Global Trend

Unlike China, France, or Japan, the United States is a great power defined by a national consensus not by shared genetics, religion or language. And it’s this unique founding principle, coupled with extraordinary natural resources, which has enabled it to become the richest, most powerful country the world has ever known.

However, since its founding, the United States has only been able to maintain the sort of unifying “national consensus” needed to optimally function for limited intervals. History demonstrates that each of these “intervals of consensus” ends in “a crisis of renewal” after just four generations. As 2021 nears its end, the United States is immersed in such a crisis.

While many so-called experts in finance, media and management seem dismayed by the current conflict, and even try to deny that it exists, the Trends editors have been anticipating and discussing this phenomenon since the early ’90s. So, today’s political strife and social turmoil come as no surprise to us.

Why does the world’s only superpower appear to be coming apart at the seams? More and more Americans recognize that the country’s “post-war” consensus based on the New Deal and refined during the 40s and 50s is inadequate for the 21st century. The best evidence is that too many citizens feel excluded from the American Dream.

In response to this emergent reality, two alternative and incompatible solutions have gained traction with the public. The Make America Great Again (or MAGA) agenda championed by Donald J. Trump and Stephen K. Bannon has clearly captured most of the attention on the right. MAGA expounds on themes of populist nationalism and traditional Judeo-Christian values.

On the left, the Green New Deal originally formulated by the Green Party and championed by Bernie Sanders and Alexandra Ocasio-Cortez (aka AOC), encompasses a similarly comprehensive program for addressing social, environmental and economic issues based primarily on socialist doctrines.

Since at least 2016, these two incompatible visions have battled for primacy as less-inspiring solutions on the right and left have become increasingly marginalized or subsumed.

From 2017 to 2020, advocates of the Make America Great Again agenda struggled to gain legislative and judicial primacy. Tax cuts, regulatory rollbacks and hard-ball foreign policy delivered positive results, at least until the COVID-19 crisis struck in early 2020. However, the comprehensive structural change envisioned by Trump, Bannon and many others, never emerged.

Since January 2021, Democrats have tenuously controlled the Executive and Legislative branches, while Republican appointees have dominated the Judiciary. Much like the MAGA stalwarts, Sanders, AOC and their ideological brethren want to quickly achieve comprehensive structural change. Consequently, the most zealous on the left have interpreted their 2020 campaign victories as ideological mandates. And for those zealots, the third and fourth quarters of 2021 represent a decisive “do-or-die juncture” for advancing the Green New Deal agenda.

For this reason, the United States stands at a great inflection point. And the Trends editors believe the next five years will prove to be the most consequential period since the American Civil War.

Consider the facts.

Since July, the administration has lost the public’s confidence with regard to ensuring prosperity as Americans face the crises delineated in trend #1 this month. In terms of consumer prices, much of the explosive rise in inflation can be readily traced back to misguided and naive policy decisions.

On the pandemic front, voters are becoming frustrated by the government’s handling of vaccine mandates and related lockdowns. In foreign policy, the Afghanistan debacle has emerged as the greatest American failure since Vietnam. In terms of personal safety, the left’s “Defund the Police” mantra and other “social justice” rhetoric has contributed to a break-down in law-and-order in many urban centers. And the reversal of Trump-era immigration policies has led to an unprecedented crisis at the southern border.

Not surprisingly, the administration’s approval numbers continue to plummet, especially among crucial independent voters.

Despite these natural consequences growing out of just nine months of apparent administrative malfeasance, progressives in Congress have embarked upon the most radical spending program in American history. And because of their razor-thin majorities in both houses of Congress, they’ve become trapped in an endless loop of negotiations over the “bipartisan infrastructure package” and the evolving Build Back Better reconciliation bill.

The result is turmoil in the White House and heated battles over every piece of legislation that is introduced. As a result, the divided House and Senate have been unable get anything done since February.

Meanwhile, the bifurcated and fragmented media only intensifies the acrimony as half the country sees one reality and the other half sees something totally different.

Investors and consumers have seen some of this before. But this time there is a difference. No matter how the Green New Deal proposals are presented they all have negative connotations when it comes to the business world.

Four years ago, investors were looking ahead to progress on earnings repatriation and tax reform that would add to the positive change that was already in place. This time around it’s the complete opposite. The war on Corporate America that ended in 2017 has been re-energized. We’re now back to looking in every direction to see where the next set of rules and regulations will come from and how much corporate earnings will be lowered rather than enhanced.

Mostly because of the Democrat’s overreach, it’s increasingly likely that Republicans will get another chance to implement their alternative agenda by mid-decade. And that’s why progressives are desperate to “fundamentally transform America,” now!

The Tea Party Revolution of 2010 derailed Obama’s poorly managed efforts to “fundamentally transform America.” Reflecting upon that experience, today’s progressives won’t quit fighting for what may be their last opportunity to define the 21st century American consensus.

Meanwhile, conservatives will work tenaciously to undermine those efforts and to lay the groundwork for delivering their own 21st century American consensus.

Given this trend, we offer the following forecasts for your consideration.

First, the fourth quarter of 2021 will prove decisive, though not conclusive, in determining the 21st century American consensus.

Historians recognize that the battles of Midway and Stalingrad made the outcome of World War II inevitable, even though the most brutal fighting happened after these battles.

