A Political Perspective
An Economic Look at a Trump vs. Biden for " We The People."
Without any question this election period is easily the most contentious in my lifetime, and likely in all of American History. The fact is, we have two totally, and I do mean totally contrasting plans for the future of America. And, with that said, whoever controls America, can virtually shape how the rest of the world moves as well.
Historically, most people recommend that as a business professional we should refrain from discussing religion or politics be it at family dinners and even more so in our business. The reason of course, is that your opinions can come with an enormous expense such as the loss of clients and relationships within your personal life...and I get that.
However, what makes this election different than any other is the significant differences in how our country moves forward... and by default, how the insurance and financial world moves forward. So, this time, political results can and very likely will dramatically change how the markets move, and the decisions you'll have to make next with your financial plans.
As a result, because of the stark differences of each candidate's proposals, this election becomes a bit more germane to our business, as I am often asked how as a financial professional do I view how the outcome of this election might change the economic outlook? Both immediately and over the long-term? Now, I could take the easy way out and suggest that I prefer to keep my political perspectives personal and just go about life regardless of who wins, but I assure you there will be decisions to make and we must understand how to adjust our financial plans as a result. However, because of the nature of this election and how it will affect all of us both personally and financially (as well as what America might become) I have chosen to share with you my thoughts.
We will start with Biden & The DNC, since most people have no clue about how that might fly, while we already have a good idea about how the world has fared under his administration, all of which I will address.
If Biden Wins.
While we do not have a true and accurate accounting of how all things might shape up with a Biden Administration, we can, however, analyze the likely impact of the DNC plan (available online) of their proposed legislations and how, if those changes come to fruition might affect all of you financially! So, how would Joe Biden’s Plans (plus, what he says he will do), the enactment of the DNC manifesto affect your life? Let's speculate.
First, and under the heading of "Truth Be told" If Biden wins it should increase my business dramatically as I am sure Wall St. will not respond positively and we might see (as Trump also predicts) a Stock Market Crash. If that happens and many people decide it's finally time to discontinue risking their 401(K)s & IRAs (the most important dollars of their lives) to the volatility and into safer vehicles (FIA's as an example) that movement of cash out of the market, will likely contribute to the negative repercussions on Wall St. And, even if you say you say you hate Wall Street, those are the companies that drive both jobs and the economy.
Now, to how their actual plan can be even further challenging, we must first look at what Joe and the DNC have promised to do, and what their proposed legislation suggests they will do, and then I''' breakdown how each proposal might affect the country and ultimately your wallet based on Economic possibilities. Here goes...
Joe and the DNC say they want to...
*Repeal the Trump Tax Plan
*Raise Taxes on Business to 28%
*$15 minimum wage
*Universal healthcare & Medicaid for all Americans AND illegal aliens. (Pg. 61)
*Immediate citizenship for illegals (Pg. 63)
*Free college for all (Pg. 65)
*Eliminate border walls and Immigration Enforcement (Pg. 62, 64 & 65)
*Make Washington D.C. the 51st State.
*$70 trillion Green New Deal, where the USA would be “net-zero greenhouse gas by 2050.” But CLOSE all coal & natural gas power plants by 2035. By 2030 all new construction in the USA must be net-zero greenhouses.
*Create a U.S. Agency for Global Media “to ensure that only accurate information is reported in the news or on the internet ???”
(who makes that decision as to what is reported? It's their way of hiding the facts about corruption)
*Rejoin the Paris Climate Agreement!
*Create a new federal agency of 100,000 people to trace every American! (say what?)
*Immediately restore voting rights for convicted felons.
*Provide funding to facilitate vote-from-home and mail-in-voting.
*Create a new Federal Credit Bureau (to replace Equifax, et al), and require banks to use this new credit reporting service that will be set up to assist low-income people in buying houses and cars.
*Make gun manufacturers responsible and liable for how their guns are used. (Destroying gun manufacturing)
*Declare and treat drug use as a Mental Illness instead of an illegal activity.
Frankly, there is way too much to unpack & cover how each can affect you personally and financially, but this is my opinion as a financial professional for more than 3 decades.
