#taxpolicy

What To Expect From A Biden Election

Last week was a very intense week that left most people, regardless of political leanings, very anxious as ballot counting continued through the end of the week.

It appears that former Vice President Joe Biden will be the next President (legal challenges and recounts leave some uncertainty but are not likely to shift the overall outcome). His inauguration is January 20th, so let us look at what to expect with his presidency and how it could impact your portfolio:

1. COVID-19 Pandemic

With rising cases, it is expected that Biden will rely on the advice of health experts who may recommend a federal mandate for masks and social distancing. We expect an effort to increase testing and tracing until a vaccine becomes widely available (we got some good news today from Pfizer on their clinical trials). Assuming the FDA approves at least one vaccine by early January and mass immunization of the general population starts shortly thereafter, economic growth could pick up sharply in the 1st half of 2021.

2. More Fiscal Stimulus

Many expect a bi-partisan deal offering aid to those impacted by COVID. The timing and amount of stimulus are hard to predict, but a package could include expanded eligibility and extension of unemployment insurance, new funding for the Paycheck Protection Program (PPP), aid for state and local governments, and additional funding for COVID-19 public health efforts. Another round of payments to individuals is less clear.

3. Foreign Policy

President-elect Biden could partially reverse the course that President Trump was on by easing tariffs, updating trade agreements, and re-instating certain treaties. The effect of a Biden presidency on tensions between the U.S. and China remains unknown.

4. Taxes

President-elect Biden made increasing taxes on corporations and wealthy Americans a centerpiece of his campaign. His ability to do this will be impacted by the outcome of a January double runoff in Georgia for Senate seats. If the Democrats win these Georgia Senate races, they will control the Presidency and the House, and the Senate would be split 50-50 with the deciding vote going to Vice President-elect Kamala Harris. If these two races are split, then the Republicans will enjoy a 51-49 majority in the Senate and the President’s ability to push through anything but modest tax reform will be compromised.

5. Regulation    

President-elect Biden may use executive orders to reverse some of Trump’s executive orders – especially with regards to certain immigration issues.

How does this impact the stock market?

We have seen equity markets respond positively since the election; however, we cannot forecast how long the honeymoon will last.   We do believe that corporate earnings will improve significantly in 2021 and that is what is most important to investors. We are continuing to focus on long term investing using a disciplined approach.

How does this impact my finances?

Few policy experts believe President-elect Biden will address tax policy right out of the gate. Instead, he is expected to focus attention on seeking Congress’s support to enact his more immediate coronavirus relief package to help shore up the economy.  We will continue to monitor how this may impact your finances.