Trump's diagnosis gives Biden 'free pass' to focus on COVID-19: Fmr. Romney Adviser

Stocks are falling today on President Trump's COVID-19 diagnosis and jobs data. Stanford University’s Hoover Institute Research Fellow and Former Mitt Romney 2012 Policy Adviser Lanhee Chen and The Wealth Consulting Group CEO Jimmy Lee join the On the Move panel to discuss.

Video Transcript

JULIE HYMAN: Let's talk more about what's going on in Washington as well as that jobs report. We want to bring in Lanhee Chen. He is Stanford University's Hoover Institute research fellow. He is also a former advisor to Mitt Romney's 2012 campaign. He's joining us from California. And Jimmy Lee, who is the Wealth Consulting Group CEO, he is joining us from Las Vegas.

Lanhee, I do want to start with you and what we just heard Joe talking about in terms of the economy, in terms of also what we're seeing in Washington with the president and first lady testing positive for coronavirus. It's hard to know which of these to start with right now. But as we look at the markets today, we are seeing a decline. It doesn't look like that the read for market participants is as sanguine as Joe [INAUDIBLE]-- as the picture that he paints, right?

LANHEE CHEN: Well, look, there's a tremendous amount of uncertainty right now. There's uncertainty-- we don't know what the president's condition is or will be. We don't know who else may have been exposed. We don't know how this is going to affect the cadence of the campaign going forward. We do know about the jobs report, and I think that certainly the administration would love to be talking about the positive elements of that more.

Because traditionally, you know, the state of the economy, particularly the state of the labor market, is a significant factor in electoral vote choice as we-- as we go into this last crucial 30-day period. So I think the big challenge is, how do you dissect-- what do you make of everything that we're seeing?

And of course, all the hot takes are out there, right? How is this going to affect the campaign? How is it going to affect polls in one state or another? The reality is, no one knows. And I think that uncertainty, more than anything else, is what's weighing on investors and what's weighing on the market right now.

ADAM SHAPIRO: So, Jimmy, I want to talk about this permanent job loss, because we had Guy Berger from LinkedIn yesterday say, "Pay attention to that." 3.8 million. And Joe was saying it's really not an accurate number. What do you make of that? Because that's going to, I would imagine, have negative impact across the board.

JIMMY LEE: Well, I-- I'm very bullish on American business, Adam. But I do believe that companies are going to take this opportunity to become more efficient, and I think you're going to see that. And I think the job growth picture is going to be a little slower in terms of getting it back to where we were. It could take a very long time to get back to the under 4% number that we were at pre-pandemic.

So I do think that companies will run leaner. And while I-- while I am bullish on the economy and the recovery of the American consumer, I think jobs will take a long time to get back to where they were.

AKIKO FUJITA: Lanhee, getting back to the point you made, I mean, nobody really knows how things are going to shift, but there will be plenty of speculation. I mean, the thinking here is that, at least in the next several days, there is going to be a lot of focus on the coronavirus, not just the president's health, but the White House's response to this. I mean, is that a net negative for this campaign at the end of the day, just given how much criticism he's gotten for the response?

LANHEE CHEN: Well, the polling tells us, if you believe the polling, that-- that the public generally has not been approving of the president's response and the administration's response to COVID-19. So, you know, campaigns are-- are really about what messages you're driving and what the environment will let you drive. And the reality is that if you gave the Trump campaign a list of issues they wanted to be talking about in the last 30 days, I don't think COVID-19 would be at the top of that list.

They want to talk about the economy. They want to talk about law and order. They want to talk about getting tough on China. I don't think COVID is part of the mix. And so the question in terms of the overall dynamic of the campaign is this. If the campaign is going to be waged based on which candidate is more well-equipped to respond to COVID-19, I-- I think that's a difficult conversation for the Trump campaign to be having over the last 30 days.

So the-- the terrain is definitely going to be more difficult if that's where the conversation is headed. And certainly, I think I would expect that they would rather be trying to turn the attention elsewhere. But this is one of those stories where it's going to be very difficult to change the attention.

