Joe Biden and Donald Trump will soon throw off the gloves over the economy.
Biden, in accepting the Democratic party’s nomination for president this past Thursday, vowed to attack the economy’s biggest obstacle: the coronavirus. He said he would implement rapid tests, increase the availability of medical supplies and protective equipment, and make sure schools can safely open. Look for Biden to hammer away at that theme in the coming weeks, political pros say.
“Biden has real experience in having the federal government lead programs, from auto rescue to Ebola,” says Tom Block, a policy strategist at Fundstrat Global Advisors. “This was a shortcoming in the Trump response to Covid 19—too much delegation and competition for resources at the state level and not enough central coordination. Biden has identified this as an issue.”
President Trump is sure to press some economic issues of his own when the Republican National Convention gets under way this coming week.
“We’ll see the Republicans go after the Democrats for advocating big government programs and much higher taxes,” says Greg Valliere, chief U.S. policy strategist at AGF Investments. “That’s the Achilles heel for the Democrats.”
Republicans are likely to tout Trump’s tax cuts, efforts to roll back regulations, and his tough stance on China. The stock market’s new highs, the low unemployment numbers before the pandemic—and jobs that have since returned—are sure to be highlighted.
The Democrats’ convention wasn’t unprecedented simply because the pandemic turned it into a mostly virtual event. Biden’s running mate, California Senator Kamala Harris, made history as the first woman of color to run for vice president with a major party.
Was the Trump trouncing and talk of inclusion and diversity enough to sway undecided voters? “You might see a small bump for Biden, and then you’ll see another small bump for Trump,” when the Republican convention starts, says Thomas McLoughlin, head of Americas fixed income at UBS Global Wealth Management. The Biden-Trump debate next month will be “the last big factor to potentially move individuals who are still on the fence,” he says.
The Democratic convention was light on specifics, but touched on plans to fight climate change, address racial inequality, reduce gun violence, and reform immigration. Biden’s list was familiar: support working-class Americans and unions, reduce student debt, and improve health care. New roads, bridges, airports, and broadband will spur economic growth.
Biden said that wealthy Americans and large corporations must pay their “fair share’’ in taxes. His plan to raise corporate taxes would undo some of the boost Trump’s tax cuts gave to S&P 500 earnings.
Democrats are “proposing so many taxes—it’s not just individual. It’s corporate, it’s estate tax, it’s capital gains tax,” Valliere says. “Everywhere you look, the Democrats are proposing significantly higher taxes.”
And yet, the stock market might shrug off the election. Oliver Allen, assistant economist at Capital Economics, wrote in a note on Friday that his firm sees U.S. stocks rising in the next few years, regardless of who wins—though they’d do a “bit better” under Trump. The Democrats’ tone “reinforces the idea” that policies favored by the party’s left, which present the biggest threat to the market, aren’t likely to materialize under Biden, he said.
Write to Connor Smith at [email protected]