Dubroff: Trump’s budget priorities will create tri-county winners, losers
Henry Dubroff
A cardinal rule about covering politics these days is that it’s never too early to speculate.
So, with the contours of the Trump administration’s approach to budgeting just coming to light, it seemed timely to begin to try to sort out winners and losers among major tri-county institutions.
It’s way too early to predict what will happen — indeed Donald Trump’s surprising rise to the presidency was unpredictable and so are his Twitter bursts.
But it seems clear from the direction the White House has set that there will be winners and losers as the nation charts a new fiscal course. A few thoughts:
• Large health care organizations are going to come under pressure. Whether it is MediCal restrictions, or people opting out of the exchanges, insurance plans that cost less but cover less, or downward pressure on the cost of drugs and procedures, hospitals are going to be treating more people and earning less revenue. That’s going to put a lot of pressure on one of the region’s biggest industries to reduce their costs and collect more from patients.
• Military bases could be winners. Sharp increases in military spending are likely to lead to mission expansion for Vandenberg Air Force Base and Naval Base Ventura County, two of the largest employers in the Tri-Counties. More satellite and anti-missile defense launches at Vandenberg, and more activity at the missile test range off the Ventura County coast, are likely outcomes. For the region’s military contractors, including Teledyne, Raytheon and Lockheed Martin, increased spending for major weapons could be offset by cost cuts.
• Research funding cuts will hurt universities and high tech companies. The Trump administration has promised big cuts to discretionary funding and that means research into all sorts of things including advanced materials, experimental military projects and, not surprisingly, alternative energy. White House skepticism about climate change could also factor into funding for energy efficiency projects and environmental initiatives.
• Private philanthropy will have to step up. When it comes to arts and entertainment or humanities funding, the Trump administration seems determined to make a statement by making deep cuts. But as the highly successful spring fundraising campaign for national public radio station KCLU underscores, people are ready to support activities in which they’re deeply engaged.
• Veterans may get a bit of a break. The region’s veterans are an underserved group who’ve seen bureaucratic screw ups, including an ill-advised grab for bonus pay. But we count on our military for so much — in addition to national defense it was the National Guard that saved the day in the Oroville Dam crisis. If the Trump administration can effectively provide services to retired military, it will have done something that neither Bush nor Obama could seem to get right.
• Less regulation and faster growth will help the banks — if it happens. The March 21 swoon in financial services stocks shows how much the stock markets have anticipated a looser regulatory regime for banks, increased inflation, higher interest rates and lower taxes for corporations and individuals. When Trump’s ability to deliver on some of these came into question, bank shares dropped sharply, with some down in the 5 percent range. One thing that’s fairly certain is that some rules for community banks with assets under $10 billion or even $50 billion will be loosened through executive action even if the administration can’t undo key parts of the Dodd-Frank legislation.
• It’s not clear how innovation will work under a Trump administration. Beyond the question of research funding, tax law changes could alter the incentives for funding the emerging startup culture. Placing science and technology second to ideology could further alter the landscape for break-the-mold thinking. But every big upheaval in the political or any other sphere creates opportunities.
The bottom line is that it’s easy to speculate but harder to know what the final budget contours will look like or if the Trump administration will succeed in passing an infrastructure bill that might speed Ventura County water projects or Highway 101 widening in Santa Barbara and San Luis Obispo counties.
To paraphrase Yogi Berra, many organizations that are dependent on federal funding will know what the future is when they get there.
CORRECTION
In last week’s column on Lynda Weinman, I misspelled the last name of her husband and business partner —Bruce Heavin.
• Reach Editor Henry Dubroff at hdubroff@pacbiztimes.com.
