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Paul Ryan Leaves Washington

04.15.2018 | Ben Phillips, CFA

paul ryan

House Speaker Paul Ryan (R-WI) announced his retirement from the House last Thursday, ending months of rumors.

 

Paul Ryan Leaves Washington

 

Ryan is a long-time Washington politician, after first being elected to the House in 1998. Ryan’s focus has long been on cutting taxes, which he supports funding with decreases in discretionary spending, particularly welfare and entitlement spending.

 

His political positions are generally conservative, and he is known as a fiscal deficit hawk, a designation given to individuals who advocate against budget deficits.

 

Ryan rose to Speaker of the House in October 2015. During his time as Speaker, Ryan successfully pushed the passage of tax reform in December 2017. However, he also presided over dramatic increases in government spending, the election of Donald Trump in 2016, and what appears to be a change in the party’s free-trade ideology.

 

When it came to reigning in welfare spending and repealing Obamacare, Ryan failed to pass legislation. 

 

The timing of his announcement appears to be an acknowledgement of the changing Republican party and its future success, not only in this year’s midterms, but also the 2020 elections.

 

Republican Ranks Thinning, Democrats Feeling Momentum

 

Ryan is not the only Republican retiring. In fact, he’s the latest in a lengthy line of Republicans exiting Washington after this year’s midterms. In addition to Ryan, prominent Republicans Orrin Hatch, Bob Corker, Jeb Hensarling, Trey Gowdy, and Darrell Issa have all announced their retirements.

 

On the other hand, Democrats appear to sense weakness and a political opportunity. While the party still struggles to define its message and identify party leadership, members are campaigning on Trump’s controversies, the December 2017 tax bill shortcomings, and defending Obamacare.

 

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Defining Midterm Issues

 

It’s starting to feel like 2010 all over again. Except this time the party roles appear flipped, with Republicans playing defense and Democrats playing offense. In the 2010 election, Republicans gained control of the House as Democrats defended Obamacare. Fours year later, Republicans gained control of the Senate as Democrats continued to defend Obamacare. If Democrats can win control of the House, the policymaking environment shifts dramatically.

 

Could 2018 lead to a breakup of Republican control of the House, Senate, and White House? We’ll let the political forecasters make that call. But if investors start to sense a split Congress, we think they will start positioning themselves in anticipation of bipartisan policies, such as repairing infrastructure and health insurance reform.

 

It may seem like politics as usual, but it’s important to remember the campaign season and midterm elections will determine policymaking for the following two years. We’ll be there to monitor stock market performance and connect what’s happening on the campaign trail with what’s happening on Wall Street.

 

 


 

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Important Information

Active Weighting Advisors LLC ("AWA") is an SEC-registered investment adviser that manages ETFs under the brand name EventShares Funds. Mr. Phillips is the Chief Investment Officer of AWA. The views expressed are subject to change, and no forecasts can be guaranteed. The comments may not be relied upon as recommendations, investment advice or an indication of trading intent. AWA is not soliciting any action based on this document. In preparing this document, the author has relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources. Investing involves risk, including the possible loss of principal and fluctuation of value. Mr. Phillips and AWA disclaim responsibility for updating information. In addition, Mr. Phillips and AWA disclaim responsibility for third-party content, including information accessed through hyperlinks. For more information about EventShares, contact us by calling 877.539.1510 or visit our website at www.EventShares.com.