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Fast 2018 Election Analysis

Democrats win a House majority. Republicans maintain and grow a Senate majority. A
Democratic House majority means power to subpoena and investigate the Trump
Administration. The subpoena powers of Congress – including compelling testimony from
Administration officials - will give Democrats means uncover vulnerabilities in the Trump
Administration and possibly create real competition for the agenda and narrative in
Washington and the media.

Political takeaways

• Democrats winning in the House behind a healthcare message and suburban surges, but
national implications are limited because there was no surge of new Democratic voters
as Republicans pick up Senate seats in ‘Red’ parts of the country.

• The next two years will be a big test of leaders’ deal making skills. But, are deals viewed
as the best strategy or do the parties continue to divide and reflect the partisan desires
of bases.

• Who steps forward as the Democrats messenger until a 2020 nominee is decided? Who
does POTUS target? Pelosi, Waters and Warren are the obvious targets. Cumming,
Schiff, Nadler all have platforms.

• How do investigations impact team Trump? What shakeups come in the Cabinet. Staff?
Already seen AG Sessions fired.

• How do the minorities in each chamber behave? Do the parties stay unified or do
vulnerable incumbents break away?

• How much bandwidth is taken up with oversight and investigations?

• Where is Bob Mueller? When does he resurface – if at all?

We expect President Trump to continue his bold executive actions in areas such as tariffs, trade
deals, immigration enforcement and other hot-button issues as a means of driving attention
elsewhere from investigations and subpoenas. President Trump will also employ a strategy to
play the “witch hunt” card even more strongly, as support from the President’s base typically
ramps up when he is perceived as a victim of the “Washington machine.”

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The President, like Reagan, Clinton and Obama will hope to follow their paths of losing the
House while winning reelection.

Imperium’s Post-Election Policy Quick Thoughts

• Do earmarks return? If so, can it improve outcomes and bipartisanship?

• The agenda and what Congress can get done by August 2019 will be the
accomplishments of the Congress beyond must-do’s. Where do issues like
infrastructure, the budget/sequester, immigration and education fit?

Here are a few of the areas we see major policy questions.

• Defense. Which priorities and programs will be challenges? Is a $700 billion budget
realistic? How do budget caps complicate decisions or pressure lawmakers? What
happens to the cap of $576 defense discretionary spending by FY2020?

• Healthcare costs, medical device tax and prescription drug prices all on the docket for
action in 2019.

• Economic growth. Will there be more tax cuts as POTUS promised? Can Congress agree
to fix the problems in the Republican tax bill? Do Democrats try to change SALT?

• Trade. Does President Trump still have the ability to pass his USMCA trade agreement?
Can new trade agreements with the UK and EU gain traction?

• Foreign policy. Election security becomes a focus. New rounds of sanctions? How much
does Russia get focused upon? How much can human rights foil the Administration’s
foreign policy priorities?

• Technology. How is 5G rollout impacted? Are there antitrust issues raised around the
major tech companies? How much can be done on cyber security, data & privacy
priorities that have stalled or languished for years?

• China – Will Congress respond by pressuring the Administration to resolve tariffs fights,
or market access or will there be further escalation? More likely, is the Administration’s
approach is quietly condoned by both parties. Look for China hawks maintaining a lead
in pressuring robust challenges to Chinese economic competition and strategic treats.

Imperium is uniquely positioned with bipartisan coverage in both chambers. A strong team is
needed to help work in a strategic bipartisan fashion that can yield results. With the House
shift last night, obtaining bipartisan AND bicameral consensus will be necessary debated.

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Relationships – Knowing the people who now have influence is our business.

• At least 80 new members of the House, more than 100 women in the House.
• 7 new members of the Senate
• House Leadership Changes
o Nancy Pelosi, most likely to be Speaker,
o Kevin McCarthy or Jim Jordan, Minority Leader
• New House Committee Leaders
o Financial Services, Maxine Waters (D-CA)
o Ways & Means, Richard Neal (D-MA)
o Judiciary, Jerry Nadler (D-NY)
o Armed Services, Adam Smith (D-WA)
o Energy & Commerce, Frank Pallone (D-NJ)
o Oversight & Government Reform, Elijah Cummings (D-MD)
o Appropriations, Nita Lowey (D-NY)
o Foreign Affairs, Elliot Engel (D-NY)
o Homeland Security, Bennie Thompson (D-MS)
o Rules, Jim McGovern (D-MA)
o Transportation & Infrastructure, Peter DeFazio (D-OR)
o Budget, John Yarmuth (D-KY)
o Intelligence, Adam Schiff (D-CA)
• Senate leadership Changes
o Majority Whip: John Thune (R-SD)
• Senate Committee Leadership Changes
o Judiciary: Chuck Grassley (R-IA)
o Foreign Relations: Jim Risch (R-ID)
o Small Business: Marco Rubio (R-FL)
o Homeland Security & Government Affairs, Ranking member: Gary Peters (D-MI)
or Maggie Hassan (D-NH)
o Commerce Ranking Member, Maria Cantwell (D-WA) or Amy Klobuchar (D-MN)

This is just the beginning of what we know. If you have questions about what these changes
mean for your company, organization or issues, please contact us or visit our website
www.imperiumglobaladvisors.com

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