It took a while, but the votes have all been counted, and the election is finally over. It was certainly no landslide or “Blue Wave” as some were predicting, but the final decision was clear and decisive. If it didn’t seem that way, that’s because we live in an era in which close elections are the norm. A few points of historical perspective:
1) Because of the heavy turnout (over 65%), both candidates received more votes than any other person in history. Biden won by over 6 million votes, 51% to 47%. Biden also had a solid majority in the electoral college, 306-232, the exact same numbers as Trump had in 2016, when he claimed that he had an overwhelming mandate.
2) While the 4% margin might seem thin, only three elections since 1960 have seen the winner claim more than 53% of the vote: LBJ in 1964, Nixon in 1972, Reagan in 1984. All of the other 12 elections have been decided by a less than 6% margin.
3) It is difficult for an incumbent president to lose a re-election campaign, as only four have managed to accomplish the feat in the past century, Herbert Hoover in 1928, Jimmy Carter in 1976, Bush Sr. in 1992, and now Trump. In all of those cases, the incumbent president was seen as failing to take decisive action or deal effectively with a crisis. For Hoover it was the Great Depression, Carter had the Iran Hostage situation, Bush had a serious recession, and Trump had Covid and an economic implosion.
4) A little historical trivia: Trump is only the 3rd man since the Civil War (William Jennings Bryan, 1896 & 1900, and Thomas Dewey, 1944 & ’48, are the other two) to lose two the popular vote in two consecutive elections.
Okay, so what happens now. Historians are loathe to predict the future, as am I, especially when dealing with this most unpredictable of presidents. Again, however, we can look to the past for a hint of what to expect.
—Prediction number 1: The economy will improve. That’s a pretty safe guess, since we’re in a mess at the moment. While Trump has been proclaiming “the greatest economy in history,” job losses have been astronomical, lives hang in the balance, and Congress has failed to enact a second relief bill. Before we see any improvement, however, we will see some dark days ahead. Trump’s failure to even acknowledge the Covid Virus, let alone do anything about it, has created this incredible spike in the number of cases and deaths. That will force state governments to reinstate shut-down measures, a process that has already begun. Thus economic recovery will be delayed.
–Prediction number 2: It’s also safe to say that Biden will provide more leadership in the battle versus Covid than Trump has, and he will base his actions on science, not political expediency. In recent days, we have had good news about the development of two new Covid vaccines. To be fair, Trump’s push for the development of a vaccine at “warp speed” probably hastened it’s progress. Of course, it’s now clear that he did this for political gain, not because he cared about the lives of Americans. And let’s not give him too much credit; that would be like congratulating a drunk driver who is weaving down the road and accidently wanders into the correct lane on occasion. Even many people who voted for Trump feel more confidence in Biden in terms of organizing distribution and inoculation efforts. Still, this has been a befuddling virus thus far, and we are learning more about it every day. So stay tuned on this front.
—Prediction number 3: The stock market will do well over the next four years. The market has rebounded significantly since election day, both because of Biden’s election and the Covid vaccine news. It’s not that investors like Democrats more than Republicans; it had more to do with the election removing the cloud of uncertainty that has hovered over Wall Street for so long. The fact is, however, that, over the past forty years, the stock market has performed considerably better under Democratic presidents than under GOP leaders. Here are the numbers by president for the S & P 500 performance since 1980:
Clinton, + 210% improvement
Obama, + 182%
Reagan, + 117%
Bush, Sr., + 51%
Trump, + 45%
Bush, Jr., – 40%
Of course, the stock market is not the entire economy; it is more of an indicator of investor confidence. It does, however, reflect economic growth. And many people, myself included, are dependent on a strong stock market for their retirement incomes. In terms of gross domestic product, which is a more accurate indicator of economic strength, Clinton has a slight edge over Reagan, with the others trailing significantly. All three Democrats (if we include Biden) inherited an economy in serious distress. Both Clinton and Obama, however, handed their successors a robust economy that was getting even stronger. (Few seem to remember that the US was operating on an actual surplus for the last few years of Clinton’s administration—the government was taking in more money than it was spending.) Here’s hoping that Biden can do the same thing.
