Author Archives: GK Strategy

View from the US: The Rise of American Progressives

Erin Caddell of GK Strategy’s American partner Anchor Advisors examines the ideological battle reshaping the Democratic Party and what it could mean for investors, corporates and the future direction of US policy

Sir Isaac Newton’s Third Law of Motion, published in 1687, states that for every action there is an equal and opposite reaction. This centuries-old theorem may go some way toward explaining the ideological split currently occurring in the U.S. Democratic party – one that could carry significant importance for the congressional midterm elections in November 2026 and for U.S. policy for many years to come.

Republican President Donald Trump faces a difficult political backdrop approaching the midterms, often thought of as a referendum on the incumbent U.S. president’s first two years in office. Trump faces sagging approval ratings in his second term, with notable weakness on his handling of the economy due to rising inflation, as well as a Middle East war with no easy way out. As this column has noted before, Republicans are already defending one of the narrowest House majorities in American history (218-212, with four vacancies and one independent).

Given these dynamics, many Democratic leaders and pundits have suggested the party employ a midterm campaign version of Napoleon’s military adage to never interrupt your enemy when he is making a mistake: focus voters’ attention on Trump policies that many voters view unfavorably rather than on promoting a robust alternative agenda. To these strategists, the poster child for the ideal Democratic candidate in 2026 is Roy Cooper, a two-time former governor of North Carolina running for U.S. Senate in that state with the simple slogan “Make Stuff Cost Less”. Cooper focuses fairly narrowly on criticizing Trump actions that he argues have resulted in “farmers… getting crushed by tariffs” and “families… seeing prices rise at grocery stores and restaurants.” In response, Cooper proposes a modest set of reforms such as tougher anti-trust enforcement and making data centers pay more for the power they draw from public utilities.

Cooper may well reach the Senate – he has run ahead of his Republican opponent in every poll published since the race began. But the middle-of-the-road approach of Cooper and other moderates is not capturing the hearts of Democratic voters writ large. The hard-edged governing style of Trump and his Republican congressional allies, in areas ranging from immigration enforcement to foreign policy to social spending, has, to use a scientific term, made Democrats mad as hell. And – returning to Newton’s Third Law – Democrats want their leaders to push back hard at Trump with policies equal and opposite to those promulgated by the GOP-led Administration and Congress.

Evidence of Democrat voters’ more confrontational impulse is ample in recent party primaries to select candidates to run in the November congressional elections. In June, two progressive U.S. House candidates running to represent district in New York City – Brad Lander and Darializa Avila Chevalier – ousted incumbents, while a third (Claire Valdez, a member of the state Assembly) defeated the Brooklyn borough president in a race for another U.S. House seat. All three candidates support increased government support for public housing, universal federal health insurance, abolishing the U.S. Immigration and Customs Enforcement (ICE) agency, cutting defense spending, shifting energy production from fossil fuels to renewables to address climate change, and reducing American military involvement abroad, among other progressive policies. All are vocal in their criticism of Trump. It is not just in deep-blue New York where the left is gaining momentum: earlier this month, Melat Kiros, a 29-year-old Democratic U.S. House candidate in Colorado, backing an agenda similar to her New York counterparts, unseated U.S. Rep. Diana DeGette, who had represented the district in D.C. for nearly 30 years. Progressive candidates have tallied recent election wins in states from Maryland to Oregon.

A number of the candidates cited above, and others squaring off against more-moderate Democrats, are members of the Democratic Socialists of America (DSA), a left-leaning political organization founded in 1982. DSA’s importance in the U.S. political ecosystem can be easily exaggerated by both critics and supporters – the organization reports about 120,000 members, compared to 45 million Democrats and 39 million Republicans. Yet the DSA has clearly touched a nerve within a Democratic party still trying to figure out how best to oppose Trump and his MAGA movement – and position itself for a post-Trump future. The party’s goal to create “a system where ordinary people have a real voice in our workplaces, neighborhoods, and society” (see below) echoes in the campaign speeches and placards of progressive candidates on the stump today. The most famous DSA member is New York City Mayor Zohran Mamdani, the 34-year-old political wunderkind who rode his own anti-Establishment, anti-incumbent wave to power in January, defeating Andrew Cuomo, former New York governor and scion of a well-known political family.

What is Democratic Socialism? “Capitalism is a system designed by the owning class to exploit the rest of us for their own profit. We must replace it with democratic socialism, a system where ordinary people have a real voice in our workplaces, neighborhoods, and society… We want a democracy that creates space for us all to flourish not just survive and answers the fundamental questions of our lives with the input of all. We want to collectively own the key economic drivers that dominate our lives, such as energy production and transportation. We want the multiracial working class united in solidarity instead of divided by fear. We want to win “radical” reforms like single-payer Medicare for All, defunding the police/refunding communities, the Green New Deal, and more as a transition to a freer, more just life.” (Source: Democratic Socialist of America)

The recent success of DSA members and similarly inclined progressives has led to an equal and opposite (Newton again!) reaction from moderates who argue that moving too far to the left will cost Democrats in the midterm elections in November as well as the presidential election in 2028. In a July 20th note, Third Way, a center-left think tank, warned: “If [Democrats] follow the siren song of the left, they will steer their ships into the rocks. If they remain in the mainstream, they will have a fighting chance of winning not only the primary, but also most crucially, the general election.” Third Way and other naysayers of the progressive wave cite the example of Kamala Harris, who ran on a progressive agenda as the Democratic party’s presidential nominee in 2024 after then-President Joe Biden opted not to run for re-election. In the 2024 campaign, Harris proposed ambitious spending to combat climate change, an increase in the corporate tax rate and anti-price gouging laws for groceries, among other policies popular with many progressives. Trump, of course, comfortably defeated Harris in the presidential election (though the hurried mid-campaign handoff from Biden to Harris certainly didn’t help).

