The electability debate

Written by Erica Salowe, Researcher

Edited by Tom Gillingham, Associate Partner

Good morning,

My beloved alma mater, the Pennsylvania State University, currently costs about $35,000 per year in out-of-state tuition fees. Combined with the additional costs of food, accommodation and books, that price tag spikes to an eye-watering $50,000 per year. Considering these figures, it’s easy to understand why so many young Americans drowning in university loans find themselves enamoured with senator Bernie Sanders’ campaign promise to cancel $1.6 trillion in student debt. That goal, combined with universal healthcare and a $15 per hour minimum wage, marks Sanders out as a candidate with the capacity for unprecedented social change in the USA. Unfortunately for Sanders and his base, Joe Biden took the lead in the Democratic primary race on Tuesday with decisive victories in Michigan, Mississippi, Missouri and Idaho. Democrats, now reasoning that Sanders has no path forward in the race, are conferring on whether the senator will drop out gracefully or if he’ll need a nudge. Is it just me, or does this feel reminiscent of 2016? As it stands, Sanders admits that the most recent results have put his campaign at a disadvantage, but he’s not going down without a fight. After a quiet night on Tuesday, Sanders announced yesterday with his usual ardour that he would stay in the race and challenge Biden with 11 policy questions in the next primary debate. I admit, I’m curious to see how Biden will fare under this intense scrutiny. I also can’t help but wonder how Sanders’ persistence will affect his staunch base, and by extension the presidential election. If Biden wins the nomination, a diehard sect of young Bernie supporters probably won’t vote for Trump out of spite; however, they may not vote at all, which could have the same effect. Although Sanders believes he is winning the generational debate, he admits he is losing on the electability front. If Sanders ultimately succumbs to the pressure to drop out after delivering hard hits to Biden on Sunday, the Vermont senator faces the challenge of departing gracefully without leaving his base feeling disenfranchised and forlorn.

News

President Trump has announced a 30 day travel suspension from some European countries to the US in an effort to contain the coronavirus. The restriction will not apply to the UK, but it will apply to the 26 countries of the border-free Schengen area. The decision goes into effect on Friday. The UK government plans to issue social distancing rules after the World Health Organisation declared the coronavirus outbreak a pandemic yesterday. Health secretary Matt Hancock will discuss a bill with Labour that places restrictions on people’s movements. (£) Italian officials have ordered all retailers except food stores and pharmacies to close. The enhanced lockdown measures come after the country’s infections rose to 12,462, an increase from 10,149 on Tuesday. (£)

Business and economy

Yesterday, Chancellor Rishi Sunak announced the UK’s biggest spending plan since Norman Lamont’s Budget in 1992. Starting with an £18 billion rise in spending, Sunak tacked on £12 billion to tackle the spread of coronavirus and support Britain’s economy during the pandemic. This will add £125 billion to the national debt over five years, driving the total to over £2 trillion in 2024-25. English nurseries are reportedly not included in the tax holiday given to small businesses to offset costs from coronavirus. Nursery workers fear they will have to shut down as they are struggling to withstand the loss of income. Prudential chief executive Mike Wells has confirmed plans for a partial listing of its American business, Jackson. Prudential reports that Jackson will issue new shares to be listed in the US, which will bring external capital to fund its growth.

Columns of note

In The Telegraph, Allister Heath praises the scale, scope and ambition of Rishi Sunak’s £30 billion spending plan for helping Britain weather the impact of coronavirus. Heath acknowledges that a Tory chancellor spending such a colossal sum indicates the UK is already in recession, but he argues that the lack of complacency and delusion shows that the government understands the gravity of this pandemic. Heath predicts that Sunak’s next intervention may be to discuss across-the-board tax cuts and direct assistance for large businesses. David Aaronovitch of The Times observes the returning trend of populist leaders across the globe finding ways to extend their tenure in office. Along with Vladimir Putin’s recent moves to remain president of Russia until 2036, Aaronovitch cites similar monopolisations of power occurring in Turkey, China, and Zimbabwe. However, he points out a bit of western hypocrisy; if members of US Congress are re-elected, then they are allowed to hold their positions for life as well. Overall, he argues that establishing and enforcing term limits is necessary to ensure safeguards for a democracy.

Source: Petar Pismestrovic

Markets

What happened yesterday?

With roughly 118,000 coronavirus cases spanning 114 countries and causing 4,291 deaths, the World Health Organisation officially declared the coronavirus outbreak a pandemic. After the announcement, the S&P 500 fell 4.9%, just short of bear market territory. The blue-chip Dow Jones Industrial Average dropped 5.9%, entering a bear market after an 11-year bull run. Boeing may have contributed significantly to the Dow’s plunge, losing nearly a fifth of its market value after drawing on the full amount of its $13.8 billion loan facility. Europe’s Stoxx 600 ended the day down 0.9%. In Asian markets, Tokyo’s equities benchmark Topix dipped 1.5%, China’s CSI 300 lost 1.3%, and Hong Kong’s Hang Seng fell 0.6%. Despite the Bank of England slashing its main interest rate by half a percentage point to manage the impact of coronavirus, the FTSE 100 ended the day down 1.4% at 5876.52. The FTSE 250 lost 1.18%, closing at 17339.23. Brent crude ended down 3.8% to $35.79 per barrel. Despite this fall, Saudi Aramco reported an increase in crude production capacity, indicating an escalation of the oil price war.

What's happening today?

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Interims

Brooks

Galliford Try Go-Ahead

AGMs Benchmark Hlds Blackrock I&g

UK economic announcements (00:01) RICS Housing Market Survey Int. economic announcements (10:00) Industrial Production (EU) (12:30) Continuing Claims (US) (12:30) Initial Jobless Claims (US) (12:30) Producer Price Index (US) (12:45) ECB Interest Rate (EU)

Did you know?

Research has shown people who are raised in warmer climates tend to be friendlier than those brought up in places with cold, harsh temperatures.

Parliamentary highlights

House of Commons Oral questions Transport (including Topical Questions) Business Statement Business Questions to the Leader of the House - Mr Jacob Rees-Mogg Financial Statement Continuation of the Budget Debate Adjournment Support for community housing - Mr Richard Bacon House of Lords Oral questions Results of the general election held in the Republic of Ireland - Lord Robathan Eradication of Japanese Knotweed - Lord Greaves Arrangements for COP26 - Lord Foulkes of Cumnock Restoration and renewal of Parliament - Lord Hunt of Kings Heath Debate Case for the government to use wellbeing as a key indicator of national performance when setting budgets, deciding policy priorities and reviewing the effectiveness of policy goals - Baroness Tyler of Enfield Short debate Reviewing and strengthening the Ministerial Code - Lord Tyler Debate Investing in, and embracing a green economy that promotes resource efficiency and zero carbon usage - Baroness Parminter Scottish Parliament General questions First Minister’s questions Member’s business S5M-20766 Jamie Halcro Johnston: Scottish Apprenticeship Week 2020 Ministerial statement Novel coronavirus COVID-19 update Portfolio questions Stage 1 Debate Animals and Wildlife (Penalties, Protections and Powers) (Scotland) Bill Business Motions