ADAM SHAPIRO: Jimmy, I want to get back to markets, especially about the role the consumer is going to pay-- play in this. Because despite some of the negative headwinds on consumption and on income, the consumer remains resilient. So what is that going to do with the markets, do you think, especially going into the holiday retail season?

JIMMY LEE: Adam, I think we could see some volatility. And-- and going back to that jobs number, you know, the headline number was off, but 200,000-plus jobs were lost were government sector jobs, right? Mostly in education. And so I think that-- that, you know, that story there, you have to look inside that headline to really see what's going on. And-- and we want to see a positive job growth picture.

But as far as the markets go, I think there-- you know, the president and-- and getting the virus is going to be-- you know, cause more volatility with uncertainty, and so I would expect that the markets are going to sell off on negative news like that. But I view it as-- as buying opportunities for long-term investors. I really do believe that the American consumer is very, very resilient.

I would love to see another stimulus package out before the election, or-- or hopefully soon after the election. But-- and we need-- there are a lot of Americans that are out of work, so we need some help, and for small businesses. But as far as the markets go, I think that we'll see some added volatility, but those will be buying opportunities. I'm in that camp for sure.

RICK NEWMAN: Hey, Lanhee, Rick Newman here. The markets seem to be warming to the idea of a Biden presidency, even if it's a Biden presidency with full control of Congress. And there's now been some macro economic analysis that says, yeah, the economy might actually do better if Biden is able to get through some of those big spending programs, even if he does have to raise some taxes to get there. What do you think about that?

LANHEE CHEN: Well, look, I think that, you know, that's certainly one perspective and one point of view. I think that the additional spending, the additional deficit implications, you know, it-- it really is kind of premised-- I think a lot of that's premised on a low interest rate environment. And I-- I think if we believe that that's set to continue for some period of time, you know, it's plausible to argue that what Biden has proposed is-- you know, is going to produce some positive impact for the economy.

But, you know, in the long run, I have a very difficult time seeing how $5 trillion in spending over the next 10 years won't create some kind of fiscal drag down the road. So I-- you know, I-- I understand that point of view. It's not one that I take. I do think the choice is quite stark in this election between two different directions for policy going forward, particularly if there's unified control of Congress if Biden wins the election. So I-- I would be a little bit more cautious about-- about where that policy road leads if, indeed, we see unified Democratic control of government.

AKIKO FUJITA: Lanhee, I-- I want to see if we can tap back into-- to your experience as a policy advisor for the Romney campaign back in 2012. You've got what is essentially-- I mean, [INAUDIBLE] is kind of an October surprise on the table. Put yourself in the position of strategist for Joe Biden. How would you carry this across the line now that you've got this on the table?

LANHEE CHEN: Well, here's the tough part of it, Akiko. I think initially at least, the challenge is going to be, you know, you-- you want to tread delicately, right? I mean, there's even a question about whether you can run campaign advertising given the president's situation. I think you have to keep an eye on that for the next several days.

The-- the reality, though, is this. If the president, let's say, has mild symptoms and those symptoms remain mild and recovers relatively quickly, it gives the Biden campaign a free pass essentially to focus entirely on COVID as an issue and all of the related elements of that. And-- and as I said earlier, that's something we know the American public tends to give Joe Biden and his team the benefit of the doubt on.

In fact, some polling I saw yesterday out of a few swing states rates Biden anywhere from 15 to 23 points higher on the COVID issue. So this is an-- an issue they want to be talking about. I would-- I would drive all of my campaign messaging, all of my campaign outreach, onto that COVID issue. And you saw a little bit of that in the debate on Tuesday night.

Really, the thing Biden wanted to talk about was COVID. And so this presents a natural opportunity for that, but you have to be nimble as a campaign. Because if the president's condition, let's say, it gets worse or doesn't get better anytime soon, you have to calibrate. You can't be-- you can't appear overly political, and I think that's the challenge in this situation.

JULIE HYMAN: Indeed. Thank you, Lanhee. Lanhee Chen is Stanford University's Hoover Institute research fellow. And, Jimmy Lee, thank you as well, the Wealth Consulting Group CEO. Thank you. Appreciate it, both.