1. Medicare/Medicaid for all! "First and Foremost" it is NOT free!
With Medicare for all, you/ we would all be required to pay an increase in taxes to cover the cost of the benefits for those that are either not working or too poor to pay, and then this is the possibility of more illegal immigrants to pay for as they plan to tear down the 400 miles of wall while depleting ICE, opening the floodgates to many illegals at our expense (this is in their plans, read it). In other words, most of your income may be shifted to the government (in taxes obviously, or whatever they choose to call it) to pay for the expenses for Medicare/Medicaid for all. That means even if you eat well, exercise, and do your part to remain out of the Dr.'s office and hospitals, you're still going to be on the hook to pay more for healthcare, not for you or your family, but for other people. And, just so you know, here is just how challenging Medicare already can be today.
A Look at Medicare Today
As fate would have it this happens to be the start of AEP (Annual Enrollment Period) for Medicare-eligible individuals when enrollees can either obtain coverage for the first time or make changes due to increasing cost, no doctors you prefer on the plan, and/or inadequate benefits. What you need to know is that there are many restrictions with Medicare. For example, where (what state or country) you can receive medical treatment. Actually, when you look at Medicare it is restricted and it is NOT a great plan.
The fact is, that most every recipient has or will pay into the system to have it, first during their working years and second while on the plan. Additionally, there are benefits you must pay for as out of pocket expenses at the medical facility, such as co-payments, deductibles, or Rx Drugs, and that deductible as well. In addition, some doctors prefer not to participate in Medicare as it is often counterproductive (costly) for them. It's the same reason why many doctors prefer not to be part of the ACA, or why there is essentially only ONE insurance carrier remaining on the ACA exchange. It simply became too costly for carriers and would've ultimately driven them out of the business.
In addition, the ACA rates and mandates forced companies to reduce hours for employees effectively making them part time so as not to have to pay for their healthcare. Many middle-class Americans saw their premiums rise to the extent that the monthly premium was greater than their mortgage payment. I frankly, lost many recurring clients as well as seeing my own personal healthcare rates more than tripled.
So, while I agree that every CITIZEN should be entitled to healthcare, there are better alternatives and I believe I could solve most of it, I cannot get the Powers that be to call me. However, if you or anyone you know NEEDs healthcare benefits and they do not smoke (a choice that is costly both financially & physically) I can share what is among the most comprehensive plans anywhere, available for as little as $180 per month per person (discounted for family).
2. The Economy & Your Economic Outlook
The fact is, that Businesses & American workers, do not want to see their jobs going overseas for cheaper labor. And, now with the reports of the Biden's ties to Foreign Countries (check out info on Hunter Biden's laptop) paying the family millions could spell out more corruption, American businesses will not react well to this. I know many people might want to attack me on that one, but I encourage you to look it up before all of Social Media erases it from the web, or better yet watch other news sources or listen to talk radio.
A. If he repeals the Trump Tax Plan, your taxes automatically increase on Day 1--- Yes, they do!
It's“the repeal” where your costs & tax increases come into play. For that, you'll need to Understand how the Current Tax rules work and how that affects me and you.
Here's how that works.
- The current $12,600 Deduction per person goes back down to $6000 (the original amount prior to the Trump Plan).
- The child tax deduction gets cut in half.
- The tax brackets increase as well so, you will all pay more to the IRS immediately!
B. If they bring back the ACA and the mandate and if you fall in the middle, whereas you can’t qualify for the free (taxpayer-funded) coverage & you can’t afford the higher insurance rates with their exorbitant deductibles-you actually won't have any coverage at all, but you'll still have to pay the mandate (aka taxes) for other people's healthcare benefits (not for your family), and where potentially some are in the country illegally not paying taxes or contributing to the system as they send their earnings back home to their country, while you are likely struggling and going backward financially.
C. The $15 hr Min Wage / Raising Corporate Taxes & raises taxes only on those above $400k?
If BIDEN increases the tax on the wealthy, many of those might take their residency to foreign countries with enough money to never work again, much like the wealthy have recently left NY and CA to escape their covid restrictions. That means, fewer people here to tax. And, if they own corporations and move out of the country with their businesses in hand, then there will be fewer jobs in the USA, leaving us with more of the poor to help out (from our taxes), and frankly, no one I know has ever received a job from a poor person.