Analogously, derailing the Build Back Better reconciliation bill, and perhaps the “bipartisan infrastructure package,” this quarter will undercut the momentum behind the Green New Deal agenda making its success highly unlikely; however, the war for political dominance will go on for several more years.

Already, other components of this agenda related to racial preferences, elections, immigration, criminal justice and court-packing have been legislatively side-lined or face nearly insurmountable judicial hurdles. Now, taking down one or both of the administration’s biggest initiatives will expose progressive’s long-hidden priorities and the implications of those priorities for the average voter. 

Furthermore, the desperately tone-deaf tactics recently employed by progressives and the skilled brinksmanship employed by Congressional conservatives will make it virtually impossible for the Green New Deal to be fully resuscitated in the medium term.

Second, without the need to fund the progressive wish-list, tax rates should remain largely unchanged in 2022 and 2023.

Recent stock prices have factored in higher corporate and individual tax rates. As the specter of higher taxes fades, expect stocks to rise.

Third, lawsuits spearheaded by conservative NGOs will increasingly impede executive action by the Biden administration.

Harnessing a model developed by progressives, Trump administration alumni have launched and enhanced an array of well-funded NGOs specializing in issue-based litigation. With a nominal 6-3 conservative majority on the Supreme Court and little likelihood of a shift to the left, nearly every progressive executive order is likely to face at least a preliminary legal challenge.

Fourth, barring some Black Swan event, conservative Republicans will retake Congress in 2022, putting a freeze on the Green New Deal.

With Biden’s numbers imploding, expect a nationalized “wave election” resembling 1994, 2008, and 2010. Furthermore, the 2020 Census reallocated 6 net house seats from Blue states to Red ones and Republican-majority legislatures control redistricting in all those states and many more.

Since Democrat control of the House rests on a slim five-seat majority, a transfer of House control seems preordained, even before considering the historic propensity of the party in the White House to lose 20+ seats in their first mid-term election.

On the Senate side, Democrats in Arizona and Georgia are particularly vulnerable in light of recent election law reforms in those states, while strong Republican nominees in New Hampshire and Nevada, make those states likely pickups, as well.

Meanwhile no incumbent Republican Senators should have much trouble winning reelection. Party switches after the 2022 election may also help get the party closer to a 60-vote Senate majority beginning in 2025. And open seats in Ohio and Pennsylvania seem to be the only plausible, if unlikely, Democrat Senate pickups.

Fifth, Republicans will also increase their control of state legislatures and governorships in 2022.

Current trends favor Republicans to take over governorships in Wisconsin, Kansas, Nevada, New Mexico, Pennsylvania, Maine, Michigan, and Kentucky. The winners in Virginia and Minnesota are less clear. With solid legislative majorities strengthened by 2022 elections in most of these states,

Republicans will be positioned to reenforce voter integrity protections ahead of the 2024 elections. Coupled with the Biden track record, that makes the dynamics of 2024 more similar to 2016 than to 2020.

Sixth, unlike Republicans in 2017 and Democrats in 2021, if Republicans win the Presidency and retain their Congressional and judicial majorities, they will be united and prepared to define the 21st century American consensus beginning in 2025.

For the most part, the Republican Congressmen and Senators expected to retire in 2022 and 2024 are less aligned with the MAGA agenda than their most likely Republican replacements; that will help ensure party unity when it counts.

This MAGA-dominance of the GOP will be further enhanced through grassroots efforts to take control of the Republican party from the precinct-level up; in many cases this simply means harnessing alliances that have existed since the 2010 Tea Party revolt.

And to prevent misalignment within the next Republican administration, a pro-active effort is already underway to identify and vet 4,000 appointees who are committed to the MAGA agenda and can be confirmed by the Senate on or before Inauguration Day 2025.

Seventh, the ultimate victory of the MAGA consensus will depend on acknowledging the importance of jurisdictional competition.

The post-war consensus and the Green New Deal implicitly favor a unitary Federal government forcing its will on the 50 states. The mass production revolution with its mass media and mass markets favored this one-size-fits-all model.

But since the digital paradigm emerged in the 1980s, the benefits of jurisdictional competition among states and regions have increased. Ideas that may make sense to majorities in Oregon, New York and California simply don’t make sense to majorities in Georgia, Florida and Texas.

Over time, the mobility enabled by the Internet, air travel and highways will enable sorting of the population ideologically and psycho-graphically. So, just as during Reconstruction after the Civil War, the 2020s will see America naturally gravitate to a new consensus with each state evolving to meet the needs of its own population.

This new consensus featuring a less-intrusive Federal government, respecting the 10th amendment, will enjoy widespread support across all 50 states. And,

Eighth, the success of the strategy we’ve outlined will be ensured by couching the MAGA agenda in the widely respected vocabulary of “the Reagan revolution.”

While Trump’s over-the-top rhetorical style and appeal to “economic activism” attracted a new audience, it also alienated many potential allies who didn’t fully appreciate the substance of the MAGA program. Far from being frighteningly new, the MAGA agenda simply adjusts proven supply-side priorities embraced by Ronald Reagan to reflect the geopolitical realities of the 21st century.

As such, conservatives can readily position this agenda as the best solution to today’s concerns over the pandemic, crime, and the economy. Republicans will be successful in this endeavor if they can show voters how this agenda will provide the tools to restore normalcy and bring about a bright new “morning in America.”