Weekly Review – November 12, 2020

Published on November 12, 2020 / Leer en español

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CNE’s Post-Election Outlook
from San Juan / D.C. / Madrid


Dear Readers:

The returns from last week’s elections generated some surprises­–both in the United States and in Puerto Rico.

In the U.S., Trump managed to obtain 70 million votes for President, the Republican Party kept control of the Senate and reduced the Democrats’ lead in the House. For all its strength, though, this is the seventh of the last eight elections in which the Republicans fail to win the popular vote.

The Democrats, for their part, managed to eke out a close win for Joseph Biden and Kamala Harris, the first woman and the first African American and Asian woman ever to be elected vice president. The closeness of the results and the failure to win a majority in the Senate will probably lead to significant infighting between the centrist/incrementalist liberal wing of the party and its more progressive left-leaning groups. But this is not new, these two factions have been fighting each other ever since the 1968 election.

In our view, the results in the U.S. point to an electorate in flux. The Republicans are relying on a shrinking demographic group to deliver them wins in the Electoral College; while the Democrats have been able to scrape nationwide majorities but have proven unable to form a stable, geographically-dispersed, coalition to win the Electoral College on a consistent basis. Right now, demographic trends appear to favor the Democrats as Millennial and Generation Z voters, who tend to be more liberal on both social and economic issues, start to throw their weight around; while rural, non-college-educated whites are the only demographic cohort whose life expectancy has decreased during the last five years. Demographic trends, though, take time to play out, so it may take two more presidential electoral cycles before we can figure how these trends settle down for good.

In Puerto Rico, although thousands of votes have yet to be counted, each of the traditionally-dominant political parties obtained about a third of the votes for governor; while the other third was divided among the Puerto Rico Independence Party and two new political parties, the Movimiento Victoria Ciudadana, and Proyecto Dignidad. The emerging parties also managed to win several seats in both the Puerto Rico House and Senate and, as of this writing, it is not clear that any single party would command a majority in either chamber. This means the elected and certified governor will be forced to negotiate with his political opposition to obtain support for his agenda, perhaps on a bill by bill basis.

Given all that is going on, we are dedicating this entire issue to present our first take on the election results. First, we reintroduce the idea of negotiating a social pact for Puerto Rico, in light of the current fluid political environment and the critical economic situation. Then, Rosanna Torres, Director of our office in Washington, provides a first look at the new political dynamics in DC. We close with a piece by Jennifer Wolff, from CNE’s bureau in Madrid, who writes about some of the international implications of the U.S. election.

Sergio M. Marxuach, Editor-in-Chief

Insights + Analysis from CNE

A Social Pact for Puerto Rico

By Sergio M. Marxuach, Policy Director

The recent election in Puerto Rico was surprising in several ways, as new political movements and parties obtained significant support and managed to win several seats in the island’s House and Senate, breaking with fifty years of bipartisan government. In addition, the Puerto Rico Independence Party (“PIP”) reported its best election results since 1956.

The emergence of new parties and political movements, the strengthening of the PIP, the weakening of traditional bipartisanship, and the reduction in voter turnout are signs of deep dissatisfaction with the established order. In the 2000 elections, 2,012,135 people voted for three gubernatorial candidates, while ten days ago it is estimated that 1,235,521 people voted, a reduction of 776,614 voters, or 38.6%, even though the electoral offer doubled to six gubernatorial candidates. This reduction is due, in part, to frustration with the traditional political process and in part to the increase in emigration that we have experienced during the last decade or so, the thousands who, as they say in the United States, have already “voted with their feet.”

Pedro Pierluisi of the New Progressive Party (“NPP”) is expected to be the next governor, as he obtained a plurality of approximately 33% of the vote, and Jenniffer Gonzalez will continue as Resident Commissioner in Washington, D.C. However, the Popular Democratic Party is expected to control the legislative assembly with a minimum majority in both houses. The inevitable conclusion is that the island is deeply divided. We are the country of the 30-something percent. No single political party or movement commands the support of a clear majority of the population. Under these conditions of political deadlock, unless exceptional political leadership arises, no party or political faction will be able to impose unilateral solutions to our problems.

At the same time, the government agenda is full of complicated issues, such as the debt restructuring, the post-Maria reconstruction, and managing the COVID-19 pandemic; which are layered over the long and familiar list of a declining population; anemic economic growth; high levels of unemployment, poverty, and social inequality; a bankrupt pension system; high crime rates; a Dickensian public health system; and a poor public education system.