If they increase the min wage to $15 an hour, that means fewer jobs the same way it will by Raising Corp Taxes. Here are some of the repercussions of that proposition. BTW, min wage was meant for HS kids to get into the workforce and to help support themselves as they enter college, not to pay for a family!
Raising the Corp taxes and/or the min wage, will encourage companies to either raise prices or cut jobs. Have you been to a McDonalds' or Grocery Store where Checkers and Order Takers have been replaced by Computers? That will increase exponentially, to replace $ 15-hour min wages. And, If they cut jobs then we'll have more on unemployment with their benefits paid by taxes on “we (you) the people.”
IF they bring back the mandate, corporations will make most workers part time (fewer hours) to remove them off of the list of employees eligible for health benefits.
If we have fewer people working we have fewer people paying into the tax system & into SS which then requires potential cuts to both unemployment and/or SS benefits so the Govt is able to continue to provide the benefits you need or earned (Unemployment & SS).
D. Assuming none of that ever happens (but it likely will) we the working class will then see increases on the SS costs OUT OF OUR PAYCHECKS today in order for Gov't to continue to pay the people.
E. (This really stinks) Potentially, there could be cuts to you for your SS income when your time comes to receive your benefits in spite of having paid for them for a lifetime.
F. If instead corporations raise prices... then by default, you pay more (inflation), and by default, the sales tax on each product or service increases, which means more money out of your pockets.
G. He says he wants to raise capital gains taxes! That means fewer people willing to invest in the stock market and potentially less RE investors as well, as benefits for those investments slowly evaporate making it less viable to do either or both. That ultimately means both of those markets could decline.
H. Now, If corporations instead decide to farm our jobs to China for lower price labor and or prices... then we still have unemployment here, AND we become beholden to a communist country as they control our economics. This is the arrangements they had under prior administrations which made them a more powerful nation and military threat. Remember years ago, when something said "made in China" it was a poorly made and inexpensive product. Now, they’re controlling the markets by keeping themselves in everyone’s business. Btw, also hijacking our information and research.
I: If we continue to have low mortgage interest rates & fuel prices (as a result of Fracking which has made us energy independent) then we have less dependence on the Middle Eastern countries, lower expenses, more homeowners, less out of pocket costs, more money invested, which means greater stability for our corporations... a good stock market. Which ultimately means more in all your pockets. And, then the challenges that exist for many of the poor slowly disappear as demand for jobs here increases.
J. In the end, the candidate that brings better economics to the people is what makes the country work. If everyone who wants a job, has a job and their economics improves, you will see less crime.
How can you protect yourselves either way? - if you are at or near retirement and you want to insulate yourself against the possibility of an economic decline or potentially rising interest rates, then perhaps we should talk now to discuss how you can secure your assets like a solid bank account but without forfeiting the potential of a rising and growing economy today.
K. Additional points:
Did We mention that they are planning on TRACKING EVERY AMERICAN - talk about an invasion of your privacy and Your Rights!
College is NEVER FREE, someone pays for the professors, the building, the lights, etc... it's you paying for life where you can NEVER pay it off, vs. 4 years going to the schools you can afford or qualify for and you can eventually pay it off!
If they allow illegal immigrants to vote and make DC & PR states, they assume they will vote Democrat and they control the USA forever, thereby eliminating our system of "checks and balances!"
And- IF they take away guns, and your money, they reduce or eliminate your ability to fight for your freedom! It's a plan for total control!
This is Pure Socialism and it has not worked well anywhere!
If Trump Wins.
Frankly, we already have a pretty good idea of what likely happens with Trump since he is President and we know what is or has happened from an economic standpoint. I do not care to comment on how one might interpret or feel about his personality that's not relevant here. The fact is, half the country appreciates that he says what he feels while the other half tends to react to what he says (or to what has been reported that he said), even if those words from both sides are reported and then taken out of context.
Now, I don't have to repeat just how crazy 2020 has been... you already know! It will forever be known for the Covid-19 Pandemic, the riots ('peaceful protests"), BLM, Antifa, Defund the Police, etc., but it should also be acknowledged for the rise, the covid fall, and... the rise again of the stock market. 2020 will go down in history as the most divisive since the Civil war & perhaps the most unique year in American History. However, because of what has happened, we already know how the world will likely fare with a continued Trump Presidency. And, in spite of the ongoing challenges, lockdowns, and loss of businesses and jobs (as a consequence of the shutdowns for COVID), the stock market has rebounded in an unprecedented fashion during the most challenging times in American history all under this current administration.
