How Trump Just Blew His Last Chance

Last week, President Trump forfeited his last chance to win reelection. It was lost during the economic stimulus bill negotiations between the president’s representatives, Treasury Secretary Steven Mnuchin and Chief of Staff Mark Meadows, and the Democratic Congressional leaders, House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer.

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Q2 2020 hedge fund letters, conferences and more

Issues With The Size Of The Stimulus Package

Ostensibly, the main issue was the size of the stimulus package. Almost three months ago, the Democratic controlled House had passed a $3.4 trillion bill. But the Republican Senate, which considered the price tag way too high, refused to consider it.

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In recent weeks, it became increasingly clear that President Trump was bound and determined to starve the U.S. Postal Service of sorely needed funding. Indeed, the Postmaster General, Louis DeJoy, one of Trump’s most generous contributors, had been doing his best to introduce “efficiencies,” which had resulted in the slower delivery of the mail.

Trump put on a big show about being very concerned about the integrity of the upcoming presidential election, and was particularly worried about widespread fraud caused by the vastly increased volume of voting by mail due to the Coronavirus pandemic. He claimed cutting Post Office funding would ensure the integrity of the election.

And so, perhaps the sticking point of the negotiations was the $25 billion Post Office spending item that Pelosi and Schumer demanded be included in the economic stimulus bill. There were other disagreements, of course, such as the amount of financial aid for state and local governments to deal with the pandemic, and, of course, the vast size of the stimulus package. In fact, the $25 billion of aid to the USPS would be about one percent of a $2.5 trillion total.

Trump's Reelection Campaign

Trump has long realized that his stewardship of our economy had been his most potent issue in his reelection campaign. Until this summer, voters generally gave him relatively high marks for what had been a relatively prosperous economy.

Now he had pinned his electoral hopes almost entirely on a strong economic recovery. Prematurely reopening the economy before the pandemic had been brought under control, and now trying to force the opening of public schools in the coming weeks were just prices we would needed to pay to reinforce the recovery.

But that recovery has been fading fast, with our nation’s output of goods and services declining by eight or ten percent in the second quarter, and probably by almost as much in the current quarter. The only thing we can do to even begin to recover is to spend a huge amount of money.

By investing $4- or even $5-trillion, we could spend our way out of this terrible recession. And you’d -be proven right, Mr. President: Our economy would indeed shoot up like a rocket ship!

If Trump had even some halfway decent economic advisors, they would have explained to him that the bigger the stimulus package, the greater the economic recovery. Instead of arguing with House Democrats for spending too much, he should be demanding that Senate Republicans spend even more than the $3.4 trillion that the House had already voted for.

Economic Stimulus Bill Might Not Pass Before Mid-September

But Trump allowed himself to get so distracted by his attempt to defund the USPS, that he lost whatever chance he had to get a huge economic stimulus package passed before Congress left Washington for its summer vacation. They won’t return until after Labor Day, and it appears highly unlikely that any economic stimulus bill will be passed before mid- or late-September.

By then, tens of millions of unemployed Americans will have gone two months with greatly reduced unemployment insurance benefits, no $1,200 checks with Trump’s signature will have been mailed out, and millions of additional workers will have lost their jobs.

And then too, by the time most Americans will even begin to feel the benefits of an new surge of stimulus spending, it will be too late to change many minds. In fact, millions of voters would have already mailed in their ballots.

So, when the presidential campaign enters the homestretch around mid-October, President Trump will not have even one winning campaign issue to run on. All he’ll have left to talk about is how his rightful reelection is being snatched away from him by the hordes of children stealing ballots out of mailboxes.