But There is Hope

At first light, this combination of a weak and divided leadership and highly complex policy issues could seem like a truly dismal scenario. However, recently published studies on the processes of social bargaining (“concertación social”) that took place in Europe during the 1990s provide us with some hope.

Social bargaining is a process of negotiation between the government and representatives of various social groups, usually labor unions and business organizations. The objective of this negotiation process is to reach a formal agreement, known as a social pact, regarding public policy matters such as labor laws, pension reform, levels of public and private investment, taxes, and other social welfare policies with a view to minimizing inequality and social exclusion. This definition excludes purely ceremonial or symbolic agreements. We are not talking about achieving “consensus” around the lowest common denominator, nor about agreeing to miss universe-type platitudes in favor of children, supporting world peace, or admiring the Pope.

One of the most interesting findings that arises from a comparative analysis of these processes in various European countries is that the probability for social bargaining to occur is higher in countries where (1) the burden of the economic problems (the “economic problem load”) is high and (2) the current government is weak in electoral terms.

The explanation for that conjunction is simple. All governments that face difficult economic problems, such as chronic deficits, unsustainable public indebtedness, high inflation, or unemployment in excess of 10%, are eventually forced to implement significant reforms. However, governments with strong electoral majorities tend to favor the implementation of unilateral solutions since they perceive that they do not need allies to succeed, while electorally weak or unstable governments, by definition, cannot impose unilateral solutions and are forced to seek the support of other social actors outside their natural political base.

The Situation in Puerto Rico

In Puerto Rico it is obvious we face a heavy economic problem load and that the incoming government is weak in electoral terms. However, the existence of these two conditions, by themselves, is not enough to jumpstart a social bargaining process. It is also necessary to take affirmative action in good faith to start the process, and it is here we may face some obstacles.

We do not have experience with this type of process and the chances of success, that is, of achieving a social pact, are low, since all participants have to be willing to make short-term sacrifices to obtain benefits in the medium and long term. On the other hand, it is clear that what we have done so far to get out of the crisis has not worked. It is imperative to try something new. A social pact would also present the Fiscal Oversight and Management Board with a set of policies that would define the limits of what reforms are politically feasible in the near future.

The combination of economic insecurity, social inequality, and weak governance that currently prevails in Puerto Rico would be explosive in any other country. The events that occurred during the Arab Spring a few years ago are a good example of what has happened in other societies. In Puerto Rico, we still have time to avoid that scenario. It is time for our government, business, and labor leaders to fulfill their political, moral, and intellectual responsibility to the country. The time for social bargaining is at hand.

(In)decision 2020

By Rosanna Torres – Director, Washington D.C. Office

Last week the anticipation of discerning the final outcome of the 2020 U.S. elections was quite the emotional rollercoaster.  It kept everyone alike – from political junkies and policy wonks to folks usually shielded from political dynamics – glued to their screens, monitoring every batch of votes coming in and slowly shifting the leads for both presidential candidates.  It wasn’t until early Friday morning – after President Trump’s diatribe against the voting process – that former Vice President Joe Biden inched towards a presidential victory. On Saturday morning the streets in an unseasonably warm D.C. flooded with pro-Biden supporters after the Associated Press called in Pennsylvania’s 20 electoral votes in favor of Biden.  Legal challenges to the voting process and ballot recounts are sure to follow in the coming weeks.  After all, that is the typical outcome of defeat by narrow margins in any election, certainly so in such a consequential presidential race.

While we now know who will ultimately occupy the White House in January, the full picture of how the next four years will play out is far from certain.  Notably, the composition of the 117th Congress is still up in the air. The Democrats lost various seats to Republican challengers but still managed to keep control of the House. Yet the disappointment of not being able to garner a “blue wave” will call into question the ability of House Speaker Nancy Pelosi to corral the party caucus and retain the gavel. With 49 new freshman members coming to the House of Representatives, she is already campaigning for the seat.

As far as congressional committees go, Appropriations Chairwoman Nita Lowey is retiring this year opening up a vacancy in one of the most powerful committees of the House. Three women are vying succession: Energy and Water Development Appropriations subcommittee Chairwoman Marcy Kaptur from Ohio; Labor, Health and Human Services and Education Appropriations subcommittee Chairwoman Rosa DeLauro from Connecticut; and Military Construction-Veterans Affairs Appropriations subcommittee Chairwoman Debbie Wasserman Schultz from Florida.

