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Joe Biden's plans for the USA

Democrat Joe Biden is leading in the polling for the US presidential election. What are his policies and is it too early to write off Donald Trump?

Democrat Joe Biden is leading in the polling for the US presidential election. What are his policies and is it too early to write off Donald Trump?

by
Charles Stanley

in Features

26.06.2020

According to the polls, Joe Biden will win the Presidency this November. It is true it has got more difficult for Donald Trump to win his second term, though the issue polls show he still does well on economic matters like getting people back into jobs and living standards. The US remains very divided, with the Republican and Democrat forces fairly evenly balanced, disliking each other intensely.

Twentieth-century political thinking still valued by some, today held that in a democracy the centre-left won elections when it showed a friendly face to the centre-right and won over low conviction Conservatives, whilst the centre-right won when it showed some sympathy to the left.

The great parties contesting elections often sought moderate or consensual leaders who were felt to have that ability to reach out to a group of voters said to be in the centre-ground. Conservatives had to show they valued government involvement and support for the disadvantaged. Socialists or Democrats had to show they understood the need for lower taxes and economic freedoms for the successful and enterprising to flourish.

Today there is a rival theory. Reading social media, there are not that many indecisive moderate centrist voters reading the nuances and waiting to be swayed. There are lots of committed and angry groups pushing their demands for change. In the US, not much more than half the electors vote in a Presidential election, so many of the presumed centrists or moderates may simply be the disinterested or the ones who think none of it will make much difference for them. To win, Mr Trump or Mr Biden only need to get the support of just over one-quarter of the voters, probably 27.5%.

To do that, there is a case that they need to mobilise their base and play up the differences between them, rather than seeking a great moderation. The Republicans and Democrats often think in terms of constructing coalitions of motivated interest groups and factions in the politically active or opinionated half of the population. Mr Trump's tweets anger Democrats and frighten some of his advisers but they have a purpose to keep faith with supporters.

Biden a moderate?

Mr Biden has allowed an image of moderation to grow around him as a contrast to Mr Trump's style. In a way, it is misleading, as he set out a strongly ideological stance on taxes, social matters, health and the environment. He had to, as he sought to fight off very radical opponents in the primaries.

He has not used the freedom of winning the nomination to rein in his main programmes. He proposes a $4 trillion tax rise over the next ten years, and a massive green transformation. He wants to increase the rate of corporation tax from 21% to 28%, to impose a 12.4% social security tax on incomes over $400,000, increase the top rate of tax and capital gains tax to 39.6%, and remove many of the tax deductions from higher earners. He also proposes a minimum corporation tax rate of 15% to catch low payers, and a doubling of the global intangible low tax on company income earned by subsidiaries abroad. None of this would be much liked by Wall Street and investors. The US stock market advanced strongly under the early months of Mr Trump based on the large tax cuts he proposed making company income more valuable for shareholders. Could some of this reverse were Mr Biden to win?

Bad policies for investors

Mr Biden would add to stock market concern with his policies designed to wean the US off big oil and gas. He would start his Presidency by getting the US to re-join the Paris Climate Treaty. He would pledge to make the US carbon neutral with 100% clean energy by 2050 with suitably taxing targets for 2025. He promises to "take action against fossil fuel companies and other polluters who put profit before people and knowingly harm our environment and poison our land and water." He seeks a federal investment of $1.7tn in clean energy and energy conservation, levering in a total investment of $5 trillion. He wants all new car and van sales to be electric vehicles. He would ban new oil and gas working on federal lands and in state waters and wants more biofuel. He would spend more on research including into carbon capture and storage, and new fuels for aircraft.

By any standards, this is a radical programme. If the US votes Mr Biden in, it will be a decisive shift in the world approach to fossil fuels, with the US changing from being a proponent to the leading advocate of their closure. It would lead to a further downgrading of oil, gas and coal investment, whilst offering more opportunities to profit from clean technologies. It also means writing off huge investments in transport and heating based on carbon fuels. The general tax rises will be a negative.

The US is locked into a big battle between the two coalitions. There are the low-tax freedom lovers with their guns and diesel vehicles, with their wish to keep abroad at arm's length. Often espousing Christian causes, they want to project an image of an America making itself more independent. Their opponents are the metropolitan public service-oriented green voters, who want the US to return to being the policeman of the world. They campaign for minority rights and for the application of the international rules-based order.

The election is likely to see both sides have to appeal to their base. Mr Trump may have lost some ground thanks to the economic damage done by the virus, but Joe Biden still has to convince enough people that his radical plans would keep their own jobs and incomes secure. The markets may start to discount a Biden Presidency nearer the event but for the moment, investors seem to be where the pollsters are, thinking it's still too early or too close to call.

Nothing on this website should be construed as personal advice based on your circumstances. No news or research item is a personal recommendation to deal.

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