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Moody’s: Next Congress unlikely to change direction of US policy following midterm elections November 07, 2018 at 03:35PM

Moody’s: Next Congress unlikely to change direction of US policy following midterm elections

 

Moody’s: Next Congress unlikely to change direction of US policy following midterm elections

New York, November 07, 2018 — US policy direction is not likely to change significantly following the November 6 US midterm elections, says Moody’s Investors Service in a new report. The rating agency expects President Donald Trump’s administration to
continue to drive federal policy in the key areas of trade, healthcare and immigration over the next two years, with varying credit impact across sectors.

“Amid high levels of political polarization, passing major legislation through a split Congress will be challenging and we expect the administration will likely continue to advance its policy goals using executive
powers and administrative rulemaking rather than seeking legislative action,” says Rebecca Karnovitz, a Moody’s assistant vice president. “However, the likelihood of increased congressional scrutiny over the administration, led by the House, will slow the
pace at which the executive branch can implement its agenda.”

The executive branch will continue to drive trade policy, imposing further trade measures on China and maintaining pressure with regard to investment and intellectual property issues. Meanwhile, the updated North
American Free Trade Agreement, renamed the US-Mexico-Canada Agreement, will likely receive congressional approval in 2019, even though the Democratic-led House will likely demand modifications that could slow the ratification process.

In terms of healthcare policy, the administration will continue to chip away at the Affordable Care Act’s infrastructure and give states greater flexibility in the management of their Medicaid programs. The credit
implications of these policies will be mixed for the healthcare industry and for state governments.

Within the limits of its executive powers, the administration will likely continue to clamp down on illegal immigration and tighten rules for legal immigration. Immigration restrictions could raise labor costs
for companies and exacerbate labor shortages and wage pressures at a time of record low unemployment.

 

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