FEDERAL INSIGHT By Andy Fishburn The Outlook for 2017 I N WASHINGTON, D.C. , the Election of 2016 is slowly sinking in. Th e Washington establishment woke up on Nov. 8 fully thinking that Hillary Clinton would be elected President, and that there was a good chance that the Democrats would control the Senate. Well, when the sun rose on Nov. 9, Donald Trump was President-Elect and Republicans had maintained their Senate majority, only losing a few seats. Th e best explanation for what happened has nothing to do with polling errors—and there were many—but rather with something a statistician would call autocorrelation. Th e the-ory was that Hillary Clinton couldn’t lose because Democrats had won a collection of states in the past six presidential elec-tions that totaled to 242 electoral votes. Th ese states included the so-called blue-wall states of Michigan, Wisconsin and Pennsylvania, where public polling showed Hillary Clinton leading throughout the fall. All she had to do was cobble together a few other states and her campaign would easily exceed the 270 electoral votes needed to claim the presiden-cy—she could even lose a blue-wall state and still win easily. Th e glaring problem with this theory is that Michigan, Wisconsin and Pennsylvania, while diff erent in many re-gards, are basically the same state from an electoral perspec-tive as a state like, say, Ohio. Th us, it was quite improbable that Donald Trump was leading consistently in Ohio, but trailing consistently in Michigan, Wisconsin and Pennsylva-nia. All of these states have proud manufacturing heritages, and as those manufacturing jobs moved away for whatever reason, many aff ected residents believed that the free-trade espousing Washington establishment was to blame, for ei-ther letting those jobs go in the fi rst place, or not providing a suitable re-placement once those jobs left . Enter Donald Trump, who for whatever his faults as a candidate, had a very clear message on trade: We’re going to tear up those bad agreements and put American workers fi rst. This message clearly reso-nated along the blue wall. And thus, the problem with the theory was that if Donald Trump won one blue-wall state, he would probably win them all, and he did. Political professionals should have seen a logical error in polls that consistently showed Trump up in Ohio, but down in Michigan, Wisconsin and Penn-sylvania, but they didn’t. 48 JANUARY/FEBRUARY 2017 EQUIPMENT LEASING & FINANCE MAGAZINE So what do the election results mean for 2017? Republi-cans are still trying to sort that out, and so are the Demo-crats. On the campaign trail, candidate Trump talked about immigration reform, healthcare reform, tax reform, trade reform, regulatory reform and infrastructure spending, among many other policy areas. Two of those areas have the potential to dramatically af-fect the equipment leasing and fi nance industry: tax reform and regulatory reform in the fi nancial services arena. On tax reform, many are saying that 2017 is the best shot since 1986 at true comprehensive tax reform. As of December 2016, the President-Elect and House Republicans have both put out plans that have many similarities, most notably signifi cantly lowering the top-line corporate tax-rate. Of potential concern, both plans also propose to curtail or eliminate the ability of businesses to deduct business interest as a normal and ordi-nary business expense on a net basis, meaning interest expens-es would not be deductible if they exceed interest income—we hope this is not the case for most fi nancial services companies. ELFA is already busy analyzing how these proposa ls cou ld have an impact on our industry, and it is important to remember t hat while interest could become less deductible or nondeductible, lease pay-ments will likely remain deductible, at least what could be called the principal portion of the payment. Th is has the potential to make leasing more attractive in this new environment for many of your customers. Rest assured that ELFA will be active in the coming months, advo-cating for the best interests (pardon the pun) of our industry. On the fi nancial services regulatory reform front, Repub-licans have long desired either to repeal or make wholesale changes to the Dodd-Frank Act. While full repeal is unlikely, there is a real possibility that major changes could be made in 2017 and 2018 that could aff ect our industry. Th e fi rst would be changes to the way the Consumer Fi-nancial Protection Bureau (CFPB) is structured. Many Re-publicans believe that the CFPB should have a fi ve-person (Continued on page 51) ISTOCK/ SHUTTERSTOCK