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Comment by bkovacev | Hacker News Reader

As someone who is not that much into politics but receives salary in US dollar - what does Biden win mean for the US economy and the dollar?

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Here's Moody's pre-election analysis (PDF)[0]. Overall they viewed a Democratic win as more economically productive than a Republican one.

[0] https://www.moodysanalytics.com/-/media/article/2020/the-mac...

No one really knows.

A big factor will be who wins the Senate, and that won’t be decided until January due to two run off elections in Georgia.

The two possible outcomes in the Senate will still leave questions about what, if any, additional stimulus legislation will be passed, and my guess is that this has the potential to impact the markets and exchange rates significantly.

There is no easy answer to your question, so I would start reading up on the potential outcomes and relevant legislation if it might have a material impact on you.

Probably not a lot for quite a while to be honest. The virus is still here, the deficit is still ballooning and Biden won't even be in office for another few months. Even when he is, it will take time for policies to be formulated, enacted and eventually have any effect.

Not much if they don’t win the senate.

Historically, when the President and at least one house of Congress are opposing parties, the federal government tends to be gridlocked except in time of national emergency (e.g., 9/11).

This, I believe, is why the markets are reacting rather optimistically to the election results. Market makers clearly believe that a Biden presidency and a Republican Senate will get very little done, pass very few new laws, and spend a lot of time quarreling. This allows the economy to essentially run on auto-pilot, which in a free market system is rather conducive to growth.

If however the Senate swings to the Democrats after all the votes are counted, it may be a different story.

> Historically, when the President and at least one house of Congress are opposing parties, the federal government tends to be gridlocked except in time of national emergency (e.g., 9/11).

Unless you mean in the strict technical sense of national emergency, where the US has spent exactly 14 months not in one since March 9, 1933 (so the rule is moot because it basically never applies), historically that's mostly not true; it wasn't that true in the 1980s through 1992s with Democrats controlling one and sometimes two houses of Congress and Reagan-Bush presidencies. It wasn't very true in the mid-late 1990s with Clinton vs. Gingrich (there were shutdowns, but also major bipartisan initiatives like welfare reform).

Still, it's pretty true if you narrow it to a Democratic President and Mitch McConnell as Senate Majority leader, rather than trying to make it some nonpartisan broad historical phenomenon.

Clinton was a pragmatist; he shifted to a more moderate position after 1994 and the huge GOP sweep of the House. Thus he and Gingrich were able to work together and get some great work done.

> Clinton was a pragmatist;

Maybe, more significant was that he was ideologically a center-right neoliberal, the same as the dominant faction of the Republican Party at the time he was elected.(but not the same as the right turn the Republican Party took in response.)

> he shifted to a more moderate position after 1994

Not really. Overall policy outcome shifted from what a center-right neoliberal with weakly progressive stands on social issues could agree with a Democratic Congress that was to his left on both economic and social issues on to what athe same President could agree with with a Congress that was slightly to his right on economic issues and far to his right on social issues.

Welfare reform, for instance, may have passed after Republicans took office, but it wasn't Clinton “shifting to a more moderate position”, as it was a major part (though not as significant as health care, on which he was defeated by Democratic defections before Republicans took control) of his 1992 platform.

But the point is, in either case, while you can find excuses for each of the exceptions to the supposed “divided government is normally total gridlock outside of unusual emergencies” idea, the history of divided government has far more exceptions than cases which support the rule.

Likely the biggest change for the next year will be strategy for fighting Covid. Expect vast expansion of test and trace, bigger push for mask mandates, but also earlier reopening of public spaces and a sharper recovery in second half of 2021. Impact on the dollar is a crap shoot due to huge Fed intervention that never wound down from the last recession.

Probably not as much as this:

https://fred.stlouisfed.org/series/M1REAL

More predictability in the market, even more so if the Senate remains in Republican hands (since the ensuing political deadlock would make it unlikely that we'll see major legislation pass over the next two years).

Return of a coordinated US foreign policy, which includes supporting allies and not kowtowing to dictators, will bring stability to global financial markets. With the US once again making decisions based on facts and science and sound economic policy, I fully expect the US economy to get back into stable, modest growth (vs. the last 4 years of chaotic instability. If the government is unstable, the economy reacts pessimisticly).

The guy elected promoted and voted for the Iraq war. Let's ease up on saying the foreign policy is going to be good.

Where did Trump kowtow to dictators?

Closer relations with China. Reverse on immigration. US attracts/accepts more foreign workers. Probably a raising dollar and lower stockmarket. The high taxes might see some flee high tax states/regions (living in New York city making 400k will cost you 60%+ of income tax) to lower cost states or out of country or remote.

Overall remote work should increase with a different lockdown tone at the federal level creating uncertainy in commercial real estate.

You won’t see 60% income tax on 400k. That would require an additional 10%+ new income tax (which no one is asking on a 400k income). Even then, you’d not lose 60% of your income. You’d lose around 35%-40% to taxes still because of how tax brackets work.

Anything after 400k would be taxed at that rate, 62%.

"In California, New Jersey and New York City, taxpayers earning more than $400,000 a year could face combined state and local statutory income tax rates of more than 60%"

https://www.google.com/amp/s/www.cnbc.com/amp/2020/10/19/tax...

The question is how does this affect many FAANG employees? Is a move out of state an option?

It is an option, but remember something that the Democrat party was talking about in 2016... a global tax. Prediction, that will make a big comeback under Biden

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