2016 US Presidential & Congressional Elections – Initial Analysis

United States Presidential Election

After one of the most controversial elections in American history, Donald Trump has been elected as the 45th President of the United States. In the early morning hours of November 9th, Trump secured 279 electoral college votes over Hillary Clinton’s 228 electoral college votes.  270 votes are needed to secure the Presidency.  Three states – New Hampshire, Michigan and Arizona – remain too close to call for either candidate.  However, the results of these states will not change the outcome of the election. 

By all accounts, Trump’s victory will go down as one of the most stunning upsets in American history.  Trump never held office before and defied all polls and political pundits after a divisive campaign against Secretary Clinton and the Republican establishment. 

Trump’s election ramifications were significant. Republicans minimized losses in the House and retained outright control of the Senate (even though they are not close to the 60 seats necessary to overcome a filibuster).  As a result, Republicans will control the White House and both chambers of Congress in 2017.

Trump and his position on key issues

Trump recently stated that the U.S. and India would be “best friends” if he was elected, and “there won’t be any relationship more important to us.”  With that in mind, it will be important to see if Trump’s campaign rhetoric regarding immigration, high skilled visas and trade will evolve as he begins to govern and tries to increase business ties with India.   

Based on policy positions detailed during his campaign, we believe a Trump Administration will initially focus on a range of issues, such as immigration, trade, tax reduction (couched as a jobs bill), repealing Obamacare, and infrastructure spending. 

Here are the various positions Trump has taken on key issues of concern to NASSCOM and member companies:

  • Immigration

Trump has stated repeatedly that the influx of foreign workers holds down salaries, keeps unemployment high, and makes it difficult for poor and working class Americans to earn a middle class wage. 

With regard to high-skilled visas, Trump has been an outspoken critic of the H-1B visa program and of the way it is used by the IT services industry in particular.  Among many other things, he said –

We graduate two times more Americans with STEM degrees each year than find STEM jobs, yet as much as two-thirds of entry-level hiring for IT jobs is accomplished through the H-1B program. More than half of H-1B visas are issued for the program’s lowest allowable wage level, and more than eighty percent for its bottom two. Raising the prevailing wage paid to H-1Bs will force companies to give these coveted entry-level jobs to the existing domestic pool of unemployed native and immigrant workers in the U.S., instead of flying in cheaper workers from overseas. This will improve the number of black, Hispanic and female workers in Silicon Valley who have been passed over in favor of the H-1B program. Mark Zuckerberg’s personal Senator, Marco Rubio, has a bill to triple H-1Bs that would decimate women and minorities.

Too many visas, like the H-1B, have no requirement to hire American workers first. In the year 2015, with 92 million Americans outside the workforce and incomes collapsing, we need companies to hire from the domestic pool of unemployed. Petitions for workers should be mailed to the unemployment office, not USCIS.

In March 2016, Trump offered some support for the high skill visa programs only to clarify his statement the next day by stating he supports high-skilled visas (for Silicon Valley) but remains opposed to the H-1B program claiming that the program “is neither high-skilled nor immigration:  these are temporary foreign workers, imported from abroad, for the explicit purpose of substituting for American workers at lower pay.  I will end forever the use of the H-1B as a cheap labor program.” 

Trump has acknowledged that as an employer, he used the H-1B program to hire foreign workers.  While it was a lawful option, Trump has stated that he “shouldn’t be allowed to use it” and because of this experience, he knows how unfair the program is for American workers.

It’s also important to note that Trump’s key advisor on immigration issues and one of his most loyal campaign surrogates was Senator Jeff Sessions.  Sessions is a fierce critic of high skilled immigration and has called for very drastic reductions and new restrictions.  Among other things, Sessions is currently the chairman of the Senate immigration subcommittee.  Sessions was one of the key individuals singled out and thanked by Trump during his acceptance speech.  The expectation is that Session could be rewarded with a Cabinet position (perhaps Department of Defense or the Department of Homeland Security) or a top White House position, any of which would ensure his strong influence with President Trump. 

  • Trade – China does not stop its illegal activities, Trump will use every lawful presidential power to remedy trade disputes, including the application of tariffs consistent with Section 201 and 301 of the Trade Act of 1974, and Section 232 of the Trade Expansion Act of 1962.

Congressional Results

Republicans will continue to maintain control of the House of Representatives and the Senate in the 115th Congress.  Like the Presidential race, many political pundits were predicting much closer contests in both houses of Congress. 

In the House of Representatives, Republican’s lost 6 seats and will maintain control with 235 seats versus Democrat’s 191 seats.  It’s likely that Paul Ryan (R-WI) will continue as Speaker, particularly given that he has credited Trump with saving the Republican’s congressional majorities and has pledged to work with him.  Below are a few key races important to NASSCOM:

  • Rep. Bera (D-CA):  Re-elected with 53%
  • Rep. Issa (R-CA):  Re-elected with 52%
  1. Reps. Issa and Goodlatte will remain the point people for the Republicans on high skill immigration.  Issa may be inclined to continue with his push to change the exempt wage level and possibly add in additional ideas given SCE, the criticism of his legislation and now the noise around layoffs at UCSF.  The possibility of Issa and Lofgren working together, though, probably died when she attacked him and his staff over their work on H-1Bs during the campaign.

