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The Big Three For 2024- Presidential, Congress, & Policy Implications

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In this episode, Chris Krueger, Macro Policy Analyst, discusses three main buckets for the 2024 U.S. election:

  • The presidential race between Biden and Trump (with four key variables)
  • Congressional races
  • The policy implications of these races in 2025 and beyond.

Press play to listen to the podcast.


Speaker 1:

Welcome to TD Cowen Insights, a space that brings leading thinkers together to share insights and ideas shaping the world around us. Join us as we converse with the top minds who are influencing our global sectors.

Chris Krueger:

Good morning. Welcome back to TD Cowen Street Cred. I am Chris Krueger with TD Cowen’s Washington Research Group. We’ll attempt to translate K Street to Wall Street faster than a speeding Acela and even faster if you juice up the playback.

We made it to March in our fourth pod of the year. The most predictable and anticlimactic presidential primary and recent memory is now basically over, apparently keeping the powder dry for the fall. We have broken the 2024 election into three buckets in under 10 minutes. The three buckets we want to tackle today: number one, Biden versus Trump; number two, the undercard/the race for Congress; and then number three, the policy implications of all of that. With that, let’s pod.

Okay. Before we get to the first bucket, we wanted to just flag two issues. Number one, this is going to be very close. The 2020 presidential election was decided by fewer than 43,000 combined votes in Arizona, Georgia, and Wisconsin. The margin was even closer in the 2022 midterms. Fewer than 12,000 combined votes among five districts in Arizona, California, Colorado, and New York flipped the House.

Point two, all of the 2017 Tax Cuts and Jobs Act individual rates and changes revert on January 1st, 2026. This will be the issue on Capitol Hill next year, regardless of election outcome. That’s a scheduled $3.5 trillion tax increase, which is in the CBO’s deficit projection baseline. Any of those tax increases that don’t happen will raise the deficit.

Okay. The main event: Biden verse Trump. The Georgia primary is tomorrow, Tuesday. Trump and Biden should secure a majority of the delegates by March 18th at the latest, though their nominations are not official until the summer conventions. The Republicans are July 15th, and the Democrats are August 18th. We’re now going to enter this bizarro four-month time period.

Election likely comes down to just eight states: the five that Biden flipped from 2016. That’s Arizona, Georgia, Wisconsin, Pennsylvania, and Michigan, and then what we call the three Ns: New Hampshire, North Carolina, and Nevada.

Getting into the four key variables for the presidential election: number one, the economy; number two, Trump’s legal status; number three, the actuarial tables; and number four, third-party candidates.

The economy… If only it was so simple as 1992 when James Carville famously said, “It’s the economy, stupid.” There’s a lot more to it than that. But if you go back to 1900, all five presidents who were running for reelection who had a recession in the year they were running for reelection lost. The fate of the economy is still a huge, huge topic. You saw that in last week’s State of the Union address and the criticism from Trump on the State of the Union address.

Second key variable here is Trump’s legal situation. Despite a flurry of legal wins on former President Trump’s four criminal trials… We had the Supreme Court Colorado ballot question, the Supreme Court taking up the total presidential immunity claim and thus delaying that January 6th trial. Trump has had two substantial losses on his civil trials in New York on the monetary side. Today, Trump has a deadline to pay E. Jean Carroll over $90 million from the earlier defamation suit in January.

Now, on more a positive side for the former president, the so-called hush money case in New York is going to be the first of the four criminal trials. That begins later this month, on March 25th. This case is viewed as the most partisan. The two trials brought by Special Counsel Jack Smith… That’s the January 6th trial in Washington D.C. and the so-called documents case in Florida. Those are both on hold pending the Supreme Court’s decision on Trump’s claim of total presidential immunity, which will be heard in late April. We expect the court to ultimately reject that claim in late June/early July. But that has pushed out all those trials. The earliest that the January 6th trial could begin is probably sometime in September. A verdict may not happen until after November 5th.

Of note in these primaries, the exit polls from last week in Virginia, North Carolina, and California… They all tracked earlier polls in New Hampshire and Iowa with the question of Trump’s acquittal and or conviction, with about a third of those Republican voters declaring that a conviction would make the former president unfit to be president. Those remain a huge variable.

The third variable in the presidential election… the actuarial tables. I mean, we’ve never had an 81-year-old president. We’ve never had a 77-year-old former president who’s now likely the Republican nominee for president.

Finally, the fourth thing to keep an eye on here… That is these third-party candidates. Margins are really going to matter. As we said earlier, at the top, it’s going to be 20,000 votes/30,000 votes/50,000 votes. Margins are going to matter. Some news on this front from last week: Robert Kennedy Jr.’s campaign announced that he has secured ballot access in Nevada. He’s going to be on a number of other swing state ballots.

Okay. Moving to the undercard, the race for Congress. Congress is really the key gating question for legislation. You have three big items next year, regardless of election outcome: some type of debt ceiling issue, probably late spring/early summer, that $3.5 trillion tax increase I mentioned at the top of the pod, and then you have the so-called Obamacare subsidy cliff, when those expensive subsidies for the Affordable Care Act expire along with the 2017 Tax Cuts and Jobs Act. Look, the race for Congress comes down to margin and geography. We have historically tight margins in Congress, a 51/49 Senate, basically a two-seat swing in the House on votes. These are natural results from unbelievably narrow elections and a very divided regionalized country.

The margin in the geography are flipped, though. The Senate, which is currently Democratic-controlled, is going to be fought in the key electoral college states, along with Ohio, Montana, West Virginia, maybe even Maryland. That’s flipped in the House. The House, which is currently Republican-controlled, largely going to be fought in California, New York, and the suburbs. Boil this down to low gravy. For the first time in history, the House and the Senate are projected to flip to opposite parties in a single election. Again, very on-brand for 2024.

The final area here… the policy implications. Our seven-person team in Washington published… and ahead of the curve on this last week. I think there are a couple of big areas at a macro level on either side. A Biden win… I think there are probably two clear read-throughs. The first is that all of the Inflation Reduction Act, green energy dollars, the trillion-plus… That’s all de-risked from a political standpoint. A lot of that would also be de-risked with the House Democratic win as well.

The other big area under Biden, and we saw this in the State of the Union last week, taxes are likely to go up on those making above call it $500,000 a year. The corporate tax rate is not on an automatic cliff. I mean, despite Biden’s push on that, hard to see how the corporate rate goes much higher from 21, if at all. The flip side of this… Let’s say Trump wins. I think bigger picture, unlike the first term, the cabinet is likely all gas, no break. If you remember Trump’s term, really the first nine to 10 months was a bit lost. You had the Congress trying to repeal and replace Obamacare. A lot of Trump’s folks weren’t in positions. That’s very different this time around.

With Trump, we’d expect a focus on really three areas: number one, trade; number two, immigration; number three, deregulation. With both the trade component and the immigration component, probably a lot of inflationary concerns to keep an eye on there. Largest deportation effort in American history combined with 10% across-the-board tariffs on all imported goods. You do get deregulation. From a market standpoint, tax is unlikely to go higher, but you do now have a deficit to contend with. Candidly, these are probably topics for a later pod, given that we are 240 days out.

Okay. That’s a wrap. This has been Chris Krueger with TD Cowen’s Washington Research Group for Street Cred. Have a great week.

Speaker 1:

Thanks for joining us. Stay tuned for the next episode of TD Cowen Insights.

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