The Committee on Foreign Relations, whose chairman Eliot Engel from New York lost a primary to anti-establishment member Jamaal Bowman, will also look for a new chair come January. Those looking to fill his shoes include Brad Sherman from California, Gregory Meeks from New York, and Joaquin Castro from Texas. Another position up for grabs is the Agriculture Committee chairmanship after representative Collin Peterson from Minnesota was defeated by the Republican Michelle Fischbach. Possible contenders include David Scott from Georgia, Jim Costa from California, and Marcia Fudge from Ohio. Still, committee assignments are all in flux, especially if the new President-elect taps any of these members to serve as Ambassador or as part of his Cabinet.

The Senate’s reconfiguration is also uncertain with six new Senators and two potential runoff elections in January. Until the Senate is called for either party, it is unclear how the balance of power will shift. If Republicans retain control, it will certainly outline how they intend to wield their power of the upper chamber when discussions on a long-awaited second relief package to address the economic fallout of the pandemic get underway (again).  The same holds true for the Senate confirmation process for nominees of the cabinet for the Biden-Harris Administration.

While voter turnout for the 2020 elections was at an all-time historic high (and it’s a fair reason to celebrate the power of the vote), it is hard to glean absolute truths from 2020 electoral maps; instead, it sheds light on the stark division in the U.S. when it comes to economic, social and cultural viewpoints.  In the likely event that Mitch McConnell retains control of the Senate, that sentiment will play out in the form of a divided government.  The work to bridge the divides of the “United” States of America has just begun.

Until then, the lame duck Congress has to find the energy to work together and pass a bill to fund government operations past December 11, when current spending authority is set to expire.

Puerto Rico, the U.S., and the International Community: What Can We Expect After Four Years of President Trump?

By Jennifer Wolff, Ph.D., Director – CNE Policy Bureau, Madrid

Watch Jennifer Wolff’s conversation with Carlota García Encina (in Spanish)

Puerto Rico is claiming attention from the U.S. at a moment in which the Caribbean and Latin America have ceased to be part of the strategic priorities of the U.S. At the same time, Latinos in the U.S. have become increasingly important to the U.S.’ electoral process. For Puerto Rico, this means that the island will need to promote its agenda as part of a broad domestic reform program embraced by the Democratic Party in Washington D.C.  This is one of the conclusions drawn on the U.S. election by Carlota García Encina, chief researcher on Transatlantic Relations at Real Instituto Elcano, a strategic and international affairs think-tank based in Madrid.

CNE talked to García Encina in Madrid about what can be expected from a Biden administration in foreign affairs and these are some of the clues she spelled out for us:

  • A Biden presidency will bring the U.S. back to the spaces of international cooperation in matters such as the COVID-19 pandemic, climate change, and international trade. The international community receives the U.S.’s return with relief after President Trump’s ruptures with the World Health Organization, the Paris Agreement, and the World Trade Organization. The U.S. leadership will be important in generating global responses to global problems. Nevertheless, the tensions generated by Trump’s presidency will force a Biden administration to invest time and energy in rebuilding the trust of the international community.
  • The world to which the U.S. now returns to is vastly different and will require new cooperation mechanisms: there are new players in the international field and more complex challenges, such as the rise of populist movements throughout the world, the threat of technological disruptions, and migratory flows.
  • The geostrategic competition between China and the U.S. will dominate the international agenda in many ways. A Biden administration will seek to reestablish links with traditional allies of the U.S. such as Europe and will seek to implement its international agenda through multilateral organizations. For example, the U.S. will probably rely on the North Atlantic Treaty Organization to police the frontiers of Eastern Europe vis a vis Russia. And will probably rely on the World Trade Organization to compel China to follow international trade norms and agreements.
  • This means we should not expect a return to a militaristic U.S., particularly because the American public is no longer willing to assume the costs of such an international presence.
  • The U.S.’s actions regarding international commerce will also be conditioned by a strong domestic economic agenda and the “Buy American” / “Build Back Better” platforms on which Biden campaigned.
  • Latin America and the Caribbean have ceased to be a priority in the U.S.’ foreign policy agenda. The U.S. has no integrated plan for any of the regions, where China and Europe have gained weight as regional partners in the past years. Latin America and the Caribbean may spark some interest from the U.S. if at some point the U.S. becomes interested in neutralizing China in both regions, which have been within the traditional sphere of influence of the U.S.
  • Puerto Rico’s success in pushing its agenda in Washington will depend to a certain extent on the balance of power in the U.S. Senate. The island could benefit from any agenda of political reforms pushed by the Democratic Party. Puerto Rico and the Puerto Rican diaspora in the U.S. came to the fore in Europe as part of media coverage on the importance of the Latino vote in the U.S. election.