Moreover, for generations, the Democrats were decried as the “tax and spend” party, while the GOP was seen as the party of financial restraint. From the 1930s to 1980, Democrats dominated the national government, implemented relatively high taxes on the wealthy (when compared to today), regularly paid off government loans, and kept the national debt low. The post-War economy hummed along beautifully under those circumstances until the 1970s. The party positions have been reversed in recent years. Republicans have become the “borrow and spend” party since 1980, spending money at a much higher rate while also cutting taxes for the wealthy and corporations. That means that we have had to borrow much more money in order to function. Then, of course, the US has to repay those enormous loans along with the considerable interest that has accrued along the way. The end result is that our national debt (the amount of money the government owes banks) has grown exponentially, quadrupling in the 12 years of Reagan-Bush leadership alone. That growing debt keeps being pushed forward to the next generation, and, until we get responsible fiscal leaders who will combine spending restraint with a more equitable tax system, the national debt looms over the country like a mushroom cloud.
In the end, as a recent Forbes Magazine article stated, the stock market doesn’t really care who the president is. It does, however, love gridlock.
—Prediction number 4: Gridlock will continue. There are still two senatorial races facing run-off elections in Georgia on January 5th. Despite that, I believe the Republicans will retain control of the Senate. That’s bad news for Progressives in the Democratic party who are hoping for wholesale changes in the political system. It’s good news for investors who do not want to see dramatic changes that could disrupt the economy. As long as the two parties share control in the executive and legislative branches, we will not see any significant new laws, and government will avoid swinging to one extreme or the other. Further, while the Democrats united to defeat Trump, the various branches of the coalition disagree significantly on important issues. Progressives wanting to “defund” the police and other such reforms will be disappointed, because, despite the ridiculous claims by Trump and the GOP that Biden is a dangerous, screaming radical, he is and always has been, squarely in the center on most political issues. He has made a career out of compromising and working with Republicans. There is no reason to believe that his presidency will be any different, despite the pressure he will receive from the left wing of his party. That said, the GOP has become so radicalized by Trump, Fox, Limbaugh, etc., that the party will remain completely unwilling to compromise, despite how much that intransigence hurts the nation. Result: more gridlock.
—Prediction number 5: In the eyes of the world, the US will be stronger and more respected under Biden’s leadership. This is another no-brainer. Trump took a nation that was admired worldwide under Obama, a US that provided leadership on many important issues, and he turned us into a laughingstock. The only country that will be disappointed by Biden’s victory will be Russia, which treated Trump like Putin’s personal lapdog. Within the US, the diplomatic corps, intelligence agencies, FBI, CIA, and military leaders will all breathe a sigh of relief on January 20th. Trump demanded that all of those people use their non-partisan offices to help re-elect the president, rather than do what was best for the security of this nation. He also insulted our fighting men and women and all veterans by saying they were “losers” for fighting to defend their nation. All of that will stop.
Last night, Kathleen and I finished watching the brilliant WWII series, Band of Brothers. We started watching it, for the 2nd or 3rd time, on Veterans Day. If you are not familiar with the series, you owe it to yourself to see it. The ten-part factual history drama follows one unit of American soldiers, from training camp to the end of the war in Europe. Interspliced with the film are interviews with the actual soldiers. The commitment and sacrifice of those men, along with their willingness to put their nation ahead of themselves is astounding. The series is inspiring, emotional, and thought provoking.
During the last two episodes, Hitler is being smashed by the Russians from the east and the Americans and British from the west. There is no longer any hope for a Nazi victory. Rather than give up and admit defeat, however, Hitler orders his elite SS troops to retreat into the Alps and continue fighting a guerilla war—to the death if necessary. Sound familiar?
