US Presidents, The Economy & Investing

October 21, 2015 When an investor thinks about who should be president, where’s the biggest impact of that choice going to show up? Taxes? We've seen increases in capital gains over the last few years.

Brandus: The federal tax burden is at its lowest level since the Eisenhower era. People seem to forget that. Yet people still think they're drowning in taxes and that’s because the state and local burden has gone up so much in past years; it's not so much because of federal taxes.

People always tend to focus on things through the prism of the presidency—what is this president going to do, and what does it mean for the economy and for taxes?

You have to look at Congress in a similar way. It’s an equal branch of government. So what will this Congress do about capital gains and the budget and raising the debt ceiling, and this and that?

It's not so much the president. He is one player, but what will Congress do as well? At the end of the day, it all comes down to what Congress wants to do. Let's go back to the campaign, which is probably more in the forefront of folks' minds. Donald Trump was born and bred on Wall Street. Everything you'd see about him would tell you that this is a friend of Wall Street, but it doesn't appear that way. How do you read him?

Brandus: His views on carried interest do not exactly paint him as a friend of Wall Street. He talks about his hedge fund buddies and says, “Look, I know all these guys, they're good guys. But they're getting away with murder here through this carried-interest loophole that he wants to shut down. Boy, they hate him for that reason!

But beyond the little island of Manhattan, I think it plays pretty well. People out in the hinterlands don't really understand what “carried interest” means; they don't quite get that. They only understand the part about how he wants to take it to the fat cats even though he is one of them.

He's gotten a lot of populist mileage out of that kind of thing. But the thing about Trump that’s interesting, that people don't seem to get (and he's quite smart—just ask him) is that he seems to think he has an answer for everything. And when you're running for president, of course people just say all kinds of things.

Presidents think they can come in to Washington and change the world, and they really can't. Their powers were designed from the get-go to be rather limiting. We did not want a monarchy replicated here. So, from the very beginning, presidential powers were always very constrained. And if Donald Trump, or anybody else, thinks that they're going to have these enormous powers, they've got another think coming.

Presidents have to deal with Congress. It doesn't matter what Trump wants, or Jeb Bush wants, or Hillary Clinton wants. It matters what Congress wants, too, and how those two parties can work together to push things forward. I'm going to put you on the spot. Who's going to be the next president?

Brandus: I've voted for both Republicans and Democrats over the years. And so, without revealing who I'm going to vote for, I'll say there's no question that Hillary Clinton is going to be the Democratic nominee. That will be not be quite as historic as the first black nominee, but she'll be the first female nominee of a major party. That in itself will be historical.

And on the Republican side, all these so-called experts have been wrong about Trump from the get-go—oh, he's going to do himself in; he just doesn't have what it takes; he's not disciplined. And yet this guy keeps on going and going. The real voting in Iowa and New Hampshire is still several months away.

Jeb Bush is hanging in there, but he's not exciting anybody; he's like a bowl of cold oatmeal. I guess what I'm saying about this race is that Hillary Clinton will undoubtedly be the nominee. I'll make that prediction.

On the Republican side, I have no idea. I'd say Trump, Bush or Marc Rubio, probably, on the Republican side. But if I'm wrong, we never had this conversation.


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