2024 Election: Biggest issues for investors

Fri, Dec 22, 2023, 8:36 AM

The 2024 election is right around the corner with a probable rematch between President Joe Biden and Former President Donald Trump, who was most recently removed from the ballot in Colorado. While there are many issues that will be mentioned during election cycle, some are more paramount for investors than others. Yahoo Finance Senior Columnist Rick Newman joins Yahoo Finance as part of the weekly series 2024 Investor Guide to break down the pressing issues involved with the 2024 election for investors.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video Transcript

SEANA SMITH: We want to stick with the 2024 presidential election. The race looking tight early. Polls showing that we could see though a rematch between President Joe Biden and former President Donald Trump.

Now, here with a look at what this election means for investors in the three biggest issues to keep in mind, we want to bring in Rick Newman. He is joining us now as part of our Yahoo Finance's 2024 investor guide. Hey, there, Rick.

So lots to get into here three big issues that investors need to keep in mind. Your first one is in regards to the Trump tax cuts. Talk to us just about the significance of this and the impact that it could have on investors.

RICK NEWMAN: So there are two components to the Trump tax cuts from 2017, corporate tax cuts, which are permanent, but then individual tax cuts which are not permanent. They expire at the end of 2025. Now, that's two years away.

That might seem like a long time from now. But whoever is the next president is going to be the one who is signing whatever law Congress passes to figure out what to do about that. And I think it will be quite a stark difference between whether it's a Republican or a Democrat.

Let's say Joe Biden wins re-election, I think that-- and he has a Democratic Congress, I think there's a good chance that tax cuts for everybody making more than $400,000 are going to go back to where they were before 2017. So the top rate as one example got cut from 39.6% to 37%, I think that would go back up.

But if a Republican Donald Trump or another president-- another Republican, then maybe a larger chance that those tax cuts remain in place. I mean, there are a lot of different ways it could go, but that is a big one coming up. And there's also the chance that if we have a Democrat, corporate tax rates could go back up.

BRAD SMITH: Rick, one other area that you're looking at is federal debt. You say federal debt is a key issue for investors, why is that?

RICK NEWMAN: Because it's now a problem. The debt crisis is arriving and it's not a tidal wave. I mean, we're not seeing panic in the markets. It's more like water is leaking through the foundation.

But we saw this over the summer and the fall with 10-year Treasury rates going up by about a percentage point after the Federal Reserve finished raising interest rates. So that was some other reason. I mean, it's very hard to suss out exactly why interest rates would be going up, but many investors think it's just because there is so much debt coming out of the US Federal government.

And borrowing costs are going up. That debt is going to-- the deficits are going to stay over $1 trillion. This is really becoming a problem. And it'd be nice to hear some presidential candidates say something about how to deal with this. So far, none of them has.

SEANA SMITH: And Rick, the outcome of the 2024 election could be pretty pivotal when you take into account the country's fight against-- or fight for maybe in some instances green energy, fight against climate change. What is the potential outcome, tell us, about some of those initiatives?

RICK NEWMAN: One of the biggest bills President Biden signed into law was the so-called Inflation Reduction Act. Ridiculous name, it had nothing to do with inflation. But it had the most incentives for green energy production in American history.

So Republicans don't love that and they've actually been trying to vilify electric vehicles as some kind of leftist publicity stunt. I think that's ridiculous. Electric vehicles are real, and they're good, and they have a place in the economy.

But if Republicans come to power, they could try to do something to pull back some of those green energy incentives. And that's important because companies are making big investment decisions today on the belief that those incentives will remain and that we're not going to have a new president or a new administration that comes in and pulls the rug out from under them. And this is not just happening in blue states or blue districts. It's happening all across the country in red states as well as blue. So companies are making big long-term decisions based on those tax incentives being there for a long time.

So if we get a Republican who comes in and says drill, drill, drill, we're going back to fossil fuels. I want to repeal all those incentives. That would be a big problem for companies that are getting into this space.

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2024 Election: Biggest issues for investors

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