Biden vs Trump 2: Where it stands
The 2024 US presidential election will again have significant implications for financial markets. In this article we cite key dates ahead and discuss potential fiscal and trade policy implications of the expected Biden vs Trump contest and the state of play in Trump’s criminal cases.
KEY DATES
| 24 February | South Carolina Republican primary |
| 4 March | Trump January 6 insurrection federal trial set to start (currently on appeal and likely to be delayed) |
| 5 March | Super Tuesday primaries in many states including California, Texas, Minnesota, Colorado, North Carolina |
| 7 March | President Biden delivers State of the Union address to Congress |
| 25 March | Trump New York state criminal trial for falsifying business records |
| 20 May | Trump Florida trial for misuse of classified documents. Likely to be delayed by Trump-appointed judge |
| 15-18 July | Republican National Convention, Milwaukee, Wisconsin |
| 5 August | Trump Georgia state trial (earliest start date) |
| 19-22 August | Democratic National Convention, Chicago, Illinois |
| 5 November | Election Day |
There is less uncertainty than usual at this stage of the presidential nomination cycle over who the nominees will be. Former president Trump is very likely to wrap up the Republican nomination no later than Super Tuesday on 5 March while only ill health would prevent President Biden accepting the Democratic Party nomination for another term at the August convention.
In this note we focus on the policies of Biden and Trump rather than potential third party candidates. Voter dissatisfaction with another Biden-Trump contest has encouraged the likes of Robert F Kennedy Jr and (current Democratic senator) Joe Manchin to consider running, perhaps under the No Labels party banner. But the US electoral system means that third party or independent candidates such as Ross Perot in 1992 or Ralph Nader in 2000 typically drain votes from the major parties rather than being serious candidates to win the presidency.
FISCAL POLICY
US fiscal policy is effectively on hold this year, as is often the case when different parties are in power in the White House and Congress. We expect little more than agreements to prevent the federal government from shutting down. At least for now the debt limit is not a concern as it is suspended until 1 January 2025. In practice the risk of default will only rise some months after that date.
Republican resistance to President Biden’s fiscal proposals such as funding for Ukraine does not mean that the US is fiscally prudent. Despite a resilient economy including persistently low unemployment, the federal budget deficit is around -6% of GDP, one of the largest deficits in the developed world.
The Republican primary contest to date has included very limited discussion on fiscal policy, with Nikki Haley standing out for her concern over the sustainability of the current budget trajectory. But with tax increases still anathema to Republicans, any suggestions of fiscal tightening are focused on cutting spending on programs such as Medicaid and food stamps. In years past, Republicans would call for cuts to Medicare and Social Security but they appear to now realise that this can cost votes even among the Republican base.
A potential exception to the Republicans’ opposition to increasing taxes is to raise revenue via other policies, such as imposing import tariffs or removing subsidies for manufacturers offered in the Inflation Reduction Act (IRA, the climate bill).
President Biden is also not prioritising deficit reduction though if re-elected, he is likely to again attempt to raise taxes on higher incomes. This could be achieved even without broad congressional support, as the personal income tax cuts enacted in 2017 under then-President Trump expire in late 2025.
TRADE POLICY
Trump campaigned on protectionist trade policy in 2016 and delivered at least on the promised tariffs, if not the improved trade balance, as deficits widened during his presidency. Trade policy was not a key issue in the 2020 election and there was little appetite either from the Biden administration or the Democratic Party to shift towards free trade, outside removing some of the tariffs Trump imposed on US allies. Indeed protectionism arguably increased overall. Biden imposed numerous restrictions on China’s access to US technological exports and in multiple pieces of legislation including the IRA and the Infrastructure and Jobs Act, the US offers massive new subsidies for favoured manufacturing industries.
Trump is pledging to take even stronger action in a second term, potentially including a 10% tariff on all imports and higher duties on imports from China such as electric vehicles. A blanket tariff however would be inflationary and vulnerable to public pushback on some products. This would open the door for frenzied lobbying for exemptions, many of which were granted in his first term e.g. iPhones from China. Australia fared well in the lobbying process in Trump’s first term.
THE TRUMP TRIALS
Trump’s dominance in polls for the Republican nomination for much of 2023 was such that it was hard not to suspect that most of the other candidates were running either to be Trump’s vice president or a cabinet member. Alternatively, they were hoping for a Steven Bradbury moment where they can skate past as Trump is disqualified or badly damaged by e.g. a criminal conviction.
Trump clearly sees political advantage in the publicity of the court cases, e.g. sometimes choosing to attend court in the E. Jean Carroll defamation trial when his presence was not required. But polls even of Republican voters reveal that he would lose support if actually convicted in a criminal trial. Trump is facing charges in 4 criminal cases.
The two federal criminal cases are the January 6 election interference case and the classified documents case. The two state criminal cases pertain to Georgia election interference (where 4 co-accused have already pleaded guilty) and New York falsification of business records (the Stormy Daniels case).
For the purposes of this document, we will focus on the bottom line for Trump’s candidacy. The start date for most of these trials is sliding towards election day and quite possibly into 2025. This is due to various delaying tactics by Trump’s lawyers and his good fortune in the classified documents case to be randomly allocated a Florida judge who he nominated and was confirmed by the Senate just days after Trump lost the 2020 election. There seems to be only a small chance of a conviction before election day on November 5.
Clearly if Trump wins the election, he will end the federal cases. The state cases are less easy to prevent but the penalties in the Stormy Daniels case are not severe, while the chances of a unanimous jury in the Georgia case may have slipped recently on allegations that District Attorney Fani Willis is romantically involved with one of the prosecutors she hired.
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