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One of the top voter issues heading into the election is the state of the economy. A new poll from the Kaiser Family Foundation found one-third of voters say the economy is the most important issue influencing deciding their vote for president.
Whether the economy is up or down, the figure in the Oval Office has a direct impact on the nation’s financial state. We asked financial experts which presidency would be the worse for the economy.
We did a deeper dive into the pros and cons of each potential presidency with two of our experts. Here’s what they said.
Why some experts think a Biden presidency will be worse
“It's not a close question. Biden would be much worse for the economy, and a train wreck for markets and small businesses around the country,” said Vince Clanton, certified financial planner and president of Chancellor Wealth Management.
Financial experts also dread the possibility of the tax code becoming more confusing. The 2017 Tax Cuts and Jobs Act passed under President Trump simplified the tax code and lowered taxes rates across the board, he said. Trump’s hard stance on trade also encouraged companies to bring production back to the U.S.
“It put more money in people’s pockets and increased personal consumption,” said Clanton. “That drives the economy. Biden wants to raise taxes, which leaves less money for people to invest into the markets.”
Why some experts think a Trump presidency will be worse
While Trump’s policies of deregulation and tax cuts may have driven double-digital stock market growth, Wall Street is not the entire economy. Any short-term spending boost from Trump’s tax law will eventually wear away and leave behind a large deficit, said Chris Chen, certified financial planner at Insight Financial Strategies.
“I think people’s understanding of how Trump’s policies benefit them is misguided,” he said. “A Trump administration would continue to exacerbate wealth inequality, worsen the climate change challenge and normalize corruption.”
During the Trump Administration, 2.5 million Americans lost health care and income inequality increased, according to a study by the Congressional Budget Office. Trump’s trade policies raised prices for consumers, said Chen. The president’s denial and inaction of climate change will additionally cost taxpayers billions in reconstruction and aid in the long run.
“I get it, no one wants to pay more for taxes,” said Chen. “But it’s part of the cost of living in a civilized society. Taxes pay for all kinds of things we need, like roads, schools and in some cases, retirement and health care. And not addressing those problems now will cost even more down the road.”
The most important thing you can do is vote, in national and local elections. Your state or district representative may have a more direct impact on your personal finances than the president, said Chen.
Why? There’s a limit to what a president can do alone. Tax law changes and major overhauls are created and passed in Congress, though the president can veto a bill. The president can also issue executive orders, but not all of them can be legally enforceable. Your local representative alone can’t lower federal taxes, they may be able to pass neighborhood improvements that could increase your home’s value or enact job programs that raise wages.
If you’re worried about your investments, experts agree you should keep calm and stay the course. Jennifer Grant, certified financial planner at Perryman Financial Advisory, believes the next president won’t have a long-term impact on the stock market — investors are better off having a plan and sticking with it. A 2018 Vanguard study found the average portfolio return under Democratic presidents was 8.4%, compared to 8.2% under Republican presidents, an inconsequential difference.
“The election will certainly bring short-term volatility; however, I believe that you should not confuse political beliefs with a well-diversified investment plan,” Grant said. “The next couple of months will likely be crazy ups and downs in the markets. But it’s likely just noise.”
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Image: Nastia Kobzarenko
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