FS Thrive x Jason Cole: What’s happening in Washington?

We review upcoming elections, policy changes and government trends that could impact your portfolios.

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August 15, 2023 | 27 minute read

About this episode

What happens in Washington is almost always felt on Wall Street. No one knows this better than Executive Director of Public Policy and Corporate Social Responsibility, Jason Cole.

In this episode, Ginevra Czech, Director of Client Value Add Programs, sits down with Jason to discuss what he refers to as the three Cs of government: Confrontation, competition and uneasy cooperation. They dive into the news from Washington—and how it could affect markets.

Learn more at www.fsthrive.com.

Transcript excerpt

Ginevra Czech (00:03):

Welcome back to FS Thrive, a podcast by FS Investments. I’m your host, Ginevra Czech, Director of Client Value Add Programs. Today we are talking with Jason Cole, Executive Director of Public Policy and Corporate Social Responsibility here at FS. Jason and I have recently had some great calls with advisors and other financial professionals discussing what he calls the three C’s: Confrontation, competition and uneasy cooperation. We’ll explore these themes and discuss what’s happening in Washington that could impact markets and your portfolios.

Well, Jason, it’s great to be back here with you today. I know that we’ve connected in the past, and I’ve had you on a couple of different advisor calls. So today I was hoping that we could just rehash some of the topics that we’ve been discussing with advisors, whether it’s public policy, political risks, things that are important that are affecting your day-to-day, that could affect our advisors, their portfolios and their clients’ bottom lines. You know, we can just jump right in. I know that when we’ve had you on calls, you’ve really started with the political backdrop. So, I’m curious just to hear from you what’s been going on and what you’re paying attention to.

Jason Cole (01:26):

Yeah, I think it’s important to have context and political context for what’s going on in Washington D.C. right now. And I think the best way to tee that up is to take a look at what happened last November in the 2022 midterm elections where Republicans took control of the House ever so narrowly. And it was, importantly, the 10th time in the 12 elections since 2000 that control of the White House, Senate or House has anged. And so you’ve had this sequence of a number of change elections over the last 22 years  that have serious implications for policy. By contrast, in the 50 years prior to 2000, there were just nine so-called change elections. And so the frequency in which we’re seeing change of control in the House, White House or Senate, has some policy implications.

And the biggest one is that either party thinks that they can take control of the House, Senate or White House in any given election. And so what happens is decisions begin being filtered through this political lens of how will Decision X affect my prospects or my opponent’s prospects at the ballot box next year? And so that’s going to make everything a lot more contentious in Washington D.C. That’s an important political backdrop to have. The other thing that happened in November was the Republicans took control, again, like I said ever so narrowly, they took a five-seat, they have a five-seat margin in the House of Representatives. And that close margin, is also really important in understanding what’s going on, particularly in the House, but certainly in Congress, because the, that narrow control allows for factions to emerge within the majority party that can have, it can really affect outcomes. And we’ve seen this in a number of cases this year, whether it’s over the debt limit, we’re seeing it now as Congress tries to pass its annual funding bills and there are some factions that are emerging in the house that are setting up a lot of confrontations, for members of Congress and particularly the Speaker of the House.

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Ginevra Czech

Director, Client Value-Add Programs

Jason Cole

Executive Director, Public Policy and Corporate Social Responsibility

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