“Change,” Anders Sandberg

November 3, 2020; National Public Radio

As we look at some of the obvious and immediate differences between the presidential candidates—which, effectively, Trump and Biden still are—among the most glaring are their takes on the country’s economic course to move out of the current downturn. NPR talked to David Wessel, director of the Hutchins Center at the Brookings Institution, on this point yesterday. He believes the election will essentially decide what happens with the near-term economy. He also believes that the stock market was expecting a particular result. In his view:

If Joe Biden wins and the Democrats take the Senate, we’re almost certain to get a big fiscal package—at least $2 trillion of aid to households, state and local governments, small businesses—very shortly after Inauguration Day. And that should give the economy a big lift. And, in fact, that’s the scenario that the stock market seems to be expecting and welcoming, even though Joe Biden is talking about raising taxes on investors. Now, if Donald Trump wins reelection, I think we’ll still get some fiscal stimulus, maybe even in the lame-duck Congress, but it’ll be smaller, and it’s much more likely to have tax cuts along with big spending increases.

It’s clear that President Biden would mean higher taxes, particularly for rich people and corporations…and I think it would mean that the government would lean much more heavily against the inequality that the market is producing. If he gets a Democratic Senate, it probably means a big and green public infrastructure program. But no matter what happens in the Senate, the regulators whom Joe Biden would name would surely be more aggressive than their Trump counterparts have been. In contrast, a Trump win would likely mean further rollbacks of labor, environmental and financial regulation.

We will see over the next few days how the stock market reacts to the prolonging of Election Day into days, weeks, or months of doubt, but on the ground, there will be businesses and families who are bending and breaking under the multiple burdens of pandemic, economy, and political landscape. A generous stimulus package would surely have been a stabilizing force in such a time of destabilization and loss, but none was passed in the last few months, and what are the odds of getting back to that work anytime soon?

Lori Konish of CNBC writes that the most hopeful scenario for a stimulus package that is passed quickly enough at a high enough dollar amount to make a significant immediate difference is if Biden wins and the Senate’s balance changes.

Brian Gardner, chief Washington policy strategist at Stifel, had projected that with such a Democratic sweep, the American people could be looking at a package in the $2 to $3 trillion range passed before the December 11 deadline. We now know that option is off the table of course.

If Biden wins but there’s no Democratic Senate majority, the package may be more modest, and if Trump wins, the package is likely to return to the stalemated Pelosi/Mnuchin negotiated pittance. With a contested election, however, we would likely see no movement at all. So much hangs on this moment.—Ruth McCambridge