Our own autocratic, would-be dictator has refused to accept reality. He, too, has ordered his stalwart supporters to fight to the death on his behalf. Thus, we are subjected to frivolous lawsuits that have led even the obsequious Tucker Carlson on Fox to urge Trump to “give it up.” It all came to a ludicrous pinnacle a few days ago when Trump’s $20,000-a-day lawyer, Rudy Giuliani, gave a bizarre press-conference that serves as a metaphor for the entire post-election charade. While making wild accusations (my favorite was the one about a Venezuelan president, dead since 2013, being part of the conspiracy to defeat Trump), without any evidence, of course, Rudy began to literally melt down before our eyes. Not only did his torrent of lies cause him to sweat profusely, but the rivulets of perspiration became mixed with dark-colored hair dye that ran down his face in a grotesque display of the ineptitude of Trump’s doomed attempts to steal the election. Ironically, the president’s efforts to undermine the democratic process before the election led voting officials to employ extra safe-guards against fraud or any other possible corruption. The result was the cleanest and most unimpeachable election in history, which left Trump no avenue through which to overturn the results by fraudulent means.
—Prediction number 6: Despite all misgivings you might be feeling about the Covid crisis and the election, we will get through this. The cavalry (and the vaccine) is on the way, and January 20th will arrive. Finally, remember the example of those brave men depicted in Band of Brothers. They serve as healthy reminders of what this country is capable of accomplishing when its people are united in purpose and direction.
The only prediction that I doubt regards the stock market. To be clear, I do not believe either that presidents have much to do with the performance of the stock market and I don’t believe the stock market’s likely regression will be Biden’s fault. But to me a regression seems inevitable. Despite the Trump Administration’s wild incompetence with COVID, the stock market has been flying high for the last several months while economic chaos has reigned on Main Street. Won’t the other shoe have to drop eventually?!? Is there a precedent for Wall Street humming while unemployment soars and small businesses shutter? The latter two seem almost a certainty.
These are just the fears of this novice economist who has enjoyed watching his investment accounts these last few months but fears the worst for the years to come.
Adam:
I agree completely. The market has seemed out of touch with reality for six months, and a collapse is inevitable when investors finally come to terms with job losses and the closure of small businesses (many more of the latter are sure to follow). I’m speaking more long-term, over a four-year span, which is always the best way to view investments. You will be fine by the time you retire–unless that damn national debt comes home to roost.
THANK YOU JACK! Going on almost 4 years of claiming of “fake news” ALWAYS denying the truth and the facts. Trying to always make everyone question what is truth. Facts of the past point this out. I would like to see more facts like how Reagan’s trickle down has not and will not ever work. History is SO important to show what works and what doesn’t. Putting money in the hands of the people has shown how everyone prospers not just 1%. More of the facts PLEASE.
John: Thanks so much for the comment. I wanted to get into the “trickle-down” theory, too, but cut it out to keep the article somewhat brief. “Trickle-down economics” refers to a theory pushed by Republicans since at least the 1920s, and probably earlier. The basic premise is that if government gives money to corporations and the wealthiest people, especially in the form of tax breaks, that they will invest in businesses that create jobs, and money will trickle down and eventually help those at the bottom. The problem with that, as you indicated, IT HAS NEVER WORKED!
In the 1920s, three GOP presidents, Harding, Coolidge, and Hoover, all followed the theory. The policy was implemented by Andrew Mellon, who served as Sec. of the Treasury for all three men. The result was that, by the late ’20s, wealthy men and their companies, the most glaring example being John D. Rockefeller, paid zero taxes while a full 60% of all Americans lived below the poverty level. Of course, this imbalance of wealth was the primary cause of the Great Depression.
In the 1980s, Ronald Reagan used it again, although it was often referred to as “Reaganomics” or “Supply Side Economics.” It was essentially the same policy, however: cutting taxes on the rich and the corporations while doing nothing for the poor. Even his successor, George HW Bush, called it “Voodoo Economics” when he ran against Reagan in 1980. As President, however, Bush continued the policy. The result was a great increase in the disparity of wealth, and serious recessions in 1982 and 1991.
