Trump vs. Biden: Who is better for your money?
“Not Pretty, Not Rich” is a newsletter about money, finance, and the economy written by me, Sam Becker. You can connect with me through my website, Twitter, LinkedIn, or send me an email at firstname.lastname@example.org. Also, if you enjoy this newsletter, I’d really appreciate it if you would share or forward it to others.
It’s Friday, October 30, 2020.
What’s shaping the world this week
Lockdown redux: European countries, including France and Germany, are going back into lockdown to try and control the spread of COVID cases.
GDP numbers: U.S. GDP rose 7.4% during the third quarter (33.1% annualized), a record quarterly gain. It’s good, but not good enough:
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Trump versus Biden: Which candidate is better for your money?
A look at how the election could affect your wallet.
The 2020 election is almost here, finally, after what seems like a decade. President Trump and former Vice President Biden have been squaring up and going at each other for months, and hopefully next week, we’ll know which one of them will serve the next presidential term in the White House.
No matter who wins, it’s important to keep in mind that we’re facing some tough times ahead. We’re experiencing a second (or third?) wave of the COVID-19 pandemic, the economy is in recession, and there are some deep cultural issues and differences that are being hashed out in our living rooms and on the streets. That’s all to say that no one — not Biden or Trump — is going to wave a magic wand and make everything better. So let’s all keep that in mind.
But getting down to your money, I took a look at several different areas in which the two candidates’ policies or plans could potentially affect our finances. Obviously, there is a lot to cover, and I don’t get anywhere close to covering it all. So, think of this as an exercise that merely scratches the surface — simply diving into one of these topics in-depth, like tax plans, could result in an entire book’s worth of content.
That said, here’s how the two stack up across a few different categories. This is a fairly simple survey and takes a broad view of the candidates and their plans. That said, things could always change, and how you or anyone else is ultimately affected will depend on your personal situation. That said, here we go:
A main talking point for the Trump campaign is that a President Biden would raise everyone’s taxes and that everyone would be poorer as a result. Biden has said that his plan would raise taxes, but only on very wealthy earners — those earning more than $400,000.
Trump and the Republicans passed their big tax cut bill back in 2017, which lowered taxes for individual earners and lowered the corporate tax rate substantially, from 35% to 21%. But the cut for individuals expires in 2025. As for future tax plans, there isn’t anything concrete — Trump has consistently floated and promised more tax cuts, but there is no hard plan. Under a Biden administration, wealthy households and corporations would likely see a tax increase.
The bottom line:
A second Trump term (likely) means that taxes remain where they are, with a possibility of further cuts — particularly for businesses and higher-earners. A Biden presidency could result in the repeal of the 2017 Trump tax cuts, and potential increases for businesses and wealthier households.
An analysis of Biden’s plan from The Tax Foundation
Another analysis of Biden’s plan from the Tax Policy Center
A look at second-term Trump tax ideas
More on Trump’s tax ideas
The economy has been the focal point of the Trump presidency. Trump and his administration have long said that they’ve “rebuilt” the economy after they took over, driving the unemployment rate down to a low of 3.5% from 4.7%, where it was during Obama’s final month in office.
And the economy has been strong over the past few years. The Trump administration cut a number of different regulations and taxes — two things that have not-so-obvious costs — which juiced hiring (although perhaps not as much as you might think) and the stock market. The problem now, however, is that we’re trying to get through a pandemic, and there’s no easy way out of it.
Biden plans to focus on the pandemic first, and then create jobs (assuming some big stimulus bills can clear Congress) to help re-juice the economy. He’d also lend his support to progressive policies like increasing the federal minimum wage — something that would help low earners, but negatively impact employers. Trump, on the other hand, would stick to his script of deregulation and tax cuts in order to boost growth.
The bottom line:
It’s hard to say what might happen under another four years of Trump — a lot depends on getting the pandemic under control. But further tax cuts and deregulation could spur job growth, pandemic aside. A Biden administration would likely go big on stimulus measures, which could boost job growth in the near-term.
Job creation is a cornerstone of the Trump campaign’s second-term agenda
The Biden campaign’s outline of his jobs plan
A Moody’s analysis of Biden’s jobs plan
The Trump campaign’s list of economic achievements
You may remember that the markets were initially spooked when Trump won the presidency in 2016. But a short while later, stocks surged — and though the pandemic and trade wars have caused some volatility, that initial jolt (that carried on for a couple of years) sent the market to new highs.
Because nobody can predict the future, it’s all but impossible to say how a Trump second term or a Biden administration would affect the markets, but here are some resources that may help further your understanding of how elections can create some ripples. That said, more deregulation and tax cuts would likely send the markets higher, and tax increases, whereas a focus on climate and initiatives to help low-earners, would probably see them stall.
The bottom line:
If I could tell you what the market was going to do, I would be sitting in a mountain retreat somewhere and watching “The Sopranos” for the umpteenth time. But from what I gather, the markets would respond positively to Trump’s potential re-election, and probably a Biden win, too, but for different reasons. What’s going to affect the markets more than anything, though, is the government’s reaction to the pandemic, and whether or not more stimulus is enacted.
A YCharts guide: How presidential elections affect the stock market
A JPMorgan analysis on the topic
Another analysis from U.S. Bank
CNBC: How the election could affect your investments
Health care is a big issue (and expense) for most Americans. And for Trump, it’s a real problem — despite saying that he has a plan to replace the Affordable Care Act, he and his Republican colleagues have not shown anything resembling a plan in the decade or so since the ACA was signed into law.
So, again, this is an issue on which the Trump campaign doesn’t have a plan or an agenda.
A Biden administration, on the other hand, would likely keep and build upon the ACA (assuming it isn’t struck down by the Supreme Court). That would probably mean adding a public option, expanding coverage and care, and getting more people insured.
The bottom line:
There’s no way to sugarcoat it: A second Trump term would likely mean the eventual striking down of the ACA, or the continued weakening of it. Trump has no plan — not even a secret one — no matter what he claims. Under Biden, it’s probable that the ACA will be expanded and built upon, and maybe a big push toward a public option or another single-payer system.
An episode of “The Ezra Klein Show” podcast with Sarah Kliff, a health care reporter for the New York Times.
The Biden campaign’s health care page
A deep analysis of the two candidates’ plans and stances
A comparison from WebMD
Obviously, there’s a lot more at stake and on the agenda here, including issues like climate policy, energy, and education. Those three issues, and dozens of others, have the potential to impact us all financially, one way or another. And while we may have our preferred candidate, nobody knows exactly what’s going to happen with any great degree of certainty, and we should keep that in mind.
For example, I am very surprised that the Affordable Care Act wasn’t repealed in 2017 or 2018 when Republicans were in a position to do it. And no one predicted that a pandemic would wreck the economy in an election year, throwing everyone’s plans — including the president’s — out with the bathwater.
I’ll leave you with this: One candidate has clearly given some thought as to how they would approach the problems we’re facing, and consulted with experts for their opinions. The other likes to ad-lib his way through challenges, without a strategy, and then move on to the next thing, whether the problem has been solved or not. I think that’s a fair assessment, even if I’m showing my cards a bit.
But we’re going to live through some very rough and strange times heading into 2021, and it’s important to do some research, think through your decision, and then make the effort to cast a vote.
One thing to keep in mind is that we’re currently living through a once-in-a-century pandemic and associated recession. Things are pretty bad. And no matter who wins next week, the economy will probably regain a lot of steam over the next few years. Neither Biden nor Trump are going to wave their wands and restore everything as it was. But if we can all focus on the things we have immediate control over, don’t let our emotions get the best of us, and work with and listen to our neighbors in good faith, we’ll make some big strides in bridging our divides.
Numbers, links, and things to think about
13,000: The number of jobs a new Foxconn factory was supposed to bring to Wisconsin. Here’s an update.
$10,000,000,000,000,000,000: The prospective value of the metals contained in an asteroid called “16 Psyche” between Mars and Jupiter, according to a new study.
7,000: The number of workers Boeing laid off this week. The company will have reduced its workforce by 30,000 between the start of 2020 and the end of 2021.
There’s a budding business involving turning podcasts into movies and TV shows.
A very cool project from the New York Times that maps out which parts of the country are funding the two presidential candidates.
Society is wealthier, but for many people, life increasingly sucks. Why?
I’ll see you guys on the other side,