What we already know...
1. Trump's position on things such as spending American taxpayer dollars on the Global Warming Initiative (not), while the major offenders (of pollution) are for the most part not contributing. We already know how he obtained additional financial assistance from our NATO allies to reduce the expense for the American Taxpayer.
2. We know how the results of fracking have led to American Energy Independence as it lowered our fuel costs. We know how his renegotiation of NAFTA to the USMCA has benefited workers in America while maintaining opportunities for both Mexico and Canada. We know how he managed to shake up the criminal justice system when they reformed many inequities with Prison Reform - the Second Step initiative.
3. His administration has worked to bring home troops as they kept the USA out of foreign wars on foreign lands, His administration actually brokered peace treaties with Israel and their life long adversaries, something that hasn't been accomplished in many, many years. And, while spending billions to beef up the military seems expensive, it falls in line with what Reagan once suggested, "peace through strength!" It's that military strength that keeps us out from more military challenges. All Factors that have been extremely positive for our economy, your 401K's, and the Job Market. Hence, all good things for business, the economy, and your financial life.
4. Now, many have called him out for his response to the Pandemic blaming the business & job losses on him... If you go back to the first case identified within the US, President Trump, shut down travel from China and eventually Europe all while the Democratic leaders, such as Pelosi and De Blasio were encouraging gatherings in NY (ST. PATRICK'S DAY PARADE ) and SF ("COME OUT TO CHINATOWN), while Biden called him Xenophobic. Nobody, not even Dr. Fauci initially suggested the need for concern or suggested wearing a mask. Frankly, I'm not sure what anyone else would have done differently. By comparison, almost 60,000,000 Americans contracted H1N1 which fortunately did not have as challenging effect on the weak & elderly and didn't receive nearly as much "air time" as COVID rendering the former administration for lack of a better word, "lucky."
Now, what happens with our economics is so important because as economics goes, so do our personal lives.
5. The personal & financial growth of "we the people." Why? Because when you (the majority) are doing well financially, you will have a better & brighter outlook on life. It's your opportunity to move forward positively as you grow financially and support yourself and your family. Therefore, at the end of the day, from the financial & investment perspective we already know what we have and what we likely will continue to have with a Trump Administration, and it has been pretty good for most people. It's lower taxes, lower interest rates which means more... More money in your pockets, More money in your retirement accounts which all translates to rising homeownership, a thriving stock market, and more jobs in America, all of which inspire investors and investments.
Side Note: I’m willing to do a FB live to answer any financial questions or discuss your suggestions for how any of this is better for "We the People of the United States" if enough people want to discuss the economic pros and cons and how to be secure in your personal life either way.
6. Additional Commentary; No administration will or can be perfect for everyone or every business regardless of which party is running the country. Because everyone's circumstances are always unique everyone will experience different results and they cannot always turn out well. But with that acknowledged, I will quote a democratic president JFK, who famously said; "It's not what your country can do for you, but what you can do for your country!" Unfortunately, sometimes in order for the majority to win, someone will not be as fortunate but that is where it becomes our job to make it possible (via, re-education, trade schools, grants, etc.) for those less fortunate or hurt by changes to be able to adjust and take the steps necessary so they too can eventually thrive. That's how "we the people" help e the people." It's how American should run although, it hasn't always been that way.
7. Finally - What’s important for most people is Not the personality of the individual (although that’s important when negotiations begin with foreign leaders is the strength of the character) but the strength in and of our country. And, btw, our military strength is also critical for negotiations on economics with foreign leaders (unfortunately) as well.
That's just my opinion on some of the economic topics, there are always more that can be read into every option and certainly, there can be exceptions to every rule, and frankly, there is so much more to unpack both ways than what is covered here... but know this is just one person's look at how this might all affect you initially. Peace out.
Disclaimer: This is one person's opinion and does not represent the opinions of any company or carrier. This should not be construed as legal or tax advice. For legal and tax advice you should always seek out the advice of a licensed tax professional or attorney. All rights reserved. No product or carrier is represented or implied here. (c) Copyright 2020 by Financial 411 & Robert Goldsmith