George Bush, Jr. re-introduced the policy with three tax cuts for the wealthy in the early 2000s. A GOP-controlled Congress made matters worse by rescinding the Glass-Steagall Act in 1999. The GSA was a Depression-Era law designed to prevent banks from making risky investments with their customer’s savings accounts. Without this law in place, commercial banks were allowed to go back into the investment business, play the stock market with bank funds, and make incredibly risky loans on housing. The Democrats contributed to the problem by encouraging high-risk housing loans with little or no collateral in order to help those without much money become homeowners. The price of houses skyrocketed, and banks were loaning $500,000 for houses worth $350,000. In 2007, of course, it all blew up, and we entered the worst economic slump since the 1930s. Again, T-D Economics was partially responsible for an economic disaster and the growing gap between rich and poor.
A lengthy answer, but it’s a complex topic. When I knew you back in the 1980s, remember that during the Reagan Recession, many people who lost their jobs through downsizing started little video stores in every strip mall in America. Flash forward twenty years to the early 2000s. My wife was encouraging me to buy stock in Netflix. My reply was: “There’s no way that company is worth $8 a share! Besides, they can’t possibly compete with Blockbuster.” Shows what I know.
Thanks Jack, I knew you would know the history. I read the other day that CEO’s income has increased over 300% since 1978 and the employees of those corporations only increased an average of 12% over the same period. Glad to be out of the rat race although, like most, tied to the success of the stock market. I am pretty confident though that it will be fine over the long haul.
You and your family stay well and stay safe. So good to be able to follow your blog. It’s almost like visiting with you again.
Thank you, Jack. I hope your all of your predictions become truth. I feel, however, that the stock market may negatively be impacted in the upcoming year. Even if the economy improves, there is a great possibility that there will be massive homeless and poverty issues for million of Americans for quite some time. Businesses that have failed due to Covid-19 will bring new opportunities to new entrepreneurs as history as shown. Although the courts are knocking down Trump’s frivolous lawsuits one after the other, he has declared that he will appeal them all the way up to the Supreme Court. It is unlikely that the court would entertain such nonsense, however, the delays and propaganda has already done harm to the people and will continue to do unrepairable harm. Joe Biden would be better off with a Democratic Senate and my prediction is that he will get it. Georgia….Georgia…..the road leads back to you.
Nice touch with the Ray Charles reference. As usual, a thoughtful comment from you. I was especially interested in your idea about new opportunities, entrepreneurs, and positive change emerging from a crisis. It will be interesting to watch that process. Already, I think, the work-from-home trend is affecting the price of real-estate and REIT stocks. That will continue, but things will morph into different ways of making money–it’s the American way!
“Dr.” Jack,
I knew you would find a way to call Biden the winner of this election. Typical, head-in-the-clouds, Democrat, using facts and “vote counts” to sway the results in your direction. My President, and his crack team of legal geniuses, shall prevail soon enough, and boy, will you feel silly.
I also find it shameful that you would attack America’s Mayor like that. That was not hair dye dripping from his head, it was dust from 9/11 running down his face, PROVING that he is a Patriot.
Predictions:
1. Trump wins election by 7 million legitimate votes.
2. The Rona will disappear by 2022 (Reminder: Trump said it would disappear one day)
3. Democrats will line up from Oregon to DC, just to apologize to President Trump.
You’re my brother and I love you but you have to get a little more Newsmaxx in your life…it’s the Truth Network.
3.
Mark:
I need to hear from you more often. Your deft comments, acerbic wit, hyperbolic observations, and cutting satire are always appreciated. Well done!
K
I forgot to mention your erudite eloquence.
Sorry to be a cynic, but the American way is inequality. Progressives will be ignored as cry babies or bleeding hearts or snowflakes. Elites, whether Republican or Democrat, will make sure that any fundamental change will not happen. Still, anything has to be better than the Trump Administration.