At the time of this writing, it is November 2nd and I don’t know who won the election. Are you happy or sad? Whichever you are, get over it and plan for your future. Let’s take a look at the likely policies that will be followed depending on who is in charge. The following are a summary of the thousands of webinars and published articles that I have been following from financial ‘experts.’
Presidents have the ability to use tariffs, trade pacts, and certain enforcement tools in this arena. With this in mind:
Trump Administration: Does consider tariffs as part of negotiating strategy, and has used most famously on products from China (and a few others).
Democrat Position: Focus on climate-related policies and labor standards; and we don’t know if tariffs would be utilized to pursue those.
Presidents can lower prescription prices, as the current administration has done, and can also affect changes to the ACA. Most large changes need Congressional approval.
Trump Administration: Has increased transparency, would like repeal of Obamacare and a replacement by a more efficient system with private healthcare intact.
Democrat Position: Medicare for All or expansion of Obamacare likely.
Presidents can ban fracking and drilling on federal lands, or allow it.
Trump Administration: Continue to maintain “energy independence,” loosened EPA rules, and favors continued drilling.
Democrat Position: Expand EPA regulations, subsidize “clean energy,” and “phase out” oil and gas.
The President has limited authority, but has some through Executive Branch agencies.
Trump Administration: Has not introduced more regulations on high-tech except as it pertains to theft by foreign governments (mainly aimed at China); however, recent Congressional hearings may suggest that Congress is preparing to do something.
Democrat Position: Many different proposals, including net neutrality reinstated and breaking up large tech companies through anti-trust motions.
A President has significant authority in this regard, but Congress can enact legislation such as they did with the Dodd-Frank bill.
Trump Administration: Eased much of the regulatory burden put on smaller banks by Dodd-Frank.
Democrat Position: Includes proposals for limiting buybacks and corporate leverage, tighter regulation on private equity transactions, and breaking up the banks. Also proposed forgiving student loan debt, but that would require Congressional approval.
This is really only in the hands of Congress, as they must approve tax policy.
Trump Administration: Lowered personal and corporate taxes through Tax Cuts and Jobs Act (TCJA), and have stated a desire to further reduce taxes.
Democrat Position: Discussions mainly revolve around the repeal of the TCJA, increasing taxes on high net worth people, changing some of the retirement plan rules for tax deferral, and increasing the capital gains tax.
Obviously, this has become unfortunately very politically charged. Congress is in charge of passing any additional stimulus, and the House and Senate are far apart on a number. All I know is that I have too many friends who are still not working and do want to work. Not a fan of the CCP leadership at the moment.
After the election, I will evaluate the likely 2021 policies and outlook.
by Ronald Donato, Jr., CFP®, MBA
Director of Financial Services