What To Expect With The Economy And Upcoming Election

What To Expect With The Economy And Upcoming Election

There are many factors that are in play for the upcoming 2020 election. This is a non-political blog, so let’s take a look at the economy and what each candidate’s position is, along with a non-partisan analysis.

Affordable Housing

We’ve touched quite a bit on our blog about housing and finding affordable housing with bad credit. Unfortunately, housing is not showing any decrease in prices. Home sale prices in 2020 were a median of $304,100, up 8.5% from the same time period in 2019. The rental market is not much better. The average rental is $1,463 per month, a 3% increase over the last year. In addition, the demand for rentals has gone up across all income levels.

The federal Department of Housing and Urban Development (HUD) offers a variety of programs to help with low income renters and home buyers. These include the HUD Public Housing Program, Section 8 vouchers, mortgage loans, and other similar assistance.

Trump Forecast

  • No specific plan for the 2020 election
  • 2021 budget includes a proposed cut to HUD of $8.6 billion, a 1.7% cut. While this doesn’t sound like much, this is twice the entire proposed budget to end homelessness
  • Repealed the Afformative Furthering Fair Housing (AFFH) regulation that required HUD to promote “affordable, safe, decent and free of unlawful discrimination” housing
  • Replaced with “Preserving Community and Neighborhood Choices” that low income housing experts fear will return the US to the failed Fair Housing Act of 1968

Biden Forecast

  • Plans to extend the housing voucher program
  • Reinstate the AFFH
  • Require states to use part of federal funding to improve affordable housing opportunities
  • Invest $640 billion over the next ten years to help incur that “every American” has access to housing that is affordable, stable, safe, healthy, accessible, energy-efficient, and located near good schools and with a reasonable commute to their jobs.

Minimum Wage

The federally set minimum wage is $7.25/hour. At full time, this is approximately $1,250 a month. This instantly puts the average rental out of range for the average minimum wage worker. A raise in the federal minimum wage to $15 would affect 17 million workers and lift 1.3 million above the federal poverty level.

Trump Forecast

  • In July 2020, he stated there would be a statement on minimum wage, but no statement has been made
  • Historically, the Republican Party rarely favors minimum wage increases
  • In 2019, Trump stated he would consider a minimum wage higher than $15 per hour a few days after he threatened to veto a bipartisan house-passed bill that would raise the minimum wage to $15/hour

Biden Forecast

  • Supports raising the minimum wage to $15 by 2025
  • Regulations to monitor corporate abuses of workers including overtime and labor laws
  • Supports increasingly essential worker pay

Net Farm Income

While many of us are not dependent on the family farm to survive, those costs are passed on to us, so it is an important factor to consider. According to the US Department of Agriculture, net farm income will decline in 2020. Combine this with a 20% increase in farm bankruptcies in 2019, and we could suffer increased food prices.

Trump Forecast

  • No defined plan
  • Claims that farm income has increased by 50%. That boost is likely due to increased federal aid to make up for the current tariffs.

Biden Forecast

  • Pursue a trade policy that favors farmers
  • End tariff was with China
  • Plans to provide support to new farms
  • Create food systems that maximize profits

Income Inequality

Income inequity looks at wages, salaries, savings account interest, dividends from stock and rent, and profits from selling items for more than you paid for them. It does not include the value of homes or other possessions and stocks. Income inequity looks at the uneven distribution of income among a population.

Income inequity is so pronounced in the US that the top 10% make 9 times what the bottom 90% make. The top 1% is 39% higher than the bottom 90% and the .1% make 196% more than the bottom 90%. 

Experts place the blame of inequality on technology, globalization, “superstars” like Amazon and Apple founders who hoard wealth, a decline of labor unions, and political power swaying factors in the ultra-rich favor. Some of these could be countered by better educational opportunities and by less influence in politics.

Unfortunately, 60% of Republican voters believe that economic inequality is based on personal choices.

Trump Forecast

  • Tax cuts for the wealthy
  • Rollbacks of taxes such as the “payroll tax vacation”
  • Trade including the China tariffs

Biden Forecast

  • A pronged approach through access to money, housing, and education
  • Increased and affordable access to childcare availability
  • Increased reforms including tax on the uber-wealthy

Health Care Costs

Health care costs are one of the most important issues for voters. Americans spend an average of $5,000 every year in out of pocket costs for insurance, medical bills, or prescriptions. Many Americans teeter on the verge of insolvency, thanks to medical bills.

Trump Forecast

  • Put patients and doctors back in charge of the healthcare system
  • Lower premiums
  • End surprise medical bills

Biden Forecast

  • Protect and reform the Affordable Care Act
  • Increase federal subsidies to enrollees

Taxes

No one likes to pay taxes, but taxes provide us with many services and benefits. Our tax burden is not particularly bad. In comparison with other G20 countries, the US pays less in personal taxes than 12 countries. Many of those 12 countries have a higher standard of living than the US. One of the main issues with the tax code is that it is unbelievably complex and there are many exploitable loopholes that allow people with good accountants and lots of money to avoid paying taxes.

From a corporate standpoint, companies can headquarter themselves in a country with little or no tax but still benefit from US protection. Companies that paid no income taxes last year include Netflix, Amazon, Chevron, Delta Airlines, Eli Lilly, General Motors, Gannett, Goodyear Tire, Halliburton, IBM, Jetblue, Principal Financial, Salesforce.com US Steel, and Whirlpool.

Companies with untaxed profits include General Electric, Microsoft, Pfizer, Merck, Apple, Google, Medtronic, Abbott Labs, and Johnson and Johnson.

Trump Forecast

  • Continue Wall Street tax policy of deregulation and tax cuts
  • Payroll tax cuts (which fund social security)
  • Capital gains tax cuts
  • Middle class income tax cuts

Biden Forecast

  • Roll back $2 trillion tax cut that only benefitted Wall Street
  • Raise corporate tax to 28%
  • Restore top individual rate to 39.6%
  • 17 proposals on their campaign website

Budgets and Spending

Debt and budget are always hot topics. Unlike you and me, the federal government has no incentive to actually balance a budget or cut spending. Regardless of who is elected, you should expect an increasing deficit and spending on things you don’t necessarily approve of.

Trump Forecast

  • Reduce redundancies
  • Eliminate wasteful federal spending
  • In the 2021 budget, he has increased military and defense spending to $934 billion
  • Cut $1.6 trillion in aid to low and middle income people
  • $1 trillion cuts to Medicare

Biden Forecast

  • $2 trillion 4-year plan
  • $5.2 trillion 10-year plan
  • Increase revenue by $3.4 trillion, from taxes on the uber wealthy

Final Thoughts

By now, you know what you will get with a vote for Trump. A vote for Biden will result in a different set of events. Which one you choose depends on your goals and priorities.

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