The 2020 Presidential Election is the most important of our lifetime...
This is a tagline we have often seen portrayed in the media and in our social circles. With polar opposite economic policy up for vote, this election could dictate how America's future growth fairs. While I'm sure you are interested in my personal views (I would suspect you aren't interested), I am going to break down a few major economic policy differences between the Trump and Biden administrations. Then end with a few policies that hold some (dare i say) common ground between the two.
The Major Differences up for Debate:
- Tax Policy is one of the hottest issues up for debate between the two parties. The Democrats would potentially vote to increase taxes on corporations from 21% to 28%, while increasing the taxes of wealthy individuals making over $400,000. Along with an increase in taxes for Capital gains. The Republicans would possibly vote for another tax cut for Americans as a follow up to the Tax Cuts and Jobs Act of 2017. The democrats are also in favor of raising the Federal Minimum wage, while Republicans would likely limit low-wage Immigration as a way of boosting employee wages.
- Trade is another item up for hot debate between the two parties. Democrats would likely repeal Trump's tariffs on Steel, Aluminum, and possibly other goods. Opening up our shores to an increase in imports from other countries and attempting to take a more collaborative approach with other countries in trade negotiations. The Republicans will continue their tough stance with China on Steel, Aluminum, and other Chinese made goods; All the while hoping to negotiate further trade concessions from countries who have taken advantage of us for far too long. As a result of tougher trade policy, the administration is hoping to increase U.S. good production and exports through the slogan "Buy American."
- This topic is especially important, as America is energy independent as of 2019 for the first time since 1957. But, with that being said, the two parties have a vast gulf between them in terms of fossil fuel consumption/reduction and the move to electric/fossil fuel free alternatives. The Biden administration has previously stated that they would like to spend 2 trillion in 4 years on clean energy/electric innovation. In a more radical policy that the Democrats have proposed, the Green New Deal, which is a plan that covers a lot more the "net-zero emissions." The plan could cost upwards of $51-93 Trillion dollars over the next decade, averaging about $600,000 per household. Republicans would likely continue to utilize fossil fuels while developing cleaner energy strategies and more efficient implementation of air quality standards. America’s air is cleaner today than we have seen in recorded history. Emissions of common air pollutants declined by 7% since 2017, and will continue to decline in the coming years. In 2019, the U.S. had the largest absolute decline of energy-related carbon dioxide emissions of any country in the world.While both parties insist they care about the good of the environment, one can conclude that they have obvious differences in achieving their vision for a "better world."
Some Common Ground (Finally!)
COVID-19 Recovery Stimulus
- With an emergency order to produce a Vaccine for this worldwide pandemic, the 2021 legislative agenda will likely focus on economic recovery. Depending on the path of the pandemic, additional stimulus bills could be on the way, along with other fiscal and monetary stimulus measures. U.S. Secretary of the Treasury, Steve Mnuchin, and House Speaker, Nancy Pelosi, are in continued negotiation over a new stimulus bill that would help the American economy continue its recovery.
- Both parties have expressed frustrations with Big Tech companies, raising the prospect of antitrust actions, tougher regulations and greater oversight in the areas of privacy protection and suppression of political viewpoints. Breaking up Big-Tech would be more likely under a left-leaning government, but many on the opposite end of the political spectrum are for the idea too.
U.S. & China Trade Tensions
- While many think this Trade war is the President's doing, most believe that things would not differ under a Biden administration. Both parties believe that China Trade discrepancies are here for the long term and could shape the global trade landscape for decades to come. There is also Bipartisan agreement that we need greater protections for intellectual property. So, no matter who is in Government, expect this to be a big issue that we are in agreement on.
As always, election years tend to be more volatile with potential shifts in policy. History does tell us that no matter who is in office, the markets tend to perform well over the long term. Stick with your time-frame and diversify your portfolios. If you have any questions, please do not hesitate to reach out.
Jason R. Jacobi