While presidential candidates talk a lot about economics, in fact their ability to affect outcomes is direct for some factors but tangential or minimal for others.
Presidents can declare war or wage hostilities without declaring war (the Senate hasn’t been stepping up to the plate on this for years). That impacts defense industries.
Presidents can impose tariffs unilaterally without Congressional approval.
Presidents can put expensive programs in place (e.g. tuition forgiveness) which can be challenged in court because only the House of Representatives is responsible for the budget. Presidents can tell executive agencies to put regulations in place that can impact (even destroy) companies, such as pollution controls.
Presidents can’t construct the federal government budget although they can express their opinions. The budget controls taxes and spending and therefore fiscal stimulus or restriction.
Presidents can’t control the money supply which is independently controlled by the Federal Reserve. Presidents are supposed to leave the Fed alone although Nixon and Trump put heavy pressure on the Fed to reduce the fed funds rate. Trump can be expected to do this again.
Your Money in a Second Trump Term: Taxes, Credit Cards and Student Loans
President-elect stands to reverse many Biden-era consumer-finance initiatives
By Ashlea Ebeling, Imani Moise and Oyin Adedoyin, The Wall Street Journal, Nov. 6, 2024
…
President Biden’s push to curb credit-card late fees could be sidelined, analysts say. They don’t expect his student-loan relief efforts to survive, either. With a Republican-leaning Congress, President-elect Donald Trump’s 2017 tax cuts are more likely to be extended…
[Snip descriptions of the 2017 tax law which we are all familiar with. These would be extended.]
The Biden administration forgave more than $175 billion in student loans for more than 4.8 million Americans. Trump has generally spoken in opposition to the Biden administration’s student-loan forgiveness initiatives and would be unlikely to continue to defend them in court.
The Consumer Financial Protection Bureau would become more industry-friendly. [snip descriptions of consumer-friendly programs]… [end quote]
Tariffs could go into effect immediately. Raising tariffs is inflationary. This could have a rebound effect on the Federal Reserve.
Renewing the current 2017 tax law would stabilize the economy relative to an unpredictable change in the tax law. (Does anyone think that Congress would just go back to the old law without tinkering?)
Changes in regulations take time because they must go through a lengthy approval process.
Any tax and spending laws (such as a child tax credit) are part of the Congressional budgetary process which takes time.
The question is how much the deficit will rise and how that will impact bond yields.
Wendy