferson “impenetrable.”  Joseph Ellis found a way to conceptualize the duality of Jefferson by bringing the greatest contrasts and contradictions of his life to the forefront of understanding.  This past week, Ellis joined historian Clay Jenkinson for a conversation on how America’s moral purpose continues to evolve.

A podcast that deeply moved me this week was from historian Jon Meacham’s new series It Was Said. “Let us set the scene,” Meacham orates, “to the center of the great domestic drama of the American century.”  In his first five episodes, he takes his listeners to the soul of America: From the Lincoln Memorial with Dr. Martin Luther King, where the Jefferson Memorial stood to King’s right, and President John F. Kennedy listened live from the White House to his left.  Then, Meacham returns to the night that Dr. King was assassinated, and we experience the moment with Robert F. Kennedy.  Then, the story builds on the possibility of a unified America. In a tribute to the language of hope by Senator John McCain and President Ronald Reagan, listeners hear a common ideal and belief in an exceptional nation.  As we strive to be a more perfect union, Meacham has brought a great poetry to the legacies our most modern apostles of freedom.

At 10 a.m. on days in which the Supreme Court of the United States is in session, the Chief Justice and the Associate Justices enter the courtroom and all those in the courtroom rise and remain standing until the Marshal of the Court reads the traditional chant. The tradition of the call of Oyez dates back to when Anglo-Norman was the language of the English Courts and the word for “Hear Ye” survives.

“The Honorable, the Chief Justice and the Associate Justices of the Supreme Court of the United States. Oyez! Oyez! Oyez! All persons having business before the Honorable, the Supreme Court of the United States, are admonished to draw near and give their attention, for the Court is now sitting. God save the United States and this Honorable Court!”

Nearly every morning, I listen to Garrison Keillor’s Writers Almanac.  He has a wonderful passage this past week, on September 22, 2020, that I wanted to share with you here:

Today marks the autumnal equinox in the Northern Hemisphere, the first day of fall and the point in which the Sun is directly above the equator and the hours of day and night are nearly equal. It occurs at precisely 9:31 a.m., Eastern Daylight Time. In the Southern Hemisphere, today marks the vernal equinox, the first day of spring.

As poet Sarah Morgan Bryan Piatt wrote:

“It is the summer’s great last heat, It is the fall’s first chill: they meet.”

Oliver Schwab is executive vice president of government affairs at Virtua Partners. Oliver supports and provides strategic guidance to the Virtua team, investors and owners with an active voice, shaping and understanding government policy.

In additional to Oliver’s work with Virtua, he leads a family office that he co-founded. Oliver is also trustee and treasurer of a private foundation. He served as a chief of staff in the United States Congress from 2011-2018. Oliver has experience as a principal in tax, trade, financial services and national security policy. He continues to support public diplomacy as a national security scholar.

Oliver is a visiting lecturer at the European Business School in Germany and the University of Warsaw in Poland. He is also a graduate student in strategic studies at the United States Naval War College, China scholar at the Center for Strategic and International Studies, and has been a fellow at the Woodrow Wilson Center for International Scholars and the Council on Foreign Relations. Oliver focuses his research on the relationship between policy, strategy and decision making. He and his wife Ana are the incoming cabinet co-chairs at the Thomas Jefferson Foundation.

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