In a previous piece, on Virginia’s gubernatorial election, to be held on November 2, 2021 (though mail-in voting starts on September 17), between former Democratic governor Terry McAuliffe and his Republican opponent Glenn Youngkin, I pointed out how both candidates, corporate politicians to the core, are trying desperately to find ways to differentiate themselves from each another.
Youngkin refers only fleetingly to his history in the top echelons of the financial sector (with that platinum entry pass, an MBA from Harvard Business School). But flaunting his previous position as the co-CEO of The Carlyle Group can be a double-edged sword, given the Group’s long track record of asset-stripping and job destruction.
Dirt-throwing opponents can take advantage of someone offering himself to voters as a” job creator” who has a 25-year-long background as a vulture capitalist in a multinational firm lacking a real record of job creation.
Youngkin is trying to counter the fact that he is a plutocrat by presenting himself on his website as a “homegrown Virginian” whose first job was “washing dishes and frying eggs at a diner in Virginia Beach”.
Invoking the played-out trope of the American Dream, with its symbolism of dogged aspiration and hard work, has of course long been a staple in US politics. The truth here is that Youngkin’s father worked in finance and played basketball for Duke University—hardly a shabby background for his son, the aspiring politician. The website shuffles-off the Carlyle Group as “an investment firm”.
Youngkin’s so far rather nebulous agenda is being given more focus as the polls open, namely, big tax cuts and huffing and puffing on the embers of Trumpian culture wars.
Where taxation policy is concerned, Youngkin is having the usual difficulty of lining up projected costs with his pledges.
For example, Youngkin wants to eliminate the state and local sales tax on groceries, estimated to cost $225m by his policy team. In reality the cost will be than more $600m, because the team did not include in its estimates the cost to local governments and Virginia’s transportation trust fund, which receive some of the revenue raised by the 2.5% tax on groceries.
Youngkin also plans to give one-time rebates of $600 to couples and $300 to individuals who pay at least those amounts in state income tax, at a cost of $1.5bn.
Youngkin also wants to double the standard deduction, at a cost of $1bn.
His team say these sums would be paid out of the $2.6bn surplus Virginia acquired in the fiscal year that ended on June 30.
The team overlooks prior commitments that will eat into this surplus, rendering problematic the implementation of Youngkin’s tax policies.
The state constitution requires a $1.1bn deposit in the revenue stabilization or “rainy day” fund, as well as a “super deposit” of $564m if revenues grow by 5% or more in the new forecast to be issued later this year.
Virginia law requires an additional $300m to be deposited to the water quality improvement fund and $116m in the transportation trust fund.
Ralph Northam, the current governor, wants to set aside $222 million to repay the federal government if it considers Virginia to have spent improperly part of the $4.3m it received under the American Rescue Plan Act.
If all these prior commitments materialize, there will be little scope for implementing Youngkin’s tax policies.
Democrats in the state legislature support increasing the state’s standard deduction and indexing it to inflation to preserve its value. The House Finance Chair Vivian Watts, D-Fairfax, is in favour of both these options.
At the same time Watts wants major changes to income tax to be a part of a larger, 2-year study begun this year by the Joint Legislative Audit and Review Commission (JLARC), focusing on ways to make the tax fairer and less regressive or indexed to income.
Virginia’s top Republicans, probably because they prefer tax policy to serve the interests of the wealthy, have said they are not likely to do anything about JLARC’s findings.
McAuliffe has not so far said anything about tax policy. A wily political veteran—he was Bill Clinton’s campaign co-chair in the 1996 presidential election— McAuliffe can point to his record as governor from 2014 to 2018. During his term as governor, Virginia acquired more than $20bn in new capital investment, $7bn more than any of his predecessors. He went on more than 35 trade and marketing missions to 5 continents, again more than any of his predecessors, to promote tourism in Virginia and its products.
At the same time McAuliffe has not endeared himself to his party’s left-wing with his support for pipeline projects that trash the environment. The left-wing would much prefer someone with credentials resembling those of Bernie Sanders. However, McAuliffe is resting easy on this issue because Youngkin is not opposed to pipeline construction.
McAuliffe’s focus is on painting Youngkin into Trump’s corner.
Youngkin’s task here is unenviable. He can’t win without the support of Trump’s base, concentrated in rural Virginia, which is more sparsely populated. However he risks alienating independent voters in more populous Northern Virginia and the belt between Richmond and Washington DC if he gets too strident in his Trumpian rhetoric.
Youngkin appeared recently in a rural Baptist church, with an overwhelmingly white and elderly audience, promising that Virginia would not become the “California of the east” under his watch.
Trump (who owns a winery and golf course in Virginia) has been open in his support of Youngkin. To quote CNN:
“Trump lauded Youngkin’s poll numbers and called him an “incredible success” and “highly respected person” who will “truly Make Virginia Great Again,” tying the Republican candidate to the President’s own campaign slogan. He then went on to attack McAuliffe as a “failed and unpopular governor” who took campaign donations from him and “would do whatever I wanted”.
…. CNN reported in 2009 that Trump cut McAuliffe a $25,000 check during his failed bid for governor that year”.
McAuliffe has said he would happily “gas up any plane” that brought Trump to Virginia to campaign on Youngkin’s behalf.
This of course is campaigning braggadocio, but it highlights Youngkin’s predicament with regard to Trump: get too close, and alienate those not belonging to the latter’s base; not get close enough, and the unenthused base may not show up at the polls in sufficient numbers.
Two recent events constitute variables for both campaigns. One is the botched withdrawal from Afghanistan, the other is the Texas abortion ban.
With regard to the former, it is hard to see how Youngkin can use this to his advantage, given that Trump is at least as complicit in orchestrating the Afghan withdrawal as Biden.
The Texas abortion ban is a thornier issue for Youngkin, since it is almost certain that the McAuliffe camp will press him to distance himself from the ban. If Youngkin did this, McAuliffe will jump in and depict this as a wavering abortion stance on Youngkin’s part, in order to stir the pot for the latter’s Trumpian base.
For now, no opinion poll shows Youngkin ahead of McAuliffe, though most show it to be a fairly close race.