In the Senate, Republicans maintain control with 51 seats, with two Senate contests (New Hampshire and Louisiana) still undecided. It is expected that Senator Grassley will continue as Senate Judiciary Committee Chairman and Senator Durbin, Sessions, and others will continue to be active on our issues.

If Sessions gets selected for a senior position in the Administration, Senate Republicans will need to select a new Chairman of the immigration subcommittee.  Committee selections will be made in early 2017. One viable candidate is Senator Purdue from Georgia.  Purdue has been better than many of his colleagues on high skill immigration and always willing to listen.  He has said positive things about the sector before reversing himself in the very same hearing on high skill visas.  Regardless, the expectation is that Chairman Grassley would still control the activity on high skill immigration under the full committee’s and its subcommittee’s jurisdiction.

On the Democratic side, Chuck Schumer is expected to be selected by the Senate Democrats as the Minority Leader.  If this happens, he will be replaced as the Ranking Member on the immigration subcommittee. His likely replacements all have criticized the sector.  One possibly is Diane Feinstein of California who has been critical of the sector previously, is the reason why USTR is prohibited from negotiating on visas, and who could be encouraged by the stories of layoffs at UCSF to seek new restrictions.

There could also be some key changes at a staff level with some agency detailees leaving their committee positions and some Republican staffers possibly being tapped for influential positions dealing with immigration in the Trump Administration.

Outlook for Next Year

Trump’s campaign rhetoric all, but guarantees, that his administration will address border security, immigration reform and changes to U.S. trade policy in 2017. It is important to remember that bills currently pending before Congress expire at the end of this session and all bills need to be reintroduced next year.

The immigration reforms sought will be very different than what we’ve seen in recent years.  The ideas that prevented legislation from advancing related to the undocumented and possibly providing a potential path to citizenship are off the table. Plus, Republicans control both the White House and Congress.  In a post-election interview, Senate Majority Leader McConnell said that border security proposals would be one of the first issues addressed. The focus will now be on border security, enforcement, US worker protections, and prioritizing the foreign nationals that the governing party feels would most benefit the US.  High skill visas and proposals related to the use of high skill visas by the sector would come under these latter categories. 

At this time, all legislation options are on the table to advance to push immigration reform next year.  Depending on the details of the package and Congressional support, we may see comprehensive legislation or a series of smaller, discrete bills. In either case, the sector should presume that it will be targeted again next year and that the risk profile for something to move has likely increased.

Further, while some Republicans have approached immigration reform cautiously out of concern of a potential backlash from the electorate, the percentage of Latinos that supported Trump despite all of his harsh rhetoric on immigration could reduce this concern.  If so, elected officials may come to believe that they can stake out harsh positions without suffering consequences on Election Day (and may even be able to see some gains).

The sector will also need to watch who takes the key positions in the Administration.  As noted earlier in this memo, Jeff Sessions is one potential key player.  Others include Rudy Giuliani, Victoria Lipnic and Arizona’s Maricopa County Sheriff Joe Arpaio, who lost reelection last night. 

While Trump will seek legislative reforms, there are many things that he could attempt to do under the Administration’s unilateral authority as well.  These could deal with adjudicatory criteria, definitions, wage formulas, investigations and enforcement actions and more. It simply is too soon to have any clear vision on this. 

One thing that we can say with certainty is that Trump is unique and that no one can say with any specificity or certainty exactly what his specific proposals will look like and how his rhetoric may change when confronted with the realities of Washington.

Outlook for Congressional Lame Duck Session (2016)

The expectation before the election was that Congress and the Administration would work out the details for a year-long omnibus appropriations act in December.  The industry’s concern has been the small chance that Rep. Issa’s proposal to increase the exempt wage level might be included and the greater risk that Chairman Grassley’s request to include language making clear that the 50:50 fees must be collected on extensions would be granted.  NASSCOM, select companies and the Government of India have all been pushing back hard to prevent the inclusion of either provision.  The outcome of these efforts are yet to be determined.

The significant possible change in this dynamic is that yesterday’s sweep has given Republican’s reason to resist agreeing to an omnibus bill that contains policy riders favorable to the Obama Administration. Instead, Congressional Republicans may simply push for a “clean” Continuing Resolution that would keep most funding levels consistent and not contain extraneous policy riders (including those focused on the sector).  We will be watching developments on year-end funding with great interest and will keep you informed of relevant developments.

Possible Trump Cabinet

The Trump campaign has not publically discussed any potential cabinet nominees to date.  Among those individuals currently being mentioned for a Trump Administration are:

  • Secretary of State – Newt Gingrich; Sen. Bob Corker;  John Bolton
  • Attorney General
  • Treasury Secretary
  • Interior Secretary –
  • Agriculture Secretary –
  • Commerce Secretary –
  • Labor Secretary –
  • Health and Human Services Secretary –
  • Secretary of Defense – Sen. Jeff Sessions; Stephen Hadley; Sen. Jim Talent; Michael Flynn; Duncan Hunter
  • Energy Secretary
  • Education Secretary –
  • Veterans Affairs Secretary –
  • Environmental Protection Agency Administrator –
  • Health and Human Services Secretary – Ben Carson; Renee Ellmers.
  • Homeland Security Secretary – Rudy Giuliani; Jeff Sessions

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