What does this mean for US-focused investors and corporates?

The moderate, middle-of-the-road approach of some Democratic candidates doesn’t seem to meet the political moment. Thus, we do think the progressive movement will move the Democratic Party to the ideological left in the years to come, even if “socialist” candidates remain a small portion of the electorate and the Congress. This could benefit sectors that have been out of favor thus far in Trump’s second term. For instance, health insurance companies that provide insurance under Medicaid and other healthcare programs for disadvantaged Americans could benefit from reversal of recent cuts to such programs under a Democrat-controlled Congress and/or White House. Similarly, apartment-focused real estate investment trusts (REITs) would benefit from expanded public spending on housing in a more progressive political climate. Child-care providers could see the same from federal programs to provide more support for working families. In sum, Democrats’ intense anger at Trump’s policies and persona are likely to be quelled only by a similarly forceful agenda on the other side of the spectrum – the equal and opposite reaction crystallized by Newton so long ago.

 

 

What does Andy Burnham’s social care announcement mean for providers?

On Tuesday 29 July, Prime Minister Andy Burnham, Louise Casey and Health Secretary Yvette Cooper outlined the government’s approach to adult social care reform. Burnham said it was ‘shameful’ that decades of political point-scoring had come at the expense of meaningful reform and argued that he is prepared to spend political capital to deliver lasting change. The prime minister used the speech to make three key announcements.

First, Burnham confirmed that Louise Casey’s independent review of adult social care will be accelerated by a year, with final recommendations now expected by summer 2027. He said Casey had been asked to consider how the government could deliver a National Care Service, arguing that social care should become more preventative, person-centred and better integrated with the NHS.

Second, Burnham announced a renewed focus on the social care workforce. Building on the government’s plans to introduce a Fair Pay Agreement for care workers from 2028/29, he said ministers would explore wider reforms to improve pay, training and career progression. He also proposed creating clearer pathways between social care and NHS roles to help professionalise the workforce and improve recruitment and retention.

Third, Burnham announced the launch of cross-party talks on social care reform involving the Conservatives and Liberal Democrats. He argued that lasting reform would require political consensus and described the discussions as the first test of his commitment to a less adversarial style of politics. Burnham said common ground must be found if policymakers are to address challenges that have remained unresolved for decades.

Both Andy Burnham and Louise Casey signalled that future reform would involve greater scrutiny of private providers. Casey argued that there remains an important role for a mixed market in adult social care, but criticised providers perceived to be “profiteering” from care services. Burnham echoed these concerns, arguing that some parts of the sector have prioritised profit and cost-cutting over the quality of care and outcomes for vulnerable people. However, Burnham has historically adopted a pragmatic rather than an ideological approach to public service reform. As health secretary in the Brown-led government, he recognised the role that independent providers could play in increasing NHS capacity and reducing waiting times where they delivered value for patients and taxpayers.

As a result, he is unlikely to pursue reforms that materially reduce the private sector’s role in adult social care. Given the significant share of care capacity and expertise provided by independent providers, the prime minister is likely to be mindful of avoiding reforms that could destabilise the market by causing market exits and place further pressure on already stretched services. Instead, providers should expect a greater focus on accountability and transparency, clearer standards to improve the quality and consistency of care, and enhanced scrutiny of how public funding and provider profits are used. The NHS Modernisation Bill currently going through the Commons is one key place to watch if any substantive change is to come forward.

On funding, Burnham argued that significant improvements could be achieved through more effective use of existing resources before tax rises are considered. He highlighted the costs associated with avoidable hospital admissions and delayed discharges caused by inadequate social care provision, suggesting that greater investment in prevention could deliver substantial savings across the wider health system. However, significant questions remain about the long-term funding model for a National Care Service. Reports suggest officials are exploring options ranging from social insurance-style contributions to inheritance-based levies, although ministers have stressed that no decisions will be taken until Casey’s review is complete and the new prime minister remains constrained to some extent by Labour’s 2024 manifesto commitments on tax.

Phil Hope, GK’s Strategic Adviser and former care services minister under Andy Burnham at the Department for Health, who was directly referenced in the prime minister’s speech said: ‘The prime minister was clear that he wants to build a broad consensus around social care reform and move the debate beyond the political point-scoring that has hindered progress in the past. Bringing forward the Louise Casey review to 2027 creates an opportunity for that conversation to take place away from the pressures of a forthcoming general election. While concerns about profiteering were raised, there was little detail on the scale of the issue or how ministers might address it, making this an area the Casey review is likely to explore further.’

Steve Brine, GK’s Strategic Advisor and former health minister as well as chair of the cross-party Health and Social Care Select Committee said: ‘It was a hugely impressive performance from Andy Burnham with what was more a political than a policy announcement but his authenticity on the subject is welcome and important. It was really about creating the political conditions for reform rather than announcing the detail, but that day will come – along with who pays – and that is the next big moment. Casey’s challenge is to define what ministers actually mean by ‘National Care Service’ – is it about standards, funding, eligibility – and for the PM it’s how will someone’s experience be different in two, three or five years’ time? That’s ultimately how people will judge success.’