In the factless and amoral era that President Trump has ushered in, it seemed certain last night that Roy Moore, the evolution denier who is haunted by pedophilia allegations, would sail into the Senate decrying that "fake news" had lost again. Surely Alabama — the most reliably conservative state where the ghost of segregationist George Wallace still pollutes the air — wouldn't reject any candidate who President Trump had touted. But the monolithic wall of GOP support cracked and Alabama sent a Democrat to the U.S. Senate for the first time in 25 years.
While this was a huge victory for progressives, the suddenly very real prospect of Trump losing Congress in 2018 is causing anxiety amongst business leaders about what might happen to the economy. As an entrepreneur who has spent the last 20 years building and selling companies, I am here to tell you that not only will America be fine if Trump loses congress in 2018, but it would be a complete positive.
It's the economy, stupid.
My company GMM Nonstick Coatings is a good proxy for the U.S. middle class because every day 40 million Americans use GMM's products in their kitchens. Despite all of the positive news about the stock market and deregulation from our tweeter-in-chief, GMM had a slightly down year in 2017 because the American middle class was not purchasing with the strength it used to.
This is the case with many of GMM's multi-billion dollar American clients like Newell Rubbermaid and Spectrum Brands: Their stocks (and sales) are down significantly in 2017 because consumers are burdened by record household debt, not to mention huge downward pricing pressure from online retailer Amazon.
Despite Trump's rhetoric about jobs and the economy, he is only focused on the richest Americans, and a flip in Congress will ensure compromise legislation which will help the middle class who have been stagnating for decades. History shows that the economy does best with a split congress and President (just ask Bill Clinton, who worked with neocon Newt Gingrich throughout the late 1990's boom).
Who doesn't like low taxes?
Under the current tax reform proposal from Trump that is very likely to become law, I will save a ton of money in taxes in 2018. The utter fiction of "supply side economics" is that entrepreneurs like me will take these tax savings and reinvest them in our businesses, creating new jobs. But the reality is that I (and most of my Democrat and Republican friends who run large businesses) usually take our additional savings and invest it in the stock market or in real estate, which create no jobs and only enhances our wealth further.
For this reason, while I will never complain about low taxes (and I fully support middle class tax reform), it's intellectually dishonest to say that lower corporate taxes are going to help the middle class one bit. For many business leaders and entrepreneurs like myself, we are willing to pay slightly more taxes if it helps the middle class of America (just ask Warren Buffett).
Trade War = Train Wreck
Like the majority of American corporations, GMM has some operations overseas. In fact, almost 100 percent of GMM's USA client base (i.e. pretty much every single famous American housewares brand) sources their cookware, bakeware, and appliances from lower cost countries in Asia, South America, and Eastern Europe. Trump got elected by demonizing "globalist" American companies like GMM, and by promising that a flood of jobs will return from overseas to the USA. But to date, not one multi-billion company that I supply has moved one job back home.
Because of the crushing pressure from Wal-Mart to keep prices low. Steve Bannon, the cynical godfather of Trumpism, paints China and Mexico (and the rest of the world) as job-stealing devils, but as a capitalist he should know that there is an invisible hand which will move production to the lowest cost locale. And that's a good thing for both the producing and consuming nation. A trade war would be an economic catastrophe, and is very unlikely if Congress flips in 2018.
Character still matters
Back in August, GMM was besieged with hundreds of racist messages from Trump supporters, creating national news and turning my life upside down for a couple days. Why did this happen? Because as a CEO I had the nerve to write an op-ed excoriating President Trump about his tacit support of Nazis and KKK members in Charlottesville. In the months that followed, I watched with dismay as the media moved on, and Trump continued his racist and boorish behavior and policies without much consequence.
Although dozens of high profile and powerful men have gone down for sexual misconduct in the #MeToo era, Trump has been able to effortlessly dodge the 19 women who have accused him of sexual harassment, all because he has a Republican congress who is willing to look the other way. After last night's election, this may change, and the sooner the better. Some issues transcend economics, and the character of our nation is definitely one of them.
—By Ravin Gandhi, founder and CEO of GMM Nonstick Coatings, one of the world's largest suppliers of nonstick coatings to the $9 billion housewares industry. As a VC investor, Gandhi has stakes in KeyMe, Ampsy, Tred, Lettrs, Amber Agriculture and Hester Biosciences.