Trump v Biden- Decode Trump & Biden's Election Agenda

The ideological differences between the Democrats and the Republicans are reflected in Trump and Biden’s policies. While the Dems believe in government interference and optimize education and healthcare, the Reps’ economic dogma has always been “the invisible hand”.

A Greater America— Trump is set to take his first-term policies further down the same direction if he gets re-elected.
A Fairer America— If Biden takes office next year, most current policies will have to halt or reverse.

We think the stock market will reflect the winning candidate’s policies ahead of the election day, if poll gap widens. See polls here: Trader’s Insight> 2020 US General Election

Donkey vs. Elephant

The Democrats have embraced Keynesianism since Franklin D. Roosevelt took office in the 1930s. They believe in expanding government spending, raising taxes and wages, and enhancing the role of unions.

The Republicans, on the other hand, advocate the laissez-faire economy. Milton Friedman was President Reagan’s advisor, and Reaganomics was about reducing taxes and government regulations.

When it comes down to family and personal level, the Reps are more conservative than the other. They oppose same-sex marriage and abortion, while the Dems value social equality and minority rights.

The two parties have been dominating the American political landscape for long, and the polarized politics has oversimplified almost every issue of all levels, but if we take a closer look at each candidate and their stance, we will discover that no two candidates are identical. Hilary Clinton and Joe Biden are labelled as the Establishment in the Democratic Party; Bernie Sanders is a socialist sitting at the left. Donald Trump, although known for his anti-immigration and nationalist policies, sometimes makes center-leaning remarks against the Iraq war and free trade.

The American think tank Pew Research Center conducted a research in 2019, which shows a great divide between the two sides. The Reps prioritize issues including terrorism, economy, social security, immigration, and military. And the Dems are more focused on healthcare, education, environment, Medicare, and the poor and needy.

World trade has a relatively low priority among all issues, and even if American trade lays a profound impact on the world’s economy, Americans care the least about world trade.

Trump vs. Biden

On economy

With the election around the corner, Trump has not presented a substantial, second-term agenda, but he has signed several coronavirus relief bills into law this year since the pandemic hit. His core policy remains the same as when he was running for his first-time presidency, and in a FOX news interview he has reiterated that “we are going to rebuild the economy, we’re going to bring back jobs from all of these foreign lands that have stolen our jobs on horrible trade deals. We are going to continue to make great trade deals.”

It’s reported in June that, in response to the sluggish economic conditions, Trump is preparing for a $1 trillion infrastructure plan, which covers from constructing roads and bridges to building 5G and internet in the rural areas.

Biden refers himself as “middle-class Joe” and has said many times in his speeches that America is not built by the Wall Street shareholders but by the middle class. Biden’s policies include raising minimum wage, strengthening the role of workers' union, and investigating antitrust violations among large tech companies like Facebook, Google, and Amazon.

On July 10th, Biden proposed to “Build Back Better” with a $700 billion plan of “buying American goods and supporting American jobs”, countering his rival’s “Make America Great Again”.

During the past 4 years, Americans celebrated a vigorous job market and a very strong stock market. Trump’s task right now is to pass another round of fiscal stimulus as soon as possible, while Biden focuses on stimulating the post-COVID economy.

On taxes

Trump’s 2017 Tax Cuts and Jobs Act, seen as a big favor for the rich, has lowered top individual income tax rate from 39% to 37%, doubled standard deduction, and reduced statutory corporate tax significantly from 35% to 21%. Small businesses also received a deduction of 20%. Telecom and financial services companies benefit the most from Trump’s tax cuts.

The TCJA expires in 2025, and according to the Federal budget proposal for 2021, Trump hopes to extend his tax cuts into 2035.

In contrast, Biden calls for increasing the top ordinary income tax rate from 37% to 39.6% and rewarding the working class. Reversing Trump’s tax cuts is expected to bring an additional tax revenue of $4 trillion over the next decade, and Biden plans to distribute the additional revenue to improving healthcare, developing renewable energy, and meeting people’s demand for childcare and long-term care.

A research analysis done by Tax Policy Center points out that 74% of the additional tax revenue would come from the top 1% of the income earners in the US; 93% would come from the top 20%. However, increasing taxes might hurt the stock market. Goldman Sachs estimated that raising taxes will reduce S&P 500 EPS down by roughly 12% for 2021.

On energy

Trump has openly denied climate change and withdrew from Paris Agreement. He calls for America’s energy independence and promotes fossil fuels. In March 2017, he signed a few executive orders to repeal Obama’s Clean Energy Policy and to raise oil production and exports. In the following year, the US became the biggest crude oil producer in the world.

Biden was a pioneer who has brought forward legislations on climate change in the 80s. During his term as a Senator, he raised awareness for climate change; as a Vice President, he helped Obama put in place regulations on greenhouse emissions and develop green energy.

Biden plans to re-join Paris Agreement and achieve net-zero carbon emission by 2050. He will not ban shale oil drilling, but he will ban new extractions on Federal land and water. He plans to invest $2 trillion in battling climate change.

The increase of America's oil production and a low oil price have kept both inflation and interest rate low. Biden’s policies, on the contrary, encourage development in solar energy, wind power and electric cars.

On US-China trade

Trump's goals is to bring back manufacturing plants to America and to preserve America's leader status in the global economy. In order to achieve these goals, he aims to dismantle China’s manufacturing empire. His main strategy to beat China’s MIC 2025 and to secure a good profit for US products and exports was by imposing high tariffs on Chinese imports. After many rounds of trade talks with Chine, both countries signed the first-stage trade deal in January, 2020, which also included intellectual property enforcement and protections against forced technology transfers.

Biden embraces free trade and multilateral cooperation. He had advocated China’s joining in the WTO in the early 2000s, but later shifted his stance and called for the signing of TPP which then crippled China’s increasing influence on global trade.

Some have seen Biden as China-friendly because the Democrats idealized the democratization of China. Although Biden acknowledges China’s breach of global trade law and violations of intellectual property rights and human rights, he believes enhancing trade law enforcement and restart negotiating over TPP are better ways to balance out China's growing influence.

On immigration

Trump’s anti-immigration policies and his promise to build a wall along Southern border stroke a chord with his supporters. During his Presidency, he attempted to end the DACA Act (aka Dreamers Act) and also banned entries of citizens from several middle-Eastern countries. This year, he suspended H-1B and L-1 visas and banned hiring high skill immigrant workers.

Biden is set to reverse Trump’s immigration restrictions. His family background allows him to believe America is a nation of immigrants. He said the money for building a wall will be used to upgrade border surveillance technology. Whereas Obama administration had deported more than 3 million illegal immigrants in eight years, much more than Bush (2 million) or Clinton (1.9 million) did. Trump has repatriated 800 thousand people in 3 years.

On healthcare

Republicans have aimed to repeal and replace Obama’s Patient Protection and Affordable Care Act (ACA, or “Obamacare") and one of Trump’s early executive orders is to repeal Obamacare. Republicans view some provisions in the Obamacare as interference of the free market. Trump and his party also plan to reduce Federal budget for healthcare.

Biden takes pride in bringing Obamacare forward and proposed to expand and optimize the policy. He on one hand opposes Bernie Sanders’s Medicare for All, and on the other hand, aims to have 97% of Americans insured under Obamacare and a new “Public option”.