US Presidents, The Economy & Investing

White House correspondent and presidential historian talks about the impact presidents, and candidates, can have on the economy and investors.

Reviewed by: Drew Voros
Edited by: Drew Voros

Paul Brandus, author of the just-released “Under This Roof: The White House and the Presidency,” is an award-winning, independent member of the White House press corps who founded West Wing Reports in 2009. He is also the most-followed White House correspondent on Twitter, @WestWingReport. Brandus distributes television, radio and print content for clients around the U.S. and abroad. He is also a Washington columnist on economics and finance for MarketWatch.

With the presidential primary season kicking into high gear, thought it would be a good idea to catch up with him to discuss what real impact presidents, and candidates, can have on the economy and investors. Does the president have an impact on investors? Or is it a combination of Congress, the Fed, etc., and the president is just a player in that?

Paul Brandus: Well, it's all of the above, all of the players that you mentioned—the Fed, Congress, the president, even people who are just running for president.

For example, Hillary Clinton a couple of weeks ago talked about pharmaceutical prices in a way that was detrimental to these health care stocks, and they took a tumble in the minutes after she commented. It's almost an implicit recognition of the strength of her campaign, despite all the problems that she has had. When Hillary Clinton says something like that, she's a market mover.

If somebody like Chris Christie or Rand Paul said something about the pharmaceutical prices or pharmaceutical stocks, I have a feeling they would not be quite the market mover that she was. Donald Trump is in a position to be a market mover in similar ways as well.

Now, the broader question is just how much influence a president has over, say, the stock market. There's no question a president can come out and talk about oil prices or anything. And there's no question that he or she can move the markets. But all presidents try to be very careful about that.

In these daily press briefings, you can ask the president's press secretary a question that's related to, say, interest rates. And they will shy off; they'll say, "Well, we're just not going to comment on anything that potentially impacts the market." They don't want to be seen as taking sides.

Members of Congress, on the other hand, are not nearly as disciplined with their messaging, and they say things all the time that can move markets. But a member of Congress, of course, is not as prominent and doesn't have anywhere near the soapbox that the president has. Let's talk a little bit about history, since that's your expertise. What recent president has had the most impact on changing the economy?

Brandus: Franklin Roosevelt really changed the economy in fundamental ways that no other president has matched. Roosevelt came in and inherited the horrible Depression that started six months after Herbert Hoover was inaugurated. Some blame Hoover, but other people say, “Look, he inherited Calvin Coolidge’s economy.” And you can debate that, of course, forever.

Roosevelt came in in '33 and the phrase, "the first 100 days" is still used today to show just how quickly a president gets out of the gate in terms of tackling his agenda. And FDR's first 100 days, even now, are held up as the standard that every other president has tried and failed to match.

His first 100 days were amazing. It was an economic emergency. The unemployment rate was 25 percent. Millions of Americans had lost their homes. Poverty was widespread. It was really just very drastic conditions. Roosevelt got to work right away.

In those first 100 days, he started a slew of government programs that really turned the economy around. He was a Keynesian guy, big spending. He didn't mind borrowing money just to pump it into the economy.

He created all kinds of public service jobs, programs, anything to get people back to work, anything to keep liquidity in the economy. He shored up the banking system overnight. A lot of what he did we have with us today; for example, Social Security. The Roosevelt legacy still lives on today in many respects. 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.

Drew Voros has nearly 30 years' experience in financial journalism. He was a longtime business editor for the Oakland Tribune and sister papers of the Bay Area News Group, and finance writer for the Hollywood trade publication Variety. Voros' past roles have also included editor-in-